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HOUSE DOCKET, NO. 1358 FILED ON: 1/14/2025
HOUSE . . . . . . . . . . . . . . . No. 1234
The Commonwealth of Massachusetts
_________________
PRESENTED BY:
John J. Lawn, Jr.
_________________
To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
Court assembled:
The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:
An Act relative to pharmacy benefit managers.
_______________
PETITION OF:
NAME:DISTRICT/ADDRESS :DATE ADDED:John J. Lawn, Jr.10th Middlesex1/14/2025 1 of 12
HOUSE DOCKET, NO. 1358 FILED ON: 1/14/2025
HOUSE . . . . . . . . . . . . . . . No. 1234
By Representative Lawn of Watertown, a petition (accompanied by bill, House, No. 1234) of
John J. Lawn, Jr. relative to pharmacy benefit managers insurance services. Financial Services.
The Commonwealth of Massachusetts
_______________
In the One Hundred and Ninety-Fourth General Court
(2025-2026)
_______________
An Act relative to pharmacy benefit managers.
Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority
of the same, as follows:
1 SECTION 1. Chapter 176O of the General Laws is hereby amended by adding the
2following section:-
3 Section 31. (a) As used in this section, the following words shall, unless the context
4clearly requires otherwise, have the following meanings:
5 “Cost-sharing”, as defined in section 1 of chapter 176Y.
6 “Estimated rebate”, any: (i) negotiated price concessions, whether described as a rebate
7or otherwise, including, but not limited to, base price concessions, and reasonable estimates of
8any price protection rebates and performance-based price concessions that may accrue, directly
9or indirectly, to a carrier, pharmacy benefit manager or other party on a carrier’s behalf during a
10carrier’s plan year from a pharmaceutical manufacturing company, dispensing pharmacy or other
11party to the transaction based on the amounts the carrier received in the prior quarter or
12reasonably expects to receive in the current quarter; and (ii) reasonable estimates of any price 2 of 12
13concessions, fees and other administrative costs that are passed through, or are reasonably
14anticipated to be passed through to the carrier, pharmacy benefit manager or other party on the
15carrier’s behalf and that serve to reduce the carrier’s prescription drug liabilities for the plan year
16based on the amounts the carrier received in the prior quarter or reasonably expects to receive in
17the current quarter.
18 “Pharmacy benefit manager”, as defined in section 1 of chapter 176Y.
19 “Price protection rebate”, a negotiated price concession that accrues directly or indirectly
20to the carrier, or other party on behalf of the carrier, including a pharmacy benefit manager, in
21the event of an increase in the wholesale acquisition cost of a drug that is greater than a specified
22threshold.
23 (b) A carrier, or any pharmacy benefit manager, shall make available to an insured at
24least 80 per cent of the estimated rebates received by such carrier, or any pharmacy benefit
25manager, by reducing the amount of defined cost-sharing that the carrier would otherwise charge
26at the point of sale, except that the reduction amount shall not result in a credit at the point of
27sale. Neither the insured nor the carrier shall be responsible for any difference between the
28estimated rebate amount and the actual rebate amount the carrier receives; provided, that such
29estimates were calculated in good faith.
30 (c) Nothing in this section shall preclude a pharmacy benefit manager from decreasing an
31insured’s defined cost-sharing by an amount greater than that required under subsection (b).
32 (d) Annually, not later than April 1, a carrier shall file with the division a report in the
33manner and form determined by the commissioner demonstrating the manner in which the carrier
34has complied with this section. If the commissioner determines that a carrier has not complied 3 of 12
35with 1 or more requirements of this section, the commissioner shall notify the carrier of such
36noncompliance and a date by which the carrier must demonstrate compliance. If the carrier does
37not come into compliance by such date, the division shall impose a fine not to exceed $5,000 for
38each day during which such noncompliance continues.
39 (e) In implementing the requirements of this section, the division shall only regulate a
40carrier or pharmacy benefit manager to the extent permissible under applicable law.
41 (f) A pharmacy benefit manager, its agent or any third-party administrator shall not
42publish or otherwise disclose information regarding the actual amount of rebates a carrier
43receives on a specific product or therapeutic class of products, manufacturer or pharmacy-
44specific basis. Such information shall be considered to be a trade secret and confidential
45commercial information, shall not be a public record as defined by clause Twenty-sixth of
46section 7 of chapter 4 or section 10 of chapter 66, and shall not be disclosed directly or
47indirectly, or in a manner that would allow for the identification of an individual product,
48therapeutic class of products or manufacturer, or in a manner that would have the potential to
49compromise the financial, competitive or proprietary nature of the information. A pharmacy
50benefit manager shall impose the confidentiality protections and requirements of this section on
51any agent or third-party administrator that performs health care or administrative services on
52behalf of the pharmacy benefit manager that may receive or have access to rebate related
53information.
54 SECTION 2. Section 1 of chapter 176Y of the General Laws, as most recently amended
55by section 37 of chapter 342 of the acts of 2024, is hereby amended by inserting after the
56definition of “Center” the following definition:- 4 of 12
57 “Clean claim”, a claim that has no defect or impropriety, including a lack of any required
58substantiating documentation, or other circumstance requiring special treatment that prevents
59timely payment from being made on the claim.
60 SECTION 3. Said section 1 of said chapter 176Y, as most recently amended by said
61section 37 of said chapter 342 of the acts of 2024, is hereby further amended by inserting after
62the definition of “Commissioner” the following definition:-
63 “Cost-sharing”, any copayment, coinsurance, deductible or any other amount owed by an
64insured under the terms of the insured’s health benefit plan, or as required by a pharmacy benefit
65manager.
66 SECTION 4. Said section 1 of said chapter 176Y, as most recently amended by said
67section 37 of said chapter 342 of the acts of 2024, is hereby further amended by inserting after
68the definition of “Pharmacy benefit manager” the following 2 definitions:-
69 “Spread pricing”, model of prescription drug pricing in which the pharmacy benefits
70manager charges a health benefit plan a contracted price for prescription drugs, and the
71contracted price for the prescription drugs differs from the amount the pharmacy benefits
72manager directly or indirectly pays the pharmacy.
73 “Third-party administrator”, any person that directly or indirectly solicits or effects
74coverage of, underwrites, collects charges or premiums from, arranges alternative access to or
75funding for prescription drugs, or adjusts or settles claims on behalf of residents of the
76commonwealth or residents of another state from offices in this commonwealth, in connection
77with health insurance coverage. 5 of 12
78 SECTION 5. Said chapter 176Y, as most recently amended by said section 37 of said
79chapter 342 of the acts of 2024, is hereby further amended by inserting after section 4 the
80following 9 sections:-
81 Section 5. (a)(1) A pharmacy benefit manager shall have a duty to perform pharmacy
82benefit management services with care, skill, prudence, diligence and professionalism. Such duty
83shall extend to both the insured and the health plan for whom the pharmacy benefit manager is
84performing pharmacy benefit management services.
85 (2) A pharmacy benefit manager interacting with an insured shall have the same duty to
86an insured as the health plan for whom it is performing pharmacy benefit services.
87 (b) A pharmacy benefit manager shall have a duty of good faith and fair dealing with all
88parties with which it interacts in the performance of pharmacy benefit management services.
89 Section 6. (a) A pharmacy benefit manager shall provide a reasonably adequate and
90accessible pharmacy benefit manager network for the provision of prescription drugs, which
91shall provide for convenient patient access to pharmacies within a reasonable distance from a
92patient’s residence.
93 (b) A pharmacy benefit manager shall not deny a pharmacy the opportunity to participate
94in a pharmacy benefit manager network at preferred participation status if the pharmacy is
95willing to accept the terms and conditions that the pharmacy benefit manager has established for
96other pharmacies as a condition of preferred network participation status.
97 (c) A mail-order pharmacy shall not be included in the calculations for determining
98pharmacy benefit manager network adequacy. 6 of 12
99 Section 7. (a) After adjudication of a clean claim for payment made by a pharmacy, a
100pharmacy benefit manager shall not retroactively reduce payment on the claim, either directly or
101indirectly, through an aggregated effective rate, direct or indirect remuneration, quality assurance
102program or otherwise, except if the claim: (i) is found not to be a clean claim during the course
103of a routine audit performed pursuant to an agreement between the pharmacy benefit manager
104and the pharmacy; or (ii) was submitted as a result of fraud, waste, abuse or other intentional
105misconduct.
106 (b) When a pharmacy adjudicates a claim, the reimbursement amount provided to the
107pharmacy by the pharmacy benefit manager shall constitute a final reimbursement amount;
108provided, however, that nothing in this section shall be construed to prohibit any retroactive
109increase in payment to a pharmacy pursuant to a contract between the pharmacy benefit manager
110or a pharmacy.
111 (c) No pharmacy benefit manager shall charge or collect from an insured any cost-sharing
112amount that exceeds the total contracted amount by the pharmacy for which the pharmacy is
113paid. If an insured pays a copayment, the pharmacy shall retain the adjudicated costs and the
114pharmacy benefit manager shall not reduce or recoup the adjudicated cost.
115 Section 8. (a) As used in this section the following words shall, unless the context clearly
116requires otherwise, have the following meanings:
117 “Generically equivalent drug”, a drug that is pharmaceutically and therapeutically
118equivalent to the drug prescribed. 7 of 12
119 “Maximum allowable cost list”, a listing of drugs or other methodology used by a
120pharmacy benefit manager, directly or indirectly, to set the maximum allowable payment to a
121pharmacy for a generic drug.
122 “National Drug Code”, the numerical code assigned to a prescription drug by the United
123States Food and Drug Administration.
124 “Pharmacy acquisition cost”, the net amount a pharmacy paid for a pharmaceutical
125product.
126 “Pharmacy benefit manager affiliate”, a pharmacy that directly or indirectly, through 1 or
127more intermediaries, owns or controls, is owned or controlled by or is under common ownership
128or control with a pharmacy benefits manager.
129 (b) A drug shall not be placed on a maximum allowable cost list unless:
130 (i) the drug is a generically equivalent drug, it is listed as therapeutically equivalent and
131pharmaceutically equivalent A or B rated in the United States Food and Drug Administration's
132most recent version of the Orange Book or Green Book, it has an NR or NA rating by Medi-Span
133or Gold Standard, or it has a similar rating by a nationally recognized reference;
134 (ii) the drug is in stock and available for purchase by each pharmacy in the pharmacy
135benefit manager’s network from wholesale drug distributors licensed under section 36B of
136chapter 112; and
137 (iii) the drug is not obsolete.
138 (c) A pharmacy benefit manager shall: 8 of 12
139 (i) provide access to its maximum allowable cost list to each pharmacy in the pharmacy
140benefit manager’s network that is subject to the maximum allowable cost list;
141 (ii) update its maximum allowable cost list on a timely basis, but not less than once every
1427 calendar days;
143 (iii) provide a process for each pharmacy subject to the maximum allowable cost list to
144receive prompt notification of an update to the maximum allowable cost list; and
145 (iv) provide a reasonable internal grievance process consistent with subsection (d) to
146allow pharmacies to challenge a maximum allowable cost list as not compliant with this section,
147and to challenge reimbursements made under a maximum allowable cost list for a specific drug
148or drugs that are below the pharmacy acquisition cost.
149 (d)(1) A pharmacy benefit manager shall maintain a formal internal grievance process for
150pharmacies, in a form approved by the commissioner, and such formal internal grievance process
151shall provide for adequate consideration and timely resolution of grievances. A pharmacy benefit
152manager’s internal grievance process shall include the following: (i) a dedicated telephone
153number, email address and website for the purpose of submitting a grievance; (ii) the ability to
154submit a grievance directly to the pharmacy benefit manager regarding the pharmacy benefits
155plan or program; and (iii) the ability to file a grievance within not less than 30 business days of
156the qualifying event.
157 (2) The pharmacy benefit manager shall respond to a grievance within 30 business days
158of receipt of the grievance. If the pharmacy benefit manager determines as a result of the internal
159grievance process that the pharmacy benefit manager’s challenged conduct was not compliant
160with this section, the pharmacy benefit manager shall: (i) provide the pharmacy with the National 9 of 12
161Drug Code upon which the maximum allowable cost was based; (ii) reprocess the claim; (iii)
162reimburse the pharmacy in an amount that is not less than the pharmacy acquisition cost; and (iv)
163to the extent practicable, reprocess claims submitted by similarly situated pharmacies and
164reimburse said pharmacies an amount that is not less than the pharmacy acquisition cost.
165 (3) If the pharmacy benefit manager determines as a result of the internal grievance
166process that the pharmacy benefit manager’s challenged conduct was compliant with this section,
167the pharmacy benefit manager shall: (i) provide the pharmacy with the National Drug Code upon
168which the maximum allowable cost was based and the name of any wholesale drug distributors
169licensed under section 36B of chapter 112 that have the drug currently in stock at a price below
170the maximum allowable cost; or (ii) if the National Drug Code provided by the pharmacy benefit
171manager is not available at a price below the pharmacy acquisition cost from the wholesale drug
172distributor from whom the pharmacy purchases the majority of its prescription drugs for resale,
173then the pharmacy benefit manager shall adjust the maximum allowable cost as listed on the
174maximum allowable cost list above the challenging pharmacy's pharmacy acquisition cost, and
175permit the pharmacy to reverse and rebill each claim affected by the inability to procure the drug
176at a cost that is equal to or less than the challenged maximum allowable cost.
177 (e) A pharmacy benefit manager shall not reimburse a pharmacy an amount less than the
178amount that the pharmacy benefit manager reimburses a pharmacy benefit manager affiliate for
179providing the same pharmacist services.
180 (f) A violation of this section shall constitute an unfair or deceptive act or practice under
181chapter 93A. 10 of 12
182 Section 9. (a) No pharmacy benefit manager or carrier may, either directly or indirectly
183through an intermediary, agent or affiliate, engage in spread pricing. A pharmacy benefit
184manager or carrier that violates this section shall be subject to the surcharge under section 8.
185 (b) A pharmacy benefit manager shall report to the commissioner on a quarterly basis, for
186each health benefit plan with which it contracts, the data required to be collected by the center
187for health information and analysis pursuant to section 10A of chapter 12C.
188 Section 10. (a) A pharmacy benefit manager or carrier shall be subject to a surcharge
189payable to the division equal to 10 per cent of the aggregate dollar amount of reimbursements
190paid by the pharmacy benefit manager or carrier to pharmacies in the previous contract year for
191prescription drugs in the commonwealth if the pharmacy benefit manager or carrier: (i) engages
192in spread pricing; or (ii) imposes point-of-sale fees or retroactive fees. A carrier shall be jointly
193responsible to pay the surcharge amount for violations of this section by its contracted pharmacy
194benefit manager; provided, however, that a carrier shall not be jointly responsible to pay the
195surcharge amount for violations of this section by its contracted pharmacy benefit manager
196unless the contract between the carrier and the pharmacy benefit manager permits conduct
197prohibited by this section.
198 (b) A pharmacy benefit manager or carrier subject to enforcement action by the division
199for a violation of this section shall, upon the filing of a written request with the division, be
200afforded an adjudicatory hearing pursuant to chapter 30A.
201 Section 11. (a) When calculating an insured’s contribution to any applicable cost-sharing
202requirement, a carrier shall include any cost-sharing amounts paid by the insured or on behalf of
203the insured by another person. If under federal law, application of this requirement would result 11 of 12
204in health savings account ineligibility under section 223 of the federal Internal Revenue Code,
205this requirement shall apply for health savings account-qualified high deductible health plans
206with respect to the deductible of such a plan after the insured has satisfied the minimum
207deductible under section 223 of the federal Internal Revenue Code, except for with respect to
208items or services that are preventive care pursuant to section 223(c)(2)(C) of the federal Internal
209Revenue Code, in which case the requirements of this paragraph shall apply regardless of
210whether the minimum deductible under section 223 has been satisfied.
211 (b) A carrier, pharmacy benefit manager or third-party administrator shall not directly or
212indirectly set, alter, implement or condition the terms of health benefit plan coverage, including
213the benefit design, based in part or entirely on information about the availability or amount of
214financial or product assistance available for a prescription drug.
215 (c) The division may promulgate such rules and regulations as it may deem necessary to
216implement this section.
217 Section 12. A pharmacy benefit manager shall be required to submit to periodic audits by
218a licensed carrier if the pharmacy benefit manager has entered into a contract with the carrier to
219provide pharmacy benefits to the carrier or its members. The commissioner shall direct or
220provide specifications for such audits.
221 Section 13. (a) A contract between a pharmacy benefit manager and a pharmacy shall not
222include any provision that prohibits, restricts or limits a pharmacy or its employed pharmacists’
223ability to provide an insured with information on the amount of the insured’s cost-sharing for
224such insured’s prescription drug and the clinical efficacy of a more affordable alternative drug if
225one is available. No contract shall penalize a pharmacy or an individual pharmacist for disclosing 12 of 12
226such information to an insured or for dispensing to an insured a more affordable alternative
227prescription drug if one is available.
228 (b) A pharmacy benefit manager shall not charge a pharmacy a fee related to the
229adjudication of a claim unless such fee is set out in a contract between the pharmacy benefit
230manager and the pharmacist or contracting agent or pharmacy, including, but not limited to, a fee
231for: (i) the receipt and processing of a pharmacy claim; (ii) the development or management of
232claims processing services in a pharmacy benefit manager network; or (iii) participation in a
233pharmacy benefit manager network.
234 (c) A contract between a pharmacy benefit manager and a pharmacy shall not include any
235provision that prohibits, restricts or limits disclosure of information to the division deemed
236necessary by the division to ensure a pharmacy benefit manager’s compliance with the
237requirements under this section or section 21C of chapter 94C.