Alabama 2024 Regular Session

Alabama House Bill HB238 Compare Versions

Only one version of the bill is available at this time.

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1	1	HB238INTRODUCED
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3	3	HB238
4	4	8JMSH22-1
5	5	By Representative Rigsby
6	6	RFD: Insurance
7	7	First Read: 27-Feb-24
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12	12	5 8JMSH22-1 02/21/2024 JC (L)tgw 2023-3818
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14	14	First Read: 27-Feb-24
15	15	SYNOPSIS:
16	16	Pharmacy benefits managers are third-party
17	17	administrators of prescription drug benefits in a
18	18	health insurance plan. They are primarily responsible
19	19	for processing and paying prescription drug claims.
20	20	They typically negotiate price discounts and rebates
21	21	from manufacturers and determine how pharmacies get
22	22	reimbursed for dispensing prescriptions. Under state
23	23	law, pharmacy benefits managers are licensed and
24	24	regulated by the Department of Insurance.
25	25	This bill would prohibit pharmacy benefits
26	26	managers from reimbursing a pharmacy less than the
27	27	actual acquisition cost paid by the pharmacy or from
28	28	contracting with a health insurer to receive payment
29	29	amounts for prescription drug benefits that are
30	30	different from the amounts the pharmacy benefits
31	31	managers pay pharmacies. This bill would also prohibit
32	32	pharmacy benefits manufacturers from starting an
33	33	investigation against a pharmacy for fraud, waste, or
34	34	abuse without reasonable suspicion.
35	35	This bill would further specify the powers that
36	36	the Commissioner of Insurance may use to investigate
37	37	pharmacy benefits managers and would make pharmacy
38	38	benefits managers subject to the Pharmacy Audit
39	39	Integrity Act in cases involving fraud, waste, or
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69	69	Integrity Act in cases involving fraud, waste, or
70	70	abuse.
71	71	This bill would require pharmacy benefits
72	72	managers to pass on 100 percent of the rebates that
73	73	they receive from pharmaceutical manufacturers and
74	74	would provide reporting requirements on rebates
75	75	received by pharmacy benefits managers to both the
76	76	commissioner and health insurers.
77	77	This bill would also prohibit pharmacy benefits
78	78	managers from penalizing health insurers when they
79	79	transfer claims processing services and related
80	80	functions to a different pharmacy benefits manager.
81	81	A BILL
82	82	TO BE ENTITLED
83	83	AN ACT
84	84	Relating to pharmacy benefits managers; to amend
85	85	Sections 27-45A-3, 27-45A-4, 27-45A-5, 27-45A-6, 27-45A-7,
86	86	27-45A-8, 27-45A-9, and 27-45A-10, Code of Alabama 1975; to
87	87	further provide for regulation of pharmacy benefits managers
88	88	in relation to third-party payors and pharmacies; to prohibit
89	89	pharmacy benefits managers from paying pharmacies less than
90	90	the actual acquisition cost for prescription drugs and from
91	91	paying to pharmacies less than the amounts reimbursed by
92	92	third-party payors; to permit pharmacists to discuss drug
93	93	prices with covered individuals; to prohibit pharmacy benefits
94	94	managers from charging pharmacies certain fees or from
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124	124	managers from charging pharmacies certain fees or from
125	125	initiating a fraud, waste, or abuse investigation without
126	126	reasonable suspicion; to require pharmacy benefits managers to
127	127	report rebate amounts received to the Commissioner of
128	128	Insurance and to third-party payors; to provide for
129	129	examination of pharmacy benefits managers by the Commissioner
130	130	of Insurance; to add Section 27-45A-13 to the Code of Alabama
131	131	1975, to require pharmacy benefits managers to pass on 100
132	132	percent of the rebates received from pharmaceutical
133	133	manufacturers to third-party payors and to prohibit pharmacy
134	134	benefits managers from penalizing third-party payors for
135	135	switching pharmacy benefits managers; and to amend Section
136	136	34-23-187, Code of Alabama 1975, to provide that an
137	137	investigation into fraud, waste, or abuse by a pharmacy
138	138	benefits manager falls under the Pharmacy Audit Integrity Act.
139	139	BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
140	140	Section 1. Sections 27-45A-3, 27-45A-4, 27-45A-5,
141	141	27-45A-6, 27-45A-7, 27-45A-8, 27-45A-9, and 27-45A-10, Code of
142	142	Alabama 1975, are amended to read as follows:
143	143	"§27-45A-3
144	144	For purposes of this chapter, the following words shall
145	145	have the following meanings:
146	146	(1) ACTUAL ACQUISITION COST. The Average Acquisition
147	147	Cost (AAC) of a drug for the State of Alabama, as published by
148	148	the Alabama Medicaid Agency. If no AAC is available, the term
149	149	means the wholesale acquisition cost (WAC + 0%).
150	150	(2) CLAIMS PROCESSING SERVICES. The administrative
151	151	services performed in connection with the processing and
152	152	adjudicating of claims relating to pharmacist services that
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182	182	adjudicating of claims relating to pharmacist services that
183	183	include any of the following:
184	184	a. Receiving payments for pharmacist services.
185	185	b. Making payments to pharmacists or pharmacies for
186	186	pharmacist services.
187	187	c. Both paragraphs a. and b.
188	188	(2)(3) COVERED INDIVIDUAL. A member, policyholder,
189	189	subscriber, enrollee, beneficiary, dependent, or other
190	190	individual participating in a health benefit plan.
191	191	(3)(4) HEALTH BENEFIT PLAN. A policy, contract,
192	192	certificate, or agreement entered into, offered, or issued by
193	193	a payor or health insurer to provide, deliver, arrange for,
194	194	pay for, or reimburse any of the costs of physical, mental, or
195	195	behavioral health care services , including pharmacist
196	196	services.
197	197	(4)(5) HEALTH INSURER. An entity subject to the
198	198	insurance laws of this state and rules of the department, or
199	199	subject to the jurisdiction of the department, that contracts
200	200	or offers to contract to provide, deliver, arrange for, pay
201	201	for, or reimburse any of the costs of health care services,
202	202	including, but not limited to, a sickness and accident
203	203	insurance company, a health maintenance organization operating
204	204	pursuant to Chapter 21A, a nonprofit hospital or health
205	205	service corporation, a health care service plan organized
206	206	pursuant to Article 6, Chapter 20 of Title 10A, or any other
207	207	entity providing a plan of health insurance, health benefits,
208	208	or health services.
209	209	(6) IN-NETWORK or NETWORK. A network of pharmacists or
210	210	pharmacies that are paid for pharmacist services pursuant to
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240	240	pharmacies that are paid for pharmacist services pursuant to
241	241	an agreement with a health benefit plan or a pharmacy benefits
242	242	manager.
243	243	(5)(7) OTHER PRESCRIPTION DRUG OR DEVICE SERVICES.
244	244	Services, other than claims processing services, provided
245	245	directly or indirectly, whether in connection with or separate
246	246	from claims processing services, including, but not limited
247	247	to, any of the following:
248	248	a. Negotiating rebates , discounts, or other financial
249	249	incentives and arrangements with drug companies.
250	250	b. Disbursing or distributing rebates.
251	251	c. Managing or participating in incentive programs or
252	252	arrangements for pharmacist services.
253	253	d. Negotiating or entering into contractual
254	254	arrangements with pharmacists or pharmacies, or both.
255	255	e. Developing formularies.
256	256	f. Designing prescription benefit programs.
257	257	g. Advertising or promoting services.
258	258	(8) PAYOR. Any entity other than a health insurer
259	259	involved in the financing or payment of pharmacist services.
260	260	(9) PBM AFFILIATE. An entity, including, but not
261	261	limited to, a pharmacy, health insurer, or group purchasing
262	262	organization that directly or indirectly, through one or more
263	263	intermediaries, has one of the following affiliations:
264	264	a. Owns, controls, or has an investment interest in a
265	265	pharmacy benefits manager.
266	266	b. Is owned, controlled by, or has an investment
267	267	interest holder who is a pharmacy benefits manager.
268	268	c. Is under common ownership or corporate control with
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298	298	c. Is under common ownership or corporate control with
299	299	a pharmacy benefits manager.
300	300	(6)(10) PHARMACIST. As defined in Section 34-23-1.
301	301	(7)(11) PHARMACIST SERVICES. Products, goods, and
302	302	services, or any combination of products, goods, and services,
303	303	provided as a part of the practice of pharmacy.
304	304	(8)(12) PHARMACY. As defined in Section 34-23-1.
305	305	(9)(13) PHARMACY BENEFITS MANAGER. a. A person,
306	306	including a wholly or partially owned or controlled subsidiary
307	307	of a pharmacy benefits manager, that provides claims
308	308	processing services or other prescription drug or device
309	309	services, or both, to covered individuals who are employed in
310	310	or are residents of this state, for health benefit plans. The
311	311	term includes any person that administers a prescription
312	312	discount program directly or on behalf of a pharmacy benefits
313	313	manager or health benefit plan for drugs to covered
314	314	individuals which are not reimbursed by a pharmacy benefits
315	315	manager or are not covered by a health benefit plan.
316	316	b. Pharmacy benefits manager does not include any of
317	317	the following:
318	318	1. A healthcare health care facility licensed in this
319	319	state.
320	320	2. A healthcare health care professional licensed in
321	321	this state.
322	322	3. A consultant who only provides advice as to the
323	323	selection or performance of a pharmacy benefits manager.
324	324	(10) PBM AFFILIATE. A pharmacy or pharmacist that,
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326	326	owned or controlled by, or is under common control by, a
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356	356	owned or controlled by, or is under common control by, a
357	357	pharmacy benefits manager.
358	358	(14) PRESCRIPTION DRUG FILE. Any electronic and
359	359	computer data files maintained by a pharmacy benefits manager
360	360	in connection with administering prescription drug benefits on
361	361	behalf of a health benefit plan, including, but not limited
362	362	to, claims history files, drug utilization review files, prior
363	363	authorization files, EDI 834 eligibility files, accumulator
364	364	files, step therapy files, and other records pertaining to
365	365	covered individuals.
366	366	(11)(15) PRESCRIPTION DRUGS. Includes, but is not
367	367	limited to, certain infusion, compounded, and long-term care,
368	368	and specialty prescription drugs . The term does not include
369	369	specialty drugs.
370	370	(16) REBATE. Any payments or price concessions that
371	371	accrue to a pharmacy benefits manager or its health benefit
372	372	plan client, directly or indirectly, including through its PBM
373	373	affiliate or its subsidiary, third party, or intermediary,
374	374	including an off-shore group purchasing organization, from a
375	375	pharmaceutical manufacturer or its affiliate, subsidiary,
376	376	third party, or intermediary. The term includes, but is not
377	377	limited to, payments, discounts, administration fees, credits,
378	378	incentives, or penalties associated, directly or indirectly,
379	379	in any way with claims administered on behalf of a health
380	380	benefit plan.
381	381	(12)(17) SPECIALTY DRUGS. Prescription medications that
382	382	require special handling, administration, or monitoring and
383	383	are used for the treatment of patients with serious health
384	384	conditions requiring complex therapies, and that are eligible
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414	414	conditions requiring complex therapies, and that are eligible
415	415	for specialty tier placement by the Centers for Medicare and
416	416	Medicaid Services pursuant to 42 C.F.R. § 423.560.
417	417	(18) SPREAD PRICING. A prescription drug pricing model
418	418	used by a pharmacy benefits manager in which the pharmacy
419	419	benefits manager charges a health benefit plan a contracted
420	420	price for prescription drugs that differs from the amount the
421	421	pharmacy benefits manager pays the pharmacy for the
422	422	prescription drug, including any post-sale or
423	423	post-adjudication fees, discounts, or adjustments where not
424	424	prohibited by law. "
425	425	"§27-45A-4
426	426	(a) A person may not establish or operate as a pharmacy
427	427	benefits manager in this state without first obtaining a
428	428	license from the commissioner.
429	429	(b) Effective through December 31, 2021, to initially
430	430	obtain a license or renew a license, a pharmacy benefits
431	431	manager shall submit all of the following:
432	432	(1) A nonrefundable fee not to exceed five hundred
433	433	dollars ($500).
434	434	(2) A copy of the licensee's corporate charter,
435	435	articles of incorporation, or other charter document.
436	436	(3) A completed licensure form adopted by the
437	437	commissioner containing:
438	438	a. The name and address of the licensee.
439	439	b. The name, address, and official position of an
440	440	employee who will serve as the primary contact for the
441	441	Department of Insurance.
442	442	c. Any additional contact information deemed
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472	472	c. Any additional contact information deemed
473	473	appropriate by the commissioner or reasonably necessary to
474	474	verify the information contained in the application.
475	475	(c) Not later than January 1, 2022, the commissioner
476	476	shall adopt rules for licensure of pharmacy benefits managers
477	477	to operate in this state. The rules shall establish all of the
478	478	following:
479	479	(1) The licensing procedure and application form.
480	480	(2) Requirements for licensure.
481	481	(3) Reporting requirements.
482	482	(4) A fee schedule for a nonrefundable application fee
483	483	and a nonrefundable license renewal fee, set to allow the
484	484	regulation and oversight activities of the department to be
485	485	self-supporting.
486	486	(d) On and after January 1, 2022, a person applying for
487	487	a pharmacy benefits manager license shall submit an
488	488	application for licensure in the form and manner prescribed by
489	489	the commissioner by rule, along with the application fee.
490	490	(e) The commissioner may refuse to issue or renew a
491	491	license if the commissioner determines that the applicant has
492	492	been found to have violated this chapter , Article 8 of Chapter
493	493	23 of Title 34, or the insurance laws of this state or any
494	494	other jurisdiction, or has had an insurance or other
495	495	certificate of authority or license denied or revoked for
496	496	cause by any jurisdiction.
497	497	(f) Unless denied licensure pursuant to subsection (e),
498	498	a person who meets the requirements of this chapter and rules
499	499	adopted by the commissioner shall be issued a pharmacy
500	500	benefits manager license. The license may be in paper or
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530	530	benefits manager license. The license may be in paper or
531	531	electronic form and shall clearly indicate the expiration date
532	532	of the license. Licenses are nontransferable. Notwithstanding
533	533	any provision of law to the contrary, the application and
534	534	license shall be public records.
535	535	(g) The license shall be initially renewed in
536	536	accordance with a schedule prescribed by the commissioner and
537	537	shall thereafter be subject to renewal on an annual basis
538	538	along with the nonrefundable license renewal fee.
539	539	(h) A licensee shall inform the commissioner by any
540	540	means acceptable to the commissioner of any material change in
541	541	the information required by this section or rules adopted
542	542	pursuant to this section within 30 days of the change. Failure
543	543	to timely inform the commissioner of a change shall result in
544	544	a penalty against the licensee in the amount of fifty dollars
545	545	($50).
546	546	(i) The commissioner may suspend or revoke a license or
547	547	may impose civil penalties for a violation of this chapter ,
548	548	Article 8 of Chapter 23 of Title 34, or the insurance laws of
549	549	this state or any other jurisdiction, as determined by the
550	550	commissioner in accordance with rules adopted by the
551	551	commissioner, provided a pharmacy benefits manager shall have
552	552	the same rights as insurers to request a hearing in accordance
553	553	with Sections 27-2-28, et seq. , and to appeal as provided in
554	554	Section 27-2-32.
555	555	(j) Unless surrendered, suspended, or revoked by the
556	556	commissioner, a license issued under this section shall remain
557	557	valid as long as the pharmacy benefits manager continues to do
558	558	business in this state and remains in compliance with this
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588	588	business in this state and remains in compliance with this
589	589	chapter and applicable rules, including the payment of an
590	590	annual license renewal fee as set forth in subsection (g).
591	591	(k) All documents, materials, or other information, and
592	592	copies thereof, in the possession or control of the department
593	593	that are obtained by or disclosed to the commissioner or any
594	594	other person in the course of an application, examination, or
595	595	investigation made pursuant to this chapter shall be
596	596	confidential by law and privileged, shall not be subject to
597	597	any open records, freedom of information, sunshine, or other
598	598	public record disclosure laws, and shall not be subject to
599	599	subpoena or discovery. This subdivision subsection only
600	600	applies to disclosure of confidential documents by the
601	601	department and does not create any privilege in favor of any
602	602	other party.
603	603	(l)(1) Fees collected pursuant to this section shall be
604	604	deposited in the State Treasury to the credit of the Insurance
605	605	Department Fund.
606	606	(2) Civil penalties collected pursuant to this chapter
607	607	shall be deposited in the State Treasury to the credit of the
608	608	state State General Fund.
609	609	(m) Commencing January 1, 2022, a pharmacy benefits
610	610	manager licensed by the commissioner prior to January 1, 2022,
611	611	shall submit an application for a new license in accordance
612	612	with subsection (d). The pharmacy benefits manager's previous
613	613	license shall expire on the date the commissioner issues a new
614	614	license or April 1, 2022, whichever occurs earlier."
615	615	"§27-45A-5
616	616	(a) The commissioner may adopt rules necessary to
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646	646	(a) The commissioner may adopt rules necessary to
647	647	implement this chapter and Article 8 of Chapter 23 of Title
648	648	34.
649	649	(b) The powers and duties set forth in this chapter
650	650	shall be in addition to all other authority of the
651	651	commissioner.
652	652	(c) The commissioner shall enforce compliance with the
653	653	requirements of this chapter and rules adopted thereunder.
654	654	(d) The commissioner shall require the pharmacy
655	655	benefits manager to submit a report for each health insurer,
656	656	on a periodic basis, which may include, but not be limited to,
657	657	the following information:
658	658	(1) The aggregate amount of rebates received by the
659	659	pharmacy benefits manager.
660	660	(2) The aggregate amount of rebates distributed to the
661	661	health insurer.
662	662	(3) The aggregate amount of rebates the health insurer
663	663	passed on to the insurer's covered individuals which reduced
664	664	applicable cost-sharing amounts at the point-of-sale,
665	665	including deductibles, copayments, and coinsurance.
666	666	(4) The aggregate amount paid to the pharmacy benefits
667	667	manager for pharmacist services in categories for pharmacy,
668	668	drug product, medical devices, and other products, goods, or
669	669	services.
670	670	(5) The aggregate amount paid to a pharmacy for
671	671	pharmacist services in categories for drug product, medical
672	672	devices, and other products, goods, or services.
673	673	(d)(e)(1) The commissioner may examine or audit any
674	674	books and records of a pharmacy benefits manager providing
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676	676	310
677	677	311
678	678	312
679	679	313
680	680	314
681	681	315
682	682	316
683	683	317
684	684	318
685	685	319
686	686	320
687	687	321
688	688	322
689	689	323
690	690	324
691	691	325
692	692	326
693	693	327
694	694	328
695	695	329
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698	698	332
699	699	333
700	700	334
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702	702	336 HB238 INTRODUCED
703	703	Page 13
704	704	books and records of a pharmacy benefits manager providing
705	705	claims processing services or other prescription drug or
706	706	device services for a health benefit plan as may be deemed
707	707	relevant and necessary by the commissioner to determine
708	708	compliance with this chapter.
709	709	(2) Examinations conducted by the commissioner shall be
710	710	pursuant to the same examination authority of the commissioner
711	711	relative to insurers as provided in Chapter 2, including, but
712	712	not limited to, the confidentiality of documents and
713	713	information submitted as provided in Section 27-2-24;
714	714	examination expenses shall be processed in accordance with
715	715	Section 27-2-25; and pharmacy benefits managers shall have the
716	716	same rights as insurers to request a hearing in accordance
717	717	with Sections 27-2-28 , et seq., and to appeal as provided in
718	718	Section 27-2-32.
719	719	(3) Any examination or audit by the commissioner may
720	720	include production by the pharmacy benefits manager of the
721	721	following:
722	722	a. Contracts with any pharmaceutical manufacturers,
723	723	health insurers, payors, and pharmacies.
724	724	b. Data on plan utilization, plan pricing, pharmacy
725	725	utilization, and pharmacy pricing.
726	726	c. Documents created pursuant to network development,
727	727	including contract negotiations, and decisions on network
728	728	membership.
729	729	(e)(f) The commissioner's examination expenses shall be
730	730	collected from pharmacy benefits managers in the same manner
731	731	as those collected from insurers."
732	732	"§27-45A-6
733	733	337
734	734	338
735	735	339
736	736	340
737	737	341
738	738	342
739	739	343
740	740	344
741	741	345
742	742	346
743	743	347
744	744	348
745	745	349
746	746	350
747	747	351
748	748	352
749	749	353
750	750	354
751	751	355
752	752	356
753	753	357
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755	755	359
756	756	360
757	757	361
758	758	362
759	759	363
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762	762	"§27-45A-6
763	763	(a) Nothing in this chapter is intended or shall be
764	764	construed to do any either of the following:
765	765	(1) Be in conflict with existing relevant federal law.
766	766	(2) Apply to any specialty drug.
767	767	(3)(2) Impact the ability of a hospital to mandate its
768	768	employees' use of a hospital-owned pharmacy.
769	769	(b) The following provisions shall not apply to the
770	770	administration by a person of any term, including prescription
771	771	drug benefits, of a self-funded health benefit plan that is
772	772	governed by the federal Employee Retirement Income Security
773	773	Act of 1974, 29 U.S.C. §1001 et. seq.:
774	774	(1) Subdivisions (1) and (5) of Section 27-45A-8.
775	775	(2) Subdivisions (2), (3), (6), and (7) of Section
776	776	27-45A-10."
777	777	"§27-45A-7
778	778	Reserved.(a) A pharmacy benefits manager shall do all
779	779	of the following:
780	780	(1) Designate the pharmacy benefits manager's point of
781	781	contact for any in-network pharmacist and pharmacy.
782	782	(2) Respond to a request from an in-network pharmacist
783	783	or pharmacy within two business days.
784	784	(b) A pharmacy benefits manager may establish a process
785	785	whereby a pharmacist or pharmacy may appeal a reimbursement
786	786	decision that fails to pay the actual acquisition cost for any
787	787	prescription drug or device, provided that nothing herein
788	788	shall be construed to prohibit a pharmacy from filing a
789	789	complaint with the commissioner if the pharmacy is not
790	790	reimbursed in accordance with Section 27-45A-10. "
791	791	365
792	792	366
793	793	367
794	794	368
795	795	369
796	796	370
797	797	371
798	798	372
799	799	373
800	800	374
801	801	375
802	802	376
803	803	377
804	804	378
805	805	379
806	806	380
807	807	381
808	808	382
809	809	383
810	810	384
811	811	385
812	812	386
813	813	387
814	814	388
815	815	389
816	816	390
817	817	391
818	818	392 HB238 INTRODUCED
819	819	Page 15
820	820	reimbursed in accordance with Section 27-45A-10. "
821	821	"§27-45A-8
822	822	With respect to a covered individual, Aa pharmacy
823	823	benefits manager , directly or through an affiliate or a
824	824	contracted third party, may not do any of the following:
825	825	(1) Require a covered individual, as a condition of
826	826	payment or reimbursement, to purchase pharmacist services,
827	827	including, but not limited to, prescription drugs, exclusively
828	828	through a mail-order pharmacy or pharmacy benefits manager
829	829	affiliate.
830	830	(2) Prohibit or limit any covered individual from
831	831	selecting an in-network pharmacy or pharmacist of his or her
832	832	choice who meets and agrees to the terms and conditions,
833	833	including reimbursements, in the pharmacy benefits manager's
834	834	contract.
835	835	(3) Impose a monetary advantage or penalty under a
836	836	health benefit plan that would affect a covered individual's
837	837	choice of pharmacy among those pharmacies that have chosen to
838	838	contract with the pharmacy benefits manager under the same
839	839	terms and conditions, including reimbursements. For purposes
840	840	of this subdivision, "monetary advantage or penalty" includes,
841	841	but is not limited to, a higher copayment, a waiver of a
842	842	copayment, a reduction in reimbursement services, a
843	843	requirement or limit on the number of days of a drug supply
844	844	for which reimbursement will be allowed, or a promotion of one
845	845	participating pharmacy over another by these methods.
846	846	(4)a. Use a covered individual's pharmacy services data
847	847	collected pursuant to the provision of claims processing
848	848	services for the purpose of soliciting, marketing, or
849	849	393
850	850	394
851	851	395
852	852	396
853	853	397
854	854	398
855	855	399
856	856	400
857	857	401
858	858	402
859	859	403
860	860	404
861	861	405
862	862	406
863	863	407
864	864	408
865	865	409
866	866	410
867	867	411
868	868	412
869	869	413
870	870	414
871	871	415
872	872	416
873	873	417
874	874	418
875	875	419
876	876	420 HB238 INTRODUCED
877	877	Page 16
878	878	services for the purpose of soliciting, marketing, or
879	879	referring the covered individual to a mail-order pharmacy or
880	880	PBM affiliate.
881	881	b. This subdivision shall not limit a health benefit
882	882	plan's use of pharmacy services data for the purpose of
883	883	administering the health benefit plan.
884	884	c. This subdivision shall not prohibit a pharmacy
885	885	benefits manager from notifying a covered individual that a
886	886	less costly option for a specific prescription drug is
887	887	available through a mail-order pharmacy or PBM affiliate,
888	888	provided the notification shall state that switching to the
889	889	less costly option is not mandatory. The commissioner, by
890	890	rule, may determine the language of the notification
891	891	authorized under this paragraph made by a pharmacy benefits
892	892	manager to a covered individual.
893	893	(5) Require a covered individual to make a payment for
894	894	a prescription drug at the point of sale in an amount that
895	895	exceeds the lessorlesser of the following:
896	896	a. The contracted cost share amount.
897	897	b. An amount an individual would pay for a prescription
898	898	if that individual were paying without insurance.
899	899	(6) Charge a covered individual a copayment or a
900	900	cost-sharing amount that is greater than the amount paid to
901	901	the pharmacy that dispenses the prescription drug. "
902	902	"§27-45A-9
903	903	(a) For purposes of this section, client "client" means
904	904	a health insurer, payor, or health benefit plan.
905	905	(b) If requested by a client under subsection (d), a
906	906	pharmacy benefits manager shall prepare an annual report by
907	907	421
908	908	422
909	909	423
910	910	424
911	911	425
912	912	426
913	913	427
914	914	428
915	915	429
916	916	430
917	917	431
918	918	432
919	919	433
920	920	434
921	921	435
922	922	436
923	923	437
924	924	438
925	925	439
926	926	440
927	927	441
928	928	442
929	929	443
930	930	444
931	931	445
932	932	446
933	933	447
934	934	448 HB238 INTRODUCED
935	935	Page 17
936	936	pharmacy benefits manager shall prepare an annual report by
937	937	June 1 which discloses all of the following with respect to
938	938	that client:
939	939	(1) Thethe aggregate amount of all rebates that the
940	940	pharmacy benefits manager received from pharmaceutical
941	941	manufacturers on behalf of the client.
942	942	(2) The aggregate amount of the rebates the pharmacy
943	943	benefits manager received from pharmaceutical manufacturers
944	944	that did not pass through to the client.
945	945	(3) If a pharmacy benefits manager or any consultant
946	946	providing pharmacy benefits management services engages in
947	947	spread pricing, the aggregated amount of the difference
948	948	between the amount paid by the client for prescription drugs
949	949	and the actual amount paid to the pharmacy or pharmacist for
950	950	pharmacist services. For purposes of this subdivision, "spread
951	951	pricing" means the model of prescription drug reimbursement in
952	952	which a pharmacy benefits manager charges a client a
953	953	contracted price for prescription drugs, and the contract
954	954	price for the prescription drugs differs from the amount the
955	955	pharmacy benefits manager, directly or indirectly, pays the
956	956	pharmacy or pharmacist for pharmacist services.
957	957	(c) Confidentiality of a report submitted under this
958	958	section shall be governed by contract between the pharmacy
959	959	benefits manager and the client.
960	960	(d) A pharmacy benefits manager shall annually notify
961	961	all its clients in a timely manner that a report described in
962	962	subsection (b) will be made available to the client by the
963	963	pharmacy benefits manager if requested by the client."
964	964	"§27-45A-10
965	965	449
966	966	450
967	967	451
968	968	452
969	969	453
970	970	454
971	971	455
972	972	456
973	973	457
974	974	458
975	975	459
976	976	460
977	977	461
978	978	462
979	979	463
980	980	464
981	981	465
982	982	466
983	983	467
984	984	468
985	985	469
986	986	470
987	987	471
988	988	472
989	989	473
990	990	474
991	991	475
992	992	476 HB238 INTRODUCED
993	993	Page 18
994	994	"§27-45A-10
995	995	(a) With respect to a pharmacist or pharmacy, Aa
996	996	pharmacy benefits manager , directly or through an affiliate or
997	997	a contracted third party, may not do any of the following:
998	998	(1) Reimburse an in-network pharmacy or pharmacist in
999	999	the state an amount less than the amount that the pharmacy
1000	1000	benefits manager reimburses a similarly situated PBM affiliate
1001	1001	for providing the same pharmacist services to covered
1002	1002	individuals in the same health benefit plan.
1003	1003	(2) Reimburse an in-network pharmacy for a prescription
1004	1004	drug in an amount that is less than or exceeds the actual
1005	1005	acquisition cost to the pharmacy for the prescription drug
1006	1006	plus a professional dispensing fee that is equal to the
1007	1007	professional dispensing fee paid by the state under Title XIX
1008	1008	of the Social Security Act.
1009	1009	(3) Practice spread pricing in this state.
1010	1010	(2)(4) Deny a pharmacy or pharmacist the right to
1011	1011	participate as a contractnetwork provider if the pharmacy or
1012	1012	pharmacist meets and agrees to the terms and conditions,
1013	1013	including reimbursements, in the pharmacy benefits manager's
1014	1014	contract.
1015	1015	(3)(5) Impose credentialing standards on a pharmacist
1016	1016	or pharmacy beyond or more onerous than the licensing
1017	1017	standards set by the Alabama State Board of Pharmacy or charge
1018	1018	a pharmacy a fee in connection with network enrollment,
1019	1019	provided this subdivision shall not prohibit a pharmacy
1020	1020	benefits manager from setting minimum requirements for
1021	1021	participating in a pharmacy network.
1022	1022	(4)(6) Prohibit a pharmacist or pharmacy from providing
1023	1023	477
1024	1024	478
1025	1025	479
1026	1026	480
1027	1027	481
1028	1028	482
1029	1029	483
1030	1030	484
1031	1031	485
1032	1032	486
1033	1033	487
1034	1034	488
1035	1035	489
1036	1036	490
1037	1037	491
1038	1038	492
1039	1039	493
1040	1040	494
1041	1041	495
1042	1042	496
1043	1043	497
1044	1044	498
1045	1045	499
1046	1046	500
1047	1047	501
1048	1048	502
1049	1049	503
1050	1050	504 HB238 INTRODUCED
1051	1051	Page 19
1052	1052	(4)(6) Prohibit a pharmacist or pharmacy from providing
1053	1053	a covered individual specific information on the amount of the
1054	1054	covered individual's cost share for the covered individual's
1055	1055	prescription drug , the acquisition cost and reimbursement
1056	1056	amount for the prescription drug, and the clinical efficacy of
1057	1057	a more affordable alternative drug or therapy if one is
1058	1058	available, or penalize a pharmacist or pharmacy for disclosing
1059	1059	this information to a covered individual as deemed necessary
1060	1060	in the professional judgment of the pharmacist or for selling
1061	1061	to a covered individual a more affordable alternative if one
1062	1062	is available in the completion of a business transaction .
1063	1063	(5)(7) Prohibit a pharmacist or pharmacy from offering
1064	1064	and providing delivery services to a covered individual as an
1065	1065	ancillary service of the pharmacy, provided all of the
1066	1066	following requirements are met:
1067	1067	a. The pharmacist or pharmacy can demonstrate quality,
1068	1068	stability, and safety standards during delivery.
1069	1069	b. The pharmacist or pharmacy does not charge any
1070	1070	delivery or service fee to a pharmacy benefits manager or
1071	1071	health insurer.
1072	1072	c. The pharmacist or pharmacy alerts the covered
1073	1073	individual that he or she will be responsible for any delivery
1074	1074	service fee associated with the delivery service, and that the
1075	1075	pharmacy benefits manager or health insurer will not reimburse
1076	1076	the delivery service fee.
1077	1077	(6)(8) Charge or hold a pharmacist or pharmacy
1078	1078	responsible for a fee or penalty relating to an audit
1079	1079	conducted pursuant to The Pharmacy Audit Integrity Act,
1080	1080	Article 8 of Chapter 23 of Title 34, provided this prohibition
1081	1081	505
1082	1082	506
1083	1083	507
1084	1084	508
1085	1085	509
1086	1086	510
1087	1087	511
1088	1088	512
1089	1089	513
1090	1090	514
1091	1091	515
1092	1092	516
1093	1093	517
1094	1094	518
1095	1095	519
1096	1096	520
1097	1097	521
1098	1098	522
1099	1099	523
1100	1100	524
1101	1101	525
1102	1102	526
1103	1103	527
1104	1104	528
1105	1105	529
1106	1106	530
1107	1107	531
1108	1108	532 HB238 INTRODUCED
1109	1109	Page 20
1110	1110	Article 8 of Chapter 23 of Title 34, provided this prohibition
1111	1111	does not restrict recoupments made in accordance with the
1112	1112	Pharmacy Audit Integrity Act that article.
1113	1113	(7)(9) Charge a pharmacist or pharmacy a point-of-sale
1114	1114	or retroactive fee or otherwise recoup funds from a pharmacy
1115	1115	in connection with claims for which the pharmacy has already
1116	1116	been paid, unless the recoupment is made pursuant to an audit
1117	1117	conducted in accordance with the Pharmacy Audit Integrity
1118	1118	ActArticle 8 of Chapter 23 of Title 34 .
1119	1119	(10) Charge a pharmacy a fee in regard to enrollment,
1120	1120	credentialing or re-credentialing, change of ownership,
1121	1121	submission of claims, adjudication of claims, or otherwise if
1122	1122	not in conjunction with an audit conducted pursuant to Article
1123	1123	8 of Chapter 23 of Title 34.
1124	1124	(11) Initiate a fraud, waste, or abuse investigation
1125	1125	without first notifying the pharmacist or pharmacy and
1126	1126	receiving approval from the commissioner on the basis of
1127	1127	information that supports an articulable suspicion of fraud,
1128	1128	waste, or abuse by the pharmacist or pharmacy to be
1129	1129	investigated.
1130	1130	(12) Impose additional terms on a pharmacy unless the
1131	1131	pharmacy or its representative agrees to the terms in writing.
1132	1132	(8)(b)(1) Except for a drug reimbursed, directly or
1133	1133	indirectly, by the Medicaid program, a pharmacy benefits
1134	1134	manager may not vary the amount athe pharmacy benefits manager
1135	1135	reimburses an entity for a drug, including each and every
1136	1136	prescription medication that is eligible for specialty tier
1137	1137	placement by the Centers for Medicare and Medicaid Services
1138	1138	pursuant to 42 C.F.R. § 423.560, regardless of any provision
1139	1139	533
1140	1140	534
1141	1141	535
1142	1142	536
1143	1143	537
1144	1144	538
1145	1145	539
1146	1146	540
1147	1147	541
1148	1148	542
1149	1149	543
1150	1150	544
1151	1151	545
1152	1152	546
1153	1153	547
1154	1154	548
1155	1155	549
1156	1156	550
1157	1157	551
1158	1158	552
1159	1159	553
1160	1160	554
1161	1161	555
1162	1162	556
1163	1163	557
1164	1164	558
1165	1165	559
1166	1166	560 HB238 INTRODUCED
1167	1167	Page 21
1168	1168	pursuant to 42 C.F.R. § 423.560, regardless of any provision
1169	1169	of law to the contrary, on the basis of whether:
1170	1170	a. The drug is subject to an agreement under 42 U.S.C.
1171	1171	§ 256b; or
1172	1172	b. The entity participates in the program set forth in
1173	1173	42 U.S.C. § 256b.
1174	1174	(9)(2) If an entity participates, directly or
1175	1175	indirectly, in the program set forth in 42 U.S.C. § 256b, a
1176	1176	pharmacy benefits manager may not do any of the following:
1177	1177	a. Assess a fee, charge-back, or other adjustment on
1178	1178	the entity.
1179	1179	b. Restrict access to the pharmacy benefits manager's
1180	1180	pharmacy network.
1181	1181	c. Require the entity to enter into a contract with a
1182	1182	specific pharmacy to participate in the pharmacy benefits
1183	1183	manager's pharmacy network.
1184	1184	d. Create a restriction or an additional charge on a
1185	1185	patient who chooses to receive drugs from the entity.
1186	1186	e. Create any additional requirements or restrictions
1187	1187	on the entity.
1188	1188	(10)(3)A pharmacy benefits manager may not
1189	1189	Requirerequire a claim for a drug to include a modifier to
1190	1190	indicate that the drug is subject to an agreement under 42
1191	1191	U.S.C. § 256b.
1192	1192	(11)(c) A pharmacy benefits manager may not
1193	1193	Penalizepenalize or retaliate against a pharmacist or pharmacy
1194	1194	for exercising rights under this chapter or the Pharmacy Audit
1195	1195	Integrity ActArticle 8 of Chapter 23 of Title 34 ."
1196	1196	Section 2. Section 27-45A-13 is added to the Code of
1197	1197	561
1198	1198	562
1199	1199	563
1200	1200	564
1201	1201	565
1202	1202	566
1203	1203	567
1204	1204	568
1205	1205	569
1206	1206	570
1207	1207	571
1208	1208	572
1209	1209	573
1210	1210	574
1211	1211	575
1212	1212	576
1213	1213	577
1214	1214	578
1215	1215	579
1216	1216	580
1217	1217	581
1218	1218	582
1219	1219	583
1220	1220	584
1221	1221	585
1222	1222	586
1223	1223	587
1224	1224	588 HB238 INTRODUCED
1225	1225	Page 22
1226	1226	Section 2. Section 27-45A-13 is added to the Code of
1227	1227	Alabama 1975, to read as follows:
1228	1228	§27-45A-13
1229	1229	(a) For the purposes of this section, the following
1230	1230	terms have the following meanings:
1231	1231	(1) CLIENT. A health insurer or a payor.
1232	1232	(2) PHARMACY BENEFIT. The part of a health benefit plan
1233	1233	that reimburses for pharmacist services, including
1234	1234	prescription drugs and devices.
1235	1235	(b) A pharmacy benefits manager, directly or through an
1236	1236	affiliate or contracted third party, shall pass on to a client
1237	1237	100 percent of all rebates the pharmacy benefits manager
1238	1238	receives, directly or indirectly, from pharmaceutical
1239	1239	manufacturers in connection with claims the pharmacy benefits
1240	1240	manager administers on behalf of the client's health benefit
1241	1241	plan unless the client directs the pharmacy benefits manager
1242	1242	to apply the rebates to purchases of prescription drugs by
1243	1243	covered individuals at the point-of-sale. Notwithstanding the
1244	1244	foregoing, nothing shall be construed to allow a rebate from a
1245	1245	pharmaceutical manufacturer, directly or indirectly, to a
1246	1246	pharmacy benefits manager, or its PBM affiliate, or its client
1247	1247	where otherwise prohibited by law.
1248	1248	(c) When a client makes a written request to a pharmacy
1249	1249	benefits manager to reassign or transfer a pharmacy benefit to
1250	1250	another pharmacy benefits manager, within 30 days, the
1251	1251	pharmacy benefits manager, directly or through an affiliate or
1252	1252	contracted third party, shall do both of the following:
1253	1253	(1) Provide the client with the prescription drug file.
1254	1254	(2) Establish all electronic data interchange (EDI)
1255	1255	589
1256	1256	590
1257	1257	591
1258	1258	592
1259	1259	593
1260	1260	594
1261	1261	595
1262	1262	596
1263	1263	597
1264	1264	598
1265	1265	599
1266	1266	600
1267	1267	601
1268	1268	602
1269	1269	603
1270	1270	604
1271	1271	605
1272	1272	606
1273	1273	607
1274	1274	608
1275	1275	609
1276	1276	610
1277	1277	611
1278	1278	612
1279	1279	613
1280	1280	614
1281	1281	615
1282	1282	616 HB238 INTRODUCED
1283	1283	Page 23
1284	1284	(2) Establish all electronic data interchange (EDI)
1285	1285	connections necessary for the client to transfer the pharmacy
1286	1286	benefit to the new pharmacy benefits manager and maintain the
1287	1287	EDI for the six-month period following the transfer of the
1288	1288	pharmacy benefit.
1289	1289	(d) A pharmacy benefits manager, directly or through a
1290	1290	PBM affiliate or contracted party, may not do any of the
1291	1291	following:
1292	1292	(1) Engage in spread pricing.
1293	1293	(2) Charge a client more for a drug at a pharmacy
1294	1294	affiliated with the pharmacy benefits manager than the actual
1295	1295	acquisition cost for the ingredient cost of the drug.
1296	1296	(3) Enter into any agreement with a client which
1297	1297	defines "rebate" more narrowly than the definition in this
1298	1298	article or that in any way circumvents the requirement of this
1299	1299	section to pass 100 percent of the rebates back to the client.
1300	1300	(4) Enter into any agreement with a pharmaceutical
1301	1301	manufacturer that, directly or indirectly, allocates rebates
1302	1302	earned under one health benefit plan to a different health
1303	1303	benefit plan.
1304	1304	(5) Enter any agreement with a pharmaceutical
1305	1305	manufacturer for a rebate that is not attributable to a
1306	1306	specific drug covered under a specific health benefit plan.
1307	1307	(6) Charge a client a fee for access to a prescription
1308	1308	drug file that exceeds the pharmacy benefits manager's
1309	1309	reasonable cost of providing access.
1310	1310	(7) Deny or delay or take any action calculated to
1311	1311	inhibit the transfer of a prescription drug file to a client
1312	1312	when the client requests the transfer of the file.
1313	1313	617
1314	1314	618
1315	1315	619
1316	1316	620
1317	1317	621
1318	1318	622
1319	1319	623
1320	1320	624
1321	1321	625
1322	1322	626
1323	1323	627
1324	1324	628
1325	1325	629
1326	1326	630
1327	1327	631
1328	1328	632
1329	1329	633
1330	1330	634
1331	1331	635
1332	1332	636
1333	1333	637
1334	1334	638
1335	1335	639
1336	1336	640
1337	1337	641
1338	1338	642
1339	1339	643
1340	1340	644 HB238 INTRODUCED
1341	1341	Page 24
1342	1342	when the client requests the transfer of the file.
1343	1343	(8) Take any action calculated to penalize a client for
1344	1344	switching to a new pharmacy benefits manager, including, but
1345	1345	not limited to, charging the prospective pharmacy benefits
1346	1346	manager a fee to access the prescription drug file or
1347	1347	withholding rebates due to a client which are earned during
1348	1348	the period before an agreement with the new pharmacy benefits
1349	1349	manager takes effect.
1350	1350	(9) Contract with any party, including a health insurer
1351	1351	or third-party administrator, that engages in any of the
1352	1352	practices prohibited in this section.
1353	1353	Section 3. Section 34-23-187, Code of Alabama 1975, is
1354	1354	amended to read as follows:
1355	1355	"§34-23-187
1356	1356	This article does not shall apply to any audit, review,
1357	1357	or investigation that involves alleged fraud, willful
1358	1358	misrepresentation, or waste abuse that is initiated by a
1359	1359	pharmacy benefits manager ."
1360	1360	Section 4. This act shall become effective on October
1361	1361	1, 2024.
1362	1362	645
1363	1363	646
1364	1364	647
1365	1365	648
1366	1366	649
1367	1367	650
1368	1368	651
1369	1369	652
1370	1370	653
1371	1371	654
1372	1372	655
1373	1373	656
1374	1374	657
1375	1375	658
1376	1376	659
1377	1377	660
1378	1378	661
1379	1379	662
1380	1380	663