2016 -- H 7438 SUBSTITUTE A

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LC004298/SUB A

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2016

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A N   A C T

RELATING TO INSURANCE - PRESCRIPTION DRUG BENEFITS

     Introduced By: Representatives Kennedy, Azzinaro, Keable, Winfield, and Shekarchi

     Date Introduced: February 03, 2016

     Referred To: House Corporations

     It is enacted by the General Assembly as follows:

     SECTION 1. Chapter 27-18 of the General Laws entitled "Accident and Sickness

Insurance Policies" is hereby amended by adding thereto the following section:

     27-18-33.2. Pharmacy benefit manager requirements with respect to multi-source

generic pricing updates to pharmacies. – (a) Definitions. As used herein:

     (1) "Maximum allowable cost" or "MAC" means the maximum amount that a pharmacy

benefits manager will reimburse toward the cost of a drug;

     (2) "Nationally available" means that there is an adequate supply available from regional

or national wholesalers and that the product is not obsolete or temporarily unavailable;

     (3) "Pharmacy benefit manager" or "PBM" means an entity doing business in this state

that contracts to administer or manage prescription drug benefits on behalf of any carrier that

provides prescription drug benefits to residents of this state.

     (b) Upon each contract execution or renewal, a PBM shall, with respect to contracts

between a PBM and a pharmacy or, alternatively, a PBM and a pharmacy's contracting

representative or agent such as a pharmacy services administrative organization (PSAO):

     (1) Include in such contracts a requirement to update pricing information on the MAC list

at least every ten (10) calendar days;

     (2) Maintain a procedure to eliminate products from the list of drugs subject to such

pricing, or modify MAC rates when such drugs do not meet the standards and requirements of

this section as set forth in order to remain consistent with pricing changes in the marketplace.

     (c) PBM requirements for inclusion of products on a list of drugs subject to MAC pricing.

In order to place a particular prescription drug on a MAC list, the PBM must, at a minimum,

ensure that:

     (1) The product must be listed as "A", "AB", or "B" rated in the most recent version of

the United States Food and Drug Administration's approved drug products with therapeutic

equivalence evaluations, also known as the orange book, or has an "NR" or "NA" rating or

similar rating by a nationally recognized reference; and

     (2) The product must be nationally available.

     (d) Standards for pharmacy appeals. All contracts between a PBM, a contracted

pharmacy or, alternatively, a PBM and a pharmacy's contracting representative or agent such as a

pharmacy services administrative organization (PSAO) shall include a process to appeal,

investigate, and resolve disputes regarding MAC pricing. The process shall include the following

provisions:

     (1) The right to appeal shall be limited to fifteen (15) days following the initial claim;

     (2) The appeal shall be investigated and resolved within fifteen (15) days following

receipt of the appeal;

     (3) A process by which a network pharmacy may contact the PBM regarding the appeals

process;

     (4) If the appeal is denied, the PBM shall provide the reason for the denial and identify

the national drug code of a drug product that is available in adequate supply;

     (5) If an appeal is upheld, the PBM shall make an adjustment to the list effective no later

than one day after the date of determination; and

     (6) The department of health shall exercise oversight and enforcement of this section.

     SECTION 2. Chapter 27-19 of the General Laws entitled "Nonprofit Hospital Service

Corporations" is hereby amended by adding thereto the following section:

     27-19-26.1. Pharmacy benefit manager requirements with respect to multi-source

generic pricing updates to pharmacies. – (a) Definitions. As used herein:

     (1) "Maximum allowable cost" or "MAC" means the maximum amount that a pharmacy

benefits manager will reimburse toward the cost of a drug;

     (2) "Nationally available" means that there is an adequate supply available from regional

or national wholesalers and that the product is not obsolete or temporarily unavailable;

     (3) "Pharmacy benefit manager" or "PBM" means an entity doing business in this state

that contracts to administer or manage prescription drug benefits on behalf of any carrier that

provides prescription drug benefits to residents of this state.

LC004298/SUB A - Page 2 of 8

     (b) Upon each contract execution or renewal, a PBM shall, with respect to contracts

between a PBM and a pharmacy or, alternatively, a PBM and a pharmacy's contracting

representative or agent such as a pharmacy services administrative organization (PSAO):

     (1) Include in such contracts a requirement to update pricing information on the MAC list

at least every ten (10) calendar days;

     (2) Maintain a procedure to eliminate products from the list of drugs subject to such

pricing, or modify MAC rates when such drugs do not meet the standards and requirements of

this section as set forth in order to remain consistent with pricing changes in the marketplace.

     (c) PBM requirements for inclusion of products on a list of drugs subject to MAC pricing.

In order to place a particular prescription drug on a MAC list, the PBM must, at a minimum,

ensure that:

     (1) The product must be listed as "A", "AB", or "B" rated in the most recent version of

the United States Food and Drug Administration's approved drug products with therapeutic

equivalence evaluations, also known as the orange book, or has an "NR" or "NA" rating or

similar rating by a nationally recognized reference; and

     (2) The product must be nationally available.

     (d) Standards for pharmacy appeals. All contracts between a PBM, a contracted

pharmacy or, alternatively, a PBM and a pharmacy's contracting representative or agent such as a

pharmacy services administrative organization (PSAO) shall include a process to appeal,

investigate, and resolve disputes regarding MAC pricing. The process shall include the following

provisions:

     (1) The right to appeal shall be limited to fifteen (15) days following the initial claim;

     (2) The appeal shall be investigated and resolved within fifteen (15) days following

receipt of the appeal;

     (3) A process by which a network pharmacy may contact the PBM regarding the appeals

process;

     (4) If the appeal is denied, the PBM shall provide the reason for the denial and identify

the national drug code of a drug product that is available in adequate supply;

     (5) If an appeal is upheld, the PBM shall make an adjustment to the list effective no later

than one day after the date of determination; and

     (6) The department of health shall exercise oversight and enforcement of this section.

     SECTION 3. Chapter 27-20 of the General Laws entitled "Nonprofit Medical Service

Corporations" is hereby amended by adding thereto the following section:

     27-20-23.1. Pharmacy benefit manager requirements with respect to multi-source

LC004298/SUB A - Page 3 of 8

generic pricing updates to pharmacies. -- (a) Definitions. As used herein:

     (1) "Maximum allowable cost" or "MAC" means the maximum amount that a pharmacy

benefits manager will reimburse toward the cost of a drug;

     (2) "Nationally available" means that there is an adequate supply available from regional

or national wholesalers and that the product is not obsolete or temporarily unavailable;

     (3) "Pharmacy benefit manager" or "PBM" means an entity doing business in this state

that contracts to administer or manage prescription drug benefits on behalf of any carrier that

provides prescription drug benefits to residents of this state.

     (b) Upon each contract execution or renewal, a PBM shall, with respect to contracts

between a PBM and a pharmacy or, alternatively, a PBM and a pharmacy's contracting

representative or agent such as a pharmacy services administrative organization (PSAO):

     (1) Include in such contracts a requirement to update pricing information on the MAC list

at least every ten (10) calendar days;

     (2) Maintain a procedure to eliminate products from the list of drugs subject to such

pricing, or modify MAC rates when such drugs do not meet the standards and requirements of

this section as set forth in order to remain consistent with pricing changes in the marketplace.

     (c) PBM requirements for inclusion of products on a list of drugs subject to MAC pricing.

In order to place a particular prescription drug on a MAC list, the PBM must, at a minimum,

ensure that:

     (1) The product must be listed as "A", "AB", or "B" rated in the most recent version of

the United States Food and Drug Administration's approved drug products with therapeutic

equivalence evaluations, also known as the orange book, or has an "NR" or "NA" rating or

similar rating by a nationally recognized reference; and

     (2) The product must be nationally available.

     (d) Standards for pharmacy appeals. All contracts between a PBM, a contracted

pharmacy or, alternatively, a PBM and a pharmacy's contracting representative or agent such as a

pharmacy services administrative organization (PSAO) shall include a process to appeal,

investigate, and resolve disputes regarding MAC pricing. The process shall include the following

provisions:

     (1) The right to appeal shall be limited to fifteen (15) days following the initial claim;

     (2) The appeal shall be investigated and resolved within fifteen (15) days following

receipt of the appeal;

     (3) A process by which a network pharmacy may contact the PBM regarding the appeals

process;

LC004298/SUB A - Page 4 of 8

     (4) If the appeal is denied, the PBM shall provide the reason for the denial and identify

the national drug code of a drug product that is available in adequate supply;

     (5) If an appeal is upheld, the PBM shall make an adjustment to the list effective no later

than one day after the date of determination; and

     (6) The department of health shall exercise oversight and enforcement of this section.

     SECTION 4. Chapter 27-20.1 of the General Laws entitled "Nonprofit Dental Service

Corporations" is hereby amended by adding thereto the following section:

     27-20.1-15.1. Pharmacy benefit manager requirements with respect to multi-source

generic pricing updates to pharmacies. -- (a) Definitions. As used herein:

     (1) "Maximum allowable cost" or "MAC" means the maximum amount that a pharmacy

benefits manager will reimburse toward the cost of a drug;

     (2) "Nationally available" means that there is an adequate supply available from regional

or national wholesalers and that the product is not obsolete or temporarily unavailable;

     (3) "Pharmacy benefit manager" or "PBM" means an entity doing business in this state

that contracts to administer or manage prescription drug benefits on behalf of any carrier that

provides prescription drug benefits to residents of this state.

     (b) Upon each contract execution or renewal, a PBM shall, with respect to contracts

between a PBM and a pharmacy or, alternatively, a PBM and a pharmacy's contracting

representative or agent such as a pharmacy services administrative organization (PSAO):

     (1) Include in such contracts a requirement to update pricing information on the MAC list

at least every ten (10) calendar days;

     (2) Maintain a procedure to eliminate products from the list of drugs subject to such

pricing, or modify MAC rates when such drugs do not meet the standards and requirements of

this section as set forth in order to remain consistent with pricing changes in the marketplace.

     (c) PBM requirements for inclusion of products on a list of drugs subject to MAC pricing.

In order to place a particular prescription drug on a MAC list, the PBM must, at a minimum,

ensure that:

     (1) The product must be listed as "A", "AB", or "B" rated in the most recent version of

the United States Food and Drug Administration's approved drug products with therapeutic

equivalence evaluations, also known as the orange book, or has an "NR" or "NA" rating or

similar rating by a nationally recognized reference; and

     (2) The product must be nationally available.

     (d) Standards for pharmacy appeals. All contracts between a PBM, a contracted

pharmacy or, alternatively, a PBM and a pharmacy's contracting representative or agent such as a

LC004298/SUB A - Page 5 of 8

pharmacy services administrative organization (PSAO) shall include a process to appeal,

investigate, and resolve disputes regarding MAC pricing. The process shall include the following

provisions:

     (1) The right to appeal shall be limited to fifteen (15) days following the initial claim;

     (2) The appeal shall be investigated and resolved within fifteen (15) days following

receipt of the appeal;

     (3) A process by which a network pharmacy may contact the PBM regarding the appeals

process;

     (4) If the appeal is denied, the PBM shall provide the reason for the denial and identify

the national drug code of a drug product that is available in adequate supply;

     (5) If an appeal is upheld, the PBM shall make an adjustment to the list effective no later

than one day after the date of determination; and

     (6) The department of health shall exercise oversight and enforcement of this section.

     SECTION 5. Chapter 27-41 of the General Laws entitled "Health Maintenance

Organizations" is hereby amended by adding thereto the following section:

     27-41-38.1. Pharmacy benefit manager requirements with respect to multi-source

generic pricing updates to pharmacies. -- (a) Definitions. As used herein:

     (1) "Maximum allowable cost" or "MAC" means the maximum amount that a pharmacy

benefits manager will reimburse toward the cost of a drug;

     (2) "Nationally available" means that there is an adequate supply available from regional

or national wholesalers and that the product is not obsolete or temporarily unavailable;

     (3) "Pharmacy benefit manager" means an entity doing business in this state that

contracts to administer or manage prescription drug benefits on behalf of any carrier that provides

prescription drug benefits to residents of this state.

     (b) Upon each contract execution or renewal, a PBM shall, with respect to contracts

between a PBM and a pharmacy or, alternatively, a PBM and a pharmacy's contracting

representative or agent such as a pharmacy services administrative organization (PSAO):

     (1) Include in such contracts a requirement to update pricing information on the MAC list

at least every ten (10) calendar days;

     (2) Maintain a procedure to eliminate products from the list of drugs subject to such

pricing, or modify MAC rates when such drugs do not meet the standards and requirements of

this section as set forth in order to remain consistent with pricing changes in the marketplace.

     (c) PBM requirements for inclusion of products on a list of drugs subject to MAC pricing.

In order to place a particular prescription drug on a MAC list, the PBM must, at a minimum,

LC004298/SUB A - Page 6 of 8

ensure that:

     (1) The product must be listed as "A", "AB", or "B" rated in the most recent version of

the United States Food and Drug Administration's approved drug products with therapeutic

equivalence evaluations, also known as the orange book, or has an "NR" or "NA" rating or

similar rating by a nationally recognized reference; and

     (2) The product must be nationally available.

     (d) Standards for pharmacy appeals. All contracts between a PBM, a contracted

pharmacy or, alternatively, a PBM and a pharmacy's contracting representative or agent such as a

pharmacy services administrative organization (PSAO) shall include a process to appeal,

investigate, and resolve disputes regarding MAC pricing. The process shall include the following

provisions:

     (1) The right to appeal shall be limited to fifteen (15) days following the initial claim;

     (2) The appeal shall be investigated and resolved within fifteen (15) days following

receipt of the appeal;

     (3) A process by which a network pharmacy may contact the PBM regarding the appeals

process;

     (4) If the appeal is denied, the PBM shall provide the reason for the denial and identify

the national drug code of a drug product that is available in adequate supply;

     (5) If an appeal is upheld, the PBM shall make an adjustment to the list effective no later

than one day after the date of determination; and

     (6) The department of health shall exercise oversight and enforcement of this section.

     SECTION 6. This act shall take effect on September 30, 2016.

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LC004298/SUB A

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LC004298/SUB A - Page 7 of 8

EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO INSURANCE - PRESCRIPTION DRUG BENEFITS

***

     This act would regulate business relationship between pharmacy services providers/group

health insurers/health service organizations with department of health oversight.

     This act would take effect on September 30, 2016.

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LC004298/SUB A

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LC004298/SUB A - Page 8 of 8