SB93INTRODUCED Page 0 SB93 LUDQAAA-1 By Senators Jones, Butler, Beasley, Stewart, Chesteen, Kelley, Barfoot, Allen, Price RFD: Banking and Insurance First Read: 04-Feb-25 1 2 3 4 5 6 LUDQAAA-1 02/04/2025 JC (L)lg 2025-541 Page 1 First Read: 04-Feb-25 SYNOPSIS: Pharmacy benefits managers are third-party administrators of prescription drug benefits in a health insurance plan. They are primarily responsible for processing and paying prescription drug claims. They typically negotiate price discounts and rebates from manufacturers and determine how pharmacies get reimbursed for dispensing prescriptions. Under state law, pharmacy benefits managers are licensed and regulated by the Department of Insurance. This bill would prohibit pharmacy benefits managers from reimbursing a pharmacy less than the actual acquisition cost paid by the pharmacy and would prohibit pharmacy benefits managers from charging pharmacies or pharmacists miscellaneous fees related to network participation and claims processing. This bill would permit pharmacists to disclose information to consumers about drug prices and alternative drugs for treatment. This bill would recognize the right of a pharmacy to refuse to dispense a drug when the pharmacy would be reimbursed less than a pharmacy's dispensing cost, and would further prohibit a pharmacy benefits manager from recovering the pharmacy's dispensing cost by requiring a consumer to pay a higher deductible or 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 SB93 INTRODUCED Page 2 by requiring a consumer to pay a higher deductible or copayment. This bill would specify that the Commissioner of Insurance may enforce violations of the Alabama Pharmacy Benefits Manager Licensure and Regulation Act committed by a pharmacy benefits manager during an audit of a pharmacy, and may also enforce the Pharmacy Audit Integrity Act in relation to auditing of a pharmacy by a pharmacy benefits manager. A BILL TO BE ENTITLED AN ACT Relating to pharmacy benefits managers; to amend Sections 27-45A-3, 27-45A-6, 27-45A-7, 27-45A-8, and 27-45A-10, Code of Alabama 1975; to further regulate pharmacy benefits managers in relation to pharmacies and pharmacists; to further regulate reimbursement by pharmacy benefits managers to pharmacies; to prohibit pharmacy benefits managers from charging pharmacies certain fees; to permit pharmacists to disclose drug information to covered individuals; to add Section 27-45A-13 to the Code of Alabama 1975, to provide circumstances when pharmacies may refuse to dispense drugs; to amend Sections 34-23-181 and 34-23-185, Code of Alabama 1975, to authorize the Commissioner of Insurance to enforce the Pharmacy Audit Integrity Act; and to amend Section 34-23-187, Code of Alabama 1975, to provide that an investigation into 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 SB93 INTRODUCED Page 3 Code of Alabama 1975, to provide that an investigation into fraud, waste, or abuse by a pharmacy benefits manager falls under the Pharmacy Audit Integrity Act; and to add Section 34-23-188, to authorize the Commissioner of Insurance to investigate complaints concerning an entity licensed by the Department of Insurance that audits a pharmacy. BE IT ENACTED BY THE LEGISLATURE OF ALABAMA: Section 1. Sections 27-45A-3, 27-45A-6, 27-45A-7, 27-45A-8, and 27-45A-10, Code of Alabama 1975, are amended to read as follows: "§27-45A-3 For purposes of this chapter, the following words shall have the following meanings: (1) ACTUAL ACQUISITION COST. The Average Acquisition Cost (AAC) of a drug for the State of Alabama, as published by the Alabama Medicaid Agency. If no AAC is available, the term means the wholesale acquisition cost (WAC + 0%). (2) AFFILIATE or PBM AFFILIATE. An entity, including, but not limited to, a pharmacy, health insurer, or group purchasing organization that directly or indirectly, through one or more intermediaries, has one of the following affiliations: a. Owns, controls, or has an investment interest in a pharmacy benefits manager. b. Is owned, controlled by, or has an investment interest holder who is a pharmacy benefits manager. c. Is under common ownership or corporate control with a pharmacy benefits manager. (1)(3) CLAIMS PROCESSING SERVICES. The administrative 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 SB93 INTRODUCED Page 4 (1)(3) CLAIMS PROCESSING SERVICES. The administrative services performed in connection with the processing and adjudicating of claims relating to pharmacist services that include any of the following: a. Receiving payments for pharmacist services. b. Making payments to pharmacists or pharmacies for pharmacist services. c. Both paragraphs a. and b. (2)(4) COVERED INDIVIDUAL. A member, policyholder, subscriber, enrollee, beneficiary, dependent, or other individual participating in a health benefit plan. (3)(5) HEALTH BENEFIT PLAN. A policy, contract, certificate, or agreement entered into, offered, or issued by a payor or health insurer to provide, deliver, arrange for, pay for, or reimburse any of the costs of physical, mental, or behavioral health care services , including pharmaceutical services. (4)(6) HEALTH INSURER. An entity subject to the insurance laws of this state and rules of the department, or subject to the jurisdiction of the department, that contracts or offers to contract to provide, deliver, arrange for, pay for, or reimburse any of the costs of health care services, including, but not limited to, a sickness and accident insurance company, a health maintenance organization operating pursuant to Chapter 21A, a nonprofit hospital or health service corporation, a health care service plan organized pursuant to Article 6, Chapter 20 of Title 10A, or any other entity providing a plan of health insurance, health benefits, or health services. 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 SB93 INTRODUCED Page 5 or health services. (7) IN-NETWORK or NETWORK. A network of pharmacists or pharmacies that are paid for pharmacist services pursuant to an agreement with a health benefit plan or a pharmacy benefits manager. (5)(8) OTHER PRESCRIPTION DRUG OR DEVICE SERVICES. Services, other than claims processing services, provided directly or indirectly, whether in connection with or separate from claims processing services, including, but not limited to, any of the following: a. Negotiating rebates , discounts, or other financial incentives and arrangements with drug companies. b. Disbursing or distributing rebates. c. Managing or participating in incentive programs or arrangements for pharmacist services. d. Negotiating or entering into contractual arrangements with pharmacists or pharmacies, or both. e. Developing formularies. f. Designing prescription benefit programs. g. Advertising or promoting services. (9) PAYOR. Any entity other than a health insurer involved in the financing or payment of pharmacist services. (6)(10) PHARMACIST. As defined in Section 34-23-1. (7)(11) PHARMACIST SERVICES. Products, goods, and services, or any combination of products, goods, and services, provided as a part of the practice of pharmacy. (8)(12) PHARMACY. As defined in Section 34-23-1. (9)(13) PHARMACY BENEFITS MANAGER. a. A person, including a wholly or partially owned or controlled subsidiary 113 114 115 116 117 118 119 120 121 122 123 124 125 126 127 128 129 130 131 132 133 134 135 136 137 138 139 140 SB93 INTRODUCED Page 6 including a wholly or partially owned or controlled subsidiary of a pharmacy benefits manager, that provides claims processing services or other prescription drug or device services, or both, to covered individuals who are employed in or are residents of this state, for health benefit plans. The term includes any person that administers a prescription discount program directly for or on behalf of a pharmacy benefits manager or health benefit plan for drugs to covered individuals which are not reimbursed by a pharmacy benefits manager or are not covered by a health benefit plan. b. Pharmacy benefits manager does not include any of the following: 1. A healthcarehealth care facility licensed in this state. 2. A healthcarehealth care professional licensed in this state. 3. A consultant who only provides advice as to the selection or performance of a pharmacy benefits manager. (10) PBM AFFILIATE. A pharmacy or pharmacist that, directly or indirectly, through one or more intermediaries, is owned or controlled by, or is under common control by, a pharmacy benefits manager. (11)(14) PRESCRIPTION DRUGS. Includes, but is not limited to, certain infusion, compounded, and long-term care, and specialty prescription drugs . The term does not include specialty drugs. (15) REBATE. Any payments or price concessions that accrue to a pharmacy benefits manager or its health benefit plan client, directly or indirectly, including through its PBM 141 142 143 144 145 146 147 148 149 150 151 152 153 154 155 156 157 158 159 160 161 162 163 164 165 166 167 168 SB93 INTRODUCED Page 7 plan client, directly or indirectly, including through its PBM affiliate or its subsidiary, third party, or intermediary, including an off-shore purchasing organization, from a pharmaceutical manufacturer or its affiliate, subsidiary, third party, or intermediary. The term includes, but is not limited to, payments, discounts, administration fees, credits, incentives, or penalties associated, directly or indirectly, in any way with claims administered on behalf of a health benefit plan. (12)(16) SPECIALTY DRUGS. Prescription medications that require special handling, administration, or monitoring and are used for the treatment of patients with serious health conditions requiring complex therapies, and that are eligible for specialty tier placement by the Centers for Medicare and Medicaid Services pursuant to 42 C.F.R. § 423.560 . (17) SPREAD PRICING. A prescription drug pricing model used by a pharmacy benefits manager in which the pharmacy benefits manager charges a health benefit plan a contracted price for prescription drugs that differs from the amount the pharmacy benefits manager pays the pharmacy for the prescription drug, including any post-sale or post-adjudication fees, discounts, or adjustments where not prohibited by law ." "§27-45A-6 (a) Nothing in this chapter is intended or shall be construed to do any of the following: (1) Bebe in conflict with existing relevant federal law. (2) Apply to any specialty drug. 169 170 171 172 173 174 175 176 177 178 179 180 181 182 183 184 185 186 187 188 189 190 191 192 193 194 195 196 SB93 INTRODUCED Page 8 (2) Apply to any specialty drug. (3) Impact or impact the ability of a hospital to mandate its employees ' use of a hospital-owned pharmacy. (b) The following provisions shall not apply to the administration by a person of any term, including prescription drug benefits, of a self-funded health benefit plan that is governed by the federal Employee Retirement Income Security Act of 1974, 29 U.S.C. §1001 et. seq.: (1) Subdivisions (1) and (5) of Section 27-45A-8. (2) Subdivisions (2), (3), (6), and (7) of Section 27-45A-10." "§27-45A-7 ReservedIn addition to any other remedy provided by law, a pharmacist, pharmacy, or covered individual who is aggrieved by a violation of this chapter may bring a civil action against a pharmacy benefits manager for damages or equitable remedies ." "§27-45A-8 With respect to a covered individual, Aa pharmacy benefits manager , directly or through an affiliate or a contracted third party, may not do any of the following: (1) Require a covered individual, as a condition of payment or reimbursement, to purchase pharmacist services, including, but not limited to, prescription drugs, exclusively through a mail-order pharmacy or pharmacy benefits manager affiliate. (2) Prohibit or limit any covered individual from selecting an in-network pharmacy or pharmacist of his or her choice who meets and agrees to the terms and conditions, 197 198 199 200 201 202 203 204 205 206 207 208 209 210 211 212 213 214 215 216 217 218 219 220 221 222 223 224 SB93 INTRODUCED Page 9 choice who meets and agrees to the terms and conditions, including reimbursements, in the pharmacy benefits manager's contract. (3) Impose a monetary advantage or penalty under a health benefit plan that would affect a covered individual's choice of pharmacy among those pharmacies that have chosen to contract with the pharmacy benefits manager under the same terms and conditions, including reimbursements. For purposes of this subdivision, "monetary advantage or penalty" includes, but is not limited to, a higher copayment, a waiver of a copayment, a reduction in reimbursement services, a requirement or limit on the number of days of a drug supply for which reimbursement will be allowed, or a promotion of one participating pharmacy over another by these methods. (4)a. Use a covered individual's pharmacy services data collected pursuant to the provision of claims processing services for the purpose of soliciting, marketing, or referring the covered individual to a mail-order pharmacy or PBM affiliate. b. This subdivision shall not limit a health benefit plan's use of pharmacy services data for the purpose of administering the health benefit plan. c. This subdivision shall not prohibit a pharmacy benefits manager from notifying a covered individual that a less costly option for a specific prescription drug is available through a mail-order pharmacy or PBM affiliate, provided the notification shall state that switching to the less costly option is not mandatory. The commissioner, by rule, may determine the language of the notification 225 226 227 228 229 230 231 232 233 234 235 236 237 238 239 240 241 242 243 244 245 246 247 248 249 250 251 252 SB93 INTRODUCED Page 10 rule, may determine the language of the notification authorized under this paragraph made by a pharmacy benefits manager to a covered individual. (5) Require a covered individual to make a payment for a prescription drug at the point of sale in an amount that exceeds the lessorlesser of the following: a. The contracted cost share amount. b. An amount an individual would pay for a prescription if that individual were paying without insurance. (6) Increase a covered individual's cost-sharing percentage or ratio at or after the point of sale by raising the deductible, copayment, or coinsurance, or by requiring any other out-of-pocket payment as a means to recoup the dispensing cost of a pharmacist or pharmacy. " "§27-45A-10 (a) With respect to a pharmacist or pharmacy, Aa pharmacy benefits manager , directly or through an affiliate or a contracted third party, may not do any of the following: (1) Reimburse an in-network pharmacy or pharmacist in the state an amount less than the amount that the pharmacy benefits manager reimburses a similarly situated PBM affiliate for providing the same pharmacist services to covered individuals in the same health benefit plan. (2) Reimburse an in-network pharmacy or pharmacist for a drug in an amount that is less than or exceeds the actual acquisition cost plus the cost of dispensing pursuant to Section 27-45A-13. (3) Practice spread pricing in this state. (2)(4) Deny a pharmacy or pharmacist the right to 253 254 255 256 257 258 259 260 261 262 263 264 265 266 267 268 269 270 271 272 273 274 275 276 277 278 279 280 SB93 INTRODUCED Page 11 (2)(4) Deny a pharmacy or pharmacist the right to participate as a contractnetwork provider if the pharmacy or pharmacist meets and agrees to the terms and conditions, including reimbursements, in the pharmacy benefits manager's contract. (3)(5) Impose credentialing standards on a pharmacist or pharmacy beyond or more onerous than the licensing standards set by the Alabama State Board of Pharmacy or charge a pharmacy or pharmacist aany fee in connection with in regard to, without limitation, network enrollment, network participation, credentialing or recredentialing, change of ownership, submission of claims, adjudication of claims, claims processed through discount card programs, or otherwise, if not in conjunction with an audit conducted pursuant to Article 8 of Chapter 23 of Title 34, provided that this subdivision shall not prohibit a pharmacy benefits manager from setting minimum requirements for participating in a pharmacy network. (4)(6) Prohibit a pharmacist or pharmacy , while filling a prescription for a covered individual, regardless of payment source, from providing athe covered individual specific information on the amount of the covered individual's cost share for the covered individual's prescription drug and the clinical efficacy of a more affordable alternative drug if one is available, or penalize a pharmacist or pharmacy for disclosing this information to a covered individual or for selling to a covered individual a more affordable alternative if one is available with any relevant information about the prescription, including the following: 281 282 283 284 285 286 287 288 289 290 291 292 293 294 295 296 297 298 299 300 301 302 303 304 305 306 307 308 SB93 INTRODUCED Page 12 prescription, including the following: a. The cost and reimbursement amount of the drug. b. An alternative drug. c. Any other information considered to be necessary in the professional judgment of the pharmacist . (5)(7) Prohibit a pharmacist or pharmacy from offering and providing delivery services to a covered individual as an ancillary service of the pharmacy, provided all of the following requirements are met: a. The pharmacist or pharmacy can demonstrate quality, stability, and safety standards during delivery. b. The pharmacist or pharmacy does not charge any delivery or service fee to a pharmacy benefits manager or health insurer. c. The pharmacist or pharmacy alerts the covered individual that he or she will be responsible for any delivery service fee associated with the delivery service, and that the pharmacy benefits manager or health insurer will not reimburse the delivery service fee. (6)(8) Charge or hold a pharmacist or pharmacy responsible for a fee or penalty relating to an audit conducted pursuant to The Pharmacy Audit Integrity Act, Article 8 of Chapter 23 of Title 34, provided this prohibition does not restrict recoupments made in accordance with the Pharmacy Audit Integrity Act. (7)(9) Charge a pharmacist or pharmacy a point-of-sale or retroactive fee or otherwise recoup funds from a pharmacy in connection with claims for which the pharmacy has already been paid, unless the recoupment is made pursuant to an audit 309 310 311 312 313 314 315 316 317 318 319 320 321 322 323 324 325 326 327 328 329 330 331 332 333 334 335 336 SB93 INTRODUCED Page 13 been paid, unless the recoupment is made pursuant to an audit conducted in accordance with the Pharmacy Audit Integrity ActArticle 8 of Chapter 23 of Title 34 . (8)(10) Except for a drug reimbursed, directly or indirectly, by the Medicaid program, vary the amount a pharmacy benefits manager reimburses an entity for a drug, including each and every prescription medication that is eligible for specialty tier placement by the Centers for Medicare and Medicaid Services pursuant to 42 C.F.R. § 423.560, regardless of any provision of law to the contrary, on the basis of whether: a. The drug is subject to an agreement under 42 U.S.C. § 256b; or b. The entity participates in the program set forth in 42 U.S.C. § 256b. (9)(11) If an entity participates, directly or indirectly, in the program set forth in 42 U.S.C. § 256b, do any of the following: a. Assess a fee, charge-back, or other adjustment on the entity. b. Restrict access to the pharmacy benefits manager's pharmacy network. c. Require the entity to enter into a contract with a specific pharmacy to participate in the pharmacy benefits manager's pharmacy network. d. Create a restriction or an additional charge on a patient who chooses to receive drugs from the entity. e. Create any additional requirements or restrictions on the entity. 337 338 339 340 341 342 343 344 345 346 347 348 349 350 351 352 353 354 355 356 357 358 359 360 361 362 363 364 SB93 INTRODUCED Page 14 on the entity. (10)(12) Require a claim for a drug to include a modifier to indicate that the drug is subject to an agreement under 42 U.S.C. § 256b. (11)(13) Penalize or retaliate against a pharmacist or pharmacy for exercising rights under this chapter or the Pharmacy Audit Integrity Act. " Section 2. Section 27-45A-13 is added to the Code of Alabama 1975, to read as follows: §27-45A-13 (a) A pharmacy benefits manager shall include in its reimbursement of a prescription drug to a pharmacist or pharmacy the cost of a professional dispensing fee as a predetermined, average cost that is applied uniformly and equally to all network pharmacies, and which shall not be below the professional dispensing fee paid by the State of Alabama under Title XIX of the federal Social Security Act, provided that the cost of the professional dispensing fee shall be borne by the pharmacy benefits manager and not the covered individual as prohibited under Section 27-45A-8. (b)(1) If a pharmacy benefits manager or a payor reimburses a pharmacist or pharmacy an amount below the pharmacist or pharmacy's dispensing cost for a particular drug, the pharmacist or pharmacy may decline to dispense the drug to a covered individual and may direct the individual to another pharmacist or pharmacy. (2) A pharmacy benefits manager may not take any retaliatory action against, or impose any penalty on, a pharmacy or pharmacist who declines to dispense a drug to a 365 366 367 368 369 370 371 372 373 374 375 376 377 378 379 380 381 382 383 384 385 386 387 388 389 390 391 392 SB93 INTRODUCED Page 15 pharmacy or pharmacist who declines to dispense a drug to a covered individual under subdivision (1), including cancellation or nonrenewal of a contract, or bringing a suit for breach of contract. (c) Subject to state and federal privacy laws, a pharmacist or pharmacy may disclose any reimbursement rate for its prescription dispensing services to an ultimate payor for those services, including an employer, the state, or the federal government. Section 3. Sections 34-23-181, 34-23-185, and 34-23-187, Code of Alabama 1975, are amended to read as follows: "§34-23-181 The following words shall have the following meanings as used in this article: (1) COMMISSIONER. The Commissioner of the Department of Insurance of the State of Alabama. (1)(2) HEALTH BENEFIT PLAN. Any individual or group plan, employee welfare benefit plan, policy, or contract for health care services issued, delivered, issued for delivery, or renewed in this state by a health care insurer, health maintenance organization, accident and sickness insurer, fraternal benefit society, nonprofit hospital service corporation, nonprofit medical service corporation, health care service plan, or any other person, firm, corporation, joint venture, or other similar business entity that pays for insureds or beneficiaries in this state. The term includes, but is not limited to, entities created pursuant to Article 6 of Chapter 20 of Title 10A. A health benefit plan located or 393 394 395 396 397 398 399 400 401 402 403 404 405 406 407 408 409 410 411 412 413 414 415 416 417 418 419 420 SB93 INTRODUCED Page 16 of Chapter 20 of Title 10A. A health benefit plan located or domiciled outside of the State of Alabama is deemed to be subject to this article if it receives, processes, adjudicates, pays, or denies claims for health care services submitted by or on behalf of patients, insureds, or beneficiaries who reside in Alabama. (2)(3) PHARMACY. A place licensed by the Alabama State Board of Pharmacy in which prescriptions, drugs, medicines, medical devices, chemicals, and poisons are sold, offered for sale, compounded, or dispensed and shall include all places whose title may imply the sale, offering for sale, compounding, or dispensing of prescriptions, drugs, medicines, chemicals, or poisons. (3)(4) PHARMACY BENEFITBENEFITS MANAGEMENT PLAN. An arrangement for the delivery of pharmacist services in which a pharmacy benefitbenefits manager undertakes to administer the payment or reimbursement of any of the costs of pharmacist services for an enrollee on a prepaid or insured basis that contains one or more incentive arrangements intended to influence the cost or level of pharmacist services between the plan sponsor and one or more pharmacies with respect to the delivery of pharmacist services and requires or creates benefit payment differential incentives for enrollees to use under contract with the pharmacy benefitbenefits manager. (4)(5) PHARMACY BENEFITBENEFITS MANAGER. A business that administers the prescription drug or device portion of pharmacy benefitbenefits management plans or health insurance plans on behalf of plan sponsors, insurance companies, unions, and health maintenance organizations. The term includes a 421 422 423 424 425 426 427 428 429 430 431 432 433 434 435 436 437 438 439 440 441 442 443 444 445 446 447 448 SB93 INTRODUCED Page 17 and health maintenance organizations. The term includes a person or entity acting for a pharmacy benefitbenefits manager in a contractual or employment relationship in the performance of pharmacy benefitbenefits management for a managed care company, nonprofit hospital or medical service organization, insurance company, or third-party payor. (5)(6) PHARMACIST SERVICES. Offering for sale, compounding, or dispensing of prescriptions, drugs, medicines, chemicals, or poisons pursuant to a prescription. Pharmacist services also includes the sale or provision of, counseling of, or fitting of medical devices, including prosthetics and durable medical equipment." "§34-23-185 (a) Each entity conducting an audit shall establish a written appeals process under which a pharmacy may appeal an unfavorable preliminary audit report to the entity. (b) Following the appeal, if the entity finds that an unfavorable audit report or any portion thereof is unsubstantiated, the entity shall dismiss the audit report or that portion without the necessity of any further action. (c)(1) Following the appeal, if any of the issues raised in the appeal are not resolved to the satisfaction of either party, that party may ask for mediation of those unresolved issues unless other remedies are granted under the terms of the contract. A certified mediator shall be chosen by agreement of the parties from the mediators list maintained by the Alabama Supreme Court. The cost of mediation shall be borne by agreement of the parties or by the decision of the mediator. 449 450 451 452 453 454 455 456 457 458 459 460 461 462 463 464 465 466 467 468 469 470 471 472 473 474 475 476 SB93 INTRODUCED Page 18 mediator. (2) Notwithstanding subdivision (1), the commissioner shall have authority to enforce this article, including any action under Chapter 45A of Title 27, and may modify or reverse the findings of an audit report. (3) A pharmacist or pharmacy may file a complaint directly with the commissioner for enforcement of this article." "§34-23-187 This article does notshall apply to any audit, review, or investigation that involves alleged fraud, willful misrepresentation, or waste abuse that is initiated by a pharmacy benefits manager ." Section 4. To add Section 34-23-188 to the Code of Alabama 1975, to read as follows: §34-23-188 The Commissioner of Insurance may investigate complaints of any alleged violation of this article by an auditing entity that is licensed or regulated under Title 27, and shall adopt rules to enforce this article. Section 5. This act shall become effective on October 1, 2025. 477 478 479 480 481 482 483 484 485 486 487 488 489 490 491 492 493 494 495 496 497