*EH1604.1*
March 21, 2025
ENGROSSED
HOUSE BILL No. 1604
_____
DIGEST OF HB 1604 (Updated March 19, 2025 12:29 pm - DI 154)
Citations Affected: IC 27-1.
Synopsis: Out-of-pocket expense credit. Requires an insurer, an
administrator, and a pharmacy benefit manager to apply the annual
limitation on cost sharing set forth in the federal Patient Protection and
Affordable Care Act under 42 U.S.C. 18022(c)(1) to prescription drugs
that: (1) are covered under a health plan; (2) are life-saving or intended
to manage chronic pain; and (3) do not have an approved generic
version. Provides that an insurer, an administrator, and a pharmacy
benefit manager may not directly or indirectly set, alter, implement, or
condition the terms of health insurance coverage based in part or
entirely on information about the availability or amount of financial or
product assistance available for a prescription drug. Requires, before
December 31 of each year, each insurer and administrator to certify to
the insurance commissioner that the insurer or administrator has fully
and completely complied with the cost sharing requirements during the
(Continued next page)
Effective: July 1, 2025; January 1, 2026.
McGuire, King, Morris,
Shackleford
(SENATE SPONSORS — CARRASCO, WALKER K, FREEMAN,
RANDOLPH LONNIE M, HUNLEY, FORD J.D., QADDOURA)
January 21, 2025, read first time and referred to Committee on Insurance.
February 11, 2025, amended, reported — Do Pass.
February 13, 2025, read second time, ordered engrossed.
February 14, 2025, engrossed.
February 17, 2025, read third time, passed. Yeas 95, nays 0.
SENATE ACTION
March 3, 2025, read first time and referred to Committee on Insurance and Financial
Institutions.
March 20, 2025, amended, reported favorably — Do Pass.
EH 1604—LS 7577/DI 154 Digest Continued
previous calendar year. Requires a health plan to credit toward a
covered individual's deductible and annual maximum out-of-pocket
expenses any amount the covered individual pays directly to any health
care provider for a medically necessary covered health care service if
a claim for the health care service is not submitted to the health plan
and the amount paid by the covered individual to the health care
provider is less than the average discounted rate for the health care
service paid to a health care provider in the health plan's network.
Requires a health plan to: (1) establish a procedure by which a covered
individual may claim a credit; (2) identify documentation necessary to
support a claim for a credit; and (3) publish average discounted rates
that the health plan has negotiated to pay health care providers for
health care services.
EH 1604—LS 7577/DI 154EH 1604—LS 7577/DI 154 March 21, 2025
First Regular Session of the 124th General Assembly (2025)
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
Constitution) is being amended, the text of the existing provision will appear in this style type,
additions will appear in this style type, and deletions will appear in this style type.
Additions: Whenever a new statutory provision is being enacted (or a new constitutional
provision adopted), the text of the new provision will appear in this style type. Also, the
word NEW will appear in that style type in the introductory clause of each SECTION that adds
a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts
between statutes enacted by the 2024 Regular Session of the General Assembly.
ENGROSSED
HOUSE BILL No. 1604
A BILL FOR AN ACT to amend the Indiana Code concerning
insurance.
Be it enacted by the General Assembly of the State of Indiana:
1 SECTION 1. IC 27-1-24.5-0.8 IS ADDED TO THE INDIANA
2 CODE AS A NEW SECTION TO READ AS FOLLOWS
3 [EFFECTIVE JANUARY 1, 2026]: Sec. 0.8. As used in this chapter,
4 "cost sharing" means any copayment, coinsurance, deductible, or
5 other similar charge that is:
6 (1) required of a covered individual for a health care service
7 covered by a health plan, including a prescription drug; and
8 (2) paid:
9 (A) by; or
10 (B) on behalf of;
11 the covered individual.
12 SECTION 2. IC 27-1-24.5-4.5 IS ADDED TO THE INDIANA
13 CODE AS A NEW SECTION TO READ AS FOLLOWS
14 [EFFECTIVE JANUARY 1, 2026]: Sec. 4.5. As used in this chapter,
15 "health care service" means a service or good furnished for the
16 purpose of preventing, alleviating, curing, or healing:
17 (1) human illness;
EH 1604—LS 7577/DI 154 2
1 (2) physical disability; or
2 (3) injury.
3 SECTION 3. IC 27-1-24.5-5, AS AMENDED BY P.L.207-2021,
4 SECTION 52, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
5 JANUARY 1, 2026]: Sec. 5. As used in this chapter, "health plan"
6 means a plan through which coverage is provided for health care
7 services through insurance, prepayment, reimbursement, or
8 otherwise. The term includes the following:
9 (1) A state employee health plan (as defined in IC 5-10-8-6.7).
10 (2) A policy of accident and sickness insurance (as defined in
11 IC 27-8-5-1). However, the term does not include the coverages
12 described in IC 27-8-5-2.5(a).
13 (3) An individual contract (as defined in IC 27-13-1-21) or a
14 group contract (as defined in IC 27-13-1-16) that provides
15 coverage for basic health care services (as defined in
16 IC 27-13-1-4).
17 (4) Any other plan or program that provides payment,
18 reimbursement, or indemnification to a covered individual for the
19 cost of prescription drugs.
20 SECTION 4. IC 27-1-24.5-6.5 IS ADDED TO THE INDIANA
21 CODE AS A NEW SECTION TO READ AS FOLLOWS
22 [EFFECTIVE JANUARY 1, 2026]: Sec. 6.5. As used in this chapter,
23 "insurer" means an insurer subject to state law and rules
24 regulating insurance or subject to the jurisdiction of the
25 department that contracts, or offers to contract, to:
26 (1) provide;
27 (2) deliver;
28 (3) arrange for;
29 (4) pay for; or
30 (5) reimburse;
31 any of the costs of health care services to a covered individual
32 under a health plan.
33 SECTION 5. IC 27-1-24.5-11.5 IS ADDED TO THE INDIANA
34 CODE AS A NEW SECTION TO READ AS FOLLOWS
35 [EFFECTIVE JANUARY 1, 2026]: Sec. 11.5. As used in this chapter,
36 "pharmacy benefit management services" means:
37 (1) negotiating the price of prescription drugs, including
38 negotiating and contracting for direct or indirect rebates,
39 discounts, or other price concessions;
40 (2) managing any aspect of a prescription drug benefit,
41 including:
42 (A) the processing and payment of claims for prescription
EH 1604—LS 7577/DI 154 3
1 drugs;
2 (B) arranging alternative access to or funding for
3 prescription drugs;
4 (C) the performance of drug utilization review;
5 (D) the processing of drug prior authorization requests;
6 (E) the adjudication of appeals or grievances related to the
7 prescription drug benefit;
8 (F) contracting with network pharmacies;
9 (G) controlling the cost of covered prescription drugs;
10 (H) managing or providing data relating to the
11 prescription drug benefit;
12 (I) the provision of services related to the prescription drug
13 benefit; or
14 (J) creating or updating prescription drug formularies;
15 (3) the performance of any administrative, managerial,
16 clinical, pricing, financial, reimbursement, data
17 administration or reporting, or billing service; and
18 (4) any other services specified in a rule adopted by the
19 department.
20 SECTION 6. IC 27-1-24.5-12, AS AMENDED BY P.L.32-2021,
21 SECTION 77, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
22 JANUARY 1, 2026]: Sec. 12. (a) As used in this chapter, "pharmacy
23 benefit manager" means: an entity that, on behalf of a health plan, state
24 agency, insurer, managed care organization, or other third party payor:
25 (1) a person who, under a written agreement with an insurer,
26 health plan, state agency, managed care organization, or other
27 third party payor, directly or indirectly provides one (1) or
28 more pharmacy benefit management services on behalf of the
29 insurer, health plan, state agency, managed care organization,
30 or other third party payor; and
31 (2) an agent, a contractor, an intermediary, an affiliate, a
32 subsidiary, or a related entity of a person described in
33 subdivision (1) who facilitates, provides, directs, or oversees
34 the provision of the pharmacy benefit management services.
35 (1) contracts directly or indirectly with pharmacies to provide
36 prescription drugs to individuals;
37 (2) administers a prescription drug benefit;
38 (3) processes or pays pharmacy claims;
39 (4) creates or updates prescription drug formularies;
40 (5) makes or assists in making prior authorization determinations
41 on prescription drugs;
42 (6) administers rebates on prescription drugs; or
EH 1604—LS 7577/DI 154 4
1 (7) establishes a pharmacy network.
2 (b) The term does not include the following:
3 (1) A person licensed under IC 16.
4 (2) A health provider who is:
5 (A) described in IC 25-0.5-1; and
6 (B) licensed or registered under IC 25.
7 (3) A consultant who only provides advice concerning the
8 selection or performance of a pharmacy benefit manager.
9 SECTION 7. IC 27-1-24.5-20, AS AMENDED BY P.L.158-2024,
10 SECTION 8, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
11 JANUARY 1, 2026]: Sec. 20. (a) The commissioner shall do the
12 following:
13 (1) Prescribe an application for use in applying for a license to
14 operate as a pharmacy benefit manager.
15 (2) Adopt rules under IC 4-22-2 to establish the following:
16 (A) Pharmacy benefit manager licensing requirements.
17 (B) Licensing fees.
18 (C) A license application.
19 (D) Financial standards for pharmacy benefit managers.
20 (E) Reporting requirements described in sections 21 and 29 of
21 this chapter.
22 (F) The time frame for the resolution of an appeal under
23 section 22 of this chapter.
24 (b) The commissioner may do the following:
25 (1) Charge a license application fee and renewal fees established
26 under subsection (a)(2) in an amount not to exceed five hundred
27 dollars ($500) to be deposited in the department of insurance fund
28 established by IC 27-1-3-28.
29 (2) Examine or audit the books and records of a pharmacy benefit
30 manager one (1) time per year to determine if the pharmacy
31 benefit manager is in compliance with this chapter.
32 (3) Adopt rules under IC 4-22-2 to:
33 (A) implement this chapter; and
34 (B) specify requirements for the following:
35 (i) Prohibited market conduct practices.
36 (ii) Data reporting in connection with violations of state law.
37 (iii) Maximum allowable cost list compliance and
38 enforcement requirements, including the requirements of
39 sections 22 and 23 of this chapter.
40 (iv) Prohibitions and limits on pharmacy benefit manager
41 practices that require licensure under IC 25-22.5.
42 (v) Pharmacy benefit manager affiliate information sharing.
EH 1604—LS 7577/DI 154 5
1 (vi) Lists of health plans administered by a pharmacy benefit
2 manager in Indiana.
3 (vii) Pharmacy benefit management services included
4 under section 11.5(4) of this chapter.
5 (c) Financial information and proprietary information submitted by
6 a pharmacy benefit manager to the department is confidential.
7 SECTION 8. IC 27-1-24.5-27.7 IS ADDED TO THE INDIANA
8 CODE AS A NEW SECTION TO READ AS FOLLOWS
9 [EFFECTIVE JANUARY 1, 2026]: Sec. 27.7. (a) This section applies
10 to a health plan that is issued, delivered, amended, or renewed
11 after December 31, 2025.
12 (b) A pharmacy benefit manager shall apply the annual
13 limitation on cost sharing set forth in the federal Patient Protection
14 and Affordable Care Act under 42 U.S.C. 18022(c)(1) to
15 prescription drugs that:
16 (1) are covered under a health plan administered by the
17 pharmacy benefit manager;
18 (2) are life-saving or intended to manage chronic pain; and
19 (3) do not have an approved generic version.
20 (c) Except as provided in subsection (d), when calculating a
21 covered individual's contribution to an applicable cost sharing
22 requirement, a pharmacy benefit manager must include any cost
23 sharing amounts paid:
24 (1) by the covered individual; or
25 (2) on behalf of the covered individual by another person.
26 (d) If application of subsection (c) would result in a covered
27 individual becoming ineligible for a health savings account under
28 Section 223 of the Internal Revenue Code, the requirement under
29 subsection (c) applies with respect to the deductible of a high
30 deductible health plan after the covered individual satisfies the
31 minimum deductible under Section 223 of the Internal Revenue
32 Code. However, subsection (c) applies to items or services that are
33 preventative care under Section 223(c)(2)(C) of the Internal
34 Revenue Code regardless of whether the minimum deductible
35 under Section 223 of the Internal Revenue Code is satisfied.
36 (e) A pharmacy benefit manager may not directly or indirectly:
37 (1) set;
38 (2) alter;
39 (3) implement; or
40 (4) condition;
41 the terms of health plan coverage, including the benefit design,
42 based in part or entirely on information about the availability or
EH 1604—LS 7577/DI 154 6
1 amount of financial or product assistance available for a
2 prescription drug.
3 SECTION 9. IC 27-1-48.5 IS ADDED TO THE INDIANA CODE
4 AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE
5 JULY 1, 2025]:
6 Chapter 48.5. Out-of-Pocket Expense Credit
7 Sec. 1. This chapter applies to a health plan entered into or
8 renewed after June 30, 2025.
9 Sec. 2. As used in this chapter, "covered individual" means an
10 individual entitled to coverage under a health plan.
11 Sec. 3. As used in this chapter, "health care provider" means an
12 individual or entity that is licensed, certified, registered, or
13 regulated by an entity described in IC 25-0.5-11.
14 Sec. 4. As used in this chapter, "health care services" means any
15 services or products rendered by a health care provider within the
16 scope of the provider's license or legal authorization.
17 Sec. 5. (a) As used in this chapter, "health plan" means any of
18 the following:
19 (1) A self-insurance program established under IC 5-10-8-7(b)
20 to provide group coverage.
21 (2) A prepaid health care delivery plan through which health
22 services are provided under IC 5-10-8-7(c).
23 (3) A policy of accident and sickness insurance as defined in
24 IC 27-8-5-1, but not including any insurance, plan, or policy
25 set forth in IC 27-8-5-2.5(a).
26 (4) An individual contract (as defined in IC 27-13-1-21) or a
27 group contract (as defined in IC 27-13-1-16) with a health
28 maintenance organization that provides coverage for basic
29 health care services (as defined in IC 27-13-1-4).
30 (b) The term includes a person that administers any of the
31 following:
32 (1) A self-insurance program established under IC 5-10-8-7(b)
33 to provide group coverage.
34 (2) A prepaid health care delivery plan through which health
35 services are provided under IC 5-10-8-7(c).
36 (3) A policy of accident and sickness insurance as defined in
37 IC 27-8-5-1, but not including any insurance, plan, or policy
38 set forth in IC 27-8-5-2.5(a).
39 (4) An individual contract (as defined in IC 27-13-1-21) or a
40 group contract (as defined in IC 27-13-1-16) with a health
41 maintenance organization that provides coverage for basic
42 health care services (as defined in IC 27-13-1-4).
EH 1604—LS 7577/DI 154 7
1 (c) The term includes hospital, medical, surgical, and
2 pharmaceutical services or products.
3 Sec. 6. As used in this chapter, "network" means a group of
4 health care providers that:
5 (1) provide health care services to covered individuals; and
6 (2) have agreed to, or are otherwise subject to, maximum
7 limits on the prices for the health care services to be provided
8 to the covered individuals.
9 Sec. 7. A health plan shall credit toward a covered individual's
10 deductible and annual maximum out-of-pocket expenses any
11 amount the covered individual pays directly to any health care
12 provider for a medically necessary covered health care service if a
13 claim for the health care service is not submitted to the health plan
14 and the amount paid by the covered individual to the health care
15 provider is less than the average discounted rate for the health care
16 service paid to a health care provider in the health plan's network.
17 Sec. 8. A health plan shall:
18 (1) establish a procedure by which a covered individual may
19 claim a credit under section 7 of this chapter;
20 (2) identify documentation necessary to support a claim for a
21 credit under section 7 of this chapter; and
22 (3) publish average discounted rates that the health plan has
23 negotiated to pay health care providers for health care
24 services.
25 Sec. 9. A health plan shall display information about the
26 procedure and documentation described in section 8 of this chapter
27 on its website.
28 Sec. 10. The department shall adopt rules under IC 4-22-2 to
29 effectuate the provisions of this chapter.
30 SECTION 10. IC 27-1-51 IS ADDED TO THE INDIANA CODE
31 AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE
32 JANUARY 1, 2026]:
33 Chapter 51. Cost Sharing for Health Insurance Coverage
34 Sec. 1. This chapter applies to a policy of health insurance
35 coverage that is issued, delivered, amended, or renewed after
36 December 31, 2025.
37 Sec. 2. As used in this chapter, "administrator" means a person
38 who, directly or indirectly and on behalf of an insurer:
39 (1) underwrites; or
40 (2) collects charges or premiums from or adjusts or settles
41 claims on:
42 (A) residents of Indiana; or
EH 1604—LS 7577/DI 154 8
1 (B) residents of another state from offices in Indiana;
2 in connection with health insurance coverage offered or provided
3 by an insurer.
4 Sec. 3. As used in this chapter, "cost sharing" means any
5 copayment, coinsurance, deductible, or other similar charge that
6 is:
7 (1) required of a covered individual for a health care service
8 covered by a policy of health insurance coverage, including a
9 prescription drug; and
10 (2) paid:
11 (A) by; or
12 (B) on behalf of;
13 the covered individual.
14 Sec. 4. As used in this chapter, "covered individual" means an
15 individual who is entitled to health insurance coverage.
16 Sec. 5. As used in this chapter, "health care service" means a
17 service or good furnished for the purpose of preventing,
18 alleviating, curing, or healing:
19 (1) human illness;
20 (2) physical disability; or
21 (3) injury.
22 Sec. 6. (a) As used in this chapter, "health insurance coverage"
23 means:
24 (1) an individual or group policy of accident and sickness
25 insurance (as defined in IC 27-8-5-1);
26 (2) an individual contract (as defined in IC 27-13-1-21) or a
27 group contract (as defined in IC 27-13-1-16) that provides
28 coverage for basic health care services (as defined in
29 IC 27-13-1-4); and
30 (3) any other health plan that is issued on an individual or
31 group basis;
32 that is subject to state law and rules regulating insurance or
33 subject to the jurisdiction of the department. The term includes
34 coverage of a dependent of the covered individual under a policy
35 or contract described in subdivisions (1) through (3).
36 (b) The term does not include a self-funded health benefit plan
37 that complies with the federal Employee Retirement Income
38 Security Act (ERISA) of 1974 (29 U.S.C. 1001 et seq.).
39 Sec. 7. As used in this chapter, "insurer" means an insurer that
40 provides health insurance coverage to a covered individual.
41 Sec. 8. As used in this chapter, "person" means a natural
42 person, corporation, mutual company, unincorporated association,
EH 1604—LS 7577/DI 154 9
1 partnership, joint venture, limited liability company, trust, estate,
2 foundation, not-for-profit corporation, unincorporated
3 organization, government, or governmental subdivision or agency.
4 Sec. 9. An insurer and an administrator shall apply the annual
5 limitation on cost sharing set forth in the federal Patient Protection
6 and Affordable Care Act under 42 U.S.C. 18022(c)(1) to
7 prescription drugs that:
8 (1) are covered under a policy or contract of health insurance
9 coverage offered or issued by the insurer;
10 (2) are life-saving or intended to manage chronic pain; and
11 (3) do not have an approved generic version.
12 Sec. 10. (a) Except as provided in subsection (b), when
13 calculating a covered individual's contribution to an applicable
14 cost sharing requirement, an insurer and administrator must
15 include any cost sharing amounts paid:
16 (1) by the covered individual; and
17 (2) on behalf of the covered individual by another person.
18 (b) If application of subsection (a) would result in a covered
19 individual becoming ineligible for a health savings account under
20 Section 223 of the Internal Revenue Code, the requirement under
21 subsection (a) applies with respect to the deductible of a high
22 deductible health plan after the covered individual satisfies the
23 minimum deductible under Section 223 of the Internal Revenue
24 Code. However, subsection (a) applies to items or services that are
25 preventative care under Section 223(c)(2)(C) of the Internal
26 Revenue Code regardless of whether the minimum deductible
27 under Section 223 of the Internal Revenue Code is satisfied.
28 Sec. 11. An insurer and an administrator may not directly or
29 indirectly:
30 (1) set;
31 (2) alter;
32 (3) implement; or
33 (4) condition;
34 the terms of health insurance coverage, including the benefit
35 design, based in part or entirely on information about the
36 availability or amount of financial or product assistance available
37 for a prescription drug.
38 Sec. 12. Before December 31 of each year, each insurer and
39 administrator shall certify to the commissioner that the insurer or
40 administrator has fully and completely complied with the
41 requirements of this chapter during the previous calendar year.
42 The certification must be signed by the chief executive officer or
EH 1604—LS 7577/DI 154 10
1 chief financial officer of the insurer or administrator.
2 Sec. 13. The commissioner may adopt rules under IC 4-22-2 to
3 implement this chapter.
EH 1604—LS 7577/DI 154 11
COMMITTEE REPORT
Mr. Speaker: Your Committee on Insurance, to which was referred
House Bill 1604, has had the same under consideration and begs leave
to report the same back to the House with the recommendation that said
bill be amended as follows:
Page 3, line 6, delete "and".
Page 3, line 8, delete "chapter." and insert "chapter; and".
Page 3, between lines 8 and 9, begin a new line block indented and
insert:
"(3) publish average discounted rates that the health plan has
negotiated to pay health care providers for health care
services.".
and when so amended that said bill do pass.
(Reference is to HB 1604 as introduced.)
CARBAUGH
Committee Vote: yeas 11, nays 0.
_____
COMMITTEE REPORT
Mr. President: The Senate Committee on Insurance and Financial
Institutions, to which was referred House Bill No. 1604, has had the
same under consideration and begs leave to report the same back to the
Senate with the recommendation that said bill be AMENDED as
follows:
Page 1, between the enacting clause and line 1, begin a new
paragraph and insert:
"SECTION 1. IC 27-1-24.5-0.8 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JANUARY 1, 2026]: Sec. 0.8. As used in this chapter,
"cost sharing" means any copayment, coinsurance, deductible, or
other similar charge that is:
(1) required of a covered individual for a health care service
covered by a health plan, including a prescription drug; and
(2) paid:
(A) by; or
(B) on behalf of;
the covered individual.
EH 1604—LS 7577/DI 154 12
SECTION 2. IC 27-1-24.5-4.5 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JANUARY 1, 2026]: Sec. 4.5. As used in this chapter,
"health care service" means a service or good furnished for the
purpose of preventing, alleviating, curing, or healing:
(1) human illness;
(2) physical disability; or
(3) injury.
SECTION 3. IC 27-1-24.5-5, AS AMENDED BY P.L.207-2021,
SECTION 52, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JANUARY 1, 2026]: Sec. 5. As used in this chapter, "health plan"
means a plan through which coverage is provided for health care
services through insurance, prepayment, reimbursement, or
otherwise. The term includes the following:
(1) A state employee health plan (as defined in IC 5-10-8-6.7).
(2) A policy of accident and sickness insurance (as defined in
IC 27-8-5-1). However, the term does not include the coverages
described in IC 27-8-5-2.5(a).
(3) An individual contract (as defined in IC 27-13-1-21) or a
group contract (as defined in IC 27-13-1-16) that provides
coverage for basic health care services (as defined in
IC 27-13-1-4).
(4) Any other plan or program that provides payment,
reimbursement, or indemnification to a covered individual for the
cost of prescription drugs.
SECTION 4. IC 27-1-24.5-6.5 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JANUARY 1, 2026]: Sec. 6.5. As used in this chapter,
"insurer" means an insurer subject to state law and rules
regulating insurance or subject to the jurisdiction of the
department that contracts, or offers to contract, to:
(1) provide;
(2) deliver;
(3) arrange for;
(4) pay for; or
(5) reimburse;
any of the costs of health care services to a covered individual
under a health plan.
SECTION 5. IC 27-1-24.5-11.5 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JANUARY 1, 2026]: Sec. 11.5. As used in this chapter,
"pharmacy benefit management services" means:
EH 1604—LS 7577/DI 154 13
(1) negotiating the price of prescription drugs, including
negotiating and contracting for direct or indirect rebates,
discounts, or other price concessions;
(2) managing any aspect of a prescription drug benefit,
including:
(A) the processing and payment of claims for prescription
drugs;
(B) arranging alternative access to or funding for
prescription drugs;
(C) the performance of drug utilization review;
(D) the processing of drug prior authorization requests;
(E) the adjudication of appeals or grievances related to the
prescription drug benefit;
(F) contracting with network pharmacies;
(G) controlling the cost of covered prescription drugs;
(H) managing or providing data relating to the
prescription drug benefit;
(I) the provision of services related to the prescription drug
benefit; or
(J) creating or updating prescription drug formularies;
(3) the performance of any administrative, managerial,
clinical, pricing, financial, reimbursement, data
administration or reporting, or billing service; and
(4) any other services specified in a rule adopted by the
department.
SECTION 6. IC 27-1-24.5-12, AS AMENDED BY P.L.32-2021,
SECTION 77, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JANUARY 1, 2026]: Sec. 12. (a) As used in this chapter, "pharmacy
benefit manager" means: an entity that, on behalf of a health plan, state
agency, insurer, managed care organization, or other third party payor:
(1) a person who, under a written agreement with an insurer,
health plan, state agency, managed care organization, or other
third party payor, directly or indirectly provides one (1) or
more pharmacy benefit management services on behalf of the
insurer, health plan, state agency, managed care organization,
or other third party payor; and
(2) an agent, a contractor, an intermediary, an affiliate, a
subsidiary, or a related entity of a person described in
subdivision (1) who facilitates, provides, directs, or oversees
the provision of the pharmacy benefit management services.
(1) contracts directly or indirectly with pharmacies to provide
prescription drugs to individuals;
EH 1604—LS 7577/DI 154 14
(2) administers a prescription drug benefit;
(3) processes or pays pharmacy claims;
(4) creates or updates prescription drug formularies;
(5) makes or assists in making prior authorization determinations
on prescription drugs;
(6) administers rebates on prescription drugs; or
(7) establishes a pharmacy network.
(b) The term does not include the following:
(1) A person licensed under IC 16.
(2) A health provider who is:
(A) described in IC 25-0.5-1; and
(B) licensed or registered under IC 25.
(3) A consultant who only provides advice concerning the
selection or performance of a pharmacy benefit manager.
SECTION 7. IC 27-1-24.5-20, AS AMENDED BY P.L.158-2024,
SECTION 8, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JANUARY 1, 2026]: Sec. 20. (a) The commissioner shall do the
following:
(1) Prescribe an application for use in applying for a license to
operate as a pharmacy benefit manager.
(2) Adopt rules under IC 4-22-2 to establish the following:
(A) Pharmacy benefit manager licensing requirements.
(B) Licensing fees.
(C) A license application.
(D) Financial standards for pharmacy benefit managers.
(E) Reporting requirements described in sections 21 and 29 of
this chapter.
(F) The time frame for the resolution of an appeal under
section 22 of this chapter.
(b) The commissioner may do the following:
(1) Charge a license application fee and renewal fees established
under subsection (a)(2) in an amount not to exceed five hundred
dollars ($500) to be deposited in the department of insurance fund
established by IC 27-1-3-28.
(2) Examine or audit the books and records of a pharmacy benefit
manager one (1) time per year to determine if the pharmacy
benefit manager is in compliance with this chapter.
(3) Adopt rules under IC 4-22-2 to:
(A) implement this chapter; and
(B) specify requirements for the following:
(i) Prohibited market conduct practices.
(ii) Data reporting in connection with violations of state law.
EH 1604—LS 7577/DI 154 15
(iii) Maximum allowable cost list compliance and
enforcement requirements, including the requirements of
sections 22 and 23 of this chapter.
(iv) Prohibitions and limits on pharmacy benefit manager
practices that require licensure under IC 25-22.5.
(v) Pharmacy benefit manager affiliate information sharing.
(vi) Lists of health plans administered by a pharmacy benefit
manager in Indiana.
(vii) Pharmacy benefit management services included
under section 11.5(4) of this chapter.
(c) Financial information and proprietary information submitted by
a pharmacy benefit manager to the department is confidential.
SECTION 8. IC 27-1-24.5-27.7 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JANUARY 1, 2026]: Sec. 27.7. (a) This section applies
to a health plan that is issued, delivered, amended, or renewed
after December 31, 2025.
(b) A pharmacy benefit manager shall apply the annual
limitation on cost sharing set forth in the federal Patient Protection
and Affordable Care Act under 42 U.S.C. 18022(c)(1) to
prescription drugs that:
(1) are covered under a health plan administered by the
pharmacy benefit manager;
(2) are life-saving or intended to manage chronic pain; and
(3) do not have an approved generic version.
(c) Except as provided in subsection (d), when calculating a
covered individual's contribution to an applicable cost sharing
requirement, a pharmacy benefit manager must include any cost
sharing amounts paid:
(1) by the covered individual; or
(2) on behalf of the covered individual by another person.
(d) If application of subsection (c) would result in a covered
individual becoming ineligible for a health savings account under
Section 223 of the Internal Revenue Code, the requirement under
subsection (c) applies with respect to the deductible of a high
deductible health plan after the covered individual satisfies the
minimum deductible under Section 223 of the Internal Revenue
Code. However, subsection (c) applies to items or services that are
preventative care under Section 223(c)(2)(C) of the Internal
Revenue Code regardless of whether the minimum deductible
under Section 223 of the Internal Revenue Code is satisfied.
(e) A pharmacy benefit manager may not directly or indirectly:
EH 1604—LS 7577/DI 154 16
(1) set;
(2) alter;
(3) implement; or
(4) condition;
the terms of health plan coverage, including the benefit design,
based in part or entirely on information about the availability or
amount of financial or product assistance available for a
prescription drug.".
Page 1, line 12, delete "(a)".
Page 2, delete lines 11 through 13.
Page 2, delete lines 27 through 29.
Page 2, line 30, delete "(b)" and insert "(c)".
Page 3, after line 16, begin a new paragraph and insert:
"SECTION 10. IC 27-1-51 IS ADDED TO THE INDIANA CODE
AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE
JANUARY 1, 2026]:
Chapter 51. Cost Sharing for Health Insurance Coverage
Sec. 1. This chapter applies to a policy of health insurance
coverage that is issued, delivered, amended, or renewed after
December 31, 2025.
Sec. 2. As used in this chapter, "administrator" means a person
who, directly or indirectly and on behalf of an insurer:
(1) underwrites; or
(2) collects charges or premiums from or adjusts or settles
claims on:
(A) residents of Indiana; or
(B) residents of another state from offices in Indiana;
in connection with health insurance coverage offered or provided
by an insurer.
Sec. 3. As used in this chapter, "cost sharing" means any
copayment, coinsurance, deductible, or other similar charge that
is:
(1) required of a covered individual for a health care service
covered by a policy of health insurance coverage, including a
prescription drug; and
(2) paid:
(A) by; or
(B) on behalf of;
the covered individual.
Sec. 4. As used in this chapter, "covered individual" means an
individual who is entitled to health insurance coverage.
Sec. 5. As used in this chapter, "health care service" means a
EH 1604—LS 7577/DI 154 17
service or good furnished for the purpose of preventing,
alleviating, curing, or healing:
(1) human illness;
(2) physical disability; or
(3) injury.
Sec. 6. (a) As used in this chapter, "health insurance coverage"
means:
(1) an individual or group policy of accident and sickness
insurance (as defined in IC 27-8-5-1);
(2) an individual contract (as defined in IC 27-13-1-21) or a
group contract (as defined in IC 27-13-1-16) that provides
coverage for basic health care services (as defined in
IC 27-13-1-4); and
(3) any other health plan that is issued on an individual or
group basis;
that is subject to state law and rules regulating insurance or
subject to the jurisdiction of the department. The term includes
coverage of a dependent of the covered individual under a policy
or contract described in subdivisions (1) through (3).
(b) The term does not include a self-funded health benefit plan
that complies with the federal Employee Retirement Income
Security Act (ERISA) of 1974 (29 U.S.C. 1001 et seq.).
Sec. 7. As used in this chapter, "insurer" means an insurer that
provides health insurance coverage to a covered individual.
Sec. 8. As used in this chapter, "person" means a natural
person, corporation, mutual company, unincorporated association,
partnership, joint venture, limited liability company, trust, estate,
foundation, not-for-profit corporation, unincorporated
organization, government, or governmental subdivision or agency.
Sec. 9. An insurer and an administrator shall apply the annual
limitation on cost sharing set forth in the federal Patient Protection
and Affordable Care Act under 42 U.S.C. 18022(c)(1) to
prescription drugs that:
(1) are covered under a policy or contract of health insurance
coverage offered or issued by the insurer;
(2) are life-saving or intended to manage chronic pain; and
(3) do not have an approved generic version.
Sec. 10. (a) Except as provided in subsection (b), when
calculating a covered individual's contribution to an applicable
cost sharing requirement, an insurer and administrator must
include any cost sharing amounts paid:
(1) by the covered individual; and
EH 1604—LS 7577/DI 154 18
(2) on behalf of the covered individual by another person.
(b) If application of subsection (a) would result in a covered
individual becoming ineligible for a health savings account under
Section 223 of the Internal Revenue Code, the requirement under
subsection (a) applies with respect to the deductible of a high
deductible health plan after the covered individual satisfies the
minimum deductible under Section 223 of the Internal Revenue
Code. However, subsection (a) applies to items or services that are
preventative care under Section 223(c)(2)(C) of the Internal
Revenue Code regardless of whether the minimum deductible
under Section 223 of the Internal Revenue Code is satisfied.
Sec. 11. An insurer and an administrator may not directly or
indirectly:
(1) set;
(2) alter;
(3) implement; or
(4) condition;
the terms of health insurance coverage, including the benefit
design, based in part or entirely on information about the
availability or amount of financial or product assistance available
for a prescription drug.
Sec. 12. Before December 31 of each year, each insurer and
administrator shall certify to the commissioner that the insurer or
administrator has fully and completely complied with the
requirements of this chapter during the previous calendar year.
The certification must be signed by the chief executive officer or
chief financial officer of the insurer or administrator.
Sec. 13. The commissioner may adopt rules under IC 4-22-2 to
implement this chapter.".
Renumber all SECTIONS consecutively.
and when so amended that said bill do pass.
(Reference is to HB 1604 as printed February 11, 2025.)
BALDWIN, Chairperson
Committee Vote: Yeas 6, Nays 1.
EH 1604—LS 7577/DI 154