Skip to main content Skip to office menu Skip to footer
Minnesota Legislature

Office of the Revisor of Statutes

SF 278

1st Unofficial Engrossment - 91st Legislature (2019 - 2020) Posted on 05/10/2019 10:52am

KEY: stricken = removed, old language.
underscored = added, new language.
Line numbers 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9
1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17 1.18 1.19 1.20 1.21 1.22 1.23 1.24 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 2.11 2.12 2.13 2.14 2.15 2.16 2.17 2.18 2.19
2.20 2.21
2.22 2.23 2.24
2.25 2.26 2.27 2.28 2.29 2.30 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 3.10 3.11 3.12 3.13 3.14 3.15 3.16 3.17 3.18 3.19 3.20 3.21 3.22 3.23 3.24 3.25 3.26 3.27 3.28 3.29 3.30 3.31 3.32 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11 4.12 4.13 4.14 4.15 4.16 4.17 4.18 4.19 4.20 4.21 4.22 4.23 4.24 4.25 4.26 4.27 4.28 4.29 4.30 5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 5.9 5.10 5.11 5.12 5.13 5.14 5.15 5.16 5.17 5.18 5.19 5.20 5.21
5.22 5.23 5.24 5.25 5.26 5.27 5.28 5.29 5.30 6.1 6.2 6.3 6.4 6.5 6.6 6.7 6.8 6.9 6.10 6.11 6.12 6.13 6.14 6.15 6.16 6.17 6.18 6.19 6.20 6.21 6.22 6.23 6.24 6.25 6.26 6.27 6.28 6.29 6.30 6.31 6.32 7.1 7.2 7.3 7.4 7.5 7.6 7.7 7.8 7.9 7.10 7.11 7.12 7.13 7.14 7.15 7.16 7.17 7.18 7.19 7.20 7.21 7.22 7.23 7.24 7.25 7.26 7.27 7.28 7.29 7.30
8.1 8.2 8.3 8.4 8.5 8.6 8.7 8.8 8.9 8.10 8.11 8.12
8.13 8.14 8.15 8.16 8.17 8.18 8.19 8.20 8.21 8.22 8.23 8.24 8.25 8.26 8.27 8.28 8.29 8.30 8.31 8.32
9.1 9.2 9.3 9.4 9.5 9.6 9.7 9.8 9.9 9.10 9.11 9.12 9.13 9.14 9.15 9.16 9.17 9.18 9.19 9.20 9.21 9.22 9.23 9.24 9.25 9.26 9.27 9.28 9.29 9.30 9.31 10.1 10.2 10.3 10.4 10.5 10.6 10.7 10.8 10.9 10.10 10.11 10.12 10.13 10.14 10.15 10.16 10.17 10.18 10.19 10.20 10.21 10.22 10.23 10.24 10.25 10.26 10.27 10.28 10.29 10.30 10.31 11.1 11.2 11.3 11.4 11.5 11.6 11.7 11.8 11.9 11.10 11.11 11.12 11.13 11.14 11.15 11.16 11.17 11.18 11.19 11.20 11.21 11.22 11.23 11.24 11.25 11.26 11.27 11.28 11.29 11.30 12.1 12.2
12.3 12.4 12.5 12.6 12.7 12.8 12.9 12.10 12.11 12.12 12.13 12.14 12.15 12.16 12.17 12.18 12.19 12.20 12.21 12.22 12.23 12.24 12.25 12.26 12.27 12.28 12.29 12.30 12.31 12.32 12.33 13.1 13.2 13.3 13.4 13.5 13.6 13.7 13.8 13.9 13.10 13.11
13.12 13.13 13.14 13.15 13.16 13.17 13.18 13.19 13.20 13.21 13.22 13.23 13.24 13.25 13.26 13.27 13.28 13.29 13.30 13.31 13.32 14.1 14.2 14.3 14.4 14.5 14.6 14.7 14.8 14.9 14.10 14.11 14.12 14.13 14.14 14.15 14.16 14.17
14.18 14.19 14.20 14.21 14.22 14.23 14.24 14.25 14.26 14.27 14.28 14.29 14.30 14.31 15.1 15.2 15.3 15.4 15.5 15.6 15.7 15.8 15.9 15.10 15.11 15.12 15.13 15.14 15.15 15.16 15.17 15.18 15.19 15.20 15.21 15.22 15.23 15.24 15.25 15.26 15.27 15.28 15.29 15.30 15.31 16.1 16.2 16.3 16.4 16.5 16.6 16.7 16.8 16.9 16.10 16.11 16.12 16.13 16.14 16.15 16.16 16.17 16.18 16.19 16.20 16.21 16.22 16.23 16.24 16.25 16.26 16.27 16.28 16.29 16.30 16.31 16.32 16.33 17.1 17.2 17.3 17.4 17.5 17.6 17.7 17.8 17.9 17.10 17.11 17.12 17.13 17.14 17.15 17.16 17.17 17.18 17.19 17.20
17.21 17.22 17.23 17.24 17.25 17.26 17.27 17.28 17.29 17.30 17.31 17.32 18.1 18.2 18.3 18.4 18.5 18.6 18.7 18.8 18.9 18.10 18.11 18.12 18.13 18.14
18.15 18.16 18.17 18.18 18.19 18.20 18.21 18.22 18.23 18.24 18.25 18.26 18.27 18.28 18.29 18.30 18.31 18.32 18.33 19.1 19.2 19.3 19.4 19.5 19.6
19.7 19.8 19.9 19.10 19.11 19.12 19.13 19.14 19.15 19.16 19.17
19.18 19.19 19.20 19.21 19.22
19.23 19.24 19.25 19.26
20.1 20.2 20.3 20.4 20.5 20.6 20.7 20.8 20.9 20.10 20.11 20.12 20.13 20.14 20.15 20.16 20.17
20.18 20.19 20.20 20.21
20.22 20.23 20.24
20.25 20.26 20.27 20.28
21.1 21.2 21.3

A bill for an act
relating to health care; modifying requirements for specialty drug prescriptions;
creating licensure and regulations for pharmacy benefit managers; appropriating
money; amending Minnesota Statutes 2018, section 151.21, subdivision 7, by
adding a subdivision; proposing coding for new law in Minnesota Statutes, chapter
62Q; proposing coding for new law as Minnesota Statutes, chapter 62W; repealing
Minnesota Statutes 2018, sections 151.214, subdivision 2; 151.60; 151.61; 151.62;
151.63; 151.64; 151.65; 151.66; 151.67; 151.68; 151.69; 151.70; 151.71.

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

Section 1.

new text begin [62Q.83] PRESCRIPTIONS FOR SPECIALTY DRUGS.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this section, the following terms have
the meanings given them.
new text end

new text begin (b) "Health plan company" has the meaning given in section 62Q.01, subdivision 4, but
also includes a county-based purchasing plan participating in a public program under chapter
256B or 256L, and in an integrated health partnership under section 256B.0755.
new text end

new text begin (c) "Mail order pharmacy" means a pharmacy whose primary business is to receive
prescriptions by mail, fax, or through electronic submissions, dispense prescription drugs
to enrollees through the use of United States mail or other common carrier services, and
provide consultation with patients by telephone or electronically rather than face-to-face.
new text end

new text begin (d) "Pharmacy benefit manager" has the meaning provided in section 151.71, subdivision
1, paragraph (c).
new text end

new text begin (e) "Retail pharmacy" means a chain pharmacy, a supermarket pharmacy, an independent
pharmacy, or a network of independent pharmacies, licensed under chapter 151, that
dispenses prescription drugs to the public.
new text end

new text begin (f) "Specialty drug" means a prescription drug that:
new text end

new text begin (1) is not routinely made available to enrollees of a health plan company or its contracted
pharmacy benefit manager through dispensing by a retail pharmacy, regardless if the drug
is meant to be self-administered;
new text end

new text begin (2) must usually be obtained from specialty or mail order pharmacies; and
new text end

new text begin (3) has special storage, handling, or distribution requirements that typically cannot be
met by a retail pharmacy.
new text end

new text begin Subd. 2. new text end

new text begin Prompt filling of specialty drug prescriptions. new text end

new text begin A health plan company or its
contracted pharmacy benefit manager that requires or provides financial incentives for
enrollees to use a mail order pharmacy to fill a prescription for a specialty drug must ensure
through contract and other means that the mail order pharmacy dispenses the prescription
drug to the enrollee in a timely manner, such that the enrollee receives the filled prescription
within five business days of the date of transmittal to the mail order pharmacy. The health
plan company or contracted pharmacy benefit manager may grant an exemption from this
requirement if the mail order pharmacy can document that the specialty drug was out of
stock due to a delay in shipment by the specialty drug manufacturer or prescription drug
wholesaler. If an exemption is granted, the health plan company or pharmacy benefit manager
shall notify the enrollee within 24 hours of granting the exemption and, if medically
necessary, shall provide the enrollee with an emergency supply of the specialty drug.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2020, and applies to health
plans offered, issued, or renewed on or after that date.
new text end

Sec. 2.

new text begin [62W.01] CITATION.
new text end

new text begin This chapter may be cited as the "Minnesota Pharmacy Benefit Manager Licensure and
Regulation Act."
new text end

Sec. 3.

new text begin [62W.02] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Scope. new text end

new text begin For purposes of this chapter, the following terms have the meanings
given.
new text end

new text begin Subd. 2. new text end

new text begin Aggregate retained rebate. new text end

new text begin "Aggregate retained rebate" means the percentage
of all rebates received by a pharmacy benefit manager from a drug manufacturer for drug
utilization that is not passed on to the pharmacy benefit manager's health carrier's clients.
new text end

new text begin Subd. 3. new text end

new text begin Claims processing service. new text end

new text begin "Claims processing service" means the
administrative services performed in connection with the processing and adjudicating of
claims relating to pharmacy services that includes:
new text end

new text begin (1) receiving payments for pharmacy services;
new text end

new text begin (2) making payments to pharmacists or pharmacies for pharmacy services; or
new text end

new text begin (3) both clause (1) and clause (2).
new text end

new text begin Subd. 4. 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. 5. new text end

new text begin Enrollee. new text end

new text begin "Enrollee" means a natural person covered by a health plan and
includes an insured, policyholder, subscriber, contract holder, member, covered person, or
certificate holder.
new text end

new text begin Subd. 6. new text end

new text begin Health carrier. new text end

new text begin "Health carrier" has the meaning given in section 62A.011,
subdivision 2.
new text end

new text begin Subd. 7. new text end

new text begin Health plan. new text end

new text begin "Health plan" means a policy, contract, certificate, or agreement
defined in section 62A.011, subdivision 3.
new text end

new text begin Subd. 8. new text end

new text begin Mail order pharmacy. new text end

new text begin "Mail order pharmacy" means a pharmacy whose
primary business is to receive prescriptions by mail, fax, or through electronic submissions,
dispense prescription drugs to enrollees through the use of the United States mail or other
common carrier services, and provide consultation with patients electronically rather than
face-to-face.
new text end

new text begin Subd. 9. new text end

new text begin Maximum allowable cost price. new text end

new text begin "Maximum allowable cost price" means the
maximum amount that a pharmacy benefit manager will reimburse a pharmacy for a group
of therapeutically and pharmaceutically equivalent multiple source drugs. The maximum
allowable cost price does not include a dispensing or professional fee.
new text end

new text begin Subd. 10. new text end

new text begin Multiple source drugs. new text end

new text begin "Multiple source drugs" means a therapeutically
equivalent drug that is available from at least two manufacturers.
new text end

new text begin Subd. 11. new text end

new text begin Network pharmacy. new text end

new text begin "Network pharmacy" means a retail or other licensed
pharmacy provider that directly contracts with a pharmacy benefit manager.
new text end

new text begin Subd. 12. new text end

new text begin Other prescription drug or device services. new text end

new text begin "Other prescription drug or
device services" means services other than claims processing services, provided directly or
indirectly, whether in connection with or separate from claims processing services, including:
new text end

new text begin (1) negotiating rebates, discounts, or other financial incentives and arrangements with
drug manufacturers;
new text end

new text begin (2) disbursing or distributing rebates;
new text end

new text begin (3) managing or participating in incentive programs or arrangements for pharmacy
services;
new text end

new text begin (4) negotiating or entering into contractual arrangements with pharmacists or pharmacies,
or both;
new text end

new text begin (5) developing prescription drug formularies;
new text end

new text begin (6) designing prescription benefit programs; or
new text end

new text begin (7) advertising or promoting services.
new text end

new text begin Subd. 13. new text end

new text begin Pharmacist. new text end

new text begin "Pharmacist" means an individual with a valid license issued by
the Board of Pharmacy under chapter 151.
new text end

new text begin Subd. 14. new text end

new text begin Pharmacy. new text end

new text begin "Pharmacy" or "pharmacy provider" means a place of business
licensed by the Board of Pharmacy under chapter 151 in which prescription drugs are
prepared, compounded, or dispensed, or under the supervision of a pharmacist.
new text end

new text begin Subd. 15. new text end

new text begin Pharmacy benefit manager. new text end

new text begin (a) "Pharmacy benefit manager" means a person,
business, or other entity that contracts with a plan sponsor to perform pharmacy benefits
management, including but not limited to:
new text end

new text begin (1) contracting directly or indirectly with pharmacies to provide prescription drugs to
enrollees or other covered individuals;
new text end

new text begin (2) administering a prescription drug benefit;
new text end

new text begin (3) processing or paying pharmacy claims;
new text end

new text begin (4) creating or updating prescription drug formularies;
new text end

new text begin (5) making or assisting in making prior authorization determinations on prescription
drugs;
new text end

new text begin (6) administering rebates on prescription drugs; or
new text end

new text begin (7) establishing a pharmacy network.
new text end

new text begin (b) "Pharmacy benefit manager" does not include the Department of Human Services.
new text end

new text begin Subd. 16. new text end

new text begin Plan sponsor. new text end

new text begin "Plan sponsor" means a group purchaser as defined under
section 62J.03; an employer in the case of an employee health benefit plan established or
maintained by a single employer; or an employee organization in the case of a health plan
established or maintained by an employee organization, an association, joint board trustees,
a committee, or other similar group that establishes or maintains the health plan. This term
includes a person or entity acting for a pharmacy benefit manager in a contractual or
employment relationship in the performance of pharmacy benefits management. Plan sponsor
does not include the Department of Human Services.
new text end

new text begin Subd. 17. new text end

new text begin Specialty drug. new text end

new text begin "Specialty drug" means a prescription drug that:
new text end

new text begin (1) cannot be routinely dispensed at a majority of retail pharmacies;
new text end

new text begin (2) is used to treat chronic and complex, or rare, medical conditions; and
new text end

new text begin (3) meets a majority of the following criteria:
new text end

new text begin (i) requires special handling or storage;
new text end

new text begin (ii) requires complex and extended patient education or counseling;
new text end

new text begin (iii) requires intensive monitoring;
new text end

new text begin (iv) requires clinical oversight; and
new text end

new text begin (v) requires product support services.
new text end

new text begin Subd. 18. new text end

new text begin Retail pharmacy. new text end

new text begin "Retail pharmacy" means a chain pharmacy, a supermarket
pharmacy, an independent pharmacy, or a network of independent pharmacies, licensed
under chapter 151, that dispenses prescription drugs to the public.
new text end

new text begin Subd. 19. new text end

new text begin Rebates. new text end

new text begin "Rebates" means all price concessions paid by a drug manufacturer
to a pharmacy benefit manager or plan sponsor, including discounts and other price
concessions that are based on the actual or estimated utilization of a prescription drug.
Rebates also include price concessions based on the effectiveness of a prescription drug as
in a value-based or performance-based contract.
new text end

Sec. 4.

new text begin [62W.03] LICENSE TO DO BUSINESS.
new text end

new text begin Subdivision 1. new text end

new text begin General. new text end

new text begin (a) Beginning January 1, 2020, no person shall perform, act,
or do business in this state as a pharmacy benefits manager unless the person has a valid
license issued under this chapter by the commissioner of commerce.
new text end

new text begin (b) A license issued in accordance with this chapter is nontransferable.
new text end

new text begin Subd. 2. new text end

new text begin Application. new text end

new text begin (a) A pharmacy benefit manager seeking a license shall apply to
the commissioner of commerce on a form prescribed by the commissioner. The application
form must include at a minimum the following information:
new text end

new text begin (1) the name, address, and telephone number of the pharmacy benefit manager;
new text end

new text begin (2) the name and address of the pharmacy benefit manager agent for service of process
in this state;
new text end

new text begin (3) the name, address, official position, and professional qualifications of each person
responsible for the conduct of affairs of the pharmacy benefit manager, including all members
of the board of directors, board of trustees, executive committee, or other governing board
or committee; the principal officers in the case of a corporation; or the partners or members
in the case of a partnership or association; and
new text end

new text begin (4) a statement reasonably describing the geographic area or areas to be served and the
type or types of enrollees to be served.
new text end

new text begin (b) Each application for licensure must be accompanied by a nonrefundable fee of $8,500
and evidence of financial responsibility in the amount of $1,000,000 to be maintained at all
times by the pharmacy benefit manager during its licensure period. The fees collected under
this subdivision shall be deposited in the general fund.
new text end

new text begin (c) Within 30 days of receiving an application, the commissioner may require additional
information or submissions from an applicant and may obtain any document or information
reasonably necessary to verify the information contained in the application. Within 90 days
after receipt of a completed application, evidence of financial responsibility, the network
adequacy report required under section 62W.05, and the applicable license fee, the
commissioner shall review the application and issue a license if the applicant is deemed
qualified under this section. If the commissioner determines the applicant is not qualified,
the commissioner shall notify the applicant and shall specify the reason or reasons for the
denial.
new text end

new text begin Subd. 3. new text end

new text begin Renewal. new text end

new text begin (a) A license issued under this chapter is valid for a period of one
year. To renew a license, an applicant must submit a completed renewal application on a
form prescribed by the commissioner, the network adequacy report required under section
62W.05, and a renewal fee of $8,500. The commissioner may request a renewal applicant
to submit additional information to clarify any new information presented in the renewal
application. The fees collected under this paragraph shall be deposited in the general fund.
new text end

new text begin (b) A renewal application submitted after the renewal deadline date must be accompanied
by a nonrefundable late fee of $500. The fees collected under this paragraph shall be
deposited in the general fund.
new text end

new text begin (c) The commissioner shall deny the renewal of a license for any of the following reasons:
new text end

new text begin (1) the pharmacy benefit manager is operating in a financially hazardous condition
relative to its financial condition and the services it administers for health carriers;
new text end

new text begin (2) the pharmacy benefit manager has been determined by the commissioner to be in
violation or noncompliance with the requirements of state law or the rules promulgated
under this chapter; or
new text end

new text begin (3) the pharmacy benefit manager has failed to timely submit a renewal application and
the information required under paragraph (a).
new text end

new text begin In lieu of a denial of a renewal application, the commissioner may permit the pharmacy
benefit manager to submit to the commissioner a corrective action plan to cure or correct
deficiencies.
new text end

new text begin Subd. 4. new text end

new text begin Oversight. new text end

new text begin (a) The commissioner may suspend, revoke, or place on probation
a pharmacy benefit manager license issued under this chapter for any of the following
circumstances:
new text end

new text begin (1) the pharmacy benefit manager has engaged in fraudulent activity that constitutes a
violation of state or federal law;
new text end

new text begin (2) the commissioner has received consumer complaints that justify an action under this
subdivision to protect the safety and interests of consumers;
new text end

new text begin (3) the pharmacy benefit manager fails to pay an application license or renewal fee; and
new text end

new text begin (4) the pharmacy benefit manager fails to comply with a requirement set forth in this
chapter.
new text end

new text begin (b) The commissioner may issue a license subject to restrictions or limitations, including
the types of services that may be supplied or the activities in which the pharmacy benefit
manager may be engaged.
new text end

new text begin Subd. 5. new text end

new text begin Penalty. new text end

new text begin If a pharmacy benefit manager acts without a license, the pharmacy
benefit manager may be subject to a fine of $5,000 per day for the period the pharmacy
benefit manager is found to be in violation. Any penalties collected under this subdivision
shall be deposited in the general fund.
new text end

new text begin Subd. 6. new text end

new text begin Rulemaking. new text end

new text begin The commissioner may adopt rules to implement this section.
new text end

new text begin Subd. 7. new text end

new text begin Enforcement. new text end

new text begin The commissioner shall enforce this chapter under the provisions
of chapter 45.
new text end

Sec. 5.

new text begin [62W.04] PHARMACY BENEFIT MANAGER GENERAL BUSINESS
PRACTICES.
new text end

new text begin (a) A pharmacy benefit manager has a fiduciary duty to a health carrier and must
discharge that duty in accordance with the provisions of state and federal law.
new text end

new text begin (b) A pharmacy benefit manager must perform its duties with care, skill, prudence,
diligence, and professionalism. A pharmacy benefit manager must exercise good faith and
fair dealing in the performance of its contractual duties. A provision in a contract between
a pharmacy benefit manager and a health carrier or a network pharmacy that attempts to
waive or limit this obligation is void.
new text end

new text begin (c) A pharmacy benefit manager must notify a health carrier in writing of any activity,
policy, or practice of the pharmacy benefit manager that directly or indirectly presents a
conflict of interest with the duties imposed in this section.
new text end

Sec. 6.

new text begin [62W.05] PHARMACY BENEFIT MANAGER NETWORK ADEQUACY.
new text end

new text begin (a) A pharmacy benefit manager must provide an adequate and accessible pharmacy
network for the provision of prescription drugs as defined under section 62K.10. Mail order
pharmacies must not be included in the calculations of determining the adequacy of the
pharmacy benefit manager's pharmacy network under section 62K.10.
new text end

new text begin (b) A pharmacy benefit manager must submit to the commissioner a pharmacy network
adequacy report describing the pharmacy network and pharmacy accessibility in this state,
with the pharmacy benefit manager's license application and renewal, in a manner prescribed
by the commissioner.
new text end

new text begin (c) A pharmacy benefit manager may apply for a waiver of the requirements in paragraph
(a) if it is unable to meet the statutory requirements. A waiver application must be submitted
on a form provided by the commissioner and must (1) demonstrate with specific data that
the requirement of paragraph (a) is not feasible in a particular service area or part of a service
area, and (2) include information as to the steps that were and will be taken to address the
network inadequacy. The waiver shall automatically expire after three years. If a renewal
of the waiver is sought, the commissioner shall take into consideration steps that have been
taken to address network adequacy.
new text end

new text begin (d) The pharmacy benefit manager must establish a pharmacy network service area
consistent with the requirements under section 62K.13 for every pharmacy network subject
to review under this section.
new text end

Sec. 7.

new text begin [62W.06] PHARMACY BENEFIT MANAGER TRANSPARENCY.
new text end

new text begin Subdivision 1. new text end

new text begin Transparency to plan sponsors. new text end

new text begin (a) Beginning in the second quarter
after the effective date of a contract between a pharmacy benefit manager and a plan sponsor,
the pharmacy benefit manager must disclose, upon the request of the plan sponsor, the
following information with respect to prescription drug benefits specific to the plan sponsor:
new text end

new text begin (1) the aggregate wholesale acquisition costs from a drug manufacturer or wholesale
drug distributor for each therapeutic category of prescription drugs;
new text end

new text begin (2) the aggregate amount of rebates received by the pharmacy benefit manager by
therapeutic category of prescription drugs. The aggregate amount of rebates must include
any utilization discounts the pharmacy benefit manager receives from a drug manufacturer
or wholesale drug distributor;
new text end

new text begin (3) any other fees received from a drug manufacturer or wholesale drug distributor;
new text end

new text begin (4) whether the pharmacy benefit manager has a contract, agreement, or other arrangement
with a drug manufacturer to exclusively dispense or provide a drug to a plan sponsor's
employees or enrollees, and the application of all consideration or economic benefits collected
or received pursuant to the arrangement;
new text end

new text begin (5) prescription drug utilization information for the plan sponsor's employees or enrollees
that is not specific to any individual employee or enrollee;
new text end

new text begin (6) de-identified claims level information in electronic format that allows the plan sponsor
to sort and analyze the following information for each claim:
new text end

new text begin (i) the drug and quantity for each prescription;
new text end

new text begin (ii) whether the claim required prior authorization;
new text end

new text begin (iii) patient cost-sharing paid on each prescription;
new text end

new text begin (iv) the amount paid to the pharmacy for each prescription, net of the aggregate amount
of fees or other assessments imposed on the pharmacy, including point-of-sale and retroactive
charges;
new text end

new text begin (v) any spread between the net amount paid to the pharmacy in item (iv) and the amount
charged to the plan sponsor;
new text end

new text begin (vi) identity of the pharmacy for each prescription;
new text end

new text begin (vii) whether the pharmacy is, or is not, under common control or ownership with the
pharmacy benefit manager;
new text end

new text begin (viii) whether the pharmacy is, or is not, a preferred pharmacy under the plan;
new text end

new text begin (ix) whether the pharmacy is, or is not, a mail order pharmacy; and
new text end

new text begin (x) whether enrollees are required by the plan to use the pharmacy;
new text end

new text begin (7) the aggregate amount of payments made by the pharmacy benefit manager to
pharmacies owned or controlled by the pharmacy benefit manager;
new text end

new text begin (8) the aggregate amount of payments made by the pharmacy benefit manager to
pharmacies not owned or controlled by the pharmacy benefit manager; and
new text end

new text begin (9) the aggregate amount of the fees imposed on, or collected from, network pharmacies
or other assessments against network pharmacies, including point-of-sale fees and retroactive
charges, and the application of those amounts collected pursuant to the contract with the
plan sponsor.
new text end

new text begin Subd. 2. new text end

new text begin Transparency report to the commissioner. new text end

new text begin (a) Beginning June 1, 2020, and
annually thereafter, each pharmacy benefit manager must submit to the commissioner of
commerce a transparency report containing data from the prior calendar year. The report
must contain the following information:
new text end

new text begin (1) the aggregate wholesale acquisition costs from a drug manufacturer or wholesale
drug distributor for each therapeutic category of prescription drugs for all of the pharmacy
benefit manager's health carrier clients and for each health carrier client, and these costs net
of all rebates and other fees and payments, direct or indirect, from all sources;
new text end

new text begin (2) the aggregate amount of all rebates that the pharmacy benefit manager received from
all drug manufacturers for all of the pharmacy benefit manager's health carrier clients and
for each health carrier client. The aggregate amount of rebates must include any utilization
discounts the pharmacy benefit manager receives from a drug manufacturer or wholesale
drug distributor;
new text end

new text begin (3) the aggregate of all fees from all sources, direct or indirect, that the pharmacy benefit
manager received for all of the pharmacy benefit manager's health carrier clients, and the
amount of these fees for each health carrier client separately;
new text end

new text begin (4) the aggregate retained rebates and other fees, as listed in clause (3), that the pharmacy
benefit manager received from all sources, direct or indirect, that were not passed through
to the health carrier;
new text end

new text begin (5) the aggregate retained rebate and fees percentage;
new text end

new text begin (6) the highest, lowest, and mean aggregate retained rebate and fees percentage for all
of the pharmacy benefit manager's health carrier clients and for each health carrier client;
and
new text end

new text begin (7) de-identified claims level information in electronic format that allows the
commissioner to sort and analyze the following information for each claim:
new text end

new text begin (i) the drug and quantity for each prescription;
new text end

new text begin (ii) whether the claim required prior authorization;
new text end

new text begin (iii) patient cost-sharing paid on each prescription;
new text end

new text begin (iv) the amount paid to the pharmacy for each prescription, net of the aggregate amount
of fees or other assessments imposed on the pharmacy, including point-of-sale and retroactive
charges;
new text end

new text begin (v) any spread between the net amount paid to the pharmacy in item (iv) and the amount
charged to the plan sponsor;
new text end

new text begin (vi) identity of the pharmacy for each prescription;
new text end

new text begin (vii) whether the pharmacy is, or is not, under common control or ownership with the
pharmacy benefit manager;
new text end

new text begin (viii) whether the pharmacy is, or is not, a preferred pharmacy under the plan;
new text end

new text begin (ix) whether the pharmacy is, or is not, a mail order pharmacy; and
new text end

new text begin (x) whether enrollees are required by the plan to use the pharmacy.
new text end

new text begin (b) Within 60 days upon receipt of the transparency report, the commissioner shall
publish the report from each pharmacy benefit manager on the Department of Commerce's
website, with the exception of data considered trade secret information under section 13.37.
new text end

new text begin (c) For purposes of this subdivision, the aggregate retained rebate and fee percentage
must be calculated for each health carrier for rebates and fees in the previous calendar year
as follows:
new text end

new text begin (1) the sum total dollar amount of rebates and fees from all drug manufacturers for all
utilization of enrollees of a health carrier that was not passed through to the health carrier;
and
new text end

new text begin (2) divided by the sum total dollar amount of all rebates and fees received from all
sources, direct or indirect, for all enrollees of a health carrier.
new text end

new text begin Subd. 3. new text end

new text begin Penalty. new text end

new text begin The commissioner may impose civil penalties of not more than $1,000
per day per violation of this section.
new text end

Sec. 8.

new text begin [62W.07] PHARMACY OWNERSHIP INTEREST; SPECIALTY
PHARMACY SERVICES; NONDISCRIMINATION.
new text end

new text begin (a) A pharmacy benefit manager that has an ownership interest either directly or indirectly,
or through an affiliate or subsidiary, in a pharmacy must disclose to a plan sponsor that
contracts with the pharmacy benefit manager any difference between the amount paid to a
pharmacy and the amount charged to the plan sponsor.
new text end

new text begin (b) A pharmacy benefit manager or a pharmacy benefit manager's affiliates or subsidiaries
must not own or have an ownership interest in a patient assistance program or a mail order
specialty pharmacy, unless the pharmacy benefit manager, affiliate, or subsidiary agrees to
fair competition, no self-dealing, and no interference with prospective economic advantage,
and establishes a firewall between the administrative functions and the mail order pharmacy.
new text end

new text begin (c) A pharmacy benefit manager or health carrier is prohibited from penalizing, requiring,
or providing financial incentives, including variations in premiums, deductibles, co-payments,
or coinsurance, to an enrollee as an incentive to use a retail pharmacy, mail order pharmacy,
specialty pharmacy, or other network pharmacy provider in which a pharmacy benefit
manager has an ownership interest or that has an ownership interest in a pharmacy benefit
manager.
new text end

new text begin (d) A pharmacy benefit manager or health carrier is prohibited from imposing limits,
including quantity limits or refill frequency limits, on a patient's access to medication that
differ based solely on whether the health carrier or pharmacy benefit manager has an
ownership interest in a pharmacy or the pharmacy has an ownership interest in the pharmacy
benefit manager.
new text end

new text begin (e) A pharmacy benefit manager must not require pharmacy accreditation standards or
recertification requirements to participate in a network that are inconsistent with, more
stringent than, or in addition to federal and state requirements for licensure as a pharmacy
in this state.
new text end

new text begin (f) A pharmacy benefit manager or health carrier must not prohibit an entity authorized
to participate in the federal 340B Drug Pricing Program under section 340B of the Public
Health Service Act, United States Code, title 42, chapter 6A, or a pharmacy under contract
with such an entity to provide pharmacy services from participating in the pharmacy benefit
manager's or health carrier's provider network. A pharmacy benefit manager or health carrier
must not reimburse an entity or a pharmacy under contract with such an entity participating
in the federal 340B Drug Pricing Program differently than other similarly situated pharmacies.
A pharmacy benefit manager that contracts with a managed care plan or county-based
purchasing plan under contract with the commissioner of human services under chapter
256B or 256L must comply with this paragraph only if the entity or contracted pharmacy
can identify all claims eligible for 340B drugs at the time of initial claims submission at the
point of sale. This paragraph does not preclude a pharmacy benefit manager that contracts
with a managed care plan or county-based purchasing plan under contract with the
commissioner of human services under chapter 256B or 256L from reimbursing an entity
or pharmacy identified in this paragraph at a lower rate for any prescription drug purchased
by the entity or pharmacy through the federal 340B Drug Pricing Program.
new text end

Sec. 9.

new text begin [62W.08] MAXIMUM ALLOWABLE COST PRICING.
new text end

new text begin (a) With respect to each contract and contract renewal between a pharmacy benefit
manager and a pharmacy, the pharmacy benefits manager must:
new text end

new text begin (1) provide to the pharmacy, at the beginning of each contract and contract renewal, the
sources utilized to determine the maximum allowable cost pricing of the pharmacy benefit
manager;
new text end

new text begin (2) update any maximum allowable cost price list at least every seven business days,
noting any price changes from the previous list, and provide a means by which network
pharmacies may promptly review current prices in an electronic, print, or telephonic format
within one business day at no cost to the pharmacy;
new text end

new text begin (3) 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;
new text end

new text begin (4) ensure that the maximum allowable cost prices are not set below sources utilized by
the pharmacy benefits manager; and
new text end

new text begin (5) upon request of a network pharmacy, disclose the sources utilized for setting
maximum allowable cost price rates on each maximum allowable cost price list included
under the contract and identify each maximum allowable cost price list that applies to the
network pharmacy. A pharmacy benefit manager must make the list of the maximum
allowable costs available to a contracted pharmacy in a format that is readily accessible and
usable to the network pharmacy.
new text end

new text begin (b) A pharmacy benefit manager must not place a prescription drug on a maximum
allowable cost list unless the drug is available for purchase by pharmacies in this state from
a national or regional drug wholesaler and is not obsolete.
new text end

new text begin (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:
new text end

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

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

new text begin (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.
new text end

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

Sec. 10.

new text begin [62W.09] PHARMACY AUDITS.
new text end

new text begin Subdivision 1. new text end

new text begin Procedure and process for conducting and reporting an audit. new text end

new text begin (a)
Unless otherwise prohibited by federal requirements or regulations, any entity conducting
a pharmacy audit must follow the following procedures:
new text end

new text begin (1) a pharmacy must be given notice 14 days before an initial on-site audit is conducted;
new text end

new text begin (2) an audit that involves clinical or professional judgment must be conducted by or in
consultation with a licensed pharmacist; and
new text end

new text begin (3) each pharmacy shall be audited under the same standards and parameters as other
similarly situated pharmacies.
new text end

new text begin (b) Unless otherwise prohibited by federal requirements or regulations, for any entity
conducting a pharmacy audit the following items apply:
new text end

new text begin (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;
new text end

new text begin (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;
new text end

new text begin (3) an on-site audit may not take place during the first five business days of the month
unless consented to by the pharmacy;
new text end

new text begin (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;
new text end

new text begin (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;
new text end

new text begin (6) a pharmacy benefit manager 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:
new text end

new text begin (i) additional information is required in the provider manual; or
new text end

new text begin (ii) the information is required by the Food and Drug Administration (FDA); or
new text end

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

new text begin (iv) the information in item (i), (ii), or (iii) is not readily available for the auditor at the
time of the audit; and
new text end

new text begin (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:
new text end

new text begin (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
new text end

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

new text begin (c) An amendment to pharmacy audit terms in a contract between a pharmacy benefit
manager and a pharmacy must be disclosed to the pharmacy at least 60 days prior to the
effective date of the proposed change.
new text end

new text begin Subd. 2. new text end

new text begin Requirement for recoupment or chargeback. new text end

new text begin For recoupment or chargeback,
the following criteria apply:
new text end

new text begin (1) audit parameters must consider consumer-oriented parameters based on manufacturer
listings;
new text end

new text begin (2) a pharmacy's usual and customary price for compounded medications is considered
the reimbursable cost unless the pricing methodology is outlined in the pharmacy provider
contract;
new text end

new text begin (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;
new text end

new text begin (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;
new text end

new text begin (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;
new text end

new text begin (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;
new text end

new text begin (7) in the case of errors that have no actual financial harm to the patient or plan, the
pharmacy benefit manager 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;
and
new text end

new text begin (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.
new text end

new text begin Subd. 3. new text end

new text begin Documentation. new text end

new text begin (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.
new text end

new text begin (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.
new text end

new text begin Subd. 4. new text end

new text begin Appeals process. new text end

new text begin The entity conducting the audit must establish a written
appeals process which must include appeals of preliminary reports and final reports.
new text end

new text begin Subd. 5. new text end

new text begin Audit information and reports. new text end

new text begin (a) A preliminary audit report must be delivered
to the pharmacy within 60 days after the conclusion of the audit.
new text end

new text begin (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.
new text end

new text begin (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.
new text end

new text begin (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.
new text end

new text begin Subd. 6. new text end

new text begin Disclosure to plan sponsor. new text end

new text begin 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.
new text end

new text begin Subd. 7. new text end

new text begin Applicability of other laws and regulations. new text end

new text begin This section does not apply to
any investigative audit that involves suspected fraud, willful misrepresentation, abuse, or
any audit completed by Minnesota health care programs.
new text end

new text begin Subd. 8. new text end

new text begin Definitions. new text end

new text begin For purposes of this section, "entity" means a pharmacy benefits
manager or any person or organization that represents these companies, groups, or
organizations.
new text end

Sec. 11.

new text begin [62W.10] SYNCHRONIZATION.
new text end

new text begin (a) For purposes of this section, "synchronization" means the coordination of prescription
drug refills for a patient taking two or more medications for one or more chronic conditions,
to allow the patient's medications to be refilled on the same schedule for a given period of
time.
new text end

new text begin (b) A contract between a pharmacy benefit manager and a pharmacy must allow for
synchronization of prescription drug refills for a patient on at least one occasion per year,
if the following criteria are met:
new text end

new text begin (1) the prescription drugs are covered under the patient's health plan or have been
approved by a formulary exceptions process;
new text end

new text begin (2) the prescription drugs are maintenance medications as defined by the health plan
and have one or more refills available at the time of synchronization;
new text end

new text begin (3) the prescription drugs are not Schedule II, III, or IV controlled substances;
new text end

new text begin (4) the patient meets all utilization management criteria relevant to the prescription drug
at the time of synchronization;
new text end

new text begin (5) the prescription drugs are of a formulation that can be safely split into short-fill
periods to achieve synchronization; and
new text end

new text begin (6) the prescription drugs do not have special handling or sourcing needs that require a
single, designated pharmacy to fill or refill the prescription.
new text end

new text begin (c) When necessary to permit synchronization, the pharmacy benefit manager must apply
a prorated, daily patient cost-sharing rate to any prescription drug dispensed by a pharmacy
under this section. The dispensing fee must not be prorated, and all dispensing fees shall
be based on the number of prescriptions filled or refilled.
new text end

new text begin (d) Synchronization may be requested by the patient or by the patient's parent or legal
guardian. For purposes of this paragraph, legal guardian includes but is not limited to a
guardian of an incapacitated person appointed pursuant to chapter 524.
new text end

Sec. 12.

new text begin [62W.11] GAG CLAUSE PROHIBITION.
new text end

new text begin (a) No contract between a pharmacy benefit manager or health carrier and a pharmacy
or pharmacist shall prohibit, restrict, or penalize a pharmacy or pharmacist from disclosing
to an enrollee any health care information that the pharmacy or pharmacist deems appropriate
regarding the nature of treatment; the risks or alternatives; the availability of alternative
therapies, consultations, or tests; the decision of utilization reviewers or similar persons to
authorize or deny services; the process that is used to authorize or deny health care services
or benefits; or information on financial incentives and structures used by the health carrier
or pharmacy benefit manager.
new text end

new text begin (b) A pharmacy or pharmacist must provide to an enrollee information regarding the
enrollee's total cost for each prescription drug dispensed where part or all of the cost of the
prescription is being paid or reimbursed by the employer-sponsored plan or by a health
carrier or pharmacy benefit manager, in accordance with section 151.214, subdivision 1.
new text end

new text begin (c) A pharmacy benefit manager or health carrier must not prohibit a pharmacist or
pharmacy from discussing information regarding the total cost for pharmacy services for a
prescription drug, including the patient's co-payment amount, the pharmacy's own usual
and customary price of the prescription, and the net amount the pharmacy will receive from
all sources for dispensing the prescription drug, once the claim has been completed by the
pharmacy benefit manager or the patient's health carrier.
new text end

new text begin (d) A pharmacy benefit manager or health carrier must not prohibit a pharmacist or
pharmacy from discussing the availability of any therapeutically equivalent alternative
prescription drugs or alternative methods for purchasing the prescription drug, including
but not limited to paying out-of-pocket the pharmacy's usual and customary price when that
amount is less expensive to the enrollee than the amount the enrollee is required to pay for
the prescription drug under the enrollee's health plan.
new text end

Sec. 13.

new text begin [62W.12] POINT OF SALE.
new text end

new text begin No pharmacy benefit manager or health carrier shall require an enrollee to make a
payment at the point of sale for a covered prescription drug in an amount greater than the
lesser of:
new text end

new text begin (1) the applicable co-payment for the prescription drug;
new text end

new text begin (2) the allowable claim amount for the prescription drug;
new text end

new text begin (3) the amount an enrollee would pay for the prescription drug if the enrollee purchased
the prescription drug without using a health plan or any other source of prescription drug
benefits or discounts; or
new text end

new text begin (4) the amount the pharmacy will be reimbursed for the prescription drug from the
pharmacy benefit manager or health carrier.
new text end

Sec. 14.

new text begin [62W.13] RETROACTIVE ADJUSTMENTS.
new text end

new text begin No pharmacy benefit manager shall retroactively adjust a claim for reimbursement
submitted by a pharmacy for a prescription drug, unless the adjustment is a result of a:
new text end

new text begin (1) pharmacy audit conducted in accordance with section 62W.09; or
new text end

new text begin (2) technical billing error.
new text end

Sec. 15.

Minnesota Statutes 2018, section 151.21, subdivision 7, is amended to read:


Subd. 7.

Drug formulary.

deleted text beginThis sectiondeleted text endnew text begin Subdivision 3new text end does not apply when a pharmacist
is dispensing a prescribed drug to persons covered under a managed health care plan that
maintains a mandatory or closed drug formulary.

Sec. 16.

Minnesota Statutes 2018, section 151.21, is amended by adding a subdivision to
read:


new text begin Subd. 7a. new text end

new text begin Coverage by substitution. new text end

new text begin (a) When a pharmacist receives a prescription
order by paper or hard copy, by electronic transmission, or by oral instruction from the
prescriber, in which the prescriber has not expressly indicated that the prescription is to be
dispensed as communicated and the drug prescribed is not covered under the purchaser's
health plan or prescription drug plan, the pharmacist may dispense a therapeutically
equivalent and interchangeable prescribed drug or biological product that is covered under
the purchaser's plan, if the pharmacist has a written protocol with the prescriber that outlines
the class of drugs of the same generation and designed for the same indication that can be
substituted and the required communication between the pharmacist and the prescriber.
new text end

new text begin (b) The pharmacist must inform the purchaser if the pharmacist is dispensing a drug or
biological product other than the specific drug or biological product prescribed and the
reason for the substitution.
new text end

new text begin (c) The pharmacist must communicate to the prescriber the name and manufacturer of
the substituted drug that was dispensed and the reason for the substitution, in accordance
with the written protocol.
new text end

Sec. 17. new text beginSEVERABILITY.
new text end

new text begin If any provision of the amendments to Minnesota Statutes, sections 62Q.83, 62W.01 to
62W.13, and 151.21, subdivisions 7 and 7a, are held invalid or unenforceable, the remainder
of the sections are not affected and the provisions of the sections are severable.
new text end

Sec. 18. new text beginINTERPRETATION.
new text end

new text begin If an appropriation in this act is enacted more than once in the 2019 regular legislative
session, the appropriation must be given effect only once.
new text end

Sec. 19. new text beginAPPROPRIATION.
new text end

new text begin $277,000 in fiscal year 2020 and $274,000 in fiscal year 2021 are appropriated from the
general fund to the commissioner of commerce for licensing activities under Minnesota
Statutes, chapter 62W.
new text end

Sec. 20. new text beginREPEALER.
new text end

new text begin Minnesota Statutes 2018, sections 151.214, subdivision 2; 151.60; 151.61; 151.62;
151.63; 151.64; 151.65; 151.66; 151.67; 151.68; 151.69; 151.70; and 151.71,
new text end new text begin are repealed.
new text end

APPENDIX

Repealed Minnesota Statutes: UES0278-1

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.