Senate Study Bill 1098 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON COMMERCE BILL BY CHAIRPERSON BROWN) A BILL FOR An Act relating to contract pharmacies and covered entities 1 that participate in the 340B drug program. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 1106XC (9) 90 ko/rn
S.F. _____ Section 1. Section 507B.4, subsection 3, Code 2023, is 1 amended by adding the following new paragraph: 2 NEW PARAGRAPH . u. 340B drug program. Any violation of 3 chapter 510D by a group health plan, a health carrier that 4 offers group or individual health insurance coverage, a 5 third-party administrator, or a pharmacy benefits manager. 6 Sec. 2. NEW SECTION . 510D.1 Definitions. 7 As used in this chapter, unless the context otherwise 8 requires: 9 1. 340B program means the program created pursuant to 10 the Veterans Health Care Act of 1992, Pub. L. No. 102-585, 11 602, and codified as section 340B of the federal Public Health 12 Services Act. 13 2. Commissioner means the commissioner of insurance. 14 3. Contract pharmacy means a pharmacy that has executed a 15 contract with a covered entity to dispense covered outpatient 16 drugs, purchased by the covered entity through the 340B 17 program, to eligible patients of the covered entity. 18 4. Covered entity means the same as defined in 42 U.S.C. 19 256b(a)(4). 20 5. Group health plan means the same as defined in section 21 513B.2. 22 6. Medicaid managed care organization means an entity 23 acting pursuant to a contract with the department of health and 24 human services to administer the medical assistance program 25 under chapter 249A, and that meets the definition of health 26 maintenance organization under section 514B.1. 27 7. Pharmacy benefits manager means the same as defined in 28 section 510B.1. 29 8. Similarly situated entity or pharmacy means an entity 30 or pharmacy located in Iowa that is of a generally comparable 31 size, and that operates in a market with similar demographic 32 characteristics, including population size, density, 33 distribution, and vital statistics, and reasonably similar 34 economic and geographic conditions. 35 -1- LSB 1106XC (9) 90 ko/rn 1/ 6
S.F. _____ 9. Third-party administrator means the same as defined in 1 section 510.11. 2 Sec. 3. NEW SECTION . 510D.2 340B drug program contract 3 pharmacies and covered entities. 4 1. Group health plans, health carriers that offer 5 group or individual health insurance coverage, third-party 6 administrators, and pharmacy benefits managers shall not 7 discriminate against a covered entity or a contract pharmacy 8 by reimbursing the covered entity or the contract pharmacy 9 for a prescription drug or a dispensing fee in an amount 10 less than the group health plan, health carrier, third-party 11 administrator, or pharmacy benefits manager reimburses a 12 similarly situated entity or pharmacy that is not a covered 13 entity or a contract pharmacy. 14 2. a. Group health plans, health carriers that offer 15 group or individual health insurance coverage, third-party 16 administrators, and pharmacy benefits managers shall not, 17 on the basis that an entity is a covered entity or that a 18 pharmacy is a contract pharmacy, or that a covered entity or 19 contract pharmacy participate in the 340B program, impose 20 any of the following contractual terms and conditions on the 21 covered entity or the contract pharmacy that differ from those 22 imposed on a similarly situated entity or pharmacy that is not 23 a covered entity or a contract pharmacy: 24 (1) Fees or other assessments that are not required by state 25 law or the Iowa administrative code. 26 (2) Chargebacks, clawbacks, or other reimbursement 27 adjustments that are not required by state law or the Iowa 28 administrative code. 29 (3) Professional dispensing fees that are not required by 30 state law or the Iowa administrative code. 31 (4) Restrictions or requirements related to participation 32 in standard or preferred pharmacy networks. 33 (5) Requirements related to the frequency or scope of 34 audits. 35 -2- LSB 1106XC (9) 90 ko/rn 2/ 6
S.F. _____ (6) Requirements related to inventory management systems 1 that utilize generally accepted accounting principles. 2 (7) Requirements related to mandatory disclosure either 3 directly or through a third party, except disclosures required 4 by federal law, of prescription orders that are filled with 5 covered outpatient drugs obtained through the 340B program. 6 b. Paragraph a , subparagraphs (1) and (2), shall not be 7 construed to prohibit adjustments for overpayments or other 8 errors associated with an adjudicated claim. 9 c. Paragraph a , subparagraph (7), shall not be construed 10 to prohibit requirements related to statutorily required 11 modifiers or other identifiers on claims submitted for drugs 12 purchased through the 340B program. 13 3. Group health plans, health carriers that offer 14 group or individual health insurance coverage, third-party 15 administrators, and pharmacy benefits managers shall not do any 16 of the following: 17 a. Place any restrictions or impose any requirements on 18 an individual that chooses to obtain a covered outpatient 19 drug from a covered entity or a contract pharmacy, whether in 20 person, via courier or the United States post office, or any 21 other form of delivery. 22 b. Refuse to contract with a covered entity or a contract 23 pharmacy based on any criteria that is not applied equally to a 24 contract with a similarly situated entity or pharmacy that does 25 not participate in the 340B drug program. 26 c. Impose any restriction or condition on a covered entity 27 that interferes with the covered entitys ability to maximize 28 the value of the discounts obtained by the covered entity 29 through the covered entitys participation in the 340B drug 30 program. 31 Sec. 4. NEW SECTION . 510D.3 Enforcement. 32 1. The commissioner may take any enforcement action under 33 the commissioners authority to enforce compliance with this 34 chapter. 35 -3- LSB 1106XC (9) 90 ko/rn 3/ 6
S.F. _____ 2. After notice and hearing, the commissioner may issue any 1 order or impose any penalty pursuant to section 507B.7 upon a 2 finding that a group health plan, a health carrier that offers 3 group or individual health insurance coverage, a third-party 4 administrator, or a pharmacy benefits manager violated this 5 chapter. 6 3. A violation of this chapter shall be an unfair or 7 deceptive act or practice in the business of insurance pursuant 8 to section 507B.4, subsection 3. 9 Sec. 5. NEW SECTION . 510D.4 Rules. 10 The commissioner of insurance may adopt rules as necessary 11 to implement the chapter. 12 Sec. 6. NEW SECTION . 510D.5 Conflict of laws. 13 If any provision of this chapter is inconsistent or in 14 conflict with applicable state or federal law or rule, or the 15 state Medicaid plan, the applicable state or federal law or 16 rule, or the state Medicaid plan, shall prevail to the extent 17 necessary to eliminate the inconsistency or conflict. 18 Sec. 7. NEW SECTION . 510D.6 Applicability. 19 This chapter shall apply to covered entities, contract 20 pharmacies, group health plans, health carriers that offer 21 group or individual health insurance coverage, third-party 22 administrators, and pharmacy benefits managers, but shall not 23 apply to their operations under a contract with the state 24 Medicaid agency or a Medicaid managed care organization, 25 regardless of whether the covered entity or contract pharmacy 26 is eligible to retain the 340B discounts generated by the 27 covered entities and contract pharmacies. 28 EXPLANATION 29 The inclusion of this explanation does not constitute agreement with 30 the explanations substance by the members of the general assembly. 31 This bill relates to contract pharmacies and covered 32 entities that participate in the 340B program. The bill 33 defines 340B program, contract pharmacy, and covered 34 entity. 35 -4- LSB 1106XC (9) 90 ko/rn 4/ 6
S.F. _____ Group health plans (plans), health carriers that offer group 1 or individual health insurance coverage (carriers), third-party 2 administrators (administrators), and pharmacy benefits managers 3 (PBM) are prohibited from discriminating against a covered 4 entity or a contract pharmacy by reimbursing the covered 5 entity or the contract pharmacy for a prescription drug or 6 a dispensing fee in an amount less than the plan, carrier, 7 administrator, or PBM reimburses a similarly situated entity or 8 pharmacy that is not a covered entity or a contract pharmacy. 9 Similarly situated entity or pharmacy is defined in the bill. 10 Plans, carriers, administrators, and PBMs shall not, on the 11 basis that an entity is a covered entity or that a pharmacy 12 is a contract pharmacy, or that a covered entity or contract 13 pharmacy participates in the 340B program, impose certain 14 contractual terms and conditions, as described in the bill, 15 on the covered entity or contract pharmacy that differ from 16 those imposed on a similarly situated entity or pharmacy 17 that is not a covered entity or a contract pharmacy. Plans, 18 carriers, administrators, and PBMs are also prohibited from 19 placing restrictions or imposing requirements on individuals 20 that choose to obtain a covered outpatient drug from a 21 covered entity or a contract pharmacy, whether in person, via 22 courier or the United States post office, or any other form 23 of delivery; refusing to contract with a covered entity or a 24 contract pharmacy based on any criteria that is not applied 25 equally to a contract with a similarly situated entity or 26 pharmacy that does not participate in the 340B program; or 27 imposing any restriction or condition on a covered entity that 28 interferes with the covered entitys ability to maximize the 29 value of the discounts obtained by the covered entity through 30 the covered entitys participation in the 340B program. 31 Group health plan and third-party administrator are 32 defined in the bill. 33 The commissioner of insurance (commissioner) may take any 34 enforcement action under the commissioners authority to 35 -5- LSB 1106XC (9) 90 ko/rn 5/ 6
S.F. _____ enforce compliance with the bill. After notice and hearing, 1 the commissioner may issue any order or impose any penalty 2 pursuant to Code section 507B.7 upon a finding that a plan, a 3 carrier, an administrator, or a PBM violated any provision of 4 the bill. 5 A violation of the bill shall be an unfair or deceptive 6 act or practice in the business of insurance pursuant to Code 7 section 507B.4(3). 8 The commissioner may adopt rules as necessary to implement 9 the bill. 10 If any provision of the bill is inconsistent or in conflict 11 with applicable state or federal law or rule, or the state 12 Medicaid plan, the state or federal law or rule, or the 13 state Medicaid plan, shall prevail to the extent necessary to 14 eliminate the inconsistency or conflict. 15 The bill applies to covered entities, contract pharmacies, 16 plans, carriers, administrators, and PBM, but shall not apply 17 to their operations under a contract with the state Medicaid 18 agency or a Medicaid managed care organization, regardless of 19 whether the covered entity or contract pharmacy is eligible to 20 retain the 340B discounts generated by the covered entities and 21 contract pharmacies. Medicaid managed care organization is 22 defined in the bill. 23 -6- LSB 1106XC (9) 90 ko/rn 6/ 6