THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

INTRODUCED BY RAFFERTY, GREENLEAF, TARTAGLIONE, SCARNATI, PILEGGI, GORDNER, ORIE, FONTANA, KITCHEN, STACK, MENSCH, KASUNIC, TOMLINSON, ERICKSON, BAKER, WAUGH, SMUCKER, PIPPY, ARGALL, ALLOWAY, BOSCOLA, WOZNIAK AND D. WHITE, JANUARY 19, 2011

REFERRED TO BANKING AND INSURANCE, JANUARY 19, 2011  

AN ACT

Amending the act of May 17, 1921 (P.L.682, No.284), entitled "An

act relating to insurance; amending, revising, and

consolidating the law providing for the incorporation of

insurance companies, and the regulation, supervision, and

protection of home and foreign insurance companies, Lloyds

associations, reciprocal and inter-insurance exchanges, and

fire insurance rating bureaus, and the regulation and

supervision of insurance carried by such companies,

associations, and exchanges, including insurance carried by

the State Workmen's Insurance Fund; providing penalties; and

repealing existing laws," providing for access to community

pharmacy services.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  The act of May 17, 1921 (P.L.682, No.284), known

as The Insurance Company Law of 1921, is amended by adding a

section to read:

Section 635.6.  Access to Community Pharmacy Services.--(a)

If a pharmacy agrees to participate in a provider network under

subsection (c), no health insurance policy, government program

or pharmacy benefit manager providing coverage or reimbursement

for the dispensing of prescription medications may, as a

condition for the provision of benefits or for the payment of

reimbursement for medications or pharmacy services, do any of

the following:

(1)  Require a covered individual to obtain any prescription

medication from a mail order pharmacy.

(2)  Impose upon a covered individual utilizing a retail

community pharmacy any copayment, deductible or other cost-

sharing requirement or prior authorization requirement not

imposed upon a covered individual utilizing a mail order

pharmacy.

(3)  Subject any medication dispensed by a retail community

pharmacy to a covered individual to a minimum or maximum

quantity limit, length of script, restriction on refills or

requirement to obtain refills not imposed upon a mail order

pharmacy.

(4)  Require a covered individual in whole or in part to pay

for any medication dispensed by a retail community pharmacy and

seek reimbursement if the individual is not required to pay for

and seek reimbursement in the same manner for a prescription

dispensed by a mail order pharmacy.

(5)  Subject a covered individual to any administrative

requirement in order to use a retail community pharmacy that is

not imposed upon the use of a mail order pharmacy, including a

requirement to express an intent or exercise an option to use or

not use any particular pharmacy or type of pharmacy as a

condition of having a prescription dispensed by a retail

community pharmacy.

(6)  Impose any other term, condition or requirement

pertaining to the use of the services of a retail community

pharmacy that materially and unreasonably interferes with or

impairs the right of a covered individual to obtain prescription

medications from a retail community pharmacy of the individual's

choice.

(b)  (1)  No health insurance company, agent or contractor of

an insurance company, government program or pharmacy benefit

manager shall, in the administration of a health insurance

policy or a pharmacy provider network, take any action or allow

any action to occur that results in actions prohibited under

subsection (a).

(2)  With respect to prescription medications dispensed by a

pharmacy eligible to participate in a provider network under

subsection (c), information regarding the dispensing of

prescription medications by a pharmacy shall not be used by a

health insurance company, an agent, affiliate or contractor of

an insurance company, a government program or by a prescription

benefit manager to promote, advertise or encourage the use of a

participating pharmacy, including a mail order pharmacy.

(3)  Any health insurance company, agent or contractor of an

insurance company, or pharmacy benefit manager, or any pharmacy

owned or affiliated with a health insurance company or pharmacy

benefit manager, receiving rebates, discounts, allowances or

other incentive payments from any person for the dispensing of

prescription medications shall at least annually file a report

fully disclosing the amount, terms and conductions of the

payments to the department. The department may review and audit

records supporting the accuracy and completeness of the report

and shall, not later than ninety (90) days after the receipt of

a report, make available to the purchaser of any health

insurance policy or employe benefit plan with respect to which

the payments where made, and to any pharmacy participating in a

network providing benefits to covered individuals receiving

benefits from the health insurance policy or employe benefit

plan, providing a summary of the amounts, terms and conditions

pursuant to which any such payments are made. The summary

prepared by the department shall not disclose information in a

format that will, with respect to any particular person making

the payments or with respect to the terms and conditions of

agreements relating to payments received from any particular

person, disclose any trade secrets relating to the payments.

(c)  (1)  A pharmacy licensed and in good standing with the

State Board of Pharmacy and not disqualified from participation

in the Medicaid or Medicare program for cause shall have a right

to participate in a pharmacy provider network, if the pharmacy

offers to enter into an agreement accepting the standard terms,

conditions or requirements relating to dispensing fees, payments

for product costs and other pharmacy services and the quality of

dispensing and other pharmacy services established by a health

insurance company, government program or pharmacy benefit

manager for all pharmacies in the provider network.

(2)  The standard terms and conditions relating to dispensing

fees and payment for product costs and other pharmacy services

established under paragraph (1) shall provide convenient access

to retail community pharmacies consistent with the standards

established under section 2121 and shall take into consideration

the standards established by the Center for Medicare and

Medicaid Services of the United States Department of Health and

Human Services under section 1395w-104(b)(1)(c) of the Social

Security Act (49 Stat. 620, 42 U.S.C. § 1395w-104(b)(1)(c)).

(3)  The standard terms and conditions relating to dispensing

fees, ingredient costs and payments for pharmacy services

provided to retail community pharmacies shall not be less than

the amounts paid by or for the benefit of a health insurance

company, government program or pharmacy benefit manager for

dispensing of the same medications and the provision of

comparable services to any mail order pharmacy, including

amounts paid or distributed to a mail order pharmacy by an

affiliate of the mail order pharmacy or by the pharmacy benefit

manager.

(4)  In determining whether the terms and conditions relating

to dispensing fees, ingredient costs and payments for pharmacy

services are not less than amounts paid to a mail order pharmacy

under paragraph (3), consideration shall be given to the extent

practicable to any rebates, discounts, allowances or other

incentive payments received for the dispensing of prescription

medications by a mail order pharmacy or an affiliate of a mail

order pharmacy, including a pharmacy benefit manager, from any

person other than amounts that reflect arm's-length payments

based on the fair value of services provided in exchange for

such payments, or amounts used to reduce the cost of

prescription medication benefits paid by the purchaser of a

health insurance policy or the services of a prescription drug

manager, or by a government program.

(5)  A pharmacy shall not be deemed to be eligible to

participate in a provider network under this subsection during

any period of time for which its right to participate in a

network has been suspended or revoked for serious violations of

a network pharmacy provider agreement established under this

subsection that reasonably warrant suspension or revocation.

(d)  (1)  With respect to a health insurance company or

pharmacy benefit manager:

(i)  The department shall review the terms and conditions of

pharmacy networks as provided under section 2121, may utilize

the enforcement mechanisms, remedies and penalties available

under section 628 and may demand the production of any

information necessary to enforce this section.

(ii)  Regardless of whether any enforcement action is taken

by the department, a covered individual, pharmacy or pharmacist

aggrieved by a violation of this section may seek relief to

remedy alleged violations of this section involving at least one

level of internal review and investigation as provided under

section 2161(b) and an opportunity to appeal to the department

in the manner provided under section 2142 unless, with respect

to a pharmacy or pharmacist, an agreement with the insurance

company or pharmacy benefit manager establishes an alternative

dispute resolution process as provided under section 2162(f).

(2)  A covered individual, pharmacy or pharmacist aggrieved

by a violation of this section by a government program may

petition the agency responsible for the administration of the

program to review complaints regarding violations of this

section.

(e)  It is the intent of the General Assembly that this

section and the other provisions of this act relating to health

insurance shall, as applied to persons subject to this act to

the fullest extent possible, be preserved from preemption by

Federal law. If any provisions of this act relating to health

insurance are  preempted by Federal law or otherwise declared

invalid or unenforceable, the remaining provisions of this act

shall remain in force and effect.

(f)  As used in this section:

(1)  "Covered individual" means an individual receiving

prescription medication coverage or reimbursement provided by a

health insurance policy, government program or pharmacy benefit

manager.

(2)  "Government program" means any of the following:

(i)  The Commonwealth's medical assistance program

established under the act of June 13, 1967 (P.L.31, No.21),

known as the "Public Welfare Code," except that the specialty

pharmacy drug program adopted by the Department of Public

Welfare may be exempt from the requirements of this section to

the extent the Department of Public Welfare, after review and

evaluation of the program, determines that the application of

the requirements of this section will materially increase the

costs of providing specialty pharmacy services.

(ii)  The adult basic coverage insurance program established

under Chapter 13 of the act of June 26, 2001 (P.L.755, No.77),

known as the "Tobacco Settlement Act."

(iii)  The Children's Health Care Program established under

Article XXIII.

(iv)  The program of pharmaceutical assistance for the

elderly established under the act of August 26, 1971 (P.L.351,

No.91), known as the "State Lottery Law."

(v)  An employe benefit plan described in section 1003(b)(1)

of the Employee Retirement Income Security Act of 1974 (Public

Law 93-46, 29 U.S.C. § 1003(b)(1)), applicable to government

employes who are residents of this Commonwealth, except that the

Pennsylvania Public Employees Benefit Trust Fund may be exempt

from the requirements of this section to the extent the Office

of Administration, after review and evaluation of the program,

and consultation with Commonwealth employe collective bargaining

units, determines that the application of the requirements of

this section will materially increase the costs of providing

pharmacy services.

(vi)  Any other program established or operated by the

Commonwealth that provides or pays for the cost of prescription

medications and pharmacy services provided to residents of this

Commonwealth.

(3)  "Health insurance company" means a fraternal benefit

society, health maintenance organization, hospital plan

corporation, insurer, preferred provider organization or

professional health services plan corporation as defined in

section 603-B, or other entity subject to this act.

(4)  "Health insurance policy" means a group or individual

health or sickness or accident insurance policy, subscriber

contract or certificate issued by a health insurance company

providing coverage or benefits for prescription medications to

residents of this Commonwealth.

(5)  "Mail order pharmacy" means a pharmacy that

predominantly receives prescriptions by mail, telefax or through

electronic submissions and predominantly dispenses the

medications to patients through the use of the United States

mail or other common or contract carrier delivery service and

generally provides consultations with patients electronically

rather than face-to-face.

(6)  "Pharmacy benefit manager" means a person, partnership,

association or corporation not holding a certificate of

authority under section 630 that establishes, operates,

maintains or administers agreements with pharmacies and health

insurance companies, government programs or employe benefit

plans described in section 1003(a) of the Employee Retirement

Income Security Act of 1974 relating to the dispensing of

prescription medications and the provision of pharmacy services

to covered individuals, including agreements relating to the

amounts to be charged by the pharmacy for services rendered,

incentives provided to covered individuals to use the services

of designated pharmacies, or limitations on reimbursement only

when services are provided by designated pharmacies.

(7)  "Retail community pharmacy" means a pharmacy that is

open to the public, serves walk-in customers and makes available

face-to-face consultations between licensed pharmacists and

persons to whom medications are dispensed.

Section 2.  The Insurance Department may adopt regulations to

administer and enforce section 635.6 of the act.

Section 3.  Section 635.6 of the act shall apply to health

insurance policies, government programs and agreements with

pharmacy benefit managers that are offered, issued, executed or

renewed or that have provisions related to prescription

medication benefits that are amended on or after the effective

date of this section.

Section 4.  This act shall take effect as follows:

(1)  The following provisions shall take effect in 120

days:

(i)  The addition of section 635.6 of the act.

(ii)  Section 3 of this act.

(2)  The remainder of this act shall take effect

immediately.