First Regular Session
Seventy-fourth General Assembly
STATE OF COLORADO
ENGROSSED
This Version Includes All Amendments Adopted
on Second Reading in the House of Introduction
LLS NO. 23-0773.02 Kristen Forrestal x4217
HOUSE BILL 23-1201
House Committees Senate Committees
Health & Insurance
Appropriations
A BILL FOR AN ACT
C
ONCERNING PRESCRIPTION DRUG BENEFITS CONTRACT TERM101
REQUIREMENTS, AND, IN CONNECTION THEREWITH, MAKING AN102
APPROPRIATION.103
Bill Summary
(Note: This summary applies to this bill as introduced and does
not reflect any amendments that may be subsequently adopted. If this bill
passes third reading in the house of introduction, a bill summary that
applies to the reengrossed version of this bill will be available at
http://leg.colorado.gov
.)
For group benefit plan contracts between a pharmacy benefit
manager (PBM) or a health insurance carrier (carrier) and an employer,
certificate holder, or policyholder, the bill requires that the amount
charged by the PBM or carrier to the employer, certificate holder, or
policyholder for a prescription drug be equal to or less than the amount
HOUSE
Amended 2nd Reading
April 14, 2023
HOUSE SPONSORSHIP
Daugherty and Soper,
SENATE SPONSORSHIP
Mullica and Smallwood,
Shading denotes HOUSE amendment. Double underlining denotes SENATE amendment.
Capital letters or bold & italic numbers indicate new material to be added to existing law.
Dashes through the words or numbers indicate deletions from existing law. paid by the PBM or carrier to the contracted pharmacy for the drug.
The bill creates transparency requirements for PBMs and carriers
regarding prescription drug benefits and grants audit authority to the
department of health care policy and financing for self-funded plans and
to the commissioner of insurance for fully insured plans, on request of the
office of the attorney general, to ensure compliance with the
requirements.
A violation of the requirements of the bill is a deceptive trade
practice under the "Colorado Consumer Protection Act", with regard to
self-funded plans, and a deceptive trade practice in the business of
insurance, with regard to fully insured plans.
Be it enacted by the General Assembly of the State of Colorado:1
2
SECTION 1. In Colorado Revised Statutes, add 10-16-158 as3
follows:4
10-16-158. Contracts - health benefit plans - pharmacy benefit5
managers - policyholders - transparency requirements - rules -6
definitions. (1) F
OR A CONTRACT BETWEEN A CARRIER OR PHARMACY7
BENEFIT MANAGER AND A CERTIFICATE HOLDER OR POLICYHOLDER THAT8
IS ISSUED OR RENEWED ON OR AFTER JANUARY 1, 2025, THE AMOUNT9
CHARGED BY THE CARRIER OR PBM TO THE CERTIFICATE HOLDER OR10
POLICYHOLDER FOR A PRESCRIPTION DRUG DISPENSED TO A COVERED11
PERSON MUST BE EQUAL TO OR LESS THAN THE AMOUNT PAID BY THE12
CARRIER OR PBM TO A CONTRACTED PHARMACY FOR SUCH PRESCRIPTION13
DRUG DISPENSED TO SUCH COVERED PERSON RESIDING IN COLORADO.14
(2) (a) F
OR GROUP HEALTH BENEFIT PLANS IN EFFECT DURING15
CALENDAR YEAR 2025,
AND EACH CALENDAR YEAR THEREAFTER, A16
CARRIER OR PHARMACY BENEFIT MANAGER SHALL DISCLOSE TO EACH17
POLICYHOLDER OR THE POLICYHOLDER'S SPECIFICALLY DESIGNATED18
BROKER OR CONSULTANT THE PRESCRIPTION DRUG CONTRACT TERMS19
1201-2- REQUIRED BY THIS SUBSECTION (2). FOR GROUP HEALTH BENEFIT PLANS IN1
EFFECT DURING CALENDAR YEAR 2023 OR 2024, OR BOTH, THE2
DISCLOSURE MUST ALSO INCLUDE ANY CHANGES IN TERMS BETWEEN EACH3
CALENDAR YEAR.4
(b) T
HE DISCLOSURES
REQUIRED PURSUANT TO THIS SUBSECTION5
(2)
MUST INCLUDE:6
(I) T
HE INGREDIENT COST AVERAGE REIMBURSEMENT RATE FOR :7
(A) G
ENERIC DRUGS DISPENSED AT RETAIL PHARMACIES ;8
(B) B
RAND-NAME DRUGS DISPENSED AT RETAIL PHARMACIES ;9
(C) S
PECIALTY DRUGS DISPENSED AT RETAIL PHARMACIES ;10
(D) G
ENERIC DRUGS DISPENSED AT MAIL-ORDER PHARMACIES;11
(E) B
RAND-NAME DRUGS DISPENSED AT MAIL-ORDER PHARMACIES;12
(F) S
PECIALTY DRUGS DISPENSED AT MAIL -ORDER PHARMACIES;13
AND14
(G) S
PECIALTY DRUGS DISPENSED AT ANY SPECIALTY PHARMACY ,15
INCLUDING A PHARMACY THAT IS FULLY OR PARTIALLY OWNED BY A16
CONTRACTING PBM, CARRIER, OR THE PBM'S OR CARRIER'S HOLDING17
COMPANIES OR AFFILIATES;18
(II) T
HE AVERAGE DISPENSING FEE PAID TO EACH TYPE OF19
PHARMACY, INCLUDING EACH RETAIL , MAIL-ORDER, AND SPECIALTY20
PHARMACY;21
(III) T
HE CHARGE PER PRIOR AUTHORIZATION ;22
(IV) U
TILIZATION MANAGEMENT PROGRAMS AND ASSOCIATED23
FEES;24
(V) A
NY OTHER CONTRACTED SERVICES AND ASSOCIATED FEES ;25
(VI) THE AVERAGE REBATE ACROSS ALL PAID PRESCRIPTIONS FOR26
THE RESPECTIVE GROUP HEALTH BENEFIT PLAN AND THE AVERAGE REBATE27
1201
-3- ACROSS ALL PAID PRESCRIPTIONS THAT PAY A REBATE FOR THE1
RESPECTIVE GROUP HEALTH BENEFIT PLAN ; AND2
(VII) T
HE REBATE GUARANTEE, WHERE APPLICABLE.3
(c) F
OR CONTRACTS BETWEEN A CARRIER OR PHARMACY BENEFIT4
MANAGER AND A CERTIFICATE HOLDER OR POLICYHOLDER THAT ARE5
RENEWED IN CALENDAR YEAR 2025,
AND EACH CALENDAR YEAR6
THEREAFTER, THE CARRIER OR PBM SHALL CALCULATE AND7
COMMUNICATE TO THE CERTIFICATE HOLDER OR POLICYHOLDER THE8
VALUE OF THE DIFFERENCE BETWEEN THE CONTRACT TERMS IN THE 9
RENEWED CONTRACTS AND THE CONTRACTS THAT WERE IN EFFECT THE10
PREVIOUS CALENDAR YEAR, ANNUALIZING THE PREVIOUS YEAR'S ACTUAL11
DATA FOR EACH RESPECTIVE CERTIFICATE HOLDER OR POLICYHOLDER . THE12
VALUE COMMUNICATED SHALL INCLUDE ANNUAL AGGREGATE SAVINGS ,13
ANNUAL AGGREGATE SAVINGS PER EMPLOYEE PER YEAR , AND ANNUAL14
AGGREGATE SAVINGS PER COVERED PERSON PER YEAR .15
(d) A
CARRIER OR PHARMACY BENEFIT MANAGER SHALL PROVIDE16
TO EACH CERTIFICATE HOLDER OR POLICYHOLDER , FOR VOLUNTARY17
CONSIDERATION, OPTIONS TO REPURPOSE AGGREGATE SAVINGS IN THE18
FORM OF REDUCTIONS TO OUT-OF-POCKET COSTS SUCH AS DEDUCTIBLES ,19
COPAYMENT AMOUNTS , COINSURANCE, OR PREMIUM CONTRIBUTIONS. THE20
CARRIER OR PBM SHALL PROVIDE THE INFORMATION TO CERTIFICATE21
HOLDERS OR POLICYHOLDERS NO LESS THAN NINETY DAYS BEFORE THE22
DATE OF THE
CONTRACT RENEWAL.23
(e) A
CARRIER OR PBM SHALL PROVIDE THE INFORMATION24
SPECIFIED IN SUBSECTIONS (2)(b), (2)(c), AND (2)(d) OF THIS SECTION TO25
ALL CERTIFICATE HOLDERS AND POLICYHOLDERS FOR CONTRACTS IN26
EFFECT DURING CALENDAR YEAR 2025, INCLUDING CERTIFICATE HOLDERS27
1201
-4- AND POLICYHOLDERS THAT MAY NOT RECEIVE A RENEWAL NOTICE DUE TO1
A MULTIYEAR CONTRACTUAL AGREEMENT OR FOR ANY OTHER REASON ,2
EXCEPT NOTICE OF TERMINATION.3
(f) THE DISCLOSURES REQUIRED IN SUBSECTIONS (2)(b)(VI) AND4
(2)(b)(VII) OF THIS SECTION MUST NOT DISCLOSE ANY PROPRIETARY5
REBATE INFORMATION BETWEEN A DRUG MANUFACTURER AND THE6
PHARMACY BENEFIT MANAGER OR ITS CARRIER AFFILIATE . THE7
DISCLOSURE OF DATA REQUIRED BY THESE SUBSECTIONS MUST REPRESENT8
THE AGGREGATE VALUE OF REBATES PASSING THROUGH FROM THE9
PHARMACY BENEFIT MANAGER OR ITS CARRIER AFFILIATE TO THE HEALTH10
BENEFIT PLAN AS DEFINED BY RULE OF THE COMMISSIONER . 11
(g) A CARRIER MAY EXEMPT A SEGMENT OF ITS BUSINESS FROM12
THIS SUBSECTION (2). THE CARRIER'S EXEMPTED BUSINESS SEGMENT MUST13
PROVIDE THE MAJORITY OF COVERED MEDICAL PROFESSIONAL SERVICES14
THROUGH A SINGLE, CONTRACTED MEDICAL GROUP AND OPERATE ITS OWN15
PHARMACIES THROUGH WHICH AT LEAST EIGHTY-FIVE PERCENT OF ITS16
AGGREGATE PRESCRIPTION DRUG CLAIMS ARE FILLED. ON AND AFTER THE17
EFFECTIVE DATE OF THIS SECTION, A CARRIER THAT MEETS THE EXEMPTION 18
CRITERIA IN THIS SUBSECTION (2)(g) SHALL SUBMIT AN ATTESTATION TO19
THE DIVISION OF SUCH COMPLIANCE WITH EACH RATE FILING REQUIRED20
PURSUANT TO SECTION 10-16-107. THE CARRIER OR PBM SHALL DISCLOSE21
ALL DATA REQUIREMENTS AS OUTLINED IN THIS SUBSECTION (2) TO THE22
CARRIER'S GROUP POLICYHOLDERS THAT ARE PRIMARILY ACCESSING23
PRESCRIPTION DRUG BENEFITS THROUGH A THIRD -PARTY PBM24
CONTRACTED WITH THE CARRIER .25
(3) THE COMMISSIONER SHALL PROMULGATE RULES TO IMPLEMENT26
THIS SECTION.27
1201
-5- (4) (a) THE COMMISSIONER MAY CONDUCT AN AUDIT OR MARKET1
CONDUCT EXAMINATION OF A CARRIER OR PHARMACY BENEFIT MANAGER2
TO ENSURE COMPLIANCE WITH THIS SECTION. THE COMMISSIONER,3
PURSUANT TO ANY RULES PROMULGATED BY THE DIVISION, MAY AUDIT4
A CARRIER OR PBM ANNUALLY TO DETERMINE IF THERE IS A VIOLATION5
OF THIS SECTION.6
(b) T
HE COMMISSIONER MAY DETERMINE A CARRIER 'S OR PBM'S7
COMPLIANCE WITH THIS SECTION BASED ON A SAMPLING OF DATA OR8
BASED ON A FULL CLAIMS AUDIT . THE SAMPLING OF DATA AND ANY9
EXTRAPOLATION FROM THE DATA USED TO DETERMINE PENALTIES MUST10
BE REASONABLY VALID FROM A STATISTICAL STANDPOINT AND IN11
ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS . A12
CARRIER OR PBM THAT DOES NOT COMPLY WITH A DIVISION REQUEST FOR13
THE DATA REQUIRED TO COMPLETE AN AUDIT VIOLATES THIS SECTION AND14
MAY BE SUBJECT TO PENALTIES.15
(c) I
NFORMATION OBTAINED THROUGH AN AUDIT CONDUCTED16
PURSUANT TO THIS SUBSECTION (4) IS PROPRIETARY AND CONFIDENTIAL17
INFORMATION, AVAILABLE ONLY TO THE COMMISSIONER AND THE18
COMMISSIONER'S AUDITING DESIGNEE AND IS NOT SUBJECT TO DISCLOSURE19
UNLESS SPECIFICALLY REQUIRED BY STATE OR FEDERAL LAW .20
(5) T
HE FAILURE OF A CARRIER OR PBM TO COMPLY WITH THIS21
SECTION IS AN UNFAIR METHOD OF COMPETITION AND AN UNFAIR OR A22
DECEPTIVE ACT OR PRACTICE IN THE BUSINESS OF INSURANCE PURSUANT23
TO SECTION 10-3-1104 (1).24 (6) (a) THE REQUIREMENTS OF SUBSECTIONS (1), (2), AND (4) OF25
THIS SECTION APPLY TO AN EMPLOYER-SPONSORED HEALTH BENEFIT PLAN,26
AN ASSOCIATED PHARMACY BENEFIT MANAGER , AND THE HEALTH BENEFIT27
1201
-6- PLAN MEMBERS ONLY IF A PERSON, TAFT-HARTLEY TRUST, MUNICIPALITY,1
STATE, LABOR UNION, PLAN SPONSOR, OR EMPLOYER THAT PROVIDES THE2
EMPLOYER-SPONSORED HEALTH BENEFIT PLAN ELECTS TO BE SUBJECT TO3
SUBSECTIONS (1), (2), AND (4) OF THIS SECTION FOR ITS MEMBERS THAT4
RESIDE IN COLORADO.5
(b) AS USED IN THIS SUBSECTION (6), "PHARMACY BENEFIT6
MANAGER" MEANS AN ENTITY DOING BUSINESS IN THIS STATE THAT7
ADMINISTERS OR MANAGES PRESCRIPTION DRUG BENEFITS, INCLUDING8
CLAIMS PROCESSING SERVICES AND OTHER PRESCRIPTION DRUG OR DEVICE9
SERVICES AS DEFINED IN SECTION 10-16-122.1, THAT IS IN A CONTRACTUAL10
RELATIONSHIP DIRECTLY OR INDIRECTLY THROUGH AN AFFILIATE WITH AN11
EMPLOYER-SPONSORED HEALTH BENEFIT PLAN, WHICH INCLUDES PLANS12
THAT ARE SELF-INSURED OR REGULATED BY THE FEDERAL "EMPLOYEE13
RETIREMENT INCOME SECURITY ACT OF 1974", 29 U.S.C. SEC. 1001 ET14
SEQ., AS AMENDED, OFFERED BY:15
(I) A PERSON;16
(II) A TAFT-HARTLEY TRUST;17
(III) A MUNICIPALITY;18
(IV) THE STATE;19
(V) A LABOR UNION;20
(VI) A PLAN SPONSOR;21
(VII) AN EMPLOYER; OR22
(VIII) A COALITION OF EMPLOYERS OR AGGREGATION OF23
EMPLOYERS WORKING TOGETHER TO NEGOTIATE IMPROVED CONTRACT24
TERMS WITH A PHARMACY BENEFIT MANAGER .25
(7) AS USED IN THIS SECTION, UNLESS THE CONTEXT OTHERWISE26
REQUIRES:27
1201
-7- (a) "CONTRACTED PHARMACY " MEANS A PHARMACY THAT HAS1
CONTRACTED WITH A CARRIER , A PHARMACY BENEFIT MANAGER , OR AN2
AFFILIATE OF THE CARRIER OR PBM.3
(b) "I
NGREDIENT COST" MEANS THE ACTUAL AMOUNT PAID TO A4
PHARMACY BY A PHARMACY BENEFIT MANAGER FOR A PRESCRIPTION5
DRUG, NOT INCLUDING A DISPENSING FEE OR PATIENT COST -SHARING6
AMOUNT.7
(c) "P
HARMACY" MEANS AN ENTITY WHERE MEDICINAL DRUGS ARE8
DISPENSED AND SOLD, INCLUDING A RETAIL PHARMACY , MAIL-ORDER9
PHARMACY, SPECIALTY PHARMACY, HOSPITAL OUTPATIENT SETTING, OR10
OTHER RELATED PHARMACY .11
SECTION 2. In Colorado Revised Statutes, add 25.5-1-133 as12
follows:13
25.5-1-133. Prescription benefits - department and pharmacy14
manager - contracts - audit - rules. (1) FOR CONTRACTS BETWEEN A15
PHARMACY BENEFIT MANAGER AND THE STATE DEPARTMENT OR ONE OF16
ITS AFFILIATED MANAGED CARE OR GANIZATIONS OFFERING A17
PRESCRIPTION BENEFIT PLAN THAT IS ISSUED OR RENEWED ON OR AFTER18
JANUARY 1, 2025, THE AMOUNT CHARGED BY THE PHARMACY BENEFIT19
MANAGER TO THE STATE DEPARTMENT OR MANAGED CARE ORGANIZATION20
FOR A PRESCRIPTION DRUG DISPENSED TO AN ENROLLEE IN THE PROGRAM21
OF MEDICAL ASSISTANCE CREATED PURSUANT TO SECTION 25.5-4-10422
MUST BE EQUAL TO OR LESS THAN THE AMOUNT PAID BY THE PHARMACY23
BENEFIT MANAGER TO A MEDICAID PHARMACY FOR THE PRESCRIPTION24
DRUG DISPENSED TO THE ENROLLEE .25
(2) THE STATE BOARD SHALL PROMULGATE RULES TO IMPLEMENT26
THIS SECTION, INCLUDING RULES GUIDING AN AUDIT OF MANAGED CARE OR27
1201
-8- FEE-FOR-SERVICE CLAIMS, TO ENSURE THAT THERE IS NO VIOLATION OF1
SUBSECTION (1) OF THIS SECTION.2
SECTION 3. Appropriation. For the 2023-24 state fiscal year,3
$10,000 is appropriated to the department of regulatory agencies for use4
by the division of insurance. This appropriation is from the division of5
insurance cash fund created in section 10-1-103 (3), C.R.S. To implement6
this act, the division may use this appropriation for personal services.7
SECTION 4. Act subject to petition - effective date. This act8
takes effect at 12:01 a.m. on the day following the expiration of the9
ninety-day period after final adjournment of the general assembly; except10
that, if a referendum petition is filed pursuant to section 1 (3) of article V11
of the state constitution against this act or an item, section, or part of this12
act within such period, then the act, item, section, or part will not take13
effect unless approved by the people at the general election to be held in14
November 2024 and, in such case, will take effect on the date of the15
official declaration of the vote thereon by the governor.16
1201
-9-