Introduced Version
HOUSE BILL No. 1606
_____
DIGEST OF INTRODUCED BILL
Citations Affected: IC 27-1-24.5; IC 27-1-44.5-12; IC 27-1-48.5.
Synopsis: Pharmacy benefit managers. Prohibits a pharmacy benefit
manager from taking certain actions. Requires a pharmacy benefit
manager to submit a report to the insurance commissioner every six
months. (Current law requires a pharmacy benefit manager to submit
the report annually.) Provides that if a contract holder requests an audit
of compliance with the contract from a pharmacy benefit manager, the
pharmacy benefit manager must provide the audit requested to the
contract holder not later than 30 business days after receiving the
request. Removes the provision specifying that the files or forms
disclosed to the contract holder by the pharmacy benefit manager as
part of an audit of compliance with the contract may be modified to
redact trade secrets. Establishes civil penalties that the department of
insurance (department) shall impose for a violation of the provisions
concerning pharmacy benefit managers. Requires a pharmacy benefit
manager to provide additional information in the pharmacy benefit
manager's report to the department. Requires, after June 30, 2025, a
health payer to include information relating to prescription drug pricing
in the data submitted to the all payer claims data base by the health
payer. 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.
Effective: July 1, 2025; January 1, 2026.
McGuire, Barrett, King, Isa
January 21, 2025, read first time and referred to Committee on Insurance.
2025 IN 1606—LS 7630/DI 141 Introduced
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,
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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.
HOUSE BILL No. 1606
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 27-1-24.5-16.5 IS ADDED TO THE INDIANA
2 CODE AS A NEW SECTION TO READ AS FOLLOWS
3 [EFFECTIVE JULY 1, 2025]: Sec. 16.5. As used in this chapter,
4 "spread pricing" means the practice in which a pharmacy benefit
5 manager charges a health plan a different amount for pharmacist
6 services than the amount the pharmacy benefit manager
7 reimburses a pharmacy for the pharmacist services.
8 SECTION 2. IC 27-1-24.5-19, AS AMENDED BY P.L.196-2021,
9 SECTION 22, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
10 JULY 1, 2025]: Sec. 19. (a) A pharmacy benefit manager shall provide
11 equal access and incentives to all pharmacies within the pharmacy
12 benefit manager's network.
13 (b) A pharmacy benefit manager may not do any of the following:
14 (1) Condition participation in any network on accreditation,
15 credentialing, or licensing of a pharmacy, other than a license or
16 permit required by the Indiana board of pharmacy or other state
17 or federal regulatory authority for the services provided by the
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1 pharmacy. However, nothing in this subdivision precludes the
2 department from providing credentialing or accreditation
3 standards for pharmacies.
4 (2) Discriminate against any pharmacy.
5 (3) Directly or indirectly retroactively deny a claim or aggregate
6 of claims after the claim or aggregate of claims has been
7 adjudicated, unless any of the following apply:
8 (A) The original claim was submitted fraudulently.
9 (B) The original claim payment was incorrect because the
10 pharmacy or pharmacist had already been paid for the drug.
11 (C) The pharmacist services were not properly rendered by the
12 pharmacy or pharmacist.
13 (4) Reduce, directly or indirectly, payment to a pharmacy for
14 pharmacist services to an effective rate of reimbursement,
15 including permitting an insurer or plan sponsor to make such a
16 reduction.
17 (5) Reimburse a pharmacy that is affiliated with the pharmacy
18 benefit manager, other than solely being included in the pharmacy
19 benefit manager's network, at a greater reimbursement rate than
20 other pharmacies in the same network.
21 (6) Impose limits, including quantity limits or refill frequency
22 limits, on a pharmacy's access to medication that differ from those
23 existing for a pharmacy benefit manager affiliate.
24 (7) Share any covered individual's information including
25 de-identified covered individual information, received from a
26 pharmacy or pharmacy benefit manager affiliate, except as
27 permitted by the federal Health Insurance Portability and
28 Accountability Act (HIPAA) (P.L.104-191).
29 (8) Require a covered individual, as a condition of payment or
30 reimbursement, to purchase pharmacist services, including
31 prescription drugs, exclusively through a pharmacy benefit
32 manager affiliate.
33 (9) Prohibit or limit any covered individual from selecting an
34 in network pharmacy or pharmacist of the covered
35 individual's choice that meets and agrees to the terms and
36 conditions in the pharmacy benefit manager's contract.
37 (10) Impose a monetary advantage or penalty under a health
38 plan that would affect a covered individual's choice of
39 pharmacy among the pharmacies that have chosen to contract
40 with the pharmacy benefit manager, under the same terms
41 and conditions described in subdivision (9).
42 (11) Retroactively:
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1 (A) impose fees on a pharmacy; or
2 (B) reduce the reimbursement amount for pharmacist
3 services issued by the pharmacy.
4 A violation of this subsection by a pharmacy benefit manager
5 constitutes an unfair or deceptive act or practice in the business of
6 insurance under IC 27-4-1-4.
7 SECTION 3. IC 27-1-24.5-21, AS ADDED BY P.L.68-2020,
8 SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
9 JULY 1, 2025]: Sec. 21. (a) Beginning June 1, 2021, and annually
10 every six (6) months thereafter, a pharmacy benefit manager shall
11 submit a report containing data from the immediately preceding
12 calendar year six (6) months to the commissioner. The commissioner
13 shall determine what must be included in the report and consider the
14 following information to be included in the report:
15 (1) The aggregate amount of all rebates that the pharmacy benefit
16 manager received from all pharmaceutical manufacturers for:
17 (A) all insurers; and
18 (B) each insurer;
19 with which the pharmacy benefit manager contracted during the
20 immediately preceding calendar year. six (6) months.
21 (2) The aggregate amount of administrative fees that the
22 pharmacy benefit manager received from all pharmaceutical
23 manufacturers for:
24 (A) all insurers; and
25 (B) each insurer;
26 with which the pharmacy benefit manager contracted during the
27 immediately preceding calendar year. six (6) months.
28 (3) The aggregate amount of retained rebates that the pharmacy
29 benefit manager received from all pharmaceutical manufacturers
30 and did not pass through to insurers with which the pharmacy
31 benefit manager contracted during the immediately preceding
32 calendar year. six (6) months.
33 (4) The highest, lowest, and mean aggregate retained rebate for:
34 (A) all insurers; and
35 (B) each insurer;
36 with which the pharmacy benefit manager contracted during the
37 immediately preceding calendar year. six (6) months.
38 (b) Except as provided in section 29(b) of this chapter, a
39 pharmacy benefit manager that provides information under this section
40 may designate the information as a trade secret (as defined in
41 IC 24-2-3-2). Information designated as a trade secret under this
42 subsection must not be published unless required under subsection (c).
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1 (c) Except as provided in section 29(b) of this chapter, disclosure
2 of information designated as a trade secret under subsection (b) may be
3 ordered by a court of Indiana for good cause shown or made in a court
4 filing.
5 SECTION 4. IC 27-1-24.5-25, AS AMENDED BY P.L.152-2024,
6 SECTION 12, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
7 JULY 1, 2025]: Sec. 25. (a) A contract holder may, one (1) time in a
8 calendar year and not earlier than six (6) months following a previously
9 requested audit, request an audit of compliance with the contract. If
10 requested by the contract holder, the audit shall include full disclosure
11 of the following data specific to the contract holder:
12 (1) Rebate amounts secured on prescription drugs, whether
13 product specific or general rebates, that were provided by a
14 pharmaceutical manufacturer. The information provided under
15 this subdivision must identify the prescription drugs by
16 therapeutic category.
17 (2) Pharmaceutical and device claims received by the pharmacy
18 benefit manager on any of the following:
19 (A) The CMS-1500 form or its successor form.
20 (B) The HCFA-1500 form or its successor form.
21 (C) The HIPAA X12 837P electronic claims transaction for
22 professional services, or its successor transaction.
23 (D) The HIPAA X12 837I institutional form or its successor
24 form.
25 (E) The CMS-1450 form or its successor form.
26 (F) The UB-04 form or its successor form.
27 The forms or transaction may be modified as necessary to comply
28 with the federal Health Insurance Portability and Accountability
29 Act (HIPAA) (P.L. 104-191). or to redact a trade secret (as
30 defined in IC 24-2-3-2).
31 (3) Pharmaceutical and device claims payments or electronic
32 funds transfer or remittance advice notices provided by the
33 pharmacy benefit manager as ASC X12N 835 files or a successor
34 format. The files may be modified as necessary to comply with
35 the federal Health Insurance Portability and Accountability Act
36 (HIPAA) (P.L. 104-191). or to redact a trade secret (as defined in
37 IC 24-2-3-2). In the event that paper claims are provided, the
38 pharmacy benefit manager shall convert the paper claims to the
39 ASC X12N 835 electronic format or a successor format.
40 (4) Any other revenue and fees derived by the pharmacy benefit
41 manager from the contract, including all direct and indirect
42 remuneration from pharmaceutical manufacturers regardless of
2025 IN 1606—LS 7630/DI 141 5
1 whether the remuneration is classified as a rebate, fee, or another
2 term.
3 (b) A pharmacy benefit manager may not impose the following:
4 (1) Fees for:
5 (A) requesting an audit under this section; or
6 (B) selecting an auditor other than an auditor designated by the
7 pharmacy benefit manager.
8 (2) Conditions that would restrict a contract holder's right to
9 conduct an audit under this section, including restrictions on the:
10 (A) time period of the audit;
11 (B) number of claims analyzed;
12 (C) type of analysis conducted;
13 (D) data elements used in the analysis; or
14 (E) selection of an auditor as long as the auditor:
15 (i) does not have a conflict of interest;
16 (ii) meets a threshold for liability insurance specified in the
17 contract between the parties;
18 (iii) does not work on a contingent fee basis; and
19 (iv) does not have a history of breaching nondisclosure
20 agreements.
21 (c) A pharmacy benefit manager shall disclose, upon request from
22 a contract holder, to the contract holder the actual amounts directly or
23 indirectly paid by the pharmacy benefit manager to the pharmacist or
24 pharmacy for the drug and for pharmacist services related to the drug.
25 (d) A pharmacy benefit manager shall provide notice to a contract
26 holder contracting with the pharmacy benefit manager of any
27 consideration, including direct or indirect remuneration, that the
28 pharmacy benefit manager receives from a pharmaceutical
29 manufacturer or group purchasing organization for formulary
30 placement or any other reason.
31 (e) The commissioner may establish a procedure to release
32 information from an audit performed by the department to a contract
33 holder that has requested an audit under this section in a manner that
34 does not violate confidential or proprietary information laws.
35 (f) A contract that is entered into, issued, amended, or renewed after
36 June 30, 2024, may not contain a provision that violates this section.
37 (g) A pharmacy benefit manager shall:
38 (1) obtain any information requested in an audit under this section
39 from a group purchasing organization or other partner entity of
40 the pharmacy benefit manager; and
41 (2) confirm receipt of a request for an audit under this section to
42 the contract holder not later than ten (10) business days after the
2025 IN 1606—LS 7630/DI 141 6
1 information is requested; and
2 (3) provide the audit requested under this section to the
3 contract holder not later than thirty (30) business days after
4 receiving the request.
5 (h) Information provided in an audit under this section must be
6 provided in accordance with the federal Health Insurance Portability
7 and Accountability Act (HIPAA) (P.L. 104-191).
8 SECTION 5. IC 27-1-24.5-27.7 IS ADDED TO THE INDIANA
9 CODE AS A NEW SECTION TO READ AS FOLLOWS
10 [EFFECTIVE JULY 1, 2025]: Sec. 27.7. A pharmacy benefit
11 manager may not engage in spread pricing.
12 SECTION 6. IC 27-1-24.5-28, AS ADDED BY P.L.68-2020,
13 SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
14 JANUARY 1, 2026]: Sec. 28. (a) A violation of this chapter is an
15 unfair or deceptive act or practice in the business of insurance under
16 IC 27-4-1-4.
17 (b) The department may also adopt rules under IC 4-22-2 to set forth
18 fines for a violation under this chapter.
19 (b) Except as provided in subsections (c) and (d), the
20 department shall impose a civil penalty for a violation of this
21 chapter, in the following amounts:
22 (1) One thousand dollars ($1,000) for the first violation.
23 (2) Five thousand dollars ($5,000) for the second violation.
24 (3) Ten thousand dollars ($10,000) for each additional
25 violation.
26 (c) If a pharmacy benefit manager has been assessed a civil
27 penalty under subsection (b) for a violation of this chapter, the
28 pharmacy benefit manager shall have thirty (30) calendar days to
29 correct the violation before the pharmacy benefit manager may be
30 assessed another civil penalty under subsection (b).
31 (d) If a pharmacy benefit manager has been assessed a civil
32 penalty under subsection (b) for a violation of this chapter that
33 resulted from a clerical error or unintentional omission on the part
34 of the pharmacy benefit manager, the department shall not
35 escalate the civil penalty imposed on the pharmacy benefit
36 manager under subsection (b).
37 (e) If a pharmacy benefit manager has been assessed multiple
38 civil penalties for violations of this chapter, the department may
39 revoke the pharmacy benefit manager's license issued by the
40 commissioner under section 18 of this chapter.
41 SECTION 7. IC 27-1-24.5-29, AS ADDED BY P.L.166-2023,
42 SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
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1 JULY 1, 2025]: Sec. 29. (a) At least every six (6) months, a pharmacy
2 benefit manager shall provide a report to the department.
3 (b) A report under subsection (a) must include the following
4 information:
5 (1) The overall aggregate amount charged to a health plan for all
6 pharmaceutical claims processed by the pharmacy benefit
7 manager for the immediately preceding six (6) months. and
8 (2) The overall aggregate amount paid to pharmacies for claims
9 processed by the pharmacy benefit manager for the immediately
10 preceding six (6) months.
11 (3) The overall aggregate amount of all rebates that the
12 pharmacy benefit manager received from all pharmaceutical
13 manufacturers for:
14 (A) all insurers; and
15 (B) each insurer;
16 with which the pharmacy benefit manager contracted during
17 the immediately preceding six (6) months.
18 (4) The overall aggregate amount of administrative fees that
19 the pharmacy benefit manager received from all
20 pharmaceutical manufacturers for:
21 (A) all insurers; and
22 (B) each insurer;
23 with which the pharmacy benefit manager contracted during
24 the immediately preceding six (6) months.
25 (5) The overall aggregate amount of retained rebates that the
26 pharmacy benefit manager received from all pharmaceutical
27 manufacturers and did not pass through to insurers with
28 which the pharmacy benefit manager contracted during the
29 immediately preceding six (6) months.
30 (c) Upon request, the department shall make a report received under
31 subsection (a) available to the members of the general assembly in an
32 electronic format under IC 5-14-6.
33 SECTION 8. IC 27-1-44.5-12 IS ADDED TO THE INDIANA
34 CODE AS A NEW SECTION TO READ AS FOLLOWS
35 [EFFECTIVE JULY 1, 2025]: Sec. 12. After June 30, 2025, a health
36 payer shall include in the data submitted to the data base under
37 this chapter the following pricing information relating to a
38 prescription drug covered by the health payer:
39 (1) The wholesale price.
40 (2) The retail price.
41 (3) The negotiated price.
42 SECTION 9. IC 27-1-48.5 IS ADDED TO THE INDIANA CODE
2025 IN 1606—LS 7630/DI 141 8
1 AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE
2 JULY 1, 2025]:
3 Chapter 48.5. Out-of-Pocket Expense Credit
4 Sec. 1. This chapter applies to a health plan entered into or
5 renewed after June 30, 2025.
6 Sec. 2. As used in this chapter, "covered individual" means an
7 individual entitled to coverage under a health plan.
8 Sec. 3. As used in this chapter, "health care provider" means an
9 individual or entity that is licensed, certified, registered, or
10 regulated by an entity described in IC 25-0.5-11.
11 Sec. 4. (a) As used in this chapter, "health care services" means
12 any services or products rendered by a health care provider within
13 the scope of the provider's license or legal authorization.
14 (b) The term includes hospital, medical, surgical, and
15 pharmaceutical services or products.
16 Sec. 5. (a) As used in this chapter, "health plan" means any of
17 the following:
18 (1) A self-insurance program established under IC 5-10-8-7(b)
19 to provide group coverage.
20 (2) A prepaid health care delivery plan through which health
21 services are provided under IC 5-10-8-7(c).
22 (3) A policy of accident and sickness insurance as defined in
23 IC 27-8-5-1, but not including any insurance, plan, or policy
24 set forth in IC 27-8-5-2.5(a).
25 (4) An individual contract (as defined in IC 27-13-1-21) or a
26 group contract (as defined in IC 27-13-1-16) with a health
27 maintenance organization that provides coverage for basic
28 health care services (as defined in IC 27-13-1-4).
29 (5) A self-funded health benefit plan that complies with the
30 federal Employee Retirement Income Security Act (ERISA)
31 of 1974 (29 U.S.C. 1001 et seq.).
32 (b) The term includes a person that administers any of the
33 following:
34 (1) A self-insurance program established under IC 5-10-8-7(b)
35 to provide group coverage.
36 (2) A prepaid health care delivery plan through which health
37 services are provided under IC 5-10-8-7(c).
38 (3) A policy of accident and sickness insurance as defined in
39 IC 27-8-5-1, but not including any insurance, plan, or policy
40 set forth in IC 27-8-5-2.5(a).
41 (4) An individual contract (as defined in IC 27-13-1-21) or a
42 group contract (as defined in IC 27-13-1-16) with a health
2025 IN 1606—LS 7630/DI 141 9
1 maintenance organization that provides coverage for basic
2 health care services (as defined in IC 27-13-1-4).
3 (5) A self-funded health benefit plan that complies with the
4 federal Employee Retirement Income Security Act (ERISA)
5 of 1974 (29 U.S.C. 1001 et seq.).
6 Sec. 6. As used in this chapter, "network" means a group of
7 health care providers that:
8 (1) provide health care services to covered individuals; and
9 (2) have agreed to, or are otherwise subject to, maximum
10 limits on the prices for the health care services to be provided
11 to the covered individuals.
12 Sec. 7. A health plan shall credit toward a covered individual's
13 deductible and annual maximum out-of-pocket expenses any
14 amount the covered individual pays directly to any health care
15 provider for a medically necessary covered health care service if a
16 claim for the health care service is not submitted to the health plan
17 and the amount paid by the covered individual to the health care
18 provider is less than the average discounted rate for the health care
19 service paid to a health care provider in the health plan's network.
20 Sec. 8. A health plan shall:
21 (1) establish a procedure by which a covered individual may
22 claim a credit under section 7 of this chapter; and
23 (2) identify documentation necessary to support a claim for a
24 credit under section 7 of this chapter.
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. [EFFECTIVE JULY 1, 2025] (a) The Indiana
31 department of insurance shall amend its administrative rules to
32 conform with IC 27-1-24.5-28, as amended by this act.
33 (b) The Indiana department of insurance shall begin the process
34 of amending its administrative rules under subsection (a) not later
35 than December 31, 2025.
36 (c) This SECTION expires July 1, 2028.
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