Introduced Version
SENATE BILL No. 503
_____
DIGEST OF INTRODUCED BILL
Citations Affected: IC 2-5-47-7; IC 4-6-17; IC 5-10-8; IC 12-15;
IC 27-1.
Synopsis: Pharmacy benefit administration. Requires the attorney
general to designate or appoint a pharmacy benefit compliance officer.
Establishes the pharmacy benefit compliance fund. Requires: (1) the
state personnel department to issue a request for proposal to enter into
a public-private partnership to administer prescription drug benefits on
behalf of a state employee health plan; and (2) the office of the
secretary of family and social services (office) to issue a request for
proposal to enter into a public-private partnership to administer
prescription drug benefits on behalf of the Medicaid program. Sets
forth certain requirements for the requests for proposal and establishes
the competitive proposal procedure. Requires the budget committee to
review a contract before the state personnel department or the office
awards a final contract for the public-private partnership. Requires, at
least three years after state personnel department and the office enter
into a contract for the public-private partnership, the attorney general
to conduct a state employee health plan audit and a Medicaid audit.
Sets forth certain requirements and restrictions for pharmacy benefit
managers. Makes an appropriation. Makes corresponding changes.
Effective: July 1, 2025.
Zay, Charbonneau
January 14, 2025, read first time and referred to Committee on Health and Provider
Services.
2025 IN 503—LS 7353/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
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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.
SENATE BILL No. 503
A BILL FOR AN ACT to amend the Indiana Code concerning
insurance and to make an appropriation.
Be it enacted by the General Assembly of the State of Indiana:
1 SECTION 1. IC 2-5-47-7, AS ADDED BY P.L.203-2023,
2 SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
3 JULY 1, 2025]: Sec. 7. The task force shall do the following:
4 (1) Review and make recommendations concerning the cost of
5 health care in the state and in comparison to other states.
6 (2) Review and make recommendations concerning reductions in
7 health care costs with the goal of ensuring that any reduction in
8 health care prices ultimately reaches the health care payer.
9 (3) Review and make recommendations concerning reports
10 submitted to the task force.
11 (4) Study and make recommendations concerning the availability
12 of value-based care and other health care models that emphasize
13 prevention and cost avoidance.
14 (5) Study and make recommendations concerning the market
15 concentration of health care providers and contributing factors,
16 including:
17 (A) whether:
2025 IN 503—LS 7353/DI 141 2
1 (i) noncompete clauses in practitioner contracts contributes
2 to a restraint of trade; and
3 (ii) prohibiting noncompete clauses would create greater
4 competition in the health workforce;
5 (B) contract tiering with health carriers;
6 (C) all-or-nothing network plans; and
7 (D) disclosure of cost and price information to plan sponsors.
8 (6) Study and make recommendations concerning whether
9 medical consumers would benefit from prohibiting
10 anti-competitive practices or otherwise encouraging increased
11 competition among providers.
12 (7) Study and make recommendations concerning whether
13 medical consumers overall would benefit from reestablishing the
14 former Indiana comprehensive health insurance association
15 policies (IC 27-8-10).
16 (8) Review and make recommendations concerning required
17 reporting for pharmacy benefit managers to the department of
18 insurance, including the report required under IC 27-1-24.5-21.
19 (9) Study and make recommendations concerning whether there
20 is sufficient competition in the commercial insurance market and
21 whether health care consumers would benefit from policies
22 designed to increase competition among commercial carriers,
23 including the promotion of:
24 (A) direct contracting;
25 (B) narrow networks; and
26 (C) insurance brokers.
27 (10) Study and make recommendations concerning whether there
28 is sufficient innovation in the design of health insurance plans,
29 including whether health care consumers would benefit from
30 policies that:
31 (A) better distinguish wellness and prevention from
32 comprehensive and catastrophic coverage;
33 (B) promote price discounts based on individual underwriting;
34 and
35 (C) empower the health care consumer with a focus on
36 prevention and shoppable services.
37 (11) Study and make recommendations concerning the cost of
38 prescription drug benefits as required by IC 27-1-3.7-5.5.
39 (11) (12) Any other topic the task force deems relevant to the
40 oversight of health care costs in Indiana.
41 SECTION 2. IC 4-6-17 IS ADDED TO THE INDIANA CODE AS
42 A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE JULY
2025 IN 503—LS 7353/DI 141 3
1 1, 2025]:
2 Chapter 17. Pharmacy Benefit Compliance Officer
3 Sec. 1. As used in this chapter, "pharmacy benefit partner"
4 refers to a private entity that enters into a public-private
5 partnership with:
6 (1) the state personnel department under IC 5-10-8-27 to
7 administer the prescription drug benefits on behalf of a state
8 employee health plan (as defined in IC 5-10-8-27(f)); or
9 (2) the office under IC 12-15-48 to administer the prescription
10 drug benefits on behalf of the Medicaid program.
11 Sec. 2. The attorney general shall designate or appoint a deputy
12 or an assistant attorney general as a pharmacy benefit compliance
13 officer to perform the duties under section 3 of this chapter.
14 Sec. 3. (a) The pharmacy benefit compliance officer designated
15 under section 2 of this chapter shall do the following:
16 (1) Audit the data received from the state personnel
17 department under IC 5-10-8-27(l) and the office of the
18 secretary of family and social services, including all managed
19 care organizations or programs, under IC 12-15-48-12 to
20 ensure compliance with the following:
21 (A) A contract entered into as a result of the request for
22 proposal issued under IC 5-10-8-27 and IC 12-15-48.
23 (B) Applicable state and federal law.
24 (2) Provide notice to a pharmacy benefit partner or
25 manufacturer if, during an audit conducted under subdivision
26 (1), the pharmacy benefit compliance officer finds that the
27 pharmacy benefit partner or manufacturer is noncompliant.
28 (3) Impose a civil penalty as provided by IC 5-10-8-27(m) and
29 IC 12-15-48-13.
30 (4) Collect fees from a pharmacy benefit partner under
31 IC 5-10-8-27(h)(5) and IC 12-15-48-7(5).
32 (5) On an annual basis:
33 (A) prepare a report summarizing the data received from
34 the state personnel department under IC 5-10-8-27(l) and
35 the office of the secretary of family and social services,
36 including all managed care organizations or programs,
37 under IC 12-15-48-12 during the previous state fiscal year;
38 and
39 (B) submit the report described in clause (A) to the budget
40 committee and the chairperson of the health care cost
41 oversight task force.
42 (b) The pharmacy benefit compliance officer may hire support
2025 IN 503—LS 7353/DI 141 4
1 staff, including an economist, a technologist, and other appropriate
2 subject matter experts.
3 Sec. 4. (a) The pharmacy benefit compliance fund is established
4 for the purposes of this chapter.
5 (b) The fund shall be administered by the attorney general.
6 (c) The fund consist of:
7 (1) fees collected under section 3(4) of this chapter; and
8 (2) any appropriations to the fund by the general assembly.
9 (d) The expenses of administering the fund shall be paid from
10 money in the fund.
11 (e) The treasurer of state shall invest the money in the fund not
12 currently needed to meet the obligations of the fund in the same
13 manner as other public money may be invested. Interest that
14 accrues from these investments shall be deposited in the fund.
15 (f) Money in the fund at the end of a state fiscal year does not
16 revert to the state general fund. Money in the fund is continuously
17 appropriated for the purposes of this chapter.
18 SECTION 3. IC 5-10-8-27 IS ADDED TO THE INDIANA CODE
19 AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY
20 1, 2025]: Sec. 27. (a) As used in this section, "covered individual"
21 means an individual who is covered under a state employee health
22 plan.
23 (b) As used in this section, "pharmacy benefit compliance
24 officer" refers to the pharmacy benefit compliance officer
25 designated by the attorney general under IC 4-6-17-2.
26 (c) As used in this section, "pharmacy benefit manager" means
27 an entity engaged in the administration and management of
28 prescription drug benefits, including:
29 (1) processing claims;
30 (2) managing formularies;
31 (3) negotiating prescription drug prices; and
32 (4) providing prescription drug utilization review services.
33 (d) As used in this section, "pharmacy benefit partner" refers
34 to the private entity that enters into a public-private partnership
35 with the state personnel department under this section to
36 administer the prescription drug benefits on behalf of a state
37 employee health plan.
38 (e) As used in this section, "rebate" has the meaning set forth in
39 IC 27-1-50-7.
40 (f) As used in this section, "state employee health plan" refers
41 to the following plans that provide coverage for prescription drugs:
42 (1) A self-insurance program established under section 7(b) of
2025 IN 503—LS 7353/DI 141 5
1 this chapter.
2 (2) A contract with a prepaid health care delivery plan that is
3 entered into or renewed under section 7(c) of this chapter.
4 (g) Before January 1, 2026, the state personnel department shall
5 issue a request for a proposal to enter into a public-private
6 partnership with a private entity to establish and operate a
7 pharmacy benefit manager to administer all the prescription drug
8 benefits on behalf of a state employee health plan. Under the
9 public-private partnership:
10 (1) the private entity shall manage the pharmacy benefit
11 manager operations; and
12 (2) the state personnel department shall provide oversight of
13 the pharmacy benefit manager operations.
14 (h) The request for proposal described in subsection (g) must
15 include the following requirements for the public-private
16 partnership:
17 (1) The pharmacy benefit partner may not:
18 (A) be affiliated with an insurance company;
19 (B) own a mail, a retail, a specialty, or other type of
20 pharmacy;
21 (C) have any investments or other financial relationships
22 with a pharmacy, a pharmacy network, or a pharmacy
23 group purchasing organizations; or
24 (D) own or have a financial relationship with a
25 prescription drug manufacturer.
26 (2) The pharmacy benefit partner must:
27 (A) demonstrate a commitment to managing prescription
28 drug benefits through financial alignment with prior
29 experience in private and public positions;
30 (B) employ at least two (2) executives who have experience
31 in building a prescription drug benefit plan and serving
32 over ten thousand (10,000) persons;
33 (C) demonstrate prior experience in prescription drug cost
34 savings through prescription drug spending reductions of
35 at least fifteen percent (15%);
36 (D) demonstrate prior experience in cost savings for
37 prescription drug benefits for over three (3) years with a
38 reduced trend in support of a sustainable pharmacy
39 benefit; and
40 (E) demonstrate prior experience in developing and
41 implementing a value based formulary and biosimilar
42 conversion.
2025 IN 503—LS 7353/DI 141 6
1 (3) The following apply to any decisions made by the
2 pharmacy benefit partner when establishing a formulary:
3 (A) The pharmacy benefit partner shall consider:
4 (i) the best value based formulary for the cost and care
5 for a covered individual; and
6 (ii) generic drugs for cost savings.
7 (B) The pharmacy benefit partner may not implement
8 formularies with a preference towards specialty drugs for
9 capturing rebates.
10 (C) A pharmacy benefit partner shall:
11 (i) pass through to the state employee health plan one
12 hundred percent (100%) of all rebates concerning the
13 dispensing or administration of prescription drugs to
14 covered individuals; and
15 (ii) disclose to the state personnel department, as the
16 state agency responsible for the administration of the
17 state employee health plan, clear and transparent
18 evidence of the amount of rebates passed through to the
19 state employee health plan not later than thirty-one (31)
20 days after the end of each month.
21 (D) A manufacturer that:
22 (i) distributes prescription drugs to covered individuals;
23 or
24 (ii) provides rebates for access to prescription drug
25 formularies;
26 shall provide an affidavit to the pharmacy benefit
27 compliance officer on a form prescribed by the pharmacy
28 benefit compliance officer in which the manufacturer
29 commits to reverting to the state employee health plan one
30 hundred percent (100%) of any rebate and any other
31 manufacturer incentives concerning the dispensing or
32 administration of prescription drugs to covered
33 individuals.
34 (4) An administrative fee charged by the pharmacy benefit
35 partner must be based on a flat fee per covered individual.
36 (5) The pharmacy benefit partner shall pay a fee of five
37 dollars ($5) for each covered individual per year to the
38 pharmacy benefit compliance officer. A fee collected under
39 this subdivision must be deposited in the pharmacy benefit
40 compliance fund established by IC 4-6-17-4.
41 (i) The state personnel department shall not award a final
42 contract with a pharmacy benefit partner until the contract has
2025 IN 503—LS 7353/DI 141 7
1 been reviewed by the budget committee. The budget committee
2 shall review the contract for content and clarity to ensure that the
3 contract is consistent with the objectives of the request for
4 proposal.
5 (j) The state personnel department shall make every effort to
6 contract with a pharmacy benefit partner from the request for
7 proposal issued under this section not later than January 1, 2027.
8 (k) The state personnel department shall make any information
9 received from a pharmacy benefit partner under subsection
10 (h)(3)(C) available to the budget committee.
11 (l) After the state personnel department enters into a contract
12 with a pharmacy benefit partner under this section, the state
13 personnel department shall submit to the pharmacy benefit
14 compliance officer a quarterly report that summarizes the:
15 (1) cost of all prescription drug claims; and
16 (2) amount of any rebates passed through to the state
17 employee health plan.
18 (m) A pharmacy benefit partner or manufacturer that violates
19 the terms of an agreed contract entered into under this section or
20 any applicable state or federal law is subject to a civil penalty of
21 one thousand dollars ($1,000) per noncompliant claim. A civil
22 penalty under this section shall be paid to the pharmacy benefit
23 compliance officer not later than ninety (90) days after receiving
24 notice of the violation from the pharmacy benefit compliance
25 officer. A civil penalty collected under this subsection must be
26 deposited in the state general fund.
27 (n) If a pharmacy benefit partner fails to meet the performance
28 metrics outlined in an agreed contract entered into under this
29 section, the state personnel department may reduce the value of the
30 contract or terminate the contract.
31 SECTION 4. IC 5-10-8-28 IS ADDED TO THE INDIANA CODE
32 AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY
33 1, 2025]: Sec. 28. (a) This section establishes the competitive
34 proposal procedure that the state personnel department shall use
35 to enter into a public-private partnership under section 27 of this
36 chapter.
37 (b) The state personnel department may pursue a competitive
38 proposal procedure using a request for qualifications and a request
39 for proposals process or proceed directly to a request for
40 proposals.
41 (c) If the state personnel department elects to use a request for
42 qualifications phase, it must provide a public notice of the request
2025 IN 503—LS 7353/DI 141 8
1 for qualifications, for the period considered appropriate by the
2 state personnel department, before the date set for receipt of
3 submittals in response to the solicitation. The state personnel
4 department shall provide the notice by posting in a designated
5 public area and publication in a newspaper of general circulation,
6 in the manner provided by IC 5-3-1. In addition, submittals in
7 response to the solicitation may be solicited directly from potential
8 offerors.
9 (d) The state personnel department shall evaluate qualification
10 submittals based on the requirements and evaluation criteria set
11 forth in the request for qualifications.
12 (e) If the state personnel department has undertaken a request
13 for qualifications phase resulting in one (1) or more prequalified or
14 shortlisted offerors, the request for proposals shall be limited to
15 those offerors that have been prequalified or shortlisted.
16 (f) If the state personnel department has not issued a request for
17 qualifications and intends to use only a one (1) phase request for
18 proposals procurement, the state personnel department must
19 provide a public notice of the request for proposals for the period
20 considered appropriate by the state personnel department, before
21 the date set for receipt of proposals. The state personnel
22 department shall provide the notice by posting in a designated
23 public area and publication in a newspaper of general circulation,
24 in the manner provided by IC 5-3-1. In addition, proposals may be
25 solicited directly from potential offerors.
26 (g) The state personnel department shall submit a draft of the
27 request for proposals to the budget committee for its review before
28 the issuance by the state personnel department of the request for
29 proposals to potential offerors. The request for proposals must:
30 (1) indicate in general terms the scope of work, goods, and
31 services sought to be procured;
32 (2) contain or incorporate by reference the specifications and
33 contractual terms and conditions applicable to the
34 procurement;
35 (3) specify the factors, criteria, and other information that
36 will be used in evaluating the proposals;
37 (4) specify any requirements or goals for use of:
38 (A) minority business enterprises and women's business
39 enterprises certified under IC 4-13-16.5;
40 (B) disadvantaged business enterprises under federal or
41 state law;
42 (C) businesses defined under IC 5-22-15-20.5 as Indiana
2025 IN 503—LS 7353/DI 141 9
1 businesses, to the extent permitted by applicable federal
2 and state law and regulations; and
3 (D) businesses that qualify for a small business set-aside
4 under IC 4-13.6-2-11;
5 (5) contain or incorporate by reference the other applicable
6 contractual terms and conditions; and
7 (6) contain or incorporate by reference any other provisions,
8 materials, or documents that the state personnel department
9 considers appropriate.
10 (h) The state personnel department shall set forth criteria in the
11 request for proposals in accordance with the requirements under
12 section 27 of this chapter. The state personnel department may use
13 a selection process that results in selection of the proposal offering
14 the best value to the public, a selection process that results in
15 selection of the proposal offering the lowest price or cost, or any
16 other selection process that the state personnel department
17 determines is in the best interests of the state and the public.
18 (i) The state personnel department shall evaluate proposals
19 based on the requirements and evaluation criteria set forth in the
20 request for proposals.
21 (j) The state personnel department may select one (1) or more
22 offerors for negotiations based on the evaluation criteria set forth
23 in the request for proposals. If the state personnel department
24 believes that negotiations with the selected offeror or offerors are
25 not likely to result in a contract, or, in the case of a best value
26 selection process, no longer reflect the best value to the state and
27 the public, the state personnel department may commence
28 negotiations with other responsive offerors, if any, and may
29 suspend, terminate, or continue negotiations with the original
30 offeror or offerors. If negotiations are unsuccessful, the state
31 personnel department shall terminate the procurement, may not
32 award the contract, and may commence a new procurement for a
33 contract. If the state personnel department determines that
34 negotiations with an offeror have been successfully completed, the
35 state personnel department shall, subject to the other requirements
36 of section 27 of this chapter and this section, award the contract to
37 the offeror.
38 (k) Before awarding a contract to an offeror, the state personnel
39 department shall schedule a public hearing on the preliminary
40 selection of the offeror and the terms of the proposed contract. The
41 state personnel department shall do the following:
42 (1) At least ten (10) days before the public hearing, post on the
2025 IN 503—LS 7353/DI 141 10
1 state personnel department's website:
2 (A) the proposal submitted by the offeror that has been
3 preliminarily selected, except for those parts of the
4 proposal that are confidential; and
5 (B) the proposed contract.
6 (2) At least ten (10) days before the public hearing:
7 (A) post notice of the public hearing on the state personnel
8 department's website; and
9 (B) publish notice of the hearing one (1) time in accordance
10 with IC 5-3-1 in two (2) newspapers of general circulation.
11 (3) Include the following in the notices required by
12 subdivision (2):
13 (A) The date, time, and place of the hearing.
14 (B) The subject matter of the hearing.
15 (C) A description of the contract to be awarded.
16 (D) The recommendation that has been made to award the
17 contract to an identified offeror.
18 (E) The address and telephone number of the state
19 personnel department.
20 (F) A statement indicating that, except for those portions
21 that are confidential, the following are available on the
22 state personnel department's website and are also available
23 for public inspection and copying at the principal office of
24 the state personnel department during regular business
25 hours:
26 (i) The selected offer.
27 (ii) An explanation of the basis upon which the
28 preliminary selection was made.
29 (iii) The proposed contract.
30 (l) At the hearing, the state personnel department shall allow the
31 public to be heard on the preliminary selection of the offeror and
32 the terms of the proposed contract.
33 SECTION 5. IC 12-15-13.6-1, AS AMENDED BY P.L.233-2023,
34 SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
35 JULY 1, 2025]: Sec. 1. (a) Once every three (3) state fiscal years:
36 (1) the state board of accounts; or
37 (2) an independent auditor with experience auditing expenses
38 related to prescription drugs that is hired by the state board of
39 accounts;
40 shall conduct an audit examining prescription drug cost sharing for the
41 Medicaid program.
42 (b) The attorney general may, for an audit described under
2025 IN 503—LS 7353/DI 141 11
1 IC 27-1-3.7, IC 27-1-3.7-3, issue a request for proposal under
2 IC 27-1-3.7 to evaluate and determine whether to include the following
3 in the request for proposal for the audit:
4 (1) Cost sharing.
5 (2) Spread pricing.
6 (3) Patient steering.
7 (4) Proper brand and generic definitions.
8 (5) Effective rate clawbacks.
9 (6) Medical loss ratio inflation.
10 (7) Formulary compliance.
11 (8) Discriminatory pricing.
12 (9) Specialty drug definition and categorization.
13 (10) Adherence to contracted pricing terms.
14 (11) Adherence to plan design, including:
15 (A) quantity limits; and
16 (B) prior authorization guidelines.
17 (12) Under market reimbursements to pharmacies.
18 (13) Dispensing fees.
19 (14) Lesser of logic pricing.
20 (15) Fraud, waste, and abuse.
21 (16) Rebates.
22 (17) Compliance with federal law.
23 (18) Review of practices of any of the following used within the
24 Medicaid program:
25 (A) Managed care organizations.
26 (B) Pharmacies.
27 (C) Pharmacy services administrative organizations.
28 (D) Wholesalers.
29 (E) Drug manufacturers.
30 (19) Any other metric determined by the attorney general for
31 inclusion in the audit of the Medicaid program.
32 This subsection expires December 31, 2025.
33 SECTION 6. IC 12-15-48 IS ADDED TO THE INDIANA CODE
34 AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE
35 JULY 1, 2025]:
36 Chapter 48. Selection of Pharmacy Benefit Manager
37 Sec. 1. As used in this chapter, "office" refers to the office of the
38 secretary of family and social services.
39 Sec. 2. As used in this chapter, "pharmacy benefit compliance
40 officer" refers to the pharmacy benefit compliance officer
41 designated by the attorney general under IC 4-6-17-2.
42 Sec. 3. As used in this section, "pharmacy benefit manager"
2025 IN 503—LS 7353/DI 141 12
1 means an entity engaged in the administration and management of
2 prescription drug benefits, including:
3 (1) processing claims;
4 (2) managing formularies;
5 (3) negotiating prescription drug prices; and
6 (4) providing prescription drug utilization review services.
7 Sec. 4. As used in this section, "pharmacy benefit partner"
8 refers to the private entity that enters into a public-private
9 partnership with the office under this chapter to administer the
10 prescription drug benefits on behalf of the Medicaid program.
11 Sec. 5. As used in this chapter, "rebate" has the meaning set
12 forth in IC 27-1-50-7.
13 Sec. 6. Before July 1, 2027, the office shall issue a request for a
14 proposal to enter into a public-private partnership with a private
15 entity to establish and operate a pharmacy benefit manager to
16 administer all the prescription drug benefits on behalf of the
17 Medicaid program. Under the public-private partnership:
18 (1) the private entity shall manage the pharmacy benefit
19 manager operations; and
20 (2) the office shall provide oversight of the pharmacy benefit
21 manager operations.
22 Sec. 7. The request for proposal described in section 6 of this
23 chapter must include the following requirements for the
24 public-private partnership:
25 (1) The pharmacy benefit partner may not:
26 (A) be affiliated with an insurance company;
27 (B) own a mail, a retail, a specialty, or other type of
28 pharmacy;
29 (C) have any investments or other financial relationships
30 with a pharmacy, a pharmacy network, or a pharmacy
31 group purchasing organizations; or
32 (D) own or have a financial relationship with a
33 prescription drug manufacturer.
34 (2) The pharmacy benefit partner must:
35 (A) demonstrate a commitment to managing prescription
36 drug benefits through financial alignment with prior
37 experience in private and public positions;
38 (B) employ at least two (2) executives who have experience
39 in building a prescription drug benefit plan and serving
40 over ten thousand (10,000) persons;
41 (C) demonstrate prior experience in prescription drug cost
42 savings through prescription drug spending reductions of
2025 IN 503—LS 7353/DI 141 13
1 at least fifteen percent (15%);
2 (D) demonstrate prior experience in cost savings for
3 prescription drug benefits for over three (3) years with a
4 reduced trend in support of a sustainable pharmacy
5 benefit; and
6 (E) demonstrate prior experience in developing and
7 implementing a value based formulary and biosimilar
8 conversion.
9 (3) The following apply to any decisions made by the
10 pharmacy benefit partner when establishing a formulary:
11 (A) The pharmacy benefit partner shall consider:
12 (i) the best value based formulary for the cost and care
13 for a Medicaid recipient; and
14 (ii) generic drugs for cost savings.
15 (B) The pharmacy benefit partner may not implement
16 formularies with a preference towards specialty drugs for
17 capturing rebates.
18 (C) A pharmacy benefit partner shall:
19 (i) pass through to the Medicaid program one hundred
20 percent (100%) of all rebates concerning the dispensing
21 or administration of prescription drugs to Medicaid
22 recipients; and
23 (ii) disclose to the office, as the state agency responsible
24 for the administration of the Medicaid program, clear
25 and transparent evidence of the amount of rebates
26 passed through to the Medicaid program not later than
27 thirty-one (31) days after the end of each month.
28 (D) A manufacturer that:
29 (i) distributes prescription drugs to Medicaid recipients;
30 or
31 (ii) provides rebates for access to prescription drug
32 formularies;
33 shall provide an affidavit to the pharmacy benefit
34 compliance officer on a form prescribed by the pharmacy
35 benefit compliance officer in which the manufacturer
36 commits to reverting to the Medicaid program one
37 hundred percent (100%) of any rebate and any other
38 manufacturer incentives concerning the dispensing or
39 administration of prescription drugs to Medicaid
40 recipients.
41 (4) An administrative fee charged by the pharmacy benefit
42 partner must be based on a flat fee per Medicaid recipient.
2025 IN 503—LS 7353/DI 141 14
1 (5) The pharmacy benefit partner shall pay a fee of five
2 dollars ($5) for each Medicaid recipient per year to the
3 pharmacy benefit compliance officer. A fee collected under
4 this subdivision must be deposited in the pharmacy benefit
5 compliance fund established by IC 4-6-17-4.
6 Sec. 8. (a) This section establishes the competitive proposal
7 procedure that the office shall use to enter into a public-private
8 partnership under this chapter.
9 (b) The office may pursue a competitive proposal procedure
10 using a request for qualifications and a request for proposals
11 process or proceed directly to a request for proposals.
12 (c) If the office elects to use a request for qualifications phase,
13 it must provide a public notice of the request for qualifications, for
14 the period considered appropriate by the office, before the date set
15 for receipt of submittals in response to the solicitation. The office
16 shall provide the notice by posting in a designated public area and
17 publication in a newspaper of general circulation, in the manner
18 provided by IC 5-3-1. In addition, submittals in response to the
19 solicitation may be solicited directly from potential offerors.
20 (d) The office shall evaluate qualification submittals based on
21 the requirements and evaluation criteria set forth in the request for
22 qualifications.
23 (e) If the office has undertaken a request for qualifications
24 phase resulting in one (1) or more prequalified or shortlisted
25 offerors, the request for proposals shall be limited to those offerors
26 that have been prequalified or shortlisted.
27 (f) If the office has not issued a request for qualifications and
28 intends to use only a one (1) phase request for proposals
29 procurement, the office must provide a public notice of the request
30 for proposals for the period considered appropriate by the office,
31 before the date set for receipt of proposals. The office shall provide
32 the notice by posting in a designated public area and publication in
33 a newspaper of general circulation, in the manner provided by
34 IC 5-3-1. In addition, proposals may be solicited directly from
35 potential offerors.
36 (g) The office shall submit a draft of the request for proposals
37 to the budget committee for its review before the issuance by the
38 office of the request for proposals to potential offerors. The request
39 for proposals must:
40 (1) indicate in general terms the scope of work, goods, and
41 services sought to be procured;
42 (2) contain or incorporate by reference the specifications and
2025 IN 503—LS 7353/DI 141 15
1 contractual terms and conditions applicable to the
2 procurement;
3 (3) specify the factors, criteria, and other information that
4 will be used in evaluating the proposals;
5 (4) specify any requirements or goals for use of:
6 (A) minority business enterprises and women's business
7 enterprises certified under IC 4-13-16.5;
8 (B) disadvantaged business enterprises under federal or
9 state law;
10 (C) businesses defined under IC 5-22-15-20.5 as Indiana
11 businesses, to the extent permitted by applicable federal
12 and state law and regulations; and
13 (D) businesses that qualify for a small business set-aside
14 under IC 4-13.6-2-11;
15 (5) contain or incorporate by reference the other applicable
16 contractual terms and conditions; and
17 (6) contain or incorporate by reference any other provisions,
18 materials, or documents that the office considers appropriate.
19 (h) The office shall set forth criteria in the request for proposals
20 in accordance with the requirements under this chapter. The office
21 may use a selection process that results in selection of the proposal
22 offering the best value to the public, a selection process that results
23 in selection of the proposal offering the lowest price or cost, or any
24 other selection process that the office determines is in the best
25 interests of the state and the public.
26 (i) The office shall evaluate proposals based on the requirements
27 and evaluation criteria set forth in the request for proposals.
28 (j) The office may select one (1) or more offerors for
29 negotiations based on the evaluation criteria set forth in the
30 request for proposals. If the office believes that negotiations with
31 the selected offeror or offerors are not likely to result in a contract,
32 or, in the case of a best value selection process, no longer reflect the
33 best value to the state and the public, the office may commence
34 negotiations with other responsive offerors, if any, and may
35 suspend, terminate, or continue negotiations with the original
36 offeror or offerors. If negotiations are unsuccessful, the office shall
37 terminate the procurement, may not award the contract, and may
38 commence a new procurement for a contract. If the office
39 determines that negotiations with an offeror have been successfully
40 completed, the office shall, subject to the other requirements of this
41 chapter, award the contract to the offeror.
42 (k) Before awarding a contract to an offeror, the office shall
2025 IN 503—LS 7353/DI 141 16
1 schedule a public hearing on the preliminary selection of the
2 offeror and the terms of the proposed contract. The office shall do
3 the following:
4 (1) At least ten (10) days before the public hearing, post on the
5 office's website:
6 (A) the proposal submitted by the offeror that has been
7 preliminarily selected, except for those parts of the
8 proposal that are confidential; and
9 (B) the proposed contract.
10 (2) At least ten (10) days before the public hearing:
11 (A) post notice of the public hearing on the office's website;
12 and
13 (B) publish notice of the hearing one (1) time in accordance
14 with IC 5-3-1 in two (2) newspapers of general circulation.
15 (3) Include the following in the notices required by
16 subdivision (2):
17 (A) The date, time, and place of the hearing.
18 (B) The subject matter of the hearing.
19 (C) A description of the contract to be awarded.
20 (D) The recommendation that has been made to award the
21 contract to an identified offeror.
22 (E) The address and telephone number of the office.
23 (F) A statement indicating that, except for those portions
24 that are confidential, the following are available on the
25 office's website and are also available for public inspection
26 and copying at the principal office of the office during
27 regular business hours:
28 (i) The selected offer.
29 (ii) An explanation of the basis upon which the
30 preliminary selection was made.
31 (iii) The proposed contract.
32 (l) At the hearing, the office shall allow the public to be heard on
33 the preliminary selection of the offeror and the terms of the
34 proposed contract.
35 Sec. 9. The office shall not award a final contract with a
36 pharmacy benefit partner until the contract has been reviewed by
37 the budget committee. The budget committee shall review the
38 contract for content and clarity to ensure that the contract is
39 consistent with the objectives of the request for proposal.
40 Sec. 10. The office shall make every effort to contract with a
41 pharmacy benefit partner from the request for proposal issued
42 under this chapter not later than July 1, 2028.
2025 IN 503—LS 7353/DI 141 17
1 Sec. 11. The office shall make any information received from a
2 pharmacy benefit partner under section 7(3)(C) of this chapter
3 available to the budget committee.
4 Sec. 12. After the office enters into a contract with a pharmacy
5 benefit partner under this chapter, the office shall submit to the
6 pharmacy benefit compliance officer a quarterly report that
7 summarizes the:
8 (1) cost of all prescription drug claims; and
9 (2) amount of any rebates passed through to the Medicaid
10 program.
11 Sec. 13. A pharmacy benefit partner or manufacturer that
12 violates the terms of an agreed contract entered into under this
13 chapter or any applicable state or federal law is subject to a civil
14 penalty of one thousand dollars ($1,000) per noncompliant claim.
15 A civil penalty under this section shall be paid to the pharmacy
16 benefit compliance officer not later than ninety (90) days after
17 receiving notice of the violation from the pharmacy benefit
18 compliance officer. A civil penalty collected under this subsection
19 must be deposited in the state general fund.
20 Sec. 14. If a pharmacy benefit partner fails to meet the
21 performance metrics outlined in an agreed contract entered into
22 under this chapter, the office may reduce the value of the contract
23 or terminate the contract.
24 SECTION 7. IC 27-1-3.7-1.5 IS ADDED TO THE INDIANA
25 CODE AS A NEW SECTION TO READ AS FOLLOWS
26 [EFFECTIVE JULY 1, 2025]: Sec. 1.5. As used in this chapter,
27 "pharmacy benefit partner" refers to a private entity that enters
28 into a public-private partnership with:
29 (1) the state personnel department under IC 5-10-8-27 to
30 administer the prescription drug benefits on behalf of a state
31 employee health plan; or
32 (2) the office of the secretary of family and social services
33 under IC 12-15-48 to administer the prescription drug
34 benefits on behalf of the Medicaid program.
35 SECTION 8. IC 27-1-3.7-4, AS ADDED BY P.L.233-2023,
36 SECTION 6, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
37 JULY 1, 2025]: Sec. 4. (a) For an audit conducted under section 3 of
38 this chapter, the audit look back period must be the previous five (5)
39 state fiscal years.
40 (b) The:
41 (1) state personnel department;
42 (2) office of the secretary of family and social services; and
2025 IN 503—LS 7353/DI 141 18
1 (3) private agency, business firm, limited liability company, or
2 corporation with which the state personnel department or the
3 office of the secretary has contracted for administrative services;
4 shall provide the necessary data to the auditor to complete an audit
5 described in this chapter.
6 SECTION 9. IC 27-1-3.7-5, AS ADDED BY P.L.233-2023,
7 SECTION 6, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
8 JULY 1, 2025]: Sec. 5. Before September 1, 2024, the attorney general
9 shall provide the results of an audit conducted under section 3 of this
10 chapter to the interim study committee on public health, behavioral
11 health, and human services established by IC 2-5-1.3-4 in an electronic
12 format under IC 5-14-6.
13 SECTION 10. IC 27-1-3.7-5.5 IS ADDED TO THE INDIANA
14 CODE AS A NEW SECTION TO READ AS FOLLOWS
15 [EFFECTIVE JULY 1, 2025]: Sec. 5.5. (a) At least three (3) years
16 after:
17 (1) the state personnel department enters into a contract
18 under IC 5-10-8-27; and
19 (2) the office of the secretary of family and social services
20 enters into a contract under IC 12-15-48;
21 with a pharmacy benefit partner, the attorney general shall
22 conduct a state employee health plan audit and a Medicaid audit
23 that evaluates the same metrics that were included in the audit of
24 prescription drugs conducted under section 3 of this chapter and
25 the metrics described in subsection (b).
26 (b) The following performance metrics must be used to evaluate
27 the pharmacy benefit partner's effectiveness:
28 (1) Annual reductions in the cost of prescription drugs for
29 covered individuals (as defined in IC 5-10-8-27(a)) and
30 Medicaid recipients.
31 (2) Availability of covered prescription drugs and timely
32 processing of claims.
33 (3) Improved health outcomes through proper medication
34 management, including reductions in hospitalizations related
35 to medication nonadherence.
36 (4) Annual surveys of covered individuals (as defined in
37 IC 5-10-8-27(a)) and Medicaid recipients to gauge satisfaction
38 with the pharmacy benefit partner's services.
39 (c) For an audit conducted under this section, the audit look
40 back period must be the previous three (3) state fiscal years.
41 (d) The attorney general shall provide the results of an audit
42 conducted under this section to the health care cost oversight task
2025 IN 503—LS 7353/DI 141 19
1 force established by IC 2-5-47-3.
2 (e) If the cost of prescription drugs for the state employee health
3 plan and the Medicaid program have not decreased by at least
4 twenty-five percent (25%) during the look back period of the audit
5 under this section, the health care cost oversight task force shall
6 study and make recommendations concerning the cost of
7 prescription drug benefits.
8 SECTION 11. IC 27-1-3.7-6 IS REPEALED [EFFECTIVE JULY
9 1, 2025]. Sec. 6. This chapter expires December 31, 2025.
10 SECTION 12. IC 27-1-24.5-1.3 IS ADDED TO THE INDIANA
11 CODE AS A NEW SECTION TO READ AS FOLLOWS
12 [EFFECTIVE JULY 1, 2025]: Sec. 1.3. (a) As used in this chapter,
13 "discount card" means a card, purchasing mechanism, or device,
14 that:
15 (1) is not insurance; and
16 (2) purports to offer discounts or access to discounts for retail
17 purchases of prescription drugs from licensed pharmacies.
18 (b) The term does not include the following:
19 (1) A health plan provided by a self-insured employer.
20 (2) A state employee health plan (as defined in IC 5-10-8-6.7).
21 (3) A policy of accident and sickness insurance (as defined in
22 IC 27-8-5-1). However, the term does not include the
23 coverages described in IC 27-8-5-2.5(a).
24 (4) An individual contract (as defined in IC 27-13-1-21) or a
25 group contract (as defined in IC 27-13-1-16) that provides
26 coverage for basic health care services (as defined in
27 IC 27-13-1-4).
28 SECTION 13. IC 27-1-24.5-2, AS ADDED BY P.L.68-2020,
29 SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
30 JULY 1, 2025]: Sec. 2. As used in this chapter, "effective rate of
31 reimbursement" includes the following:
32 (1) Generic effective rates.
33 (2) Brand effective rates.
34 (3) Direct and indirect remuneration fees.
35 (4) Any failure to pay the total reimbursement rate not later
36 than twenty-one (21) days after the provision of pharmacist
37 services.
38 (4) (5) Any other reduction or aggregate reduction of payment
39 after the initial adjudication.
40 SECTION 14. IC 27-1-24.5-3, AS ADDED BY P.L.68-2020,
41 SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
42 JULY 1, 2025]: Sec. 3. As used in this chapter, "equal access and
2025 IN 503—LS 7353/DI 141 20
1 incentives" means that a pharmacy benefit manager allows any willing
2 pharmacy provider to participate, as part of any of the pharmacy benefit
3 manager's networks through an agreement or health plan contract,
4 to provide pharmacist services as long as the pharmacy provider
5 agrees to the terms and conditions of the relevant agreement or
6 contract. applicable to any other pharmacy provider within that
7 network.
8 SECTION 15. IC 27-1-24.5-14, AS ADDED BY P.L.68-2020,
9 SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
10 JULY 1, 2025]: Sec. 14. As used in this chapter, "pharmacy benefit
11 manager network" provider" means a group of any pharmacies or
12 pharmacists that is are offered:
13 (1) through an agreement or health plan contract; and
14 (2) to provide pharmacist services for health plans.
15 SECTION 16. IC 27-1-24.5-16.5 IS ADDED TO THE INDIANA
16 CODE AS A NEW SECTION TO READ AS FOLLOWS
17 [EFFECTIVE JULY 1, 2025]: Sec. 16.5. As used in this chapter,
18 "specialty drug" means a subset of prescription drugs that meet a
19 majority of the following criteria:
20 (1) Require special handling or storage.
21 (2) Require complex and extended patient education or
22 counseling.
23 (3) Require intensive monitoring.
24 (4) Require clinical oversight.
25 (5) Require product support services for drugs that are used
26 to treat medical conditions that:
27 (A) are:
28 (i) chronic and complex; or
29 (ii) rare; and
30 (B) can be:
31 (i) progressive; or
32 (ii) debilitating or fatal if left untreated or undertreated.
33 SECTION 17. IC 27-1-24.5-19, AS AMENDED BY P.L.196-2021,
34 SECTION 22, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
35 JULY 1, 2025]: Sec. 19. (a) A pharmacy benefit manager shall provide
36 the following:
37 (1) Equal access and incentives to all pharmacies within the
38 pharmacy benefit manager's network. pharmacy providers.
39 (2) A reasonably adequate and accessible pharmacy benefit
40 manager network for the provision of prescription drugs for
41 a health plan that provides for convenient patient access to
42 pharmacies, including a brick and mortar location to the
2025 IN 503—LS 7353/DI 141 21
1 extent possible, within a reasonable distance from a patient's
2 residence.
3 (3) A pharmacy provider that is not a mail order or Internet
4 based pharmacy (as defined in IC 25-26-18-1) not more than
5 thirty (30) miles from each covered individual's residence to
6 the extent that pharmacy or pharmacist services are available
7 within the area.
8 (b) A pharmacy benefit manager may not do any of the following:
9 (1) Condition a pharmacy provider's participation in any
10 network on accreditation, credentialing, or licensing of a
11 pharmacy, other than a license or permit required by the Indiana
12 board of pharmacy or other state or federal regulatory authority
13 for the services provided by the pharmacy. However, nothing in
14 this subdivision precludes the department from providing
15 credentialing or accreditation standards for pharmacies.
16 (2) Discriminate against any pharmacy.
17 (3) Directly or indirectly retroactively deny a claim or aggregate
18 of claims after the claim or aggregate of claims has been
19 adjudicated, unless any of the following apply:
20 (A) The original claim was submitted fraudulently.
21 (B) The original claim payment was incorrect because the
22 pharmacy or pharmacist had already been paid for the drug.
23 (C) The pharmacist services were not properly rendered by the
24 pharmacy or pharmacist.
25 (4) Reduce, directly or indirectly, payment to a pharmacy for
26 pharmacist services to an effective rate of reimbursement,
27 including permitting an insurer or plan sponsor to make such a
28 reduction.
29 (5) Reimburse a pharmacy that is affiliated with the pharmacy
30 benefit manager, other than solely being included in the pharmacy
31 benefit manager's network, at a greater reimbursement rate than
32 other pharmacies in the same network. pharmacy providers.
33 (6) Impose limits, including quantity limits or refill frequency
34 limits, on a pharmacy's access to medication that differ from those
35 existing for a pharmacy benefit manager affiliate.
36 (7) Share any covered individual's information, including
37 de-identified covered individual information, received from a
38 pharmacy or pharmacy benefit manager affiliate, except as
39 permitted by the federal Health Insurance Portability and
40 Accountability Act (HIPAA) (P.L.104-191).
41 (8) Prohibit, limit, or financially incentivize any covered
42 individual from selecting a pharmacy or pharmacist of the
2025 IN 503—LS 7353/DI 141 22
1 individual's choice if the pharmacy or pharmacist is a covered
2 provider under the health plan according to the terms offered
3 by the health plan to the covered individual.
4 (9) Impose any copayment, fee, or condition on a covered
5 individual of pharmacist services under a health plan that is
6 not equally imposed on all covered individuals.
7 (10) Impose any copayment, fee, or condition on a beneficiary
8 of pharmacy services under a health plan that is not equally
9 imposed on all beneficiaries in the same benefit category,
10 class, or copayment level under the health plan when
11 receiving services from a participating pharmacy or
12 pharmacist.
13 (11) Impose a monetary advantage or penalty under a health
14 plan or pharmacy that would affect a beneficiary's choice
15 among the pharmacies or pharmacists who have agreed to
16 participate in the health plan according to the terms offered
17 by the health plan. For purposes of this subdivision, monetary
18 advantage or penalty includes any of the following:
19 (A) Higher copayment.
20 (B) Higher cost to the insurer or health plan.
21 (C) A reduction in reimbursement for services.
22 (D) Promotion of one (1) participating pharmacy over
23 another by any of the methods listed in clauses (A) through
24 (C).
25 (12) Prohibit or otherwise limit a beneficiary's access to
26 prescription drugs from a pharmacy or pharmacist enrolled
27 with the health plan under the terms offered to all pharmacies
28 in the health plan coverage area by unreasonably designating
29 the covered prescription drug as a specialty drug.
30 (13) Limit a beneficiary's access to specialty drugs, including
31 any of the following actions:
32 (A) Designating a drug as a specialty drug based solely on
33 cost.
34 (B) Designating a drug that does not meet the requirements
35 of a specialty drug as a specialty drug.
36 (C) Designating a drug that meets the requirements of a
37 specialty drug as a nonspecialty drug.
38 (14) Reimburse a pharmacy or pharmacist for a prescription
39 drug or pharmacy service in an amount less than the
40 pharmacy's acquisition cost reported by the pharmacy or
41 pharmacist for the prescription drug or pharmacy service
42 plus a professional dispensing fee equal to the Medicaid fee
2025 IN 503—LS 7353/DI 141 23
1 for service dispensing fee under 405 IAC 5-24-6.
2 (15) Charge a fee in connection with the submission,
3 transmission, or reimbursement of the provision of any
4 pharmacist services.
5 (16) Charge a fee, require an inspection, or invoke a waiting
6 period to a pharmacy provider for credentialing.
7 (17) Institute aberrant quantity and volume provisions as a
8 requirement for pharmacy provider inclusion.
9 (18) Prohibit:
10 (A) the provision of prescription delivery or mail order
11 services within, into, or outside of Indiana; or
12 (B) a pharmacy or pharmacist from charging a patient for
13 the cost of the delivery or mail order services described in
14 clause (A).
15 (19) Prohibit a pharmacy or pharmacist from:
16 (A) refusing to fill a prescription; or
17 (B) communicating with a health plan regarding any
18 aspect of the pharmacist services provided as part of the
19 health plan benefits under which the pharmacy or
20 pharmacist provides pharmacist services, including rates
21 of reimbursement, network adequacy, or restrictions on
22 services or patient care.
23 (20) Require a pharmacy or pharmacist to dispense a
24 prescription in quantities that financially disadvantage the
25 pharmacy or pharmacist, subject to the pharmacy or
26 pharmacist's compliance with applicable laws.
27 (21) Impose any requirements on a pharmacy or pharmacist
28 for participation in a pharmacy network that are not also
29 imposed on a pharmacy benefit manager affiliate.
30 (22) Adjudicate a covered individual's claim utilizing a
31 discount card unless the pharmacy benefit manager does the
32 following:
33 (A) Clearly describes the nature of the use of a discount
34 card in any contract with a pharmacy, pharmacy provider,
35 pharmacy services administrative organization, and a
36 health plan.
37 (B) Ensures that no retroactive or post claim adjudication,
38 fee, or any other financial cost regardless of name is
39 charged to a pharmacy provider for use of a discount card.
40 (C) Ensures that the pharmacy provider is reimbursed at
41 a rate that complies with subdivision (14) after a discount
42 card is applied.
2025 IN 503—LS 7353/DI 141 24
1 (D) Notifies the adjudicating pharmacy or pharmacist that
2 the claim may be adjudicated utilizing a discount card at
3 the point of sale.
4 (E) Allows the covered individual the opportunity to elect
5 not to utilize a discount card.
6 A violation of this subsection by a pharmacy benefit manager
7 constitutes an unfair or deceptive act or practice in the business of
8 insurance under IC 27-4-1-4.
9 SECTION 18. IC 27-1-24.5-21, AS ADDED BY P.L.68-2020,
10 SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
11 JULY 1, 2025]: Sec. 21. (a) Beginning June 1, 2021, and annually
12 thereafter, a pharmacy benefit manager shall submit a report containing
13 data from the immediately preceding calendar year to the
14 commissioner. The commissioner shall determine what must be
15 included in the report and consider the following information to be
16 included in the report:
17 (1) The aggregate amount of all rebates that the pharmacy benefit
18 manager received from all pharmaceutical manufacturers for:
19 (A) all insurers; and
20 (B) each insurer;
21 with which the pharmacy benefit manager contracted during the
22 immediately preceding calendar year.
23 (2) The aggregate amount of administrative fees that the
24 pharmacy benefit manager received from all pharmaceutical
25 manufacturers for:
26 (A) all insurers; and
27 (B) each insurer;
28 with which the pharmacy benefit manager contracted during the
29 immediately preceding calendar year.
30 (3) The aggregate amount of retained rebates that the pharmacy
31 benefit manager received from all pharmaceutical manufacturers
32 and did not pass through to insurers with which the pharmacy
33 benefit manager contracted during the immediately preceding
34 calendar year.
35 (4) The highest, lowest, and mean aggregate retained rebate for:
36 (A) all insurers; and
37 (B) each insurer;
38 with which the pharmacy benefit manager contracted during the
39 immediately preceding calendar year.
40 (5) An adequacy report describing the pharmacy benefit
41 manager network and the pharmacy benefit manager
42 network's accessibility in Indiana.
2025 IN 503—LS 7353/DI 141 25
1 (6) Any and all pharmacy benefit manager affiliates in
2 Indiana.
3 (b) A pharmacy benefit manager that provides information under
4 this section may designate the information as a trade secret (as defined
5 in IC 24-2-3-2). Information designated as a trade secret under this
6 subsection must not be published unless required under subsection (c).
7 (c) Disclosure of information designated as a trade secret under
8 subsection (b) may be ordered by a court of Indiana for good cause
9 shown or made in a court filing.
10 SECTION 19. IC 27-1-24.5-22, AS AMENDED BY P.L.196-2021,
11 SECTION 24, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
12 JULY 1, 2025]: Sec. 22. (a) A pharmacy benefit manager shall do the
13 following:
14 (1) Identify to contracted:
15 (A) pharmacy services administrative organizations; or
16 (B) pharmacies if the pharmacy benefit manager contracts
17 directly with pharmacies;
18 the sources used by the pharmacy benefit manager to calculate the
19 drug product reimbursement paid for covered drugs available
20 under the pharmacy health plan administered by the pharmacy
21 benefit manager.
22 (2) Establish an appeal process for contracted pharmacies,
23 pharmacy services administrative organizations, or group
24 purchasing organizations to appeal and resolve disputes
25 concerning the maximum allowable cost pricing.
26 (3) Update and make available to pharmacies:
27 (A) at least every seven (7) days; or
28 (B) in a different time frame if contracted between a pharmacy
29 benefit manager and a pharmacy;
30 the pharmacy benefit manager's maximum allowable cost list.
31 (4) Determine that a prescription drug:
32 (A) is not obsolete;
33 (B) is generally available for purchase by pharmacies in
34 Indiana from a national or regional wholesaler licensed in
35 Indiana; and
36 (C) is not:
37 (i) temporarily unavailable;
38 (ii) listed on a drug shortage list; or
39 (iii) unable to be lawfully substituted;
40 before the prescription drug is placed or continued on a maximum
41 allowable cost list.
42 (b) The appeal process required by subsection (a)(2) must include
2025 IN 503—LS 7353/DI 141 26
1 the following:
2 (1) The right to appeal a claim not to exceed sixty (60) days
3 following the initial filing of the claim.
4 (2) The investigation and resolution of a filed appeal by the
5 pharmacy benefit manager in a time frame determined by the
6 commissioner.
7 (3) If an appeal is denied, a requirement that the pharmacy benefit
8 manager do the following:
9 (A) Provide the reason for the denial.
10 (B) Provide the appealing contracted pharmacy, pharmacy
11 services administrative organization, or group purchasing
12 organization with the national drug code number of the
13 prescription drug that is available from a national or regional
14 wholesaler operating in Indiana to be purchased by the
15 contracted pharmacy, pharmacy services administrative
16 organization, or group purchasing organization at the
17 listed maximum allowable cost.
18 (4) If an appeal is approved, a requirement that the pharmacy
19 benefit manager do the following:
20 (A) Change the maximum allowable cost of the drug for the
21 pharmacy that filed the appeal as of the initial date of service
22 that the appealed drug was dispensed.
23 (B) Adjust the maximum allowable cost of the drug for the
24 appealing pharmacy and for all other contracted pharmacies in
25 the same network of the pharmacy benefit manager that filled
26 a prescription for patients covered under the same health plan
27 beginning on the initial date of service the appealed drug was
28 dispensed.
29 (C) Notify each pharmacy in the pharmacy benefit manager's
30 network that the maximum allowable cost for the drug has
31 been adjusted as a result of an approved appeal.
32 (D) Adjust the drug product reimbursement for contracted
33 pharmacies that resubmit claims to reflect the adjusted
34 maximum allowable cost, if applicable.
35 (E) Allow the appealing pharmacy and all other contracted
36 pharmacies in the network that filled the prescriptions for
37 patients covered under the same health plan to reverse and
38 resubmit claims and receive payment based on the adjusted
39 maximum allowable cost from the initial date of service the
40 appealed drug was dispensed.
41 (F) Make retroactive price adjustments in the next payment
42 cycle unless otherwise agreed to by the pharmacy.
2025 IN 503—LS 7353/DI 141 27
1 (5) The establishment of procedures for auditing submitted claims
2 by a contracted pharmacy in a manner established by
3 administrative rules under IC 4-22-2 by the department. The
4 auditing procedures:
5 (A) may not use extrapolation or any similar methodology;
6 (B) may not allow for recovery by a pharmacy benefit manager
7 of a submitted claim due to clerical or other error where the
8 patient has received the drug for which the claim was
9 submitted;
10 (C) must allow for recovery by a contracted pharmacy for
11 underpayments by the pharmacy benefit manager; and
12 (D) may only allow for the pharmacy benefit manager to
13 recover overpayments on claims that are actually audited and
14 discovered to include a recoverable error.
15 (c) The department must approve the manner in which a pharmacy
16 benefit manager may respond to an appeal filed under this section. The
17 department shall establish a process for a pharmacy benefit manager to
18 obtain approval from the department under this section.
2025 IN 503—LS 7353/DI 141