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2023 Regular Session
SENATE BILL NO. 65
BY SENATOR FRED MILLS
Prefiled pursuant to Article III, Section 2(A)(4)(b)(i) of the Constitution of Louisiana.
PHARMACEUTICALS. Provides relative to state procurement of pharmacy benefit
manager services by use of reverse auction technology. (8/1/23)
1 AN ACT
2 To amend and reenact R.S. 39:1600.1(C)(6), (D)(1), the introductory paragraph of
3 1600.1(D)(2), 1600.1(D)(2)(b), (3), (4), (6), (9), and (11)(a) and R.S. 42:802(B)(12),
4 relative to state procurement through the reverse auction process; to provide for the
5 procurement of pharmacy benefit manager services through reverse auction; and to
6 provide for related matters.
7 Be it enacted by the Legislature of Louisiana:
8 Section 1. R.S. 39:1600.1(C)(6), (D)(1), the introductory paragraph of 1600.1(D)(2),
9 1600.1(D)(2)(b), (3), (4), (6), (9), and (11)(a) are hereby amended and reenacted to read as
10 follows:
11 §1600.1. Procurement of pharmacy benefit manager services by reverse auction
12 * * *
13 C. For purposes of this Section, the following definitions shall apply:
14 * * *
15 (6) "PBM reverse auction" means an automated, transparent, and dynamically
16 competitive bidding process conducted online that starts with an opening round of
17 bids and allows qualified pharmacy benefit manager bidders to counter-offer a lower
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1 price for as many rounds of bidding as determined by the a single health plan
2 prescription drug purchaser for or a multiple health plan prescription drug
3 purchasing group. Except to the extent clearly provided by this Section, any
4 pharmacy benefit manager reverse auction shall be conducted in accordance with
5 R.S. 39:1600(D) and its corresponding regulations.
6 D. Contracts for pharmacy benefit manager services obtained through reverse
7 auction shall comply with the following:
8 (1) Notwithstanding any provision of law to the contrary, the division of
9 administration may procure the shall implement the reverse auction procedures
10 provided for in this Section for all procurements of services of a pharmacy benefit
11 manager for the administration of benefits under R.S. 42:801 et seq., in a transparent,
12 online, and dynamically competitive process and in the manner specified in this
13 Section.
14 (2) The division of administration may shall procure the following products
15 and services as needed to implement this Section in accordance with this Chapter:
16 * * *
17 (b) Related services from the The provider of the technology platform
18 identified in Subparagraph (a) of this Paragraph, which shall include, be the sole
19 provider of consulting services to the division of administration for the purpose
20 of implementing the PBM reverse auction process. As such, the provider of the
21 technology platform shall have capability, at a minimum, to provide the following
22 capabilities: services:
23 (i) Evaluation of the qualifications of PBM bidders.
24 (ii) Consultation and support to the division of administration in
25 development of the participant bidding agreement.
26 (ii) (iii) Online automated reverse auction services to support the division of
27 administration in comparing the pricing for of PBM bids in the PBM reverse
28 auction procurement process.
29 (iv) Evaluation of any qualitative factors that the division of
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1 administration may wish to weigh in the automated ordering of PBM rankings
2 in the reverse auction process based on both pricing and weighted qualitative
3 factors, in addition to ranking of PBM bids based strictly on comparison of the
4 pricing of PBM bids.
5 (iii) (v) Related professional services as necessary.
6 (3) If the The division of administration exercises the authority provided for
7 in this Section, it shall procure the technology platform and related technology
8 platform provider with capacity to provide the services required by
9 Subparagraph (2)(b) of this Subsection no later than four months in advance of the
10 date scheduled for completion of the PBM reverse auction.
11 (4) The division of administration shall not award a contract for procurement
12 of the technology platform and technology provider services to a vendor that is
13 meets any of the follow criteria:
14 (i) Is a PBM or a vendor that is managed by or a subsidiary or affiliate of a
15 PBM.
16 (ii) Receives, directly or indirectly, remuneration from a pharmacy
17 benefit manager for aggregating clients into a contractual relationship with a
18 pharmacy benefit manager.
19 (iii) Has earned revenues in the past for provision of consulting services
20 to the division of administration in support of procurement of pharmacy benefit
21 manager services through a conventional or nonreverse auction request for
22 proposals process.
23 * * *
24 (6) With technical assistance, consultation, and support provided by the
25 technology platform provider, the division of administration shall specify the terms
26 of the participant bidding agreement which shall not be modified except by specific
27 consent of the division of administration.
28 * * *
29 (9) The division of administration may shall perform a market check for
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1 providing PBM services during the term of the existing PBM services contract,
2 which shall be a technology-driven evaluation of the incumbent PBM's prescription
3 drug pricing based on benchmark comparators derived from PBM reverse auction
4 processes conducted in the United States over the previous twelve months in order
5 to ensure continuing competitiveness of incumbent prescription drug pricing over the
6 life of a PBM services contract. If the incumbent prescription benefit manager
7 fails to meet comparative benchmark pricing determined through conduct of
8 a market check in any plan year of the PBM's contract with the state, the
9 division of administration may, at its discretion, terminate the contract and
10 conduct a new PBM reverse auction for procurement of pharmacy benefit
11 manager services.
12 * * *
13 (11)(a) The processes and procedures set forth in this Part apply to group
14 benefit plans provided pursuant to R.S. 42:801 et seq., if the division of
15 administration elects to exercise its authority to conduct a PBM reverse auction in
16 accordance with this Section. This Section shall not apply in the case of a nonprofit,
17 nongovernmental health maintenance organization with respect to managed care
18 plans that provide a majority of covered professional services through a single
19 contracted medical group.
20 * * *
21 Section 2. R.S. 42:802(B)(12) is hereby amended and reenacted to read as follows:
22 §802. Powers and duties; Office of Group Benefits
23 * * *
24 B. In addition, the office shall have the following powers and duties:
25 * * *
26 (12) To procure and negotiate pharmacy benefit manager contracts through
27 the use of a reverse auction pursuant to R.S. 39:1600(D) and 1600.1 when it has been
28 determined by the division of administration to be in the best interest of the state.
29 * * *
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The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Brandi Cannon.
DIGEST
SB 65 Engrossed 2023 Regular Session Fred Mills
Present law provides that the division of administration may procure pharmacy benefit
manager services for the administration of benefits provided by the Office of Group Benefits
through the reverse auction process and establishes the standards and procedures. Proposed
law revises present law to require, rather than authorize, the division of administration to
procure pharmacy benefit manager services for the administration of benefits provided by
the Office of Group Benefits through the reverse auction process.
Present law provides for the mandatory content of contracts for PBM services obtained
through reverse auction including the minimum capabilities of the technology platform, the
required related services from the technology platform provider, and the time limit for
procuring the technology platform and related technology provider. Proposed law updates
the contract minimum requirements.
Present law provides that the division of administration shall not award a contract for the
technology platform and related provider services to a PBM and prohibits the vendor from
outsourcing any part of the reverse auction or review of invoiced drug claims. Proposed law
retains present law and further prohibits the division from awarding the contract to a vendor
that receives remuneration from a PBM for aggregating clients into a contractual relationship
with a PBM or has earned revenues in the past for providing consulting services to the
division in support of procurement of PBM services through a conventional or nonreverse
auction RFP process.
Present law provides that the division of administration may perform a market check for
providing PBM services during the term of the existing PBM services contract, which shall
be a technology-driven evaluation of the incumbent PBM's prescription drug pricing.
Proposed law requires the division to perform a market check and provides that, if the
incumbent PBM fails to meet comparative benchmark pricing, the division of administration
may terminate the contract and conduct a new PBM reverse auction.
Effective August 1, 2023.
(Amends R.S. 39:1600.1(C)(6), (D)(1), 1600.1(D)(2)(intro para), 1600.1(D)(2)(b), (3), (4),
(6), (9), and (11)(a) and R.S. 42:802(B)(12))
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Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.