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SF 917

1st Engrossment - 92nd Legislature (2021 - 2022) Posted on 03/16/2021 02:01pm

KEY: stricken = removed, old language.
underscored = added, new language.
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A bill for an act
relating to health care; modifying pharmacy benefit manager business practices;
establishing pharmacy benefit manager general reimbursement practices; modifying
maximum allowable cost pricing requirements; amending Minnesota Statutes 2020,
sections 62W.02, by adding subdivisions; 62W.04; 62W.08; 62W.09, subdivision
1; 62W.13; proposing coding for new law in Minnesota Statutes, chapter 62W.

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

Section 1.

Minnesota Statutes 2020, section 62W.02, is amended by adding a subdivision
to read:


new text begin Subd. 13a. new text end

new text begin Pharmacy acquisition cost. new text end

new text begin "Pharmacy acquisition cost" means the amount
that a pharmaceutical wholesaler charges for a pharmaceutical product as listed on the
pharmacy's invoice.
new text end

Sec. 2.

Minnesota Statutes 2020, section 62W.02, is amended by adding a subdivision to
read:


new text begin Subd. 15a. new text end

new text begin Pharmacy benefit manager affiliate. new text end

new text begin "Pharmacy benefit manager affiliate"
or "affiliate" means a pharmacy that directly or indirectly through one or more intermediaries
owns or controls, is owned or controlled by, or is under common ownership or control with
a pharmacy benefit manager.
new text end

Sec. 3.

Minnesota Statutes 2020, section 62W.02, is amended by adding a subdivision to
read:


new text begin Subd. 15b. new text end

new text begin Pharmaceutical wholesaler. new text end

new text begin "Pharmaceutical wholesaler" means a person
or entity that sells and distributes prescription pharmaceutical products, including but not
limited to brand name, generic, and over-the-counter drugs, and offers regular and private
delivery to a pharmacy.
new text end

Sec. 4.

Minnesota Statutes 2020, section 62W.04, is amended to read:


62W.04 PHARMACY BENEFIT MANAGER GENERAL BUSINESS PRACTICES.

(a) 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.

(b) 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 begin (c) A pharmacy benefit manager must not cause or knowingly permit the use of
advertisement, promotion, solicitation, representation, proposal, or offer that is untrue,
deceptive, or misleading.
new text end

new text begin (d) A pharmacy benefit manager must not charge a pharmacy a fee related to the
adjudication of a claim, including but not limited to:
new text end

new text begin (1) the receipt and processing of a pharmacy claim;
new text end

new text begin (2) the development or management of claims processing services in a pharmacy benefit
manger network; or
new text end

new text begin (3) participation in a pharmacy benefit network.
new text end

new text begin (e) A pharmacy benefit manager must not require pharmacy accreditation standards or
certification requirements that are inconsistent with, more stringent than, or in addition to
requirements established by the board of pharmacy or as permitted under this chapter.
new text end

new text begin (f) A pharmacy benefit manager must not amend or change the terms of an existing
contract between the pharmacy benefit manager and the pharmacy unless (1) the change is
disclosed to the pharmacy at least 45 days before the effective date of the change and the
change is agreed to in writing by the pharmacy or the pharmacy's representative; or (2) the
change is required to be made under state or federal law or by a governmental regulatory
authority. If the change is required by law or regulatory authority, the pharmacy benefit
manager must provide the pharmacy with the specific statute or regulation requiring the
change.
new text end

Sec. 5.

new text begin [62W.045] PHARMACY BENEFIT MANAGER GENERAL
REIMBURSEMENT PRACTICES.
new text end

new text begin (a) A pharmacy benefit manager must not reimburse a pharmacy in an amount less than
the amount the pharmacy benefit manger reimburses a pharmacy benefit manager affiliate
or subsidiary for providing the same prescription drug. The amount must be calculated on
a per unit basis using the same generic product identifier or generic code number.
new text end

new text begin (b) A pharmacy benefit manager must not pay or reimburse a pharmacy for the ingredient
drug product component less than the national average drug acquisition cost or, if the national
drug acquisition cost is unavailable, the wholesale acquisition cost.
new text end

new text begin (c) A pharmacy benefit manager must not make or permit any reduction of payment for
a prescription drug or service either directly or indirectly to a pharmacy under a reconciliation
process to an effective rate of reimbursement, direct or indirect remuneration fees, or any
other reduction or aggregate reduction of payment, unless the reduction is a result of an
audit performed under section 62W.09 and complies with section 62W.13.
new text end

new text begin (d) Termination of a pharmacy from the pharmacy benefit manager network does not
release the pharmacy benefit manager from the obligation to make any payment due to the
pharmacy for drugs or services rendered.
new text end

Sec. 6.

Minnesota Statutes 2020, section 62W.08, is amended to read:


62W.08 MAXIMUM ALLOWABLE COST PRICING.

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

(1) provide to the pharmacy, deleted text beginat the beginning of each contract anddeleted text end new text beginbefore entering into
the initial contract and before
new text end contract renewal, thenew text begin maximum allowable cost price list and
the
new text end sources utilized to determine the maximum allowable cost pricing of the pharmacy
benefit manager;

(2) update any maximum allowable cost price list at least every seven business days,
noting any price changes from the previous list, andnew text begin within seven calendar days from:
new text end

new text begin (i) an increase of ten percent or more in the pharmacy acquisition cost from 60 percent
or more of the pharmaceutical wholesalers doing business in the state;
new text end

new text begin (ii) a change in the methodology on which the maximum allowable cost price list is
based; or
new text end

new text begin (iii) a change in the value of a variable involved in the methodology.
new text end

new text begin The pharmacy benefit manager mustnew text end 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;

(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;

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

(5) upon request of a network pharmacy, new text beginidentify each maximum allowable cost price
list that applies to the network pharmacy, and
new text enddisclose the sources utilized for setting
maximum allowable cost price rates on each maximum allowable cost price list included
under the contract deleted text beginand identify each maximum allowable cost price list that applies to the
network pharmacy.
deleted text endnew text begin, including the following:
new text end

new text begin (i) average acquisition cost, including national average drug acquisition cost;
new text end

new text begin (ii) average manufacturer price;
new text end

new text begin (iii) average wholesale price;
new text end

new text begin (iv) brand effective rate or generic effective rate;
new text end

new text begin (v) discount indexing;
new text end

new text begin (vi) federal upper limits;
new text end

new text begin (vii) wholesale acquisition cost; and
new text end

new text begin (viii) any other term that a pharmacy benefit manager or plan sponsor may use to establish
the maximum allowable cost price for a prescription drug.
new text end

deleted text begin Adeleted text endnew text begin Thenew text end pharmacy benefit manager must make deleted text beginthe list ofdeleted text end the maximum allowable deleted text begincostsdeleted text endnew text begin cost
price list
new text end available to a deleted text begincontracteddeleted text endnew text begin networknew text end pharmacy in a format that is readily accessible
and usable to the network pharmacy.

(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.

(c) Each contract between a pharmacy benefit manager and a pharmacy must deleted text beginincludedeleted text end
new text begin provide new text enda process to appeal, investigate, and resolve disputes regarding maximum allowable
cost pricing that includesnew text begin the ability of a pharmacy to challenge the maximum allowable
cost price if the price
new text end:

(1) deleted text begina 15-business-day limit on the right to appeal following the initial claimdeleted text endnew text begin does not
meet the requirements of this chapter
new text end;new text begin or
new text end

(2) deleted text begina requirement that the appeal be investigated and resolved within seven business
days after the appeal is received; and
deleted text endnew text begin is below the pharmacy acquisition cost.
new text end

deleted 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.
deleted text end

(d) deleted text beginIf 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.
deleted text endnew text begin The
appeal process must include:
new text end

new text begin (1) a dedicated telephone number and e-mail address or website for the purpose of
submitting an appeal; and
new text end

new text begin (2) the ability to submit an appeal directly to the pharmacy benefit manager regarding
the pharmacy benefit plan or program or through a pharmacy service administrative program.
new text end

new text begin (e) Any appeal must be submitted to the pharmacy benefit manager within 30 business
days from the date of the initial claim. The pharmacy benefit manager must notify the
challenging pharmacy within three business days that the appeal was received. The pharmacy
benefit manager must investigate and resolve the appeal within 30 business days from the
date the appeal is received.
new text end

new text begin (f) If the appeal is upheld, or the pharmacy benefit manager fails to resolve the appeal
within the time period established in paragraph (e), the pharmacy benefit manager must:
new text end

new text begin (1) make an adjustment to the maximum allowable cost price list to at least the pharmacy
acquisition cost no later than one business day after the date of determination and make the
price adjustment applicable to all similarly situated network pharmacy providers as defined
by the plan sponsor;
new text end

new text begin (2) permit the challenging pharmacy to reverse and rebill the claim in question; and
new text end

new text begin (3) provide to the pharmacy the National Drug Code number on which the adjustment
is based.
new text end

new text begin (g) If the appeal is denied, the pharmacy benefit manager must provide the challenging
pharmacy with the reason for the denial, and:
new text end

new text begin (1) identify the National Drug Code number and the names of the national or regional
pharmaceutical wholesalers operating in this state that have the drug currently in stock at
a price below the maximum allowable cost price; or
new text end

new text begin (2) if the National Drug Code number provided by the pharmacy benefit manager is not
available below the pharmacy acquisition cost from the pharmaceutical wholesaler from
whom the pharmacy purchases the majority of prescription drugs for resale, then the
pharmacy benefit manager must adjust the maximum allowable cost price above the
challenging pharmacy's pharmacy acquisition cost and permit the pharmacy to reverse and
rebill each claim affected by the inability to procure the drug at a cost that is equal to or
less than the previously challenged maximum allowable cost price.
new text end

new text begin (h) A pharmacy may decline to provide a prescription drug or services to a patient or
pharmacy benefit manager if, as a result of a maximum allowable cost pricing, a pharmacy
is to be paid less than the pharmacy acquisition cost of the pharmacy dispensing the
prescription drug or providing the pharmacy services.
new text end

Sec. 7.

Minnesota Statutes 2020, section 62W.09, subdivision 1, is amended to read:


Subdivision 1.

Procedure and process for conducting and reporting an audit.

(a)
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; and

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

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

(1) the period covered by the audit may not exceed deleted text begin24deleted text endnew text begin sixnew text end 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 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:

(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 item (i), (ii), or (iii) is not readily available for the auditor at the
time of the audit; and

(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.

(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.

Sec. 8.

Minnesota Statutes 2020, section 62W.13, is amended to read:


62W.13 RETROACTIVE ADJUSTMENTS.

No pharmacy benefit manager shall new text begindirectly or indirectly new text endretroactively deleted text beginadjustdeleted text endnew text begin deny or
reduce
new text end a claim new text beginor aggregate of claims new text endfor reimbursement submitted by a pharmacy for a
prescription drug, new text beginmore than 30 days after the original claim was submitted,new text end unless the
adjustment is a result of adeleted text begin:
deleted text end

deleted text begin (1)deleted text end pharmacy audit conducted in accordance with section 62W.09new text begin and it was determined
that:
new text end

new text begin (1) the original claim was submitted fraudulently;
new text end

new text begin (2) the original claim payment was incorrect because the pharmacy was already paid
for the prescription drug or service; or
new text end

new text begin (3) the prescription drug or service was not dispensed or rendered by the pharmacy or
pharmacist
new text end deleted text begin ; or deleted text end new text begin .
new text end

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