Massachusetts 2025-2026 Regular Session

Massachusetts House Bill H1082 Compare Versions

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

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2	2	HOUSE DOCKET, NO. 2123 FILED ON: 1/15/2025
3	3	HOUSE . . . . . . . . . . . . . . . No. 1082
4	4	The Commonwealth of Massachusetts
5	5	_________________
6	6	PRESENTED BY:
7	7	Bruce J. Ayers
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 the pharmacy benefit manager compensation reform.
13	13	_______________
14	14	PETITION OF:
15	15	NAME:DISTRICT/ADDRESS :DATE ADDED:Bruce J. Ayers1st Norfolk1/15/2025 1 of 9
16	16	HOUSE DOCKET, NO. 2123 FILED ON: 1/15/2025
17	17	HOUSE . . . . . . . . . . . . . . . No. 1082
18	18	By Representative Ayers of Quincy, a petition (accompanied by bill, House, No. 1082) of Bruce
19	19	J. Ayers relative to pharmacy benefit manager insurance compensation reform. Financial
20	20	Services.
21	21	[SIMILAR MATTER FILED IN PREVIOUS SESSION
22	22	SEE HOUSE, NO. 934 OF 2023-2024.]
23	23	The Commonwealth of Massachusetts
24	24	_______________
25	25	In the One Hundred and Ninety-Fourth General Court
26	26	(2025-2026)
27	27	_______________
28	28	An Act to enact the pharmacy benefit manager compensation reform.
29	29	Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority
30	30	of the same, as follows:
31	31	1 The General Laws are hereby amended by inserting after Chapter 175M following new
32	32	2chapter:
33	33	3 CHAPTER 175N. Pharmacy Benefit Manager Compensation Reform Act of 2022
34	34	4 Section 1. Definitions
35	35	5 As used in this chapter, the following words shall, unless the context clearly requires
36	36	6otherwise, have the following meanings:—
37	37	7 “Carrier”, any health insurance issuer that is subject to state law regulating insurance and
38	38	8offers health insurance coverage, as defined in 42 U.S.C. § 300gg-91, or any state or local
39	39	9governmental employer plan. 2 of 9
40	40	10 “Commissioner”, the commissioner of insurance.
41	41	11 “Division”, the division of insurance.
42	42	12 “Enrollee”, any individual entitled to coverage of health care services from a carrier.
43	43	13 “Health benefit plan”, a policy, contract, certificate or agreement entered into, offered or
44	44	14issued by a carrier to provide, deliver, arrange for, pay for, or reimburse any of the costs of
45	45	15health care services.
46	46	16 “Person”, a natural person, corporation, mutual company, unincorporated association,
47	47	17partnership, joint venture, limited liability company, trust, estate, foundation, not-for-profit
48	48	18corporation, unincorporated organization, government or governmental subdivision or agency.
49	49	19 “Pharmacy benefit management fee”, a fee that covers the cost of providing one or more
50	50	20pharmacy benefit management services and that does not exceed the value of the service or
51	51	21services actually performed by the pharmacy benefit manager.
52	52	22 “Pharmacy benefit management service”:
53	53	23 (i) Negotiating the price of prescription drugs, including negotiating and contracting for
54	54	24direct or indirect rebates, discounts, or other price concessions.
55	55	25 (ii) Managing any aspect(s) of a prescription drug benefit, including but not limited to,
56	56	26the processing and payment of claims for prescription drugs, the performance of utilization
57	57	27review, the processing of drug prior authorization requests, the adjudication of appeals or
58	58	28grievances related to the prescription drug benefit, contracting with network pharmacies,
59	59	29controlling the cost of covered prescription drugs, managing data relating to the prescription drug
60	60	30benefit, or the provision of services related thereto. 3 of 9
61	61	31 (iii) Performing any administrative, managerial, clinical, pricing, financial,
62	62	32reimbursement, data administration or reporting, or billing service; and
63	63	33 (vii) Such other services as the commissioner may define in regulation.
64	64	34 “Pharmacy benefit manager”, any person that, pursuant to a written agreement with a
65	65	35carrier or health benefit plan, either directly or indirectly, provides one or more pharmacy benefit
66	66	36management services on behalf of the carrier or health benefit plan, and any agent, contractor,
67	67	37intermediary, affiliate, subsidiary, or related entity of such person who facilitates, provides,
68	68	38directs, or oversees the provision of the pharmacy benefit management services.
69	69	39 “Pharmacy benefit manager duty”, a duty and obligation to perform pharmacy benefit
70	70	40management services with care, skill, prudence, diligence, fairness, transparency, and
71	71	41professionalism, and for the best interests of the enrollee, the health benefit plan, and the
72	72	42provider, as consistent with the requirements of this section and any regulations that may be
73	73	43adopted to implement this chapter.
74	74	44 “Price protection rebate”, a negotiated price concession that accrues directly or indirectly
75	75	45to the carrier or health benefit plan, or other party on behalf of the carrier or health benefit plan,
76	76	46including a pharmacy benefit manager, in the event of an increase in the wholesale acquisition
77	77	47cost of a drug above a specified threshold.
78	78	48 “Provider”, an individual or entity that provides, dispenses, or administers one or more
79	79	49units of a prescription drug.
80	80	50 “Related entity”: 4 of 9
81	81	51 (i) any entity, whether foreign or domestic, that is a member of any controlled group of
82	82	52corporations (as defined in section 1563(a) of the Internal Revenue Code, except that “50
83	83	53percent” shall be substituted for “80 percent” wherever the latter percentage appears in such
84	84	54code) of which a pharmacy benefit manager is a member; or
85	85	55 (ii) any of the following persons or entities that are treated as a related entity to the extent
86	86	56provided in rules adopted by the commissioner:
87	87	57 (A) a person other than a corporation that is treated under such rules as a related entity of
88	88	58a pharmacy benefit manager, or
89	89	59 (B) a person or entity that is treated under such rules as affiliated with a pharmacy benefit
90	90	60manager in cases where the pharmacy benefit manager is a person other than a corporation.
91	91	61 “Rebate”:
92	92	62 (i) Negotiated price concessions including but not limited to base price concessions
93	93	63(whether described as a “rebate” or otherwise) and reasonable estimates of any price protection
94	94	64rebates and performance-based price concessions that may accrue directly or indirectly to the
95	95	65carrier or health benefit plan, or other party on behalf of the carrier or health benefit plan,
96	96	66including a pharmacy benefit manager, during the coverage year from a manufacturer,
97	97	67dispensing pharmacy, or other party in connection with the dispensing or administration of a
98	98	68prescription drug, and
99	99	69 (ii) Reasonable estimates of any negotiated price concessions, fees and other
100	100	70administrative costs that are passed through, or are reasonably anticipated to be passed through,
101	101	71to the carrier or health benefit plan, or other party on behalf of the carrier or health benefit plan, 5 of 9
102	102	72including a pharmacy benefit manager, and serve to reduce the carrier or health benefit plan’s
103	103	73liabilities for a prescription drug.
104	104	74 “Spread pricing”, any amount charged or claimed by a pharmacy benefit manager in
105	105	75excess of the ingredient cost for a dispensed prescription drug plus dispensing fee paid directly
106	106	76or indirectly to any pharmacy, pharmacist, or other provider on behalf of the health benefit plan,
107	107	77less a pharmacy benefit management fee.
108	108	78 “Unaffiliated pharmacy”, any dispensing pharmacy that is not fractionally or wholly
109	109	79owned by, or a subsidiary or an affiliate of, a pharmacy benefit manager.
110	110	80 Section 2. Compensation and Prohibition on Spread Pricing
111	111	81 (a) No pharmacy benefit manager may derive income from pharmacy benefit
112	112	82management services provided to a carrier or health benefit plan in this state except for income
113	113	83derived from a pharmacy benefit management fee. The amount of any pharmacy benefit
114	114	84management fees must be set forth in the agreement between the pharmacy benefit manager and
115	115	85the carrier or health benefit plan.
116	116	86 (b) The pharmacy benefit management fee charged by or paid to a pharmacy benefit
117	117	87manager from a carrier or health benefit plan shall not be directly or indirectly based or
118	118	88contingent upon:
119	119	89 (1) the acquisition cost or any other price metric of a drug;
120	120	90 (2) the amount of savings, rebates, or other fees charged, realized, or collected by or
121	121	91generated based on the activity of the pharmacy benefit manager; or 6 of 9
122	122	92 (3) the amount of premiums, deductibles, or other cost sharing or fees charged, realized,
123	123	93or collected by the pharmacy benefit manager from patients or other persons on behalf of a
124	124	94patient.
125	125	95 (c) Annually by December 31, each pharmacy benefit manager operating in the state must
126	126	96certify to the commissioner that it has fully and completely complied with the requirements of
127	127	97this section throughout the prior calendar year. Such certification must be signed by the chief
128	128	98executive officer or chief financial officer of the pharmacy benefit manager.
129	129	99 (d) No pharmacy benefit manager, carrier, or health benefit plan may, either directly or
130	130	100through an intermediary, agent, or affiliate engage in, facilitate, or enter into a contract with
131	131	101another person involving spread pricing in this state.
132	132	102 (e) A pharmacy benefit manager contract with a carrier or health benefit plan entered
133	133	103into, renewed, or amended on or after the effective date this act must:
134	134	104 (1) Specify all forms of revenue, including pharmacy benefit management fees, to be paid
135	135	105by the carrier or health benefit plan to the pharmacy benefit manager; and
136	136	106 (2) Acknowledge that spread pricing is not permitted in accordance with this section.
137	137	107 Section 3. Audits of Pharmacy Benefit Managers
138	138	108 (a) The commissioner and any carrier or health benefit plan contracted with a pharmacy
139	139	109benefit manager holding a license issued by the division may audit the pharmacy benefit
140	140	110manager once per calendar year. This audit right is in addition to, and shall not be construed to
141	141	111limit, any other audit rights authorized by law or contract. As part of any such audit, the 7 of 9
142	142	112commissioner, carrier, or health benefit plan may request information including but not limited
143	143	113to the following:
144	144	114 (1) All reimbursement paid to retail pharmacies, on a claim level, for all customers of the
145	145	115pharmacy benefit manager in the state, including drug-specific reimbursement, dispensing fees,
146	146	116all rebates, other fees, ancillary charges, clawbacks, or adjustments to reimbursement;
147	147	117 (2) Any difference in reimbursement paid to affiliated pharmacies and unaffiliated
148	148	118pharmacies, including differences in reimbursed ingredient costs and dispensing fees;
149	149	119 (3) Historical claims data including ingredient cost, quantity, dispensing fee, sales tax,
150	150	120usual & customary price, channel (mail/retail), carrier or health benefit plan paid amount, days’
151	151	121supply, the amount paid by the covered individual, formulary tier, acquisition cost, and any
152	152	122administrative fee associated with the claim, as applicable; and
153	153	123 (4) Aggregate rebate amounts received directly or indirectly from manufacturers
154	154	124(including from any other entity affiliated with or related to the pharmacy benefit manager that
155	155	125negotiates or contracts with manufacturers, such as group purchasing organizations and rebate
156	156	126aggregators) by calendar quarter.
157	157	127 (b) The pharmacy benefit manager shall provide information referenced in subsection (a)
158	158	128within thirty (30) days of its receipt of any request from the commissioner, carrier, or health
159	159	129benefit plan.
160	160	130 (c) The commissioner may dictate the form in which the pharmacy benefit manager will
161	161	131provide information in response to an audit under subsection (a). 8 of 9
162	162	132 (d) The pharmacy benefit manager must certify that all information submitted to the
163	163	133commissioner, or any carrier or health benefit plan in accordance with this section is accurate
164	164	134and complete in all material respects. Such certification must be signed by the chief executive
165	165	135officer or chief financial officer of the pharmacy benefit manager.
166	166	136 (e) The commissioner and any carrier or health benefit plan contracted with a pharmacy
167	167	137benefit manager holding a license issued by the division shall not directly or indirectly publish or
168	168	138otherwise disclose any confidential, proprietary information, including but not limited to any
169	169	139information that would reveal the identity of a specific health benefit plan or manufacturer, the
170	170	140price(s) charged for a specific drug or class of drugs, the amount of any rebates provided for a
171	171	141specific drug or class of drugs, or that would otherwise have the potential to compromise the
172	172	142financial, competitive, or proprietary nature of the information. Such information shall be
173	173	143considered to be a trade secret and confidential commercial information, shall not be considered
174	174	144a public record, within the meaning of chapter sixty-six of the General Laws, and shall not be
175	175	145disclosed directly or indirectly, or in a manner that would allow for the identification of an
176	176	146individual product, therapeutic class of products, or manufacturer, or in a manner that would
177	177	147have the potential to compromise the financial, competitive, or proprietary nature of the
178	178	148information. The commissioner and any carrier or health benefit plan contracted with a pharmacy
179	179	149benefit manager holding a license issued by the division shall impose the confidentiality
180	180	150protections of this subsection on any vendor or downstream third party that may receive or have
181	181	151access to this information.
182	182	152 Section 4. Savings Clause 9 of 9
183	183	153 (a) In implementing the requirements of this Act, the state shall only regulate a pharmacy
184	184	154benefit manager, carrier, or health benefit plan to the extent permissible under applicable law.
185	185	155 (b) If any section, provision, or portion of this Act, including any condition or
186	186	156prerequisite to any action or determination thereunder, is for any reason held to be illegal or
187	187	157invalid, this illegality or invalidity shall not affect the remainder thereof or any other section,
188	188	158provision, or portion of this Act, including any condition or prerequisite to any action or
189	189	159determination thereunder, which shall be construed and enforced and applied as if such illegal or
190	190	160invalid portion were not contained therein.
191	191	161 Section 5. Penalties
192	192	162 (a) If the commissioner determines that a pharmacy benefit manager is in violation of this
193	193	163chapter or any rule or regulation promulgated under this chapter, the commissioner shall issue a
194	194	164monetary penalty, suspend or revoke the pharmacy benefit manager’s license or take other action
195	195	165that the commissioner deems necessary.
196	196	166 (b) The commissioner shall issue rules and regulations to establish a process for
197	197	167administrative appeal of any penalty, suspension or revocation imposed in accordance with this
198	198	168section.
199	199	169 Section 6. Rules
200	200	170 The commissioner shall adopt any written policies, procedures or regulations the
201	201	171commissioner determines necessary to implement this section.