Massachusetts 2023-2024 Regular Session

Massachusetts House Bill H1016 Compare Versions

Only one version of the bill is available at this time.

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2	2	HOUSE DOCKET, NO. 2602 FILED ON: 1/19/2023
3	3	HOUSE . . . . . . . . . . . . . . . No. 1016
4	4	The Commonwealth of Massachusetts
5	5	_________________
6	6	PRESENTED BY:
7	7	Sean Garballey
8	8	_________________
9	9	To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
10	10	Court assembled:
11	11	The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:
12	12	An Act to enact pharmacy benefit manager duties.
13	13	_______________
14	14	PETITION OF:
15	15	NAME:DISTRICT/ADDRESS :DATE ADDED:Sean Garballey23rd Middlesex1/18/2023 1 of 6
16	16	HOUSE DOCKET, NO. 2602 FILED ON: 1/19/2023
17	17	HOUSE . . . . . . . . . . . . . . . No. 1016
18	18	By Representative Garballey of Arlington, a petition (accompanied by bill, House, No. 1016) of
19	19	Sean Garballey relative to pharmacy benefit managers and the processing and payment of claims
20	20	for prescription drugs. Financial Services.
21	21	The Commonwealth of Massachusetts
22	22	_______________
23	23	In the One Hundred and Ninety-Third General Court
24	24	(2023-2024)
25	25	_______________
26	26	An Act to enact pharmacy benefit manager duties.
27	27	Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority
28	28	of the same, as follows:
29	29	1 SECTION 1: The General Laws are hereby amended by inserting after Chapter 175M
30	30	2following new chapter:
31	31	3 CHAPTER 175N. Pharmacy Benefit Manager Duty of Care.
32	32	4 Section 1. Definitions
33	33	5 As used in this chapter, the following words shall, unless the context clearly requires
34	34	6otherwise, have the following meanings:—
35	35	7 “Carrier”, any health insurance issuer that is subject to state law regulating insurance and
36	36	8offers health insurance coverage, as defined in 42 U.S.C. § 300gg-91, or any state or local
37	37	9governmental employer plan.
38	38	10 “Commissioner”, the commissioner of insurance. 2 of 6
39	39	11 “Division”, the division of insurance.
40	40	12 “Enrollee”, any individual entitled to coverage of health care services from a carrier.
41	41	13 “Health benefit plan”, a policy, contract, certificate, or agreement entered into, offered or
42	42	14issued by a carrier to provide, deliver, arrange for, pay for, or reimburse any of the costs of
43	43	15health care services.
44	44	16 “Person”, a natural person, corporation, mutual company, unincorporated association,
45	45	17partnership, joint venture, limited liability company, trust, estate, foundation, not-for-profit
46	46	18corporation, unincorporated organization, government or governmental subdivision or agency.
47	47	19 “Pharmacy benefit management fee”, a fee that covers the cost of providing one or more
48	48	20pharmacy benefit management services and that does not exceed the value of the service or
49	49	21services actually performed by the pharmacy benefit manager.
50	50	22 “Pharmacy benefit management service”:
51	51	23 (i) Negotiating the price of prescription drugs, including negotiating and contracting for
52	52	24direct or indirect rebates, discounts, or other price concessions.
53	53	25 (ii) Managing any aspect(s) of a prescription drug benefit, including but not limited to,
54	54	26the processing and payment of claims for prescription drugs, the performance of utilization
55	55	27review, the processing of drug prior authorization requests, the adjudication of appeals or
56	56	28grievances related to the prescription drug benefit, contracting with network pharmacies,
57	57	29controlling the cost of covered prescription drugs, managing data relating to the prescription drug
58	58	30benefit, or the provision of services related thereto. 3 of 6
59	59	31 (iii) Performing any administrative, managerial, clinical, pricing, financial,
60	60	32reimbursement, data administration or reporting, or billing service; and
61	61	33 (iv) Such other services as the commissioner may define in regulation.
62	62	34 “Pharmacy benefit manager”, any person that, pursuant to a written agreement with a
63	63	35carrier or health benefit plan, either directly or indirectly, provides one or more pharmacy benefit
64	64	36management services on behalf of the carrier or health benefit plan, and any agent, contractor,
65	65	37intermediary, affiliate, subsidiary, or related entity of such person who facilitates, provides,
66	66	38directs, or oversees the provision of the pharmacy benefit management services.
67	67	39 “Pharmacy benefit manager duty”, a duty and obligation to perform pharmacy benefit
68	68	40management services with care, skill, prudence, diligence, fairness, transparency, and
69	69	41professionalism, and for the best interests of the enrollee, the health benefit plan, and the
70	70	42provider, as consistent with the requirements of this section and any regulations that may be
71	71	43adopted to implement this chapter.
72	72	44 “Provider”, an individual or entity that provides, dispenses, or administers one or more
73	73	45units of a prescription drug.
74	74	46 “Related entity”:
75	75	47 (i) any entity, whether foreign or domestic, that is a member of any controlled group of
76	76	48corporations (as defined in section 1563(a) of the Internal Revenue Code, except that “50
77	77	49percent” shall be substituted for “80 percent” wherever the latter percentage appears in such
78	78	50code) of which a pharmacy benefit manager is a member; or 4 of 6
79	79	51 (ii) any of the following persons or entities that are treated as a related entity to the extent
80	80	52provided in rules adopted by the commissioner:
81	81	53 (A) a person other than a corporation that is treated under such rules as a related entity of
82	82	54a pharmacy benefit manager, or
83	83	55 (B) a person or entity that is treated under such rules as affiliated with a pharmacy benefit
84	84	56manager in cases where the pharmacy benefit manager is a person other than a corporation.
85	85	57 “Spread pricing”, any amount charged or claimed by a pharmacy benefit manager in
86	86	58excess of the ingredient cost for a dispensed prescription drug plus dispensing fee paid directly
87	87	59or indirectly to any pharmacy, pharmacist, or other provider on behalf of the health benefit plan,
88	88	60less a pharmacy benefit management fee.
89	89	61 Section 2. Pharmacy Benefit Manager Duties
90	90	62 (a) Pharmacy benefit manager duty. A pharmacy benefit manager shall owe the pharmacy
91	91	63benefit manager duty to any enrollee, health benefit plan, or provider that receives pharmacy
92	92	64benefit management services from the pharmacy benefit manager or that furnishes, covers,
93	93	65receives, or is administered a unit of a prescription drug for which the pharmacy benefit manager
94	94	66has provided pharmacy benefit management services.
95	95	67 (1) Duty to enrollees. The pharmacy benefit manager duty owed to enrollees shall include
96	96	68duties of care and good faith and fair dealing. The commissioner shall adopt regulations defining
97	97	69the scope of the duties owed to enrollees, including by obligating pharmacy benefit managers to
98	98	70provide all pharmacy benefit management services related to formulary design, utilization 5 of 6
99	99	71management, and grievances and appeals in a transparent manner to enrollees that is consistent
100	100	72with the best interest of enrollees and to disclose all conflicts of interest to enrollees.
101	101	73 (2) Duty to health benefit plans. The pharmacy benefit manager duty owed to health
102	102	74benefit plans shall include duties of care and good faith and fair dealing. The commissioner shall
103	103	75adopt regulations defining the scope of the duties owed to health benefit plans, including by
104	104	76obligating pharmacy benefit managers to provide transparency to health benefit plans about
105	105	77amounts charged or claimed by the pharmacy benefit manager in a manner that is adequate to
106	106	78identify any instances of spread pricing and to disclose all conflicts of interest to health benefit
107	107	79plans.
108	108	80 (3) Duty to providers. The pharmacy benefit manager duty owed to providers shall
109	109	81include duties of care and good faith and fair dealing. The commissioner shall adopt regulations
110	110	82defining the scope of the duties owed to providers, including by obligating pharmacy benefit
111	111	83managers to provide transparency to providers about amounts charged or claimed by the
112	112	84pharmacy benefit manager in a manner that is adequate to identify any instances of spread
113	113	85pricing and to disclose all conflicts of interest to providers.
114	114	86 (b) Conflicts of interest. Where there is a conflict between the pharmacy benefit manager
115	115	87duties owed under this section, the pharmacy benefit manager duty owed to an enrollee shall be
116	116	88primary over the duty owed to any other party, and the pharmacy benefit manager duty owed to a
117	117	89provider shall be primary over the duty owed to a health benefit plan.
118	118	90 Section 3. Savings Clause
119	119	91 (a) In implementing the requirements of this Act, the state shall only regulate a pharmacy
120	120	92benefit manager, carrier, or health benefit plan to the extent permissible under applicable law. 6 of 6
121	121	93 (b) If any section, provision, or portion of this Act, including any condition or
122	122	94prerequisite to any action or determination thereunder, is for any reason held to be illegal or
123	123	95invalid, this illegality or invalidity shall not affect the remainder thereof or any other section,
124	124	96provision, or portion of this Act, including any condition or prerequisite to any action or
125	125	97determination thereunder, which shall be construed and enforced and applied as if such illegal or
126	126	98invalid portion were not contained therein.
127	127	99 Section 4. Penalties
128	128	100 (a) If the commissioner determines that a pharmacy benefit manager is in violation of this
129	129	101chapter or any rule or regulation promulgated under this chapter, the commissioner shall issue a
130	130	102monetary penalty, suspend or revoke the pharmacy benefit manager’s license or take other action
131	131	103that the commissioner deems necessary.
132	132	104 (b) The commissioner shall issue rules and regulations to establish a process for
133	133	105administrative appeal of any penalty, suspension or revocation imposed in accordance with this
134	134	106section.
135	135	107 Section 5. Rules
136	136	108 The commissioner shall adopt any written policies, procedures, or regulations the
137	137	109commissioner determines necessary to implement this section.