LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
FISCAL IMPACT STATEMENT
LS 7630 NOTE PREPARED: Jan 16, 2025
BILL NUMBER: HB 1606 BILL AMENDED:
SUBJECT: Pharmacy Benefit Managers.
FIRST AUTHOR: Rep. McGuire BILL STATUS: As Introduced
FIRST SPONSOR:
FUNDS AFFECTED:XGENERAL IMPACT: State & Local
XDEDICATED
FEDERAL
Summary of Legislation: Pharmacy Benefit Managers: This bill prohibits a pharmacy benefit manager from
taking certain actions. It 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.) It 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. It 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.
Department of Insurance: This bill establishes civil penalties that the Department of Insurance (DOI) shall
impose for a violation of the provisions concerning pharmacy benefit managers. It requires a pharmacy
benefit manager to provide additional information in the pharmacy benefit manager's report to the DOI. It
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.
Claims Credit: This bill 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 Date: July 1, 2025; January 1, 2026.
Explanation of State Expenditures: Claims Credit: The bill requires the state employee health plan
(SEHP) to provide a credit for a medically necessary health care service that is not submitted to a covered
individual’s health plan if the cost of the service is less than the SEHP’s average discounted in-network rate
for the same service. Credits provided will also count toward the covered individual’s deductible and out-of-
HB 1606 1 pocket maximum for the plan year. If this provision results in additional claims being submitted to the SEHP
that would have otherwise been fully paid out-of-pocket by the covered individual, then state expenses will
increase. Data is not available regarding the amount of, and the cost for, services received by covered
individuals which were not submitted to the SEHP, so any increase in SEHP expenditures, or impacts to the
timing for when a covered individual may reach their deductible or out-of-pocket maximum, is
indeterminable.
Pharmacy Benefit Managers: Any impact to state expenditures for the SEHP and the state Medicaid plan
resulting from the bill’s pharmacy benefit manager (PBM) requirements is indeterminate and will depend
on the terms of future PBM contracts entered into by the state. [The SEHP’s current PBM contract is
effective through December 31, 2026, and the state Medicaid program’s PBM contract is effective through
December 31, 2025.]
Agency Workload: The bill’s various requirements will increase workload for the Department of Insurance
(DOI) and State Personnel Department, but should be able to be implemented using existing staffing and
resources. [The DOI is funded through a dedicated agency fund.]
Explanation of State Revenues: Department of Insurance: The bill will have an indeterminate impact on
state General Fund revenue from civil penalties collected from PBMs. Beginning January 1, 2026, this bill
expands the list of actions for PBMs that are actionable as unfair or deceptive acts in the business of
insurance; however, the bill also decreases the civil penalties for violations.
The bill allows the DOI to issue civil penalties in the amounts of $1,000 for a first violation, $5,000 for a
second violation, and $10,000 for each additional violation. [Currently, civil penalty amounts are between
$25,000 and $50,000 for each act.]
Explanation of Local Expenditures: Any impact to expenditure for local units offering health insurance
will depend on the terms of their future PBM contracts.
Explanation of Local Revenues:
State Agencies Affected: Department of Insurance; Family and Social Services Administration; State
Personnel Department; all state agencies.
Local Agencies Affected: Local units offering health insurance coverage.
Information Sources: Indiana Transparency Portal.
Fiscal Analyst: Jason Barrett, 317-232-9809.
HB 1606 2