PRINTER'S NO. 804
No. 753 Session of 1999
INTRODUCED BY PESCI, GORDNER, READSHAW, WALKO, MARKOSEK, GEORGE,
CURRY, LAUGHLIN, SHANER, PETRARCA, CLARK, WRIGHT, CORRIGAN,
TRAVAGLIO, HALUSKA, SEYFERT, VAN HORNE, MUNDY, STABACK,
STEELMAN, MAHER, SURRA, DALEY, YOUNGBLOOD, SATHER, ROBINSON,
TRELLO, BELFANTI, SERAFINI, MELIO, M. COHEN, HENNESSEY,
DeLUCA, TRICH, STERN AND MICHLOVIC, MARCH 9, 1999
REFERRED TO COMMITTEE ON INSURANCE, MARCH 9, 1999
AN ACT
1 Providing for pharmacy services in health insurance policies and
2 employee benefit plans and for the rights of pharmacists and
3 persons enrolled in health insurance plans and employee
4 benefit plans; promoting competition, choice and availability
5 in the purchase of prescription drugs and pharmaceutical
6 services; and imposing penalties.
7 The General Assembly of the Commonwealth of Pennsylvania
8 hereby enacts as follows:
9 TABLE OF CONTENTS
10 Chapter 1. Pharmacy Services Freedom of Choice
11 Section 101. Short title.
12 Section 102. Definitions.
13 Section 103. Prohibited policy provisions.
14 Section 104. Unlawful acts.
15 Section 105. Provisions in conflict with chapter.
16 Section 106. Restriction on sale of insurance policies.
17 Section 107. Penalties.
18 Chapter 2. Prescription Drugs and Pharmaceutical Services
1 Section 201. Definitions.
2 Section 202. Applicability.
3 Section 203. Purpose.
4 Section 204. Restrictions.
5 Section 205. Pharmacy choice.
6 Section 206. Beneficiary's choice of pharmacy.
7 Section 207. Pricing.
8 Section 208. Additional charges.
9 Section 209. Notification.
10 Section 210. Advertisement.
11 Section 211. Penalties.
12 Chapter 3. Miscellaneous Provisions
13 Section 301. Enforcement by Insurance Commissioner.
14 Section 302. Repeals.
15 Section 303. Applicability.
16 Section 304. Effective date.
17 CHAPTER 1
18 PHARMACY SERVICES FREEDOM OF CHOICE
19 Section 101. Short title.
20 This act shall be known and may be cited as the Pharmacy
21 Services Freedom of Choice Act.
22 Section 102. Definitions.
23 The following words and phrases when used in this chapter
24 shall have the meanings given to them in this section unless the
25 context clearly indicates otherwise:
26 "Licensed pharmacist." An individual duly licensed by the
27 State Board of Pharmacy to engage in the practice of pharmacy.
28 "Medical practitioner." A physician, dentist, veterinarian
29 or other individual duly authorized and licensed by law to
30 prescribe drugs.
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1 "Person." An individual, partnership, corporation or
2 association or any other legal entity.
3 "Prescription." A written or oral order, issued by a duly
4 licensed medical practitioner in the course of that
5 practitioner's professional practice, for a controlled substance
6 or other drug, device or medication which is dispensed for use
7 by a consumer.
8 "Prescription drug." A drug supplied pursuant to a
9 prescription.
10 "Prescription drug benefit program." A program through which
11 a person enrolled in the program may obtain pharmacy services,
12 including prescription drugs, through payment by a third-party
13 entity.
14 "Provider contract." A contract or agreement providing
15 pharmacy services to a beneficiary, with payment made by a
16 third-party entity.
17 Section 103. Prohibited policy provisions.
18 No health insurance policy or employee benefit plan which is
19 executed, delivered, issued or otherwise contracted for in this
20 Commonwealth shall:
21 (1) Deny a licensed pharmacy or licensed pharmacist the
22 right to participate as a contracting provider for the policy
23 or plan upon the same terms and conditions as are offered to
24 any other pharmacy provider under the policy or plan.
25 (2) Prevent a person who is a party to or beneficiary of
26 any health insurance policy or employee benefit plan from
27 selecting a licensed pharmacy of that person's choice to
28 furnish the pharmacy services offered under the policy or
29 plan, provided that the pharmacy elects to participate as a
30 provider under the terms and conditions of the policy or
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1 plan.
2 (3) Permit or mandate a difference in the copayment fee
3 charged to a person who is a party to or beneficiary of a
4 health insurance policy or employee benefit plan, regardless
5 of the provider selected by the person or party or regardless
6 of whether the prescription benefits are provided through
7 direct contact with the provider or by utilization of a mail-
8 order service.
9 (4) Provide differences in coverage or impose different
10 conditions upon a person who is a party to or beneficiary of
11 a policy or plan based upon the provider utilized or whether
12 a mail-order service is utilized.
13 Section 104. Unlawful acts.
14 After the effective date of this act, it shall be unlawful
15 for a health insurance policy or employee benefit plan providing
16 pharmacy services, including drugs:
17 (1) To require the utilization of a specific licensed
18 pharmacy, whether located within or outside of this
19 Commonwealth.
20 (2) To deny a beneficiary or employee the right to
21 obtain the pharmacy services from a licensed pharmacy willing
22 to provide the services under the terms and conditions of the
23 insurance policy or employee benefit plan.
24 Section 105. Provisions in conflict with chapter.
25 (a) Contrary provisions void.--Any provision in a health
26 insurance policy or employee benefit plan which is executed,
27 delivered, renewed or otherwise contracted for in this
28 Commonwealth that is contrary to any provision of this chapter
29 shall, to the extent of such conflict, be void.
30 (b) Unlawful act.--It shall be unlawful for an insurer or a
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1 person to provide any health insurance policy or employee
2 benefit plan providing for pharmacy services that does not
3 conform to this chapter.
4 Section 106. Restriction on sale of insurance policies.
5 The Insurance Commissioner may not approve for sale a health
6 insurance policy or employee benefit plan providing for pharmacy
7 services which does not conform to this chapter.
8 Section 107. Penalties.
9 A person or entity who violates a provision of this chapter
10 commits a misdemeanor and shall, upon conviction, be sentenced
11 to pay a fine of not more than $5,000 or to imprisonment for not
12 more than one year, or both. For each subsequent conviction, the
13 violator shall be sentenced to pay a fine of not more than
14 $15,000 or to imprisonment for not more than three years, or
15 both.
16 CHAPTER 2
17 PRESCRIPTION DRUGS AND PHARMACEUTICAL SERVICES
18 Section 201. Definitions.
19 The following words and phrases when used in this chapter
20 shall have the meanings given to them in this section unless the
21 context clearly indicates otherwise:
22 "Benefit." A benefit for either prescription drugs or
23 pharmaceutical services, or both, provided by a health benefit
24 plan or an insurer.
25 "Drug" or "prescription drug." A substance subject to the
26 Federal Food, Drug, and Cosmetic Act (52 Stat. 1040, 21 U.S.C. §
27 301 et seq.).
28 "Health benefit plan." An accident and health insurance
29 policy or certificate; a nonprofit service corporation contract;
30 a health maintenance organization subscriber contract; a plan
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1 provided by a multiple employer welfare arrangement; coverage
2 provided by an employer, or by any waiver of or other exception
3 to the act provided under Federal law or regulation. The term
4 does not include accident only insurance, credit insurance or
5 disability income insurance.
6 "Insurer." An entity that provides or offers a health
7 benefit plan.
8 "Pharmacy." A pharmacy that redeems benefits under a health
9 benefit plan, insurer, or third-party administrator through a
10 pharmacy provider contract or otherwise.
11 "Pharmacy provider contract." A contract or agreement
12 between a pharmacy and a health benefit plan, an insurer, or a
13 third-party administrator under which the pharmacy agrees to
14 redeem prescription drugs and pharmaceutical services benefits
15 provided by a health benefit plan or insurer to the subscribers
16 or beneficiaries of the plan or health insurance certificate.
17 "Third-party administrator." A person who directly or
18 indirectly solicits or effects coverage of, underwrites,
19 collects charges or premiums, or adjusts or settles claims in
20 connection with a health benefit plan.
21 Section 202. Applicability.
22 This act applies only to health benefit plans that provide
23 benefits for prescription drugs and pharmaceutical services.
24 Section 203. Purpose.
25 The purposes of this chapter are as follows:
26 (1) To promote competition among and continued
27 availability of retail pharmacies that redeem benefits for
28 prescription drugs and pharmaceutical services provided to
29 consumers by a health benefit plan or insurance certificate.
30 (2) To prohibit anticompetitive restrictions in pharmacy
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1 provider contracts between a pharmacy and a health benefit
2 plan, insurer, or third-party administrator.
3 (3) To enable a pharmacy to establish without
4 restriction its prices for both prescription drugs and
5 pharmaceutical services, as well as to control its hours of
6 operation.
7 (4) To further ensure that consumers may redeem
8 prescription drugs and pharmaceutical services benefits
9 allowed by a health benefit plan or an insurer at the
10 pharmacy of the beneficiary's choice.
11 (5) To continue to enable a health benefit plan,
12 insurer, or third-party administrator to establish
13 prescription drug and pharmaceutical services benefits it
14 provides to its beneficiaries or insureds, so long as in so
15 doing it does not interfere with the right of the pharmacy to
16 establish its own price or charge for the drug or service.
17 Section 204. Restrictions.
18 Notwithstanding Chapter 1, a health benefit plan, insurer,
19 third-party administrator, or other entity may not, directly or
20 indirectly, restrict or prohibit a pharmacy that is not a party
21 to a pharmacy provider contract from establishing its charge or
22 price for prescription drugs and pharmaceutical services, or
23 both, or its hours of operation.
24 Section 205. Pharmacy choice.
25 Subject to the provisions of this chapter, a benefit for
26 prescription drugs or pharmaceutical services or both may be
27 redeemed by the beneficiary at any pharmacy of the beneficiary's
28 choice. The health benefit plan, insurer, third-party
29 administrator, or other person or entity providing benefits
30 shall redeem benefits for prescription drugs or pharmaceutical
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1 services provided by a pharmacy that is not a party to a
2 pharmacy provider contract at the same rate and in the same
3 manner as it redeems the benefits for the drugs or services
4 provided by a pharmacy under a pharmacy provider contract.
5 Section 206. Beneficiary's choice of pharmacy.
6 A health benefit plan, insurer, third-party administrator, or
7 other person or entity providing benefits may not, directly or
8 indirectly, restrict or financially coerce the beneficiary's
9 choice of pharmacy.
10 Section 207. Pricing.
11 Notwithstanding Chapter 1 if the charge or price established
12 by the pharmacy for a prescription drug or pharmaceutical
13 service, or both, is greater than the benefit allowed by the
14 health benefit plan or insurer for the drug or service, then the
15 beneficiary is responsible for paying the pharmacy the
16 difference between the benefit and the charge or price of the
17 pharmacy for the prescription drug or pharmaceutical service, or
18 both. Prior to filling the prescription, if the beneficiary
19 requests the information and the pharmacist has the information,
20 the pharmacist shall inform the beneficiary what the price
21 difference will be.
22 Section 208. Additional charges.
23 A health benefit plan, insurer or third-party administrator
24 shall not restrict or prohibit, directly or indirectly, a
25 pharmacy that is not a party to a pharmacy provider contract
26 from charging the beneficiary for services rendered by the
27 pharmacy that are in addition to charges for the drug, for
28 dispensing the drug, or for patient counseling.
29 Section 209. Notification.
30 The health benefit plan or the insurer shall inform all
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1 beneficiaries under the plan that benefits may be redeemed at
2 any pharmacy which the beneficiary chooses. This information
3 shall be communicated through reasonable means on a timely basis
4 and at regular intervals. The health benefit plan, insurer or
5 third party administrator may not express an opinion or judgment
6 as to what a pharmacy's charge or price should be or what a
7 beneficiary's copayment difference should be. This information
8 shall also be included in the written summary or description of
9 the health benefit plan or insurance, as well as other written
10 communications furnished to beneficiaries where benefits are
11 mentioned. Nothing in this section shall prevent a health
12 benefit plan or insurer from notifying its enrollees or
13 participants of which pharmacies have agreed to fill
14 prescriptions without any additional charges.
15 Section 210. Advertisement.
16 A pharmacy eligible to redeem benefits under a health benefit
17 plan may announce and advertise that eligibility in a
18 commercially reasonable manner.
19 Section 211. Penalties.
20 The penalties shall include the following:
21 (1) The Insurance Commissioner shall not approve any
22 health benefit plan or policy providing prescription drugs or
23 pharmaceutical services benefits that does not conform to the
24 provisions of this chapter.
25 (2) Any provision of a health benefit plan that is
26 executed, delivered, or renewed or otherwise contracted for
27 in this Commonwealth that is in conflict with any provision
28 of this chapter shall be void, to the extent of the conflict.
29 (3) Any provision of a pharmacy provider contract
30 between a health benefit plan, or insurer, or third-party
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1 administrator, or other person subject to the provisions of
2 this chapter and a pharmacy that is in conflict with this
3 chapter is void to the extent of the conflict.
4 (4) The Insurance Commissioner shall investigate and
5 sanction any person, health benefit plan, insurer, third-
6 party administrator, or other person that violates the
7 provisions of this chapter.
8 (5) A health benefit plan or insurer, or third-party
9 administrator, or other person that violates this chapter
10 shall be subject to civil penalties, restitution and summary
11 suspension of license or certificate: provided, monetary
12 civil penalties are directed by the commissioner, for the
13 purposes of this chapter, these penalties shall not be less
14 than $1,000 per day, nor more than $10,000 per day.
15 (6) If the commissioner has reason to believe that a
16 health benefit plan, insurer, third-party administrator, or
17 other person or entity has failed to comply with this
18 chapter, the commissioner shall issue and serve upon the
19 person or entity a statement of the charges in that respect
20 and a notice of hearing to be held at the time and place
21 fixed in the notice, which shall not be less than ten days
22 after the date of service of the notice. If, after hearing,
23 the commissioner finds that the person or entity is in
24 violation of this chapter, the commissioner shall reduce the
25 finding to writing and issue and serve upon the person or
26 entity an order requiring the person or entity to cease and
27 desist from engaging in the violation. A person or entity
28 required to cease and desist pursuant to this chapter may
29 obtain a review of the cease and desist order. A person or
30 entity found to be in violation of this chapter shall be
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1 subject to civil monetary penalties for violations committed
2 on and after the date the person or entity received the
3 statement of charges and notice of hearing from the
4 commissioner.
5 (7) The commissioner shall have the authority granted by
6 this act to enforce violations of this chapter, including
7 additional authority provided in this chapter.
8 (8) The Attorney General shall bring such actions as are
9 necessary to enforce or prevent violations of this chapter,
10 either through representation of the commissioner or
11 otherwise.
12 CHAPTER 3
13 MISCELLANEOUS PROVISIONS
14 Section 301. Enforcement by Insurance Commissioner.
15 It shall be the duty and responsibility of the Insurance
16 Commissioner to administer and enforce this act and to
17 promulgate necessary rules and regulations.
18 Section 302. Repeals.
19 All acts and parts of acts are repealed insofar as they are
20 inconsistent with this act.
21 Section 303. Applicability.
22 This act shall apply to all health insurance and employee
23 benefit plans providing pharmacy services benefits, including,
24 without limitation, prescription drugs, to any resident of this
25 Commonwealth.
26 Section 304. Effective date.
27 This act shall take effect in 60 days.
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