1.1 	A bill for an act
1.2 	relating to health care; creating licensure and regulations for pharmacy benefit 
1.3 	managers;amending Minnesota Statutes 2018, section 151.21, subdivision 7, by 
1.4 	adding a subdivision; proposing coding for new law as Minnesota Statutes, chapter 
1.5 	62W; repealing Minnesota Statutes 2018, sections 151.214, subdivision 2; 151.60; 
1.6 	151.61; 151.62; 151.63; 151.64; 151.65; 151.66; 151.67; 151.68; 151.69; 151.70; 
1.7 	151.71.
1.8 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.9 	Section 1. [62W.01] CITATION.
1.10 	This chapter may be cited as the "Minnesota Pharmacy Benefit Manager Licensure and 
1.11 	Regulation Act."

1.12 	Sec. 2. [62W.02] DEFINITIONS.
1.13 		Subdivision 1.Scope. For purposes of this chapter, the following terms have the meanings 
1.14 	given.
1.15 		Subd. 2.Aggregate retained rebate. "Aggregate retained rebate" means the percentage 
1.16 	of all rebates received by a pharmacy benefit manager from a drug manufacturer for drug 
1.17 	utilization that is not passed on to the pharmacy benefit manager's client.
1.18 		Subd. 3.Claims processing service. "Claims processing service" means the 
1.19 	administrative services performed in connection with the processing and adjudicating of 
1.20 	claims relating to pharmacy services that includes:
1.21 	(1) receiving payments for pharmacy services;
1.22 	(2) making payments to pharmacists or pharmacies for pharmacy services; or
2.1 	(3) both clause (1) and clause (2).
2.2 		Subd. 4.Commissioner. "Commissioner" means the commissioner of commerce.
2.3 		Subd. 5.Enrollee. "Enrollee" means a natural person covered by a health plan and 
2.4 	includes an insured, policyholder, subscriber, contract holder, member, covered person, or 
2.5 	certificate holder.
2.6 		Subd. 6.Health carrier. "Health carrier" has the meaning given in section 62A.011, 
2.7 	subdivision 2.
2.8 		Subd. 7.Health plan. "Health plan" means a policy, contract, certificate, or agreement 
2.9 	defined in section 62A.011, subdivision 3.
2.10 		Subd. 8.Mail order pharmacy. "Mail order pharmacy" means a pharmacy whose 
2.11 	primary business is to receive prescriptions by mail, fax, or through electronic submissions, 
2.12 	dispense prescription drugs to enrollees through the use of the United States mail or other 
2.13 	common carrier services, and provide consultation with patients electronically rather than 
2.14 	face-to-face.
2.15 		Subd. 9.Maximum allowable cost price. "Maximum allowable cost price" means  the 
2.16 	maximum amount that a pharmacy benefit manager will reimburse a pharmacy for a group 
2.17 	of therapeutically and pharmaceutically equivalent multiple source drugs. The maximum 
2.18 	allowable cost price does not include a dispensing or professional fee.
2.19 		Subd. 10.Multiple source drugs. "Multiple source drugs" means a therapeutically 
2.20 	equivalent drug that is available from at least two manufacturers.
2.21 		Subd. 11.Network pharmacy. "Network pharmacy" means a retail or other licensed 
2.22 	pharmacy provider that directly contracts with a pharmacy benefit manager.
2.23 		Subd. 12.Other prescription drug or device services. "Other prescription drug or 
2.24 	device services" means services other than claims processing services, provided directly or 
2.25 	indirectly, whether in connection with or separate from claims processing services, including:
2.26 	(1) negotiating rebates, discounts, or other financial incentives and arrangements with 
2.27 	drug manufacturers;
2.28 	(2) disbursing or distributing rebates;
2.29 	(3) managing or participating in incentive programs or arrangements for pharmacy 
2.30 	services;
2.31 	(4) negotiating or entering into contractual arrangements with pharmacists or pharmacies, 
2.32 	or both;
3.1 	(5) developing prescription drug formularies;
3.2 	(6) designing prescription benefit programs; or
3.3 	(7) advertising or promoting services.
3.4 		Subd. 13.Pharmacist. "Pharmacist" means an individual with a valid license issued by 
3.5 	the Board of Pharmacy under chapter 151.
3.6 		Subd. 14.Pharmacy. "Pharmacy" or "pharmacy provider" means a place of business 
3.7 	licensed by the Board of Pharmacy under chapter 151 in which prescription drugs are 
3.8 	prepared, compounded, or dispensed under the supervision of a pharmacist.
3.9 		Subd. 15.Pharmacy benefit manager. (a) "Pharmacy benefit manager" means a person, 
3.10 	business, or other entity that contracts with a plan sponsor to perform pharmacy benefits 
3.11 	management, including but not limited to:
3.12 	(1) contracting directly or indirectly with pharmacies to provide prescription drugs to 
3.13 	enrollees or other covered individuals;
3.14 	(2) administering a prescription drug benefit;
3.15 	(3) processing or paying pharmacy claims;
3.16 	(4) creating or updating prescription drug formularies;
3.17 	(5) making or assisting in making prior authorization determinations on prescription 
3.18 	drugs;
3.19 	(6) administering rebates on prescription drugs; or
3.20 	(7) establishing a pharmacy network.
3.21 	(b) Pharmacy benefit manager does not include the Department of Human Services.
3.22 		Subd. 16.Plan sponsor. "Plan sponsor" means a group purchaser as defined under 
3.23 	section 62J.03; an employer in the case of an employee health benefit plan established or 
3.24 	maintained by a single employer; or an employee organization in the case of a health plan 
3.25 	established or maintained by an employee organization, an association, joint board trustees, 
3.26 	a committee, or other similar group that establishes or maintains the health plan. This term 
3.27 	includes a person or entity acting for a pharmacy benefit manager in a contractual or 
3.28 	employment relationship in the performance of pharmacy benefit management. Plan sponsor 
3.29 	does not include the Department of Human Services.
3.30 		Subd. 17.Specialty drug. "Specialty drug" means a prescription drug that: (1) is not 
3.31 	available for order or purchase by a retail pharmacy, regardless if the drug is meant to be 
4.1 	self-administered; and (2) requires special storage and has distribution or inventory limitations 
4.2 	that are not available at a retail pharmacy.
4.3 		Subd. 18.Retail pharmacy. "Retail pharmacy" means a chain pharmacy, a supermarket 
4.4 	pharmacy, an independent pharmacy, or a network of independent pharmacies, licensed 
4.5 	under chapter 151, that dispenses prescription drugs to the public.
4.6 		Subd. 19.Rebates. "Rebates" means all price concessions paid by a drug manufacturer 
4.7 	to a pharmacy benefit manager or plan sponsor, including discounts and other price 
4.8 	concessions that are based on the actual or estimated utilization of a prescription drug.  
4.9 	Rebates also include price concessions based on the effectiveness of a prescription drug as 
4.10 	in a value-based or performance-based contract.

4.11 	Sec. 3. [62W.03] LICENSE TO DO BUSINESS.
4.12 		Subdivision 1.General. (a) Beginning January 1, 2020, no person shall perform, act, 
4.13 	or do business in this state as a pharmacy benefit manager unless the person has a valid 
4.14 	license issued under this chapter by the commissioner of commerce.
4.15 	(b) A license issued in accordance with this chapter is nontransferable.
4.16 		Subd. 2.Application. (a) A pharmacy benefit manager seeking a license shall apply to 
4.17 	the commissioner of commerce on a form prescribed by the commissioner.  The application 
4.18 	form must include at a minimum the following information:
4.19 	(1) the name, address, and telephone number of the pharmacy benefit manager;
4.20 	(2) the name and address of the pharmacy benefit manager agent for service of process 
4.21 	in this state; and
4.22 	(3) the name, address, official position, and professional qualifications of each person 
4.23 	responsible for the conduct of affairs of the pharmacy benefit manager, including all members 
4.24 	of the board of directors, board of trustees, executive committee, or other governing board 
4.25 	or committee; the principal officers in the case of a corporation; or the partners or members 
4.26 	in the case of a partnership or association.
4.27 	(b) Each application for licensure must be accompanied by a nonrefundable fee of $.......
4.28 	(c) Within 30 days of receiving an application, the commissioner may require additional 
4.29 	information or submissions from an applicant and may obtain any document or information 
4.30 	reasonably necessary to verify the information contained in the application. Within 90 days 
4.31 	after receipt of a completed application, the network adequacy report required under section 
4.32 	62W.05, and the applicable license fee, the commissioner shall review the application and 
5.1 	issue a license if the applicant is deemed qualified under this section. If the commissioner 
5.2 	determines the applicant is not qualified, the commissioner shall notify the applicant and 
5.3 	shall specify the reason or reasons for the denial.
5.4 		Subd. 3.Renewal. (a) A license issued under this chapter is valid for a period of three 
5.5 	years.  To renew a license, an applicant must submit a completed renewal application on a 
5.6 	form prescribed by the commissioner, the network adequacy report required under section 
5.7 	62W.05, and a renewal fee of $.......  The commissioner may request a renewal applicant to 
5.8 	submit additional information to clarify any new information presented in the renewal 
5.9 	application.
5.10 	(b) A renewal application submitted after the renewal deadline date must be accompanied 
5.11 	by a nonrefundable late fee of $.......
5.12 	(c) The commissioner may deny the renewal of a license for any of the following reasons:
5.13 	(1) the pharmacy benefit manager has been determined by the commissioner to be in 
5.14 	violation or noncompliance with federal or state law; or
5.15 	(2) the pharmacy benefit manager has failed to timely submit a renewal application and 
5.16 	the information required under paragraph (a).
5.17 	In lieu of a denial of a renewal application, the commissioner may permit the pharmacy 
5.18 	benefit manager to submit to the commissioner a corrective action plan to cure or correct 
5.19 	deficiencies.
5.20 		Subd. 4.Oversight. (a) The commissioner may suspend, revoke, or place on probation 
5.21 	a pharmacy benefit manager license issued under this chapter for any of the following 
5.22 	circumstances:
5.23 	(1) the pharmacy benefit manager has engaged in fraudulent activity that constitutes a 
5.24 	violation of state or federal law;
5.25 	(2) the commissioner has received consumer complaints that justify an action under this 
5.26 	subdivision to protect the safety and interests of consumers;
5.27 	(3) the pharmacy benefit manager fails to pay an application license or renewal fee; and
5.28 	(4) the pharmacy benefit manager fails to comply with a requirement set forth in this 
5.29 	chapter.
5.30 	(b) The commissioner may issue a license subject to restrictions or limitations, including 
5.31 	the types of services that may be supplied or the activities in which the pharmacy benefit 
5.32 	manager may be engaged.
6.1 		Subd. 5.Penalty. If a pharmacy benefit manager acts without a license, the pharmacy 
6.2 	benefit manager may be subject to a fine of $5,000 per day for the period the pharmacy 
6.3 	benefit manager is found to be in violation.
6.4 		Subd. 6.Enforcement. The commissioner shall enforce this chapter under the provisions 
6.5 	of chapter 45.

6.6 	Sec. 4. [62W.04] PHARMACY BENEFIT MANAGER GENERAL BUSINESS 
6.7 	PRACTICES.
6.8 	(a)  A pharmacy benefit manager must exercise good faith and fair dealing in the 
6.9 	performance of its contractual duties.  A provision in a contract between a pharmacy benefit 
6.10 	manager and a health carrier or a network pharmacy that attempts to waive or limit this 
6.11 	obligation is void.
6.12 	(b) A pharmacy benefit manager must notify a health carrier in writing of any activity, 
6.13 	policy, or practice of the pharmacy benefit manager that directly or indirectly presents a 
6.14 	conflict of interest with the duties imposed in this section.

6.15 	Sec. 5. [62W.05] PHARMACY BENEFIT MANAGER NETWORK ADEQUACY.
6.16 	(a) A pharmacy benefit manager must provide an adequate and accessible pharmacy 
6.17 	network for the provision of prescription drugs that provides access to pharmacies within 
6.18 	a reasonable distance from an enrollee's residence. The network must include a sufficient 
6.19 	number of pharmacies to ensure that pharmacy services are available to all enrollees without 
6.20 	unreasonable delay. In determining network adequacy, the commissioner shall ensure that 
6.21 	the maximum travel distance or time requirement to the nearest pharmacy equals the 
6.22 	requirement applied under section 62K.10 for pharmacy services. A mail order pharmacy 
6.23 	must not be included in the calculations of determining the adequacy of the pharmacy benefit 
6.24 	manager's pharmacy network.
6.25 	(b) A pharmacy benefit manager must submit to the commissioner a pharmacy network 
6.26 	adequacy report describing the pharmacy network and pharmacy accessibility in this state, 
6.27 	with the pharmacy benefit manager's license application and renewal, in a manner prescribed 
6.28 	by the commissioner.

6.29 	Sec. 6. [62W.06] PHARMACY BENEFIT MANAGER TRANSPARENCY.
6.30 		Subdivision 1.Transparency to plan sponsors. (a) Beginning in the second quarter 
6.31 	after the effective date of a contract between a pharmacy benefit manager and a plan sponsor, 
7.1 	the pharmacy benefit manager must disclose, upon the request of the plan sponsor, the 
7.2 	following information with respect to prescription drug benefits specific to the plan sponsor:
7.3 	(1) the aggregate wholesale acquisition costs from a drug manufacturer or wholesale 
7.4 	drug distributor for each therapeutic category of prescription drugs;
7.5 	(2) the aggregate amount of rebates received by the pharmacy benefit manager by 
7.6 	therapeutic category of prescription drugs. The aggregate amount of rebates must include 
7.7 	any utilization discounts the pharmacy benefit manager receives from a drug manufacturer 
7.8 	or wholesale drug distributor;
7.9 	(3) any other fees received from a drug manufacturer or wholesale drug distributor;
7.10 	(4) whether the pharmacy benefit manager has a contract, agreement, or other arrangement 
7.11 	with a drug manufacturer to exclusively dispense or provide a drug to a plan sponsor's 
7.12 	employees or enrollees, and the application of all consideration or economic benefits collected 
7.13 	or received pursuant to the arrangement;
7.14 	(5) prescription drug utilization information for the plan sponsor's employees or enrollees 
7.15 	that is not specific to any individual employee or enrollee;
7.16 	(6) the aggregate amount of payments made by the pharmacy benefit manager to 
7.17 	pharmacies owned or controlled by the pharmacy benefit manager;
7.18 	(7) the aggregate amount of payments made by the pharmacy benefit manager to 
7.19 	pharmacies not owned or controlled by the pharmacy benefit manager; and
7.20 	(8) the aggregate amount of the fees imposed on, or collected from, network pharmacies 
7.21 	or other assessments against network pharmacies, including point-of-sale fees and retroactive 
7.22 	charges, and the application of those amounts collected pursuant to the contract with the 
7.23 	plan sponsor.
7.24 	(b) A pharmacy benefit manager may require a plan sponsor to agree to a nondisclosure 
7.25 	agreement that specifies that the information reported under this subdivision is proprietary 
7.26 	information. The pharmacy benefit manager is not required to disclose the information to 
7.27 	the plan sponsor until the plan sponsor has executed the nondisclosure agreement, if required 
7.28 	by the pharmacy benefit manager.
7.29 		Subd. 2.Transparency report to the commissioner. (a) Beginning June 1, 2020, and 
7.30 	annually thereafter, each pharmacy benefit manager must submit to the commissioner  a 
7.31 	transparency report containing data from the prior calendar year.  The report must contain 
7.32 	the following information:
8.1 	(1) the aggregate wholesale acquisition costs from a drug manufacturer or wholesale 
8.2 	drug distributor for each therapeutic category of prescription drugs for all of the pharmacy 
8.3 	benefit manager's plan sponsor clients, unless providing this information even in the aggregate 
8.4 	permits the determination of a specific drug manufacturer;
8.5 	(2) the aggregate amount of all rebates that the pharmacy benefit manager received from 
8.6 	all drug manufacturers for all of the pharmacy benefit manager's plan sponsor clients. The 
8.7 	aggregate amount of rebates must include any utilization discounts the pharmacy benefit 
8.8 	manager receives from a drug manufacturer or wholesale drug distributor;
8.9 	(3) the aggregate retained rebates that the pharmacy benefit manager received from all 
8.10 	drug manufacturers that were not passed through to plan sponsors;
8.11 	(4) the aggregate retained rebate percentage; and
8.12 	(5) the highest, lowest, and mean aggregate retained rebate percentage for all of the 
8.13 	pharmacy benefit manager's plan sponsor clients.
8.14 	(b) Within 60 days upon receipt of the transparency report, the commissioner shall 
8.15 	publish the report from each pharmacy benefit manager on the Department of Commerce's 
8.16 	website, with the exception of data considered trade secret information under section 13.37.
8.17 	(c) For purposes of this subdivision, the aggregate retained rebate  percentage must be 
8.18 	calculated for each plan sponsor for rebates in the previous calendar year as follows:
8.19 	(1) the sum total dollar amount of rebates from all drug manufacturers for all utilization 
8.20 	of enrollees of a plan sponsor that was not passed through to the plan sponsor; and
8.21 	(2) divided by the sum total dollar amount of all rebates received from all drug 
8.22 	manufacturers for all enrollees of a plan sponsor.
8.23 		Subd. 3.Penalty. The commissioner may impose civil penalties of not more than $1,000 
8.24 	per day per violation of this section.

8.25 	Sec. 7. [62W.07] PHARMACY OWNERSHIP INTEREST; SPECIALTY 
8.26 	PHARMACY SERVICES.
8.27 	(a) A pharmacy benefit manager that has an ownership interest either directly or indirectly, 
8.28 	or through an affiliate or subsidiary, in a pharmacy must disclose to a plan sponsor that 
8.29 	contracts with the pharmacy benefit manager any difference between the amount paid to 
8.30 	that pharmacy and the amount charged to the plan sponsor.
8.31 	(b) A pharmacy benefit manager or a pharmacy benefit manager's affiliates or subsidiaries 
8.32 	must not own or have an ownership interest in a patient assistance program or a mail order 
9.1 	or specialty pharmacy, unless the pharmacy benefit manager, affiliate, or subsidiary agrees 
9.2 	to fair competition, no self-dealing, and no interference with prospective economic advantage, 
9.3 	and establishes a firewall between the administrative functions and the mail order or specialty 
9.4 	pharmacy.
9.5 	(c) A pharmacy benefit manager or health carrier is prohibited from penalizing, requiring, 
9.6 	or providing financial incentives, including variations in premiums, deductibles, co-payments, 
9.7 	or coinsurance, to an enrollee as an incentive to use a retail pharmacy, mail order pharmacy, 
9.8 	specialty pharmacy, or other network pharmacy provider in which a pharmacy benefit 
9.9 	manager has an ownership interest or in which the pharmacy provider has an ownership 
9.10 	interest in the pharmacy benefit manager.
9.11 	(d) A pharmacy benefit manager or health carrier is prohibited from imposing limits, 
9.12 	including quantity limits or refill frequency limits, on a patient's access to medication that 
9.13 	differ based solely on whether the health carrier or pharmacy benefit manager has an 
9.14 	ownership interest in a pharmacy or the pharmacy has an ownership interest in the pharmacy 
9.15 	benefit manager.
9.16 	(e) A pharmacy benefit manager must not require pharmacy accreditation standards or 
9.17 	recertification requirements to participate in a network that are inconsistent with, more 
9.18 	stringent than, or in addition to federal and state requirements for licensure as a pharmacy 
9.19 	in this state.

9.20 	Sec. 8. [62W.075] THERAPEUTIC ALTERNATIVE PRESCRIPTION DRUG.
9.21 	A pharmacy benefit manager or health carrier must not require a pharmacy to dispense 
9.22 	a therapeutically equivalent or therapeutically alternative drug that costs more than a 
9.23 	prescribed drug, unless the switch is made for medically necessary reasons that benefit the 
9.24 	patient. Before a switch is made under this section, the pharmacy must obtain approval from 
9.25 	the prescribing practitioner and must inform the enrollee of the reason for the switch.

9.26 	Sec. 9. [62W.076] SPECIALTY PHARMACY.
9.27 	A pharmacy benefit manager that contracts with a specialty pharmacy must disclose to 
9.28 	enrollees  the price for each prescription drug at the specialty pharmacy and at a retail 
9.29 	pharmacy unless the specialty pharmacy offers prescription drugs at the same or a lower 
9.30 	price than the enrollee could receive at a retail pharmacy.

10.1 	Sec. 10. [62W.077] PREFERRED NETWORK.
10.2 	A pharmacy benefit manager that uses a preferred network of pharmacies must disclose 
10.3 	to an enrollee the price for each prescription drug at the preferred network pharmacies and 
10.4 	at a retail pharmacy unless the preferred network pharmacies offer the prescription drug at 
10.5 	the same or a lower price than the enrollee could receive at a retail pharmacy.

10.6 	Sec. 11. [62W.078] REQUIRING MAIL ORDER SERVICE.
10.7 	A pharmacy benefit manager or health carrier shall not require an enrollee whose health 
10.8 	plan has the option of using a retail pharmacy to use a mail order pharmacy unless the mail 
10.9 	order pharmacy offers the prescription drug at a lower price than the enrollee could receive 
10.10 	at a retail pharmacy. The pharmacy benefit manager or health carrier shall not deny an 
10.11 	enrollee the right to use a retail pharmacy willing to dispense the prescription at the same 
10.12 	or a lower price as the mail order pharmacy.

10.13 	Sec. 12. [62W.08] MAXIMUM ALLOWABLE COST PRICING.
10.14 	(a) With respect to each contract and contract renewal between a pharmacy benefit 
10.15 	manager and a pharmacy, the pharmacy benefits manager must:
10.16 	(1) provide to the pharmacy, at the beginning of each contract and contract renewal, the 
10.17 	sources utilized to determine the maximum allowable cost pricing of the pharmacy benefit 
10.18 	manager;
10.19 	(2) update any maximum allowable cost price list at least every seven business days, 
10.20 	noting any price changes from the previous list, and provide a means by which network 
10.21 	pharmacies may promptly review current prices in an electronic, print, or telephonic format 
10.22 	within one business day at no cost to the pharmacy;
10.23 	(3) maintain a procedure to eliminate products from the list of drugs subject to maximum 
10.24 	allowable cost pricing in a timely manner in order to remain consistent with changes in the 
10.25 	marketplace;
10.26 	(4) ensure that the maximum allowable cost prices are not set below sources utilized by 
10.27 	the pharmacy benefits manager; and
10.28 	(5) upon request of a network pharmacy, disclose the sources utilized for setting 
10.29 	maximum allowable cost price rates on each maximum allowable cost price list included 
10.30 	under the contract and identify each maximum allowable cost price list that applies to the 
10.31 	network pharmacy. A pharmacy benefit manager must make the list of the maximum 
11.1 	allowable costs available to a contracted pharmacy in a format that is readily accessible and 
11.2 	usable to the network pharmacy.
11.3 	(b) A pharmacy benefit manager must not place a prescription drug on a maximum 
11.4 	allowable cost list unless the drug is available for purchase by pharmacies in this state from 
11.5 	a national or regional drug wholesaler and is not obsolete.
11.6 	(c) Each contract between a pharmacy benefit manager and a pharmacy must include a 
11.7 	process to appeal, investigate, and resolve disputes regarding maximum allowable cost 
11.8 	pricing that includes:
11.9 	(1) a 15-business-day limit on the right to appeal following the initial claim;
11.10 	(2) a requirement that the appeal be investigated and resolved within seven business 
11.11 	days after the appeal is received; and
11.12 	(3) a requirement that a pharmacy benefit manager provide a reason for any appeal denial 
11.13 	and identify the national drug code of a drug that may be purchased by the pharmacy at a 
11.14 	price at or below the maximum allowable cost price as determined by the pharmacy benefit 
11.15 	manager.
11.16 	(d) If an appeal is upheld, the pharmacy benefit manager must make an adjustment to 
11.17 	the maximum allowable cost price no later than one business day after the date of 
11.18 	determination. The pharmacy benefit manager must make the price adjustment applicable 
11.19 	to all similarly situated network pharmacy providers as defined by the plan sponsor.

11.20 	Sec. 13. [62W.09] PHARMACY AUDITS.
11.21 		Subdivision 1.Procedure and process for conducting and reporting an audit. (a) 
11.22 	Unless otherwise prohibited by federal requirements or regulations, any entity conducting 
11.23 	a pharmacy audit must follow the following procedures:
11.24 	(1) a pharmacy must be given notice 14 days before an initial on-site audit is conducted;
11.25 	(2) an audit that involves clinical or professional judgment must be conducted by or in 
11.26 	consultation with a licensed pharmacist; and
11.27 	(3) each pharmacy shall be audited under the same standards and parameters as other 
11.28 	similarly situated pharmacies.
11.29 	(b) Unless otherwise prohibited by federal requirements or regulations, for any entity 
11.30 	conducting a pharmacy audit the following items apply:
12.1 	(1) the period covered by the audit may not exceed 24 months from the date that the 
12.2 	claim was submitted to or adjudicated by the entity, unless a longer period is required under 
12.3 	state or federal law;
12.4 	(2) if an entity uses random sampling as a method for selecting a set of claims for 
12.5 	examination, the sample size must be appropriate for a statistically reliable sample. 
12.6 	Notwithstanding section 151.69, the auditing entity shall provide the pharmacy a masked 
12.7 	list that provides a prescription number or date range that the auditing entity is seeking to 
12.8 	audit;
12.9 	(3) an on-site audit may not take place during the first five business days of the month 
12.10 	unless consented to by the pharmacy;
12.11 	(4) auditors may not enter the pharmacy area unless escorted where patient-specific 
12.12 	information is available and to the extent possible must be out of sight and hearing range 
12.13 	of the pharmacy customers;
12.14 	(5) any recoupment will not be deducted against future remittances until after the appeals 
12.15 	process and both parties have received the results of the final audit;
12.16 	(6) a pharmacy benefit manager may not require information to be written on a 
12.17 	prescription unless the information is required to be written on the prescription by state or 
12.18 	federal law. Recoupment may be assessed for items not written on the prescription if:
12.19 	(i) additional information is required in the provider manual; or
12.20 	(ii) the information is required by the Food and Drug Administration (FDA); or
12.21 	(iii) the information is required by the drug manufacturer's product safety program; and
12.22 	(iv) the information in item (i), (ii), or (iii) is not readily available for the auditor at the 
12.23 	time of the audit; and
12.24 	(7) the auditing company or agent may not receive payment based on a percentage of 
12.25 	the amount recovered. This section does not prevent the entity conducting the audit from 
12.26 	charging or assessing the responsible party, directly or indirectly, based on amounts recouped 
12.27 	if both of the following conditions are met:
12.28 	(i) the plan sponsor and the entity conducting the audit have a contract that explicitly 
12.29 	states the percentage charge or assessment to the plan sponsor; and
12.30 	(ii) a commission to an agent or employee of the entity conducting the audit is not based, 
12.31 	directly or indirectly, on amounts recouped.
13.1 	(c) An amendment to pharmacy audit terms in a contract between a pharmacy benefit 
13.2 	manager and a pharmacy must be disclosed to the pharmacy at least 60 days prior to the 
13.3 	effective date of the proposed change.
13.4 		Subd. 2.Requirement for recoupment or chargeback. For recoupment or chargeback, 
13.5 	the following criteria apply:
13.6 	(1) audit parameters must consider consumer-oriented parameters based on manufacturer 
13.7 	listings;
13.8 	(2) a pharmacy's usual and customary price for compounded medications is considered 
13.9 	the reimbursable cost unless the pricing methodology is outlined in the pharmacy provider 
13.10 	contract;
13.11 	(3) a finding of overpayment or underpayment must be based on the actual overpayment 
13.12 	or underpayment and not a projection based on the number of patients served having a 
13.13 	similar diagnosis or on the number of similar orders or refills for similar drugs;
13.14 	(4) the entity conducting the audit shall not use extrapolation in calculating the 
13.15 	recoupment or penalties for audits unless required by state or federal law or regulations;
13.16 	(5) calculations of overpayments must not include dispensing fees unless a prescription 
13.17 	was not actually dispensed, the prescriber denied authorization, the prescription dispensed 
13.18 	was a medication error by the pharmacy, or the identified overpayment is solely based on 
13.19 	an extra dispensing fee;
13.20 	(6) an entity may not consider any clerical or record-keeping error, such as a typographical 
13.21 	error, scrivener's error, or computer error regarding a required document or record as fraud, 
13.22 	however such errors may be subject to recoupment;
13.23 	(7) in the case of errors that have no actual financial harm to the patient or plan, the 
13.24 	pharmacy benefit manager must not assess any chargebacks. Errors that are a result of the 
13.25 	pharmacy failing to comply with a formal corrective action plan may be subject to recovery; 
13.26 	and
13.27 	(8) interest may not accrue during the audit period for either party, beginning with the 
13.28 	notice of the audit and ending with the final audit report.
13.29 		Subd. 3.Documentation. (a) To validate the pharmacy record and delivery, the pharmacy 
13.30 	may use authentic and verifiable statements or records including medication administration 
13.31 	records of a nursing home, assisted living facility, hospital, physician, or other authorized 
13.32 	practitioner or additional audit documentation parameters located in the provider manual.
14.1 	(b) Any legal prescription that meets the requirements in this chapter may be used to 
14.2 	validate claims in connection with prescriptions, refills, or changes in prescriptions, including 
14.3 	medication administration records, faxes, e-prescriptions, or documented telephone calls 
14.4 	from the prescriber or the prescriber's agents.
14.5 		Subd. 4.Appeals process. The entity conducting the audit must establish a written 
14.6 	appeals process which must include appeals of preliminary reports and final reports.
14.7 		Subd. 5.Audit information and reports. (a) A preliminary audit report must be delivered 
14.8 	to the pharmacy within 60 days after the conclusion of the audit.
14.9 	(b) A pharmacy must be allowed at least 45 days following receipt of the preliminary 
14.10 	audit to provide documentation to address any discrepancy found in the audit.
14.11 	(c) A final audit report must be delivered to the pharmacy within 120 days after receipt 
14.12 	of the preliminary audit report or final appeal, whichever is later.
14.13 	(d) An entity shall remit any money due to a pharmacy or pharmacist as a result of an 
14.14 	underpayment of a claim within 45 days after the appeals process has been exhausted and 
14.15 	the final audit report has been issued.
14.16 		Subd. 6.Disclosure to plan sponsor. Where contractually required, an auditing entity 
14.17 	must provide a copy to the plan sponsor of its claims that were included in the audit, and 
14.18 	any recouped money shall be returned to the plan sponsor.
14.19 		Subd. 7.Applicability of other laws and regulations. This section does not apply to 
14.20 	any investigative audit that involves suspected fraud, willful misrepresentation, abuse, or 
14.21 	any audit completed by Minnesota health care programs.
14.22 		Subd. 8.Definitions. For purposes of this section, "entity" means a pharmacy benefit 
14.23 	manager or any person or organization that represents a pharmacy benefit manager.

14.24 	Sec. 14. [62W.10] SYNCHRONIZATION.
14.25 	(a) For purposes of this section, "synchronization" means the coordination of prescription 
14.26 	drug refills for a patient taking two or more medications for one or more chronic conditions, 
14.27 	to allow the patient's medications to be refilled on the same schedule for a given period of 
14.28 	time.
14.29 	(b) A contract between a pharmacy benefit manager and a pharmacy must allow for 
14.30 	synchronization of prescription drug refills for a patient on at least one occasion per year, 
14.31 	if the following criteria are met:
15.1 	(1) the prescription drugs are covered under the patient's health plan or have been 
15.2 	approved by a formulary exceptions process;
15.3 	(2) the prescription drugs are maintenance medications as defined by the health plan 
15.4 	and have one or more refills available at the time of synchronization;
15.5 	(3) the prescription drugs are not Schedule II, III, or IV controlled substances;
15.6 	(4) the patient meets all utilization management criteria relevant to the prescription drug 
15.7 	at the time of synchronization;
15.8 	(5) the prescription drugs are of a formulation that can be safely split into short-fill 
15.9 	periods to achieve synchronization; and
15.10 	(6) the prescription drugs do not have special handling or sourcing needs that require a 
15.11 	single, designated pharmacy to fill or refill the prescription.
15.12 	(c) When necessary to permit synchronization, the pharmacy benefit manager must apply 
15.13 	a prorated, daily patient cost-sharing rate to any prescription drug dispensed by a pharmacy 
15.14 	under this section. The dispensing fee must not be prorated, and all dispensing fees shall 
15.15 	be based on the number of prescriptions filled or refilled.

15.16 	Sec. 15. [62W.11] GAG CLAUSE PROHIBITION.
15.17 	(a) No contract between a pharmacy benefit manager or health carrier and a pharmacy 
15.18 	or pharmacist shall prohibit, restrict, or penalize a pharmacy or pharmacist from disclosing 
15.19 	to an enrollee any health care information that the pharmacy or pharmacist deems appropriate 
15.20 	regarding the nature of treatment; the risks or alternatives; the availability of alternative 
15.21 	therapies, consultations, or tests; the decision of utilization reviewers or similar persons to 
15.22 	authorize or deny services; the process that is used to authorize or deny health care services 
15.23 	or benefits; or information on financial incentives and structures used by the health carrier 
15.24 	or pharmacy benefit manager.
15.25 	(b) A pharmacy or pharmacist must provide to an enrollee information regarding the 
15.26 	enrollee's total cost for each prescription drug dispensed where part or all of the cost of the 
15.27 	prescription is being paid or reimbursed by the employer-sponsored plan or by a health 
15.28 	carrier or pharmacy benefit manager, in accordance with section 151.214.
15.29 	(c) A pharmacy benefit manager or health carrier must not prohibit a pharmacist or 
15.30 	pharmacy from discussing information regarding the total cost for pharmacy services for a 
15.31 	prescription drug, including the patient's co-payment amount, the pharmacy's own usual 
15.32 	and customary price of the prescription, and the net amount the pharmacy will receive from 
16.1 	all sources for dispensing the prescription drug, once the claim has been completed by the 
16.2 	pharmacy benefit manager or the patient's health carrier.
16.3 	(d) A pharmacy benefit manager or health carrier must not prohibit a pharmacist or 
16.4 	pharmacy from discussing the availability of any therapeutically equivalent alternative 
16.5 	prescription drugs or alternative methods for purchasing the prescription drug, including 
16.6 	but not limited to paying out-of-pocket the pharmacy's usual and customary price when that 
16.7 	amount is less expensive to the enrollee than the amount the enrollee is required to pay for 
16.8 	the prescription drug under the enrollee's health plan.

16.9 	Sec. 16. [62W.12] POINT OF SALE.
16.10 	No pharmacy benefit manager or health carrier shall require an enrollee to make a 
16.11 	payment at the point of sale for a covered prescription drug in an amount greater than the 
16.12 	lesser of:
16.13 	(1) the applicable co-payment for the prescription drug;
16.14 	(2) the allowable claim amount for the prescription drug;
16.15 	(3) the amount an enrollee would pay for the prescription drug if the enrollee purchased 
16.16 	the prescription drug without using a health plan or any other source of prescription drug 
16.17 	benefits or discounts; or
16.18 	(4) the amount the pharmacy will be reimbursed for the prescription drug from the 
16.19 	pharmacy benefit manager or health carrier.

16.20 	Sec. 17. Minnesota Statutes 2018, section 151.21, subdivision 7, is amended to read:
16.21 		Subd. 7.Drug formulary. This section Subdivision 3 does not apply when a pharmacist 
16.22 	is dispensing a prescribed drug to persons covered under a managed health care plan that 
16.23 	maintains a mandatory or closed drug formulary.

16.24 	Sec. 18. Minnesota Statutes 2018, section 151.21, is amended by adding a subdivision to 
16.25 	read:
16.26 		Subd. 7a.Coverage by substitution. (a) When a pharmacist receives a prescription 
16.27 	order by paper or hard copy, by electronic transmission, or by oral instruction from the 
16.28 	prescriber, in which the prescriber has not expressly indicated that the prescription is to be 
16.29 	dispensed as communicated and the drug prescribed is not covered under the purchaser's 
16.30 	health plan or prescription drug plan, the pharmacist may dispense a therapeutically 
16.31 	equivalent and interchangeable prescribed drug or biological product that is covered under 
17.1 	the purchaser's plan if the pharmacist has a written protocol with the prescriber that outlines 
17.2 	the class of drugs of the same generation and designed for the same indication that can be 
17.3 	substituted and the required communication between the pharmacist and the prescriber.
17.4 	(b) The pharmacist must inform the purchaser if the pharmacist is dispensing a drug or 
17.5 	biological product other than the specific drug or biological product prescribed and the 
17.6 	reason for the substitution.
17.7 	(c) The pharmacist must communicate to the prescriber the name and manufacturer of 
17.8 	the substituted drug that was dispensed and the reason for the substitution in accordance 
17.9 	with the written protocol.

17.10 	Sec. 19. REPEALER.
 17.11 	Minnesota Statutes 2018, sections 151.214, subdivision 2; 151.60; 151.61; 151.62; 
17.12 	151.63; 151.64; 151.65; 151.66; 151.67; 151.68; 151.69; 151.70; and 151.71, are repealed.

APPENDIX 

Repealed Minnesota Statutes: S0278-1 

151.214 PAYMENT DISCLOSURE.Subd. 2.No prohibition on disclosure. 
No contracting agreement between an employer-sponsored health plan or health plan company, or its contracted pharmacy benefit manager, and a resident or nonresident pharmacy registered under this chapter, may prohibit the pharmacy from disclosing to patients information a pharmacy is required or given the option to provide under subdivision 1. 

151.60 PHARMACY AUDIT INTEGRITY PROGRAM.
The pharmacy audit integrity program is established to provide standards for an audit of pharmacy records carried out by a pharmacy benefits manager or any entity that represents pharmacy benefits managers. 

151.61 DEFINITIONS.Subdivision 1.Scope. 
For the purposes of sections 151.60 to 151.70, the following terms have the meanings given. 

Subd. 2.Entity. 
"Entity" means a pharmacy benefits manager or any person or organization that represents these companies, groups, or organizations. 

Subd. 3.Pharmacy benefits manager or PBM. 
"Pharmacy benefits manager" or "PBM" means a person, business, or other entity that performs pharmacy benefits management. The term includes a person or entity acting for a PBM in a contractual or employment relationship in the performance of pharmacy benefits management. 

Subd. 4.Plan sponsor. 
"Plan sponsor" means the employer in the case of an employee benefit plan established or maintained by a single employer, a group purchaser as defined in section 62J.03, subdivision 6, or the employee organization in the case of a plan established or maintained by an employee organization, an association, joint board trustees, a committee, or other similar group that establishes or maintains the plan. 

151.62 PHARMACY BENEFIT MANAGER CONTRACT.
An amendment to pharmacy audit terms in a contract between a PBM and a pharmacy must be disclosed to the pharmacy at least 60 days prior to the effective date of the proposed change. 

151.63 PROCEDURE AND PROCESS FOR CONDUCTING AND REPORTING AN AUDIT.Subdivision 1.Audit procedures. 
Unless otherwise prohibited by federal requirements or regulations, any entity conducting a pharmacy audit must follow the following procedures. 

(1) A pharmacy must be given notice 14 days before an initial on-site audit is conducted. 

(2) An audit that involves clinical or professional judgment must be conducted by or in consultation with a licensed pharmacist. 

(3) Each pharmacy shall be audited under the same standards and parameters as other similarly situated pharmacies. 

Subd. 2.Audit process. 
Unless otherwise prohibited by federal requirements or regulations, for any entity conducting a pharmacy audit the following audit items apply. 

(1) The period covered by the audit may not exceed 24 months from the date that the claim was submitted to or adjudicated by the entity, unless a longer period is required under state or federal law. 

(2) If an entity uses random sampling as a method for selecting a set of claims for examination, the sample size must be appropriate for a statistically reliable sample. Notwithstanding section 151.69, the auditing entity shall provide the pharmacy a masked list that provides a prescription number or date range that the auditing entity is seeking to audit. 

(3) An on-site audit may not take place during the first five business days of the month unless consented to by the pharmacy. 

(4) Auditors may not enter the pharmacy area unless escorted where patient-specific information is available and to the extent possible must be out of sight and hearing range of the pharmacy customers. 

(5) Any recoupment will not be deducted against future remittances until after the appeals process and both parties have received the results of the final audit. 

(6) A PBM may not require information to be written on a prescription unless the information is required to be written on the prescription by state or federal law. Recoupment may be assessed for items not written on the prescription if: 

(i) additional information is required in the provider manual; or 

(ii) the information is required by the Food and Drug Administration (FDA); or 

(iii) the information is required by the drug manufacturer's product safety program; and 

(iv) the information in clause (i), (ii), or (iii) is not readily available for the auditor at the time of the audit. 

(7) The auditing company or agent may not receive payment based on a percentage of the amount recovered. This section does not prevent the entity conducting the audit from charging or assessing the responsible party, directly or indirectly, based on amounts recouped if both of the following conditions are met: 

(i) the plan sponsor and the entity conducting the audit have a contract that explicitly states the percentage charge or assessment to the plan sponsor; and 

(ii) a commission to an agent or employee of the entity conducting the audit is not based, directly or indirectly, on amounts recouped. 

151.64 REQUIREMENTS FOR RECOUPMENT OR CHARGEBACK.
For recoupment or chargeback, the following criteria apply. 

(1) Audit parameters must consider consumer-oriented parameters based on manufacturer listings. 

(2) A pharmacy's usual and customary price for compounded medications is considered the reimbursable cost unless the pricing methodology is outlined in the provider contract. 

(3) A finding of overpayment or underpayment must be based on the actual overpayment or underpayment and not a projection based on the number of patients served having a similar diagnosis or on the number of similar orders or refills for similar drugs. 

(4) The entity conducting the audit shall not use extrapolation in calculating the recoupment or penalties for audits unless required by state or federal law or regulations. 

(5) Calculations of overpayments must not include dispensing fees unless a prescription was not actually dispensed, the prescriber denied authorization, the prescription dispensed was a medication error by the pharmacy, or the identified overpayment is solely based on an extra dispensing fee. 

(6) An entity may not consider any clerical or record-keeping error, such as a typographical error, scrivener's error, or computer error regarding a required document or record as fraud, however such errors may be subject to recoupment. 

(7) In the case of errors that have no actual financial harm to the patient or plan, the PBM must not assess any chargebacks. Errors that are a result of the pharmacy failing to comply with a formal corrective action plan may be subject to recovery. 

(8) Interest may not accrue during the audit period for either party, beginning with the notice of the audit and ending with the final audit report. 

151.65 DOCUMENTATION.
(a) To validate the pharmacy record and delivery, the pharmacy may use authentic and verifiable statements or records including medication administration records of a nursing home, assisted living facility, hospital, physician, or other authorized practitioner or additional audit documentation parameters located in the provider manual. 

(b) Any legal prescription that meets the requirements in this chapter may be used to validate claims in connection with prescriptions, refills, or changes in prescriptions, including medication administration records, faxes, e-prescriptions, or documented telephone calls from the prescriber or the prescriber's agents. 

151.66 APPEALS PROCESS.
The entity conducting the audit must establish a written appeals process which must include appeals of preliminary reports and final reports. 

151.67 AUDIT INFORMATION AND REPORTS.
(a) A preliminary audit report must be delivered to the pharmacy within 60 days after the conclusion of the audit. 

(b) A pharmacy must be allowed at least 45 days following receipt of the preliminary audit to provide documentation to address any discrepancy found in the audit. 

(c) A final audit report must be delivered to the pharmacy within 120 days after receipt of the preliminary audit report or final appeal, whichever is later. 

(d) An entity shall remit any money due to a pharmacy or pharmacist as a result of an underpayment of a claim within 45 days after the appeals process has been exhausted and the final audit report has been issued. 

151.68 DISCLOSURES TO PLAN SPONSOR.
Where contractually required, an auditing entity must provide a copy to the plan sponsor of its claims that were included in the audit, and any recouped money shall be returned to the plan sponsor. 

151.69 APPLICABILITY OF OTHER LAWS AND REGULATIONS.
Sections 151.62 to 151.67 do not apply to any investigative audit that involves suspected fraud, willful misrepresentation, abuse, or any audit completed by Minnesota health care programs. 

151.70 VIOLATIONS.
Violations of sections 151.62 to 151.68 may be grounds for action, but are not deemed misdemeanors as described in section 151.29. 

151.71 MAXIMUM ALLOWABLE COST PRICING.Subdivision 1.Definitions. 
(a) For purposes of this section, the following definitions apply. 

(b) "Health plan company" has the meaning provided in section 62Q.01, subdivision 4. 

(c) "Pharmacy benefit manager" means an entity doing business in this state that contracts to administer or manage prescription drug benefits on behalf of any health plan company that provides prescription drug benefits to residents of this state. 

Subd. 2.Pharmacy benefit manager contracts with pharmacies; maximum allowable cost pricing. 
(a) In each contract between a pharmacy benefit manager and a pharmacy, the pharmacy shall be given the right to obtain from the pharmacy benefit manager a current list of the sources used to determine maximum allowable cost pricing. The pharmacy benefit manager shall update the pricing information at least every seven business days and provide a means by which contracted pharmacies may promptly review current prices in an electronic, print, or telephonic format within one business day at no cost to the pharmacy. A pharmacy benefit manager shall maintain a procedure to eliminate products from the list of drugs subject to maximum allowable cost pricing in a timely manner in order to remain consistent with changes in the marketplace. 

(b) In order to place a prescription drug on a maximum allowable cost list, a pharmacy benefit manager shall ensure that the drug is generally available for purchase by pharmacies in this state from a national or regional wholesaler and is not obsolete. 

(c) Each contract between a pharmacy benefit manager and a pharmacy must include a process to appeal, investigate, and resolve disputes regarding maximum allowable cost pricing that includes: 

(1) a 15-business day limit on the right to appeal following the initial claim; 

(2) a requirement that the appeal be investigated and resolved within seven business days after the appeal is received; and 

(3) a requirement that a pharmacy benefit manager provide a reason for any appeal denial and identify the national drug code of a drug that may be purchased by the pharmacy at a price at or below the maximum allowable cost price as determined by the pharmacy benefit manager. 

(d) If an appeal is upheld, the pharmacy benefit manager shall make an adjustment to the maximum allowable cost price no later than one business day after the date of determination. The pharmacy benefit manager shall make the price adjustment applicable to all similarly situated network pharmacy providers as defined by the plan sponsor.