PRINTER'S NO. 1753
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
1166
Session of
2018
INTRODUCED BY EICHELBERGER, ARGALL, RAFFERTY, VULAKOVICH AND
BROWNE, MAY 18, 2018
REFERRED TO BANKING AND INSURANCE, MAY 18, 2018
AN ACT
Amending the act of November 21, 2016 (P.L.1318, No.169),
entitled, "An act providing for pharmacy audit procedures,
for registration of pharmacy benefits managers and auditing
entities, for maximum allowable cost transparency and for
prescription drugs reimbursed under the PACE and PACENET
program; and making related repeals," adding provisions
relating to public contracting for pharmacy benefits
management.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. The act of November 21, 2016 (P.L.1318, No.169),
known as the Pharmacy Audit Integrity and Transparency Act, is
amended by adding a chapter to read:
CHAPTER 6
PUBLIC CONTRACTING FOR
PHARMACY BENEFITS MANAGEMENT
Section 601. Application of chapter.
The provisions of this chapter shall apply to all public
contracts for pharmacy benefits manager services entered into by
a public contracting entity, and to each request for proposals
or invitations for bids, auctions or other solicitations for
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pharmacy benefits management services on behalf of public
employees that occur after the effective date of this section.
Section 602. Definitions.
The following words and phrases when used in this chapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Copayment." An amount a public employee is required to pay
at a point of sale in order to receive a covered prescription
drug.
"Public contracting entity." A government entity authorized
to contract for pharmacy benefits manager services on behalf of
public employees.
"Public employee." A person employed, elected or appointed
to serve in a department, authority, commission, committee,
consortium, board, bureau, division or agency of the executive,
legislative or judicial branch of this Commonwealth, including
an independent agency or a public school, political subdivision
or municipal authority of this Commonwealth and a person retired
from such service and enrolled in a drug plan for retired public
employees.
"Public pharmacy benefits management contract." A contract
between a public contracting entity and a pharmacy benefits
manager for pharmacy benefits management services.
"Reverse auction." A purchasing strategy that uses
specialized software or an online marketplace and enables
suppliers to compete online in real-time by offering a contract
out for bid over a period of time and by allowing multiple
providers to offer ongoing bids on the contract while meeting
all of the specifications until the time period for bidding
expires.
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Section 603. Solicitation of pharmacy benefits management
contracts.
(a) Method of solicitation.--
(1) A public contracting entity, prior to soliciting an
invitation of bids or request for proposals for pharmacy
benefits management services shall first consider best
practices, technologies and methodologies, including reverse
auctions and electronic claim review, to maximize
transparency in both contracting and contract implementation.
(2) A public contracting entity may use technology
platforms that:
(i) Reprice PBM proposals for pharmacy spending
utilizing code-based classification of drugs from
nationally accepted data sources of comparisons of the
costs of PBM proposals.
(ii) Conduct real-time, electronic, line-by-line,
claim-by-claim review of invoiced PBM pharmacy claims
using an automated claims adjudication technology
platform that allows for online comparison of PBM
invoices and auditing of other aspects of the services
provided by the PBM.
(3) A public contracting entity may procure the
technical assistance necessary during the solicitation
process to evaluate the qualifications of bidders and to
conduct online automated reverse auction services to support
the comparisons for the procurement of pharmacy benefits
management services.
(b) Certification to department.--Within 30 days of entering
into or renewing a contract for pharmacy benefits management
services, a public contracting entity shall provide a
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certification to the department that the public contracting
entity complied with subsection (a)(1). The certification shall
include the technologies employed and the cost or anticipated
cost savings thereof.
(c) Transparency in solicitation.--An entity that seeks to
provide pharmacy benefits management services to a public
contracting entity shall provide the following information to
the public contracting entity:
(1) The formulary, information on deductions and other
out-of-pocket costs and any administrative requirement,
including preauthorization requirement.
(2) Any reimbursement difference, otherwise known as
spread pricing, for the same drug between a retail pharmacy
network and mail order service.
(3) Any financial incentive, such as rebate, refund,
purchase order discount or administrative fee the PBM expects
to receive from a manufacturer or wholesaler.
(4) The procedure to be used in determining when a drug
has moved from brand to generic.
Section 604. Public pharmacy benefits management contracts.
(a) Prohibited provisions.--
(1) (i) No public pharmacy benefits management contract
may prohibit a pharmacy from disclosing lower-cost
prescription drug options to a covered public employee,
including those that are available if the covered public
employee would purchase the prescription drug without
using the covered public employee's health insurance
coverage.
(ii) If information related to a public employee
enrollee's out-of-pocket cost or the clinical efficacy of
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a prescription drug or alternative medication is
available to a pharmacy provider, no pharmacy benefits
manager contract may provide penalties to a pharmacy
provider for providing the information to a public
employee enrollee.
(2) No public pharmacy benefits management contract may
impose on a public employee a copayment for a prescription
drug benefit in an amount that exceeds the cost of the
prescription drug that the pharmacy would charge to persons
who do not purchase the prescription drug through their
health insurance coverage.
(b) Required provisions.--
(1) A public benefits management contract shall prohibit
the pharmacy benefits manager from suspending the processing
of further refunds during a solicitation process undertaken
to replace or renew the contract.
(2) A public pharmacy benefits management contract shall
allow the public contracting entity to make the choice as to
an auditor assigned to validate the financial guarantees
specified in the contract.
(3) A public pharmacy benefits management contract shall
require the PBM to provide the following information for each
contract year:
(i) The percentage of all prescriptions that were
provided through retail pharmacies compared to mail order
pharmacies and the percentage of prescriptions for which
a generic drug was available and dispensed, known as the
generic dispensing rate, by pharmacy type, including an
independent pharmacy, chain pharmacy, supermarket
pharmacy or mass merchandiser pharmacy that is licensed
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as a pharmacy by the State and that dispenses medication
to the general public, that is paid by the health
benefits plan or PBM under the contract.
(ii) The aggregate amount and the type of rebates,
discounts or price concessions, excluding bona fide
service fees, including, but not limited to, distribution
service fees, inventory management fees, product stocking
allowances and fees associated with administrative
services agreements and patient care programs negotiated
by the PBM that are attributable to patient utilization
under the plan, the aggregate amount of the rebates,
discounts or price concessions that are passed through to
the plan sponsor and the total number of prescriptions
that were dispensed.
(iii) The aggregate amount of the difference between
the amount the health benefits plan pays the PBM and the
amount that the PBM pays retail pharmacies and mail order
pharmacies and the total number of prescriptions that
were dispensed.
(4) A public pharmacy benefits management contract shall
authorize real-time, electronic, line-by-line, claim-by-claim
review of invoiced PBM pharmacy claims, including using
automated claims adjudication technology to allow for online
comparison of PBM invoices and auditing of other aspects of
the services provided by the PBM.
Section 605. Effect of noncompliance.
Any provision of a public pharmacy benefits management
contract that violates this chapter shall be void and
unenforceable.
Section 606. Audits.
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The Insurance Commissioner may, upon request, audit a
contract for pharmacy benefit management services for compliance
with the provisions of this chapter.
Section 2. This act shall take effect in 60 days.
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