HF 1898

as introduced - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to health; requiring a certificate of
authority for pharmacy benefits managers; granting
powers and duties to state agencies and officers;
allowing access to certain information; requiring
disclosures to certain entities; setting standards and
responsibilities of pharmacy benefits managers;
proposing coding for new law as Minnesota Statutes,
chapter 60I.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [60I.01] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Scope of definitions. new text end

new text begin For purposes of
this chapter, the terms defined in this section have the
meanings given them except as otherwise provided.
new text end

new text begin Subd. 2. new text end

new text begin Aggregate amount. new text end

new text begin "Aggregate amount" means the
total amount of payment received by the pharmacy benefits
manager for each category listed in subdivision 9.
new text end

new text begin Subd. 3. new text end

new text begin Commissioner. new text end

new text begin "Commissioner" means the
commissioner of commerce.
new text end

new text begin Subd. 4. new text end

new text begin Covered entity. new text end

new text begin "Covered entity" means a
nonprofit hospital or a medical service corporation; a health
insurer; a health benefit plan; a health maintenance
organization; a health program administered by the state in the
capacity of provider of health coverage; or an employer, a labor
union, or other entity organized in the state which provides
health coverage to covered individuals who are employed or
reside in the state.
new text end

new text begin Subd. 5. new text end

new text begin Covered individual. new text end

new text begin "Covered individual" means
a member, a participant, an enrollee, a contractholder, a
policyholder, or beneficiary of a covered entity who is provided
health coverage by the covered entity. The term includes a
dependent or other individual provided health coverage through a
policy, contract, or plan for a covered individual.
new text end

new text begin Subd. 6. new text end

new text begin De-identified information. new text end

new text begin "De-identified
information" means information from which the name, address,
telephone number, and other variables have been removed
according to the requirements of Code of Federal Regulations,
title 45, part 164, section 512, subsection (a) or (b).
new text end

new text begin Subd. 7. new text end

new text begin Generic drug. new text end

new text begin "Generic drug" means a drug that
is chemically equivalent to a brand name drug for which the
patent has expired.
new text end

new text begin Subd. 8. new text end

new text begin Labeler. new text end

new text begin "Labeler" means a person that has been
assigned a labeler code by the federal Food and Drug
Administration under Code of Federal Regulations, title 21, part
207, section 20, and who receives prescription drugs from a
manufacturer or wholesaler and repackages those drugs for later
retail sale.
new text end

new text begin Subd. 9. new text end

new text begin Payments received by pharmacy benefits
manager. new text end

new text begin "Payments received by pharmacy benefits manager" means
the aggregate amount of any of the following payments, whether
paid directly or indirectly:
new text end

new text begin (1) rebates collected on behalf of and allocated to the
covered entity and pharmacy benefits manager;
new text end

new text begin (2) administrative fees collected from the manufacturer in
consideration of administrative services provided by the
pharmacy benefits manager to the manufacturer;
new text end

new text begin (3) any other fees or amounts collected by the pharmacy
benefits manager from a manufacturer or labeler for drug switch
programs, educational support, or data sales related to covered
individuals; or
new text end

new text begin (4) pharmacy network fees.
new text end

new text begin Subd. 10. new text end

new text begin Pharmacy benefits management. new text end

new text begin "Pharmacy
benefits management" means the procurement of prescription drugs
at a negotiated rate for dispensing within the state to covered
individuals, the administration or management of prescription
drug benefits provided by a covered entity for the benefit of
covered individuals, or the providing of any of the following
services with regard to the administration of the following
pharmacy benefits:
new text end

new text begin (1) claims processing, retail network management, and
payment of claims to a pharmacy for prescription drugs dispensed
to a covered individual;
new text end

new text begin (2) clinical formulary development and management services;
or
new text end

new text begin (3) rebate contracting and administration.
new text end

new text begin Subd. 11. new text end

new text begin Pharmacy benefits manager. new text end

new text begin "Pharmacy benefits
manager" means an entity that performs pharmacy benefits
management. The term includes a person acting for a pharmacy
benefits manager in a contractual or employment relationship in
the performance of pharmacy benefits management for a covered
entity. The term does not include a public self-funded pool or
a private single-employer self-funded plan that provides
benefits or services directly to its beneficiaries.
new text end

new text begin Subd. 12. new text end

new text begin Pharmacy network fees. new text end

new text begin "Pharmacy network fees"
means dollars collected from covered entities in excess of
dollars paid to the participating pharmacies for the cost of
drugs provided to covered individuals.
new text end

new text begin Subd. 13. new text end

new text begin Rebate. new text end

new text begin "Rebate" means retrospective
reimbursement of monetary amounts by a manufacturer under a
manufacturer's discount program with a pharmacy benefits manager
for drugs dispensed to covered individuals.
new text end

new text begin Subd. 14. new text end

new text begin Utilization information. new text end

new text begin "Utilization
information" means de-identified information regarding the
quantity of drug prescriptions dispensed to members of a health
plan during a specified time period.
new text end

Sec. 2.

new text begin [60I.02] PHARMACY BENEFITS MANAGER CERTIFICATE OF
AUTHORITY REQUIRED.
new text end

new text begin Subdivision 1. new text end

new text begin Certificate of authority. new text end

new text begin (a) In addition
to the other requirements in this chapter, all pharmacy benefits
managers that provide services to residents of Minnesota shall
apply for, obtain, and maintain a certificate of authority to
operate as a pharmacy benefits manager in the state from the
commissioner by December 1, 2005, and yearly thereafter.
new text end

new text begin (b) The application by a pharmacy benefits manager for a
certificate of authority to operate in the state shall be in a
form and manner prescribed by the commissioner, and shall be
verified by the sworn statement of an officer or authorized
representative of the pharmacy benefits manager.
new text end

new text begin (c) The application shall disclose any ownership interest
of any kind with:
new text end

new text begin (1) any insurance company responsible for providing
benefits directly or through reinsurance to any plan for which
the pharmacy benefits manager provides services; and
new text end

new text begin (2) any parent company, subsidiary, or other organization
that is related to the provision of pharmacy services, the
provision of other prescription drug or device services, or a
pharmaceutical manufacturer.
new text end

new text begin (d) A pharmacy benefits manager shall notify the
commissioner in writing within five business days of any
material change in the pharmacy benefits manager's ownership.
new text end

new text begin Subd. 2. new text end

new text begin Authority of commissioner. new text end

new text begin (a) The commissioner
shall have the authority to establish and assess fees for
certificates of authority, renewal of certificates, penalties,
and other fees and assessments as deemed necessary and
appropriate under this chapter.
new text end

new text begin (b) The pharmacy benefits manager shall disclose annually
to the commissioner the payments received by the pharmacy
benefits manager under any contract with a covered entity and
shall describe the manner in which the payments received by the
pharmacy benefits manager are applied toward reducing rates of
covered entities or distributed to covered individuals.
new text end

new text begin (c) If the commissioner has reason to believe the pharmacy
benefits manager has violated any of the provisions contained in
this chapter or determines that it is necessary to prevent fraud
and abuse, the commissioner shall serve upon the pharmacy
benefits manager a statement of the charges and notice of
examination of records. After notice is given and a date for
examination of records is set with the pharmacy benefits
manager, the commissioner may examine any contract between a
covered entity and the pharmacy benefits manager and any related
record to determine if there has been a violation of this
chapter.
new text end

new text begin (d) The commissioner may revoke, suspend, deny, or restrict
a certificate of authority of a pharmacy benefits manager for
violation of this chapter or other violations of state or
federal laws or regulations. In the event that a certificate is
revoked, suspended, or denied, the commissioner may permit
further operation of the pharmacy benefits manager for a limited
period not to exceed 60 days under conditions and restrictions
determined by the commissioner to be necessary for the
beneficial interests of the covered entities and covered
individuals.
new text end

new text begin (e) The commissioner may renew the certificate of authority
of any pharmacy benefits manager subject to any restrictions
considered necessary or appropriate by the commissioner.
new text end

new text begin (f) Any information disclosed to the commissioner under
this section shall be considered a trade secret covered under
chapter 325C.
new text end

Sec. 3.

new text begin [60I.03] DISCLOSURES TO COVERED ENTITIES.
new text end

new text begin Subdivision 1. new text end

new text begin Disclosure requirements. new text end

new text begin Each pharmacy
benefits manager shall satisfy the following disclosure
requirements to covered entities upon request of the covered
entity:
new text end

new text begin (1) a pharmacy benefits manager that derives any payment or
benefit for providing pharmacy benefits management from a drug
manufacturer or distributor or similar entity based on volume or
any other measurement of sales, prescribing or dispensing of
certain prescription drugs or classes or brands of drugs within
the state shall fully disclose to the covered entity the amount
of the payments and benefits received and the amount of the
payments and benefits retained by the pharmacy benefits manager.
new text end

new text begin (2) a pharmacy benefits manager shall provide to a covered
entity all financial and utilization information requested by
the covered entity relating to the provision of benefits to
participants on behalf of that covered entity relating to
services provided to or on behalf of that covered entity.
new text end

new text begin (3) a pharmacy benefits manager must allow the covered
entity to audit the pharmacy benefits manager's books, accounts,
and records including de-identified information as necessary to
confirm that the benefit of payments received by the pharmacy
benefits manager are being shared as required by the contract.
new text end

new text begin Subd. 2. new text end

new text begin Drug substitution. new text end

new text begin (a) A pharmacy benefits
manager may not substitute another prescription drug for the
drug originally prescribed unless the substitution is made for
medical reasons that benefit the covered individual or the
substitution results in financial savings and benefits to the
covered entity.
new text end

new text begin (b) If a substitution is made under this subdivision, the
pharmacy benefits manager shall fully disclose to the covered
entity any benefit or payment received in any form by the
pharmacy benefits manager from a drug manufacturer or other
entity or person with regard to the prescription drug
substitution.
new text end

new text begin (c) The request for substitution to the prescribing
practitioner must be made by a pharmacist from the pharmacy
where the prescription is on file.
new text end

Sec. 4. new text begin SEVERABILITY CLAUSE.
new text end

new text begin If any provision in sections 1 to 3 is held invalid, the
remaining provisions shall remain valid and be given full effect.
new text end

Sec. 5. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 1 to 3 are effective August 1, 2005.
new text end