EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
*sb1019*
SENATE BILL 1019
J5 4lr3029
By: Senator A. Washington
Introduced and read first time: February 2, 2024
Assigned to: Finance
A BILL ENTITLED
AN ACT concerning 1
Health Benefit Plans – Prescription Drugs – Rebates and Calculation of Cost 2
Sharing Requirements 3
FOR the purpose of requiring that the calculation of an enrollee’s contribution to a cost 4
sharing requirement for a prescription drug be based on the list price of the drug 5
reduced by at least a certain percentage; prohibiting the disclosure of certain 6
information concerning rebates; and generally relating to rebates and the calculation 7
of cost sharing requirements for prescription drugs. 8
BY adding to 9
Article – Insurance 10
Section 15–118.1 and 15–1611.3 11
Annotated Code of Maryland 12
(2017 Replacement Volume and 2023 Supplement) 13
BY repealing and reenacting, with amendments, 14
Article – Insurance 15
Section 15–1601 16
Annotated Code of Maryland 17
(2017 Replacement Volume and 2023 Supplement) 18
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 19
That the Laws of Maryland read as follows: 20
Article – Insurance 21
15–118.1. 22
(A) (1) IN THIS SECTION THE F OLLOWING WORDS HAVE THE MEANINGS 23
INDICATED. 24 2 SENATE BILL 1019
(2) “CARRIER” MEANS AN ENTITY SUBJ ECT TO THE JURISDICT ION OF 1
THE COMMISSIONER THAT CON TRACTS, OR OFFERS TO CONTRAC T, TO PROVIDE, 2
DELIVER, ARRANGE FOR , PAY FOR, OR REIMBURSE ANY OF THE COSTS OF HEALTH 3
CARE SERVICES UNDER A HEALTH BENEFIT PLA N IN THE STATE. 4
(3) “COST SHARING ” MEANS ANY COPAYMENT , COINSURANCE , 5
DEDUCTIBLE, OR OTHER SIMILAR CHA RGE REQUIRED OF AN E NROLLEE FOR A 6
HEALTH CARE SERVICE COVERED BY A HEALTH BENEFIT PLAN , INCLUDING A 7
PRESCRIPTION DRUG , AND PAID BY OR ON BE HALF OF THE ENROLLEE . 8
(4) “ENROLLEE” MEANS AN INDIVIDUAL ENTITLED TO PAYMENT FOR 9
HEALTH CARE SERVICES FROM AN ADMINISTRATO R OR A CARRIER. 10
(5) (I) “HEALTH BENEFIT PLAN ” MEANS A POLICY , A CONTRACT, A 11
CERTIFICATION , OR AN AGREEMENT OFFE RED OR ISSUED BY AN ADMINISTRATOR 12
OR A CARRIER TO PROVIDE , DELIVER, ARRANGE FOR , PAY FOR, OR REIMBURSE ANY 13
OF THE COSTS OF HEAL TH CARE SERVICES . 14
(II) “HEALTH BENEFIT PLAN ” DOES NOT INCLUDE : 15
1. A LOCAL GOVERNMENT H EALTH PLAN; OR 16
2. THE STATE EMPLOYEE AND RETIREE HEALTH AND 17
WELFARE BENEFITS PROGRAM. 18
(6) “HEALTH CARE SERVICE ” MEANS AN ITEM OR SER VICE PROVIDED 19
TO AN INDIVIDUAL FOR THE PURPOSE OF PREVE NTING, ALLEVIATING, CURING, OR 20
HEALING HUMAN ILLNES S, INJURY, OR PHYSICAL DISABILI TY. 21
(7) “PROPRIETARY INFORMATI ON” HAS THE MEANIN G STATED IN § 22
15–1601 OF THIS TITLE. 23
(8) (I) “REBATE” MEANS A NEGOTIATED P RICE CONCESSION 24
PROVIDED TO A CARRIE R OR PHARMACY BENEFI TS MANAGER BY : 25
1. A MANUFACTURER ; 26
2. A DISPENSING PHARMAC Y; OR 27
3. ANOTHER PARTY TO THE DISPENSING OR 28
ADMINISTRATION OF A PRESC RIPTION DRUG. 29
SENATE BILL 1019 3
(II) “REBATE” INCLUDES: 1
1. A PRICE PROTECTION R EBATE THAT MAY ACCRU E 2
DIRECTLY OR INDIRECT LY TO THE CARRIER , OR OTHER PARTY ON BE HALF OF THE 3
CARRIER, IF THE WHOLESALE ACQ UISITION COST OF A D RUG INCREASES ABOVE A 4
SPECIFIED THRESHOLD ; 5
2. A PERFORMANCE –BASED PRICE CONCESSI ON THAT 6
MAY ACCRUE DIRECTLY OR INDIRECTLY TO THE CARRIER, OR OTHER PARTY ON 7
BEHALF OF THE CARRIE R, INCLUDING A PHARMACY BENEFITS MANAGER , DURING 8
THE COVERAGE YEAR ; AND 9
3. ANY OTHER NEGOTIAT ED PRICE CONCESSIONS , FEES, 10
OR OTHER ADMINISTRAT IVE COSTS THAT: 11
A. ARE PASSED THROUGH , OR ARE REASONABLY 12
ANTICIPATED TO BE PA SSED THROUGH , TO THE CARRIER , OR OTHER PARTY ON 13
BEHALF OF THE CARRIE R, INCLUDING A PHARMACY BENEFITS MANAGER ; AND 14
B. REDUCE THE CARRIER ’S REIMBURSEMENT FOR A 15
PRESCRIPTION DRUG . 16
(B) (1) SUBJECT TO PARAGRAPH (2) OF THIS SUBSECTION , THE 17
CALCULATION OF AN ENROLLEE ’S CONTRIBUTION TO AN APPLICABLE COST 18
SHARING REQUIREMENT FOR A PRESCRIPTION D RUG SHALL BE BASED O N THE LIST 19
PRICE OF THE PRESCRIPTION DRUG REDUCED BY AT LEAST 85% OF THE 20
REASONABLE ESTIMATED TOTAL AMOUNT OF REBA TES RECEIVED, OR EXPECTED TO 21
BE RECEIVED , BY THE CARRIER OR PH ARMACY BENEFITS MANA GER FOR THE 22
DISPENSING OR ADMINI STRATION OF THE PRES CRIPTION DRUG . 23
(2) (I) THE CONTRIBUTION SHAL L BE CALCULATED AT T HE POINT 24
OF SALE. 25
(II) THE CARRIER OR PHARMA CY BENEFITS MANAGER MAY 26
REDUCE THE LIST PRIC E OF A PRESCRIPTION DRUG BY MORE THAN 85% OF THE 27
REASONABLE ESTIMATED TOTAL AMOUNT OF REBA TES RECEIVED, OR EXPECTED TO 28
BE RECEIVED, FOR THE DISPENSING O R ADMINISTRATION OF THE PRESCRIPTION 29
DRUG. 30
(C) IN ADDITION TO ANY OT HER ENFORCEMENT ACTI ON TAKEN BY THE 31
COMMISSIONER UNDER TH IS ARTICLE, THE COMMISSIONER MAY IMPO SE A CIVIL 32
PENALTY NOT EXCEEDIN G $10,000 FOR EACH VIOLATION OF THIS SECTION. 33
4 SENATE BILL 1019
(D) (1) IN COMPLYING WITH THE PROVISIONS OF THIS S ECTION, A 1
CARRIER MAY NOT PUBL ISH OR OTHERWISE MAK E PUBLIC INFORMATION 2
REGARDING THE ACTUAL AMOUNT OF REBATES A CARRIER RECEIVES : 3
(I) ON A PRESCRIPTION DR UG OR THERAPEUTIC CL ASS OF 4
PRESCRIPTION DRUGS ; 5
(II) FROM A MANUFACTURER ; OR 6
(III) UNDER A CONTRACT WIT H A SPECIFIC PHARMAC Y. 7
(2) INFORMATION DESCRIBED UNDER PARAGRAPH (1) OF THIS 8
SUBSECTION: 9
(I) IS PROPRIETARY INFOR MATION; AND 10
(II) IS NOT SUBJECT TO DI SCLOSURE UND ER THE PUBLIC 11
INFORMATION ACT. 12
(E) A CARRIER SHALL REQUIR E AN AGENT OR A THIR D PARTY THAT 13
PERFORMS HEALTH CARE –RELATED OR ADMINISTR ATIVE SERVICES ON BE HALF OF 14
THE CARRIER TO COMPL Y WITH SUBSECTION (D) OF THIS SECTION. 15
15–1601. 16
(a) In this subtitle the following words have the meanings indicated. 17
(b) “Agent” means a pharmacy, a pharmacist, a mail order pharmacy, or a 18
nonresident pharmacy acting on behalf or at the direction of a pharmacy benefits manager. 19
(c) “Beneficiary” means an individual who receives prescription drug coverage or 20
benefits from a purchaser. 21
(d) (1) [“Carrier”] EXCEPT AS OTHERWISE P ROVIDED IN THIS SUBT ITLE, 22
“CARRIER” means the State Employee and Retiree Health and Welfare Benefits Program, 23
an insurer, a nonprofit health service plan, or a health maintenance organization that: 24
(i) provides prescription drug coverage or benefits in the State; and 25
(ii) enters into an agreement with a pharmacy benefits manager for 26
the provision of pharmacy benefits management services. 27
(2) “Carrier” does not include a person that provides prescription drug 28
coverage or benefits through plans subject to ERISA and does not provide prescription drug 29 SENATE BILL 1019 5
coverage or benefits through insurance, unless the person is a multiple employer welfare 1
arrangement as defined in § 514(b)(6)(a)(ii) of ERISA. 2
(e) “Compensation program” means a program, policy, or process through which 3
sources and pricing information are used by a pharmacy benefits manager to determine the 4
terms of payment as stated in a participating pharmacy contract. 5
(f) “Contracted pharmacy” means a pharmacy that participates in the network of 6
a pharmacy benefits manager through a contract with: 7
(1) the pharmacy benefits manager; or 8
(2) a pharmacy services administration organization or a group purchasing 9
organization. 10
(G) “COST SHARING ” MEANS ANY COPAYMENT , COINSURANCE , 11
DEDUCTIBLE, OR OTHER SIMILAR CHA RGE REQUIRED OF A BE NEFICIARY FOR A 12
HEALTH CARE SERVICE COVERED BY A HEALTH BENEFIT PLAN , INCLUDING A 13
PRESCRIPTION DRUG , AND PAID BY OR ON BE HALF OF THE BENEFICI ARY. 14
[(g)] (H) “ERISA” has the meaning stated in § 8–301 of this article. 15
[(h)] (I) “Formulary” means a list of prescription drugs used by a purchaser. 16
[(i)] (J) (1) “Manufacturer payments” means any compensation or 17
remuneration a pharmacy benefits manager receives from or on behalf of a pharmaceutical 18
manufacturer. 19
(2) “Manufacturer payments” includes: 20
(i) payments received in accordance with agreements with 21
pharmaceutical manufacturers for formulary placement and, if applicable, drug utilization; 22
(ii) rebates, regardless of how categorized; 23
(iii) market share incentives; 24
(iv) commissions; 25
(v) fees under products and services agreements; 26
(vi) any fees received for the sale of utilization data to a 27
pharmaceutical manufacturer; and 28
(vii) administrative or management fees. 29
6 SENATE BILL 1019
(3) “Manufacturer payments” does not include purchase discounts based on 1
invoiced purchase terms. 2
[(j)] (K) “Nonprofit health maintenance organization” has the meaning stated 3
in § 6–121(a) of this article. 4
[(k)] (L) “Nonresident pharmacy” has the meaning stated in § 12–403 of the 5
Health Occupations Article. 6
[(l)] (M) “Participating pharmacy contract” means a contract filed with the 7
Commissioner in accordance with § 15–1628(b) of this subtitle. 8
[(m)] (N) “Pharmacist” has the meaning stated in § 12–101 of the Health 9
Occupations Article. 10
[(n)] (O) “Pharmacy” has the meaning stated in § 12–101 of the Health 11
Occupations Article. 12
[(o)] (P) “Pharmacy and therapeutics committee” means a committee 13
established by a pharmacy benefits manager to: 14
(1) objectively appraise and evaluate prescription drugs; and 15
(2) make recommendations to a purchaser regarding the selection of drugs 16
for the purchaser’s formulary. 17
[(p)] (Q) (1) “Pharmacy benefits management services” means: 18
(i) the [procurement of prescription drugs at a negotiated rate for 19
dispensation within the State to beneficiaries] NEGOTIATION OF THE P RICE OF 20
PRESCRIPTION DRUGS , INCLUDING THE NEGOTI ATING AND CONTRACTIN G FOR 21
DIRECT AND INDIRECT REBATES, DISCOUNTS, OR OTHER PRICE CONCE SSIONS; 22
(ii) the administration or management of prescription drug coverage 23
provided by a purchaser for beneficiaries; [and] 24
(iii) any of the following services provided with regard to the 25
administration of prescription drug coverage: 26
1. mail service pharmacy; 27
2. claims processing, retail network management, a nd 28
payment of claims to pharmacies for prescription drugs dispensed to beneficiaries; 29
3. clinical formulary development and management services; 30
SENATE BILL 1019 7
4. rebate contracting and administration; 1
5. patient compliance, therapeutic intervention, and generic 2
substitution programs; [or] 3
6. disease management programs; 4
7. DRUG UTILIZATION REV IEW; OR 5
8. ADJUDICATION OF APPE ALS OR GRIEVANCES 6
RELATED TO A PRESCRI PTION DRUG BENEFIT ; 7
(IV) THE PERFORMANCE OF A DMINISTRATIVE , MANAGERIAL , 8
CLINICAL, PRICING, FINANCIAL, REIMBURSEMENT , DATA ADMINISTRATION OR 9
REPORTING, OR BILLING SERVICES ; AND 10
(V) OTHER SERVICES DEFIN ED BY THE COMMISSIONER IN 11
REGULATION . 12
(2) “Pharmacy benefits management services” does not include any service 13
provided by a nonprofit health maintenance organization that operates as a group model, 14
provided that the service: 15
(i) is provided solely to a member of the nonprofit health 16
maintenance organization; and 17
(ii) is furnished through the internal pharmacy operations of the 18
nonprofit health maintenance organization. 19
[(q)] (R) “Pharmacy benefits manager” means: 20
(1) a person that [performs], IN ACCORDANCE WITH A WRITTEN 21
AGREEMENT WITH A PUR CHASER, EITHER DIRECTLY OR I NDIRECTLY PROVIDES O NE 22
OR MORE pharmacy benefits management services; OR 23
(2) AN AGENT OR OTHER PR OXY OR REPRESENTATIV E, CONTRACTOR , 24
INTERMEDIARY , AFFILIATE, SUBSIDIARY, OR RELATED ENTITY OF A PERSON THAT 25
FACILITATES, PROVIDES, DIRECTS, OR OVERSEES THE PROV ISION OF PHARMACY 26
BENEFITS MANAGEMENT SERVICES. 27
[(r)] (S) “Proprietary information” means: 28
(1) a trade secret; 29
(2) confidential commercial information; or 30 8 SENATE BILL 1019
(3) confidential financial information. 1
[(s)] (T) “Purchaser” means a person that offers a plan or program in the State, 2
including the State Employee and Retiree Health and Welfare Benefits Program, that: 3
(1) provides prescription drug coverage or benefits in the State; and 4
(2) enters into an agreement with a pharmacy benefits manager for the 5
provision of pharmacy benefits management services. 6
(U) (1) “REBATE” MEANS A NEGOTIATED P RICE CONCESSION PROV IDED 7
TO A CARRIER OR PHAR MACY BENEFITS MANAGE R BY: 8
(I) A MANUFACTURER ; 9
(II) A DISPENSING PHARMAC Y; OR 10
(III) ANOTHER PARTY TO THE DISPENSING OR ADMINI STRATION 11
OF A PRESCRIPTION DR UG. 12
(2) “REBATE” INCLUDES: 13
(I) A PRICE PROTECTION R EBATE THAT MAY ACCRU E 14
DIRECTLY OR INDIRECT LY TO THE CARRIER , OR OTHER PARTY ON BE HALF OF THE 15
CARRIER, IF THE WHOLESALE ACQ UISITION COST OF A D RUG INCREASES ABOVE A 16
SPECIFIED THR ESHOLD; 17
(II) A PERFORMANCE –BASED PRICE CONCESSI ON THAT MAY 18
ACCRUE DIRECTLY OR I NDIRECTLY TO THE CAR RIER, OR OTHER PARTY ON BE HALF 19
OF THE CARRIER , INCLUDING A PHARMACY BENEFITS MANAGER , DURING THE 20
COVERAGE YEAR ; AND 21
(III) ANY OTHER NEGOTIATED PRICE CONCESSIONS , FEES, OR 22
OTHER ADMINISTRATIVE COSTS THAT: 23
1. ARE PASSED THROUGH , OR ARE REASONABLY 24
ANTICIPATED TO BE PA SSED THROUGH , TO THE CARRIER , OR OTHER PARTY ON 25
BEHALF OF THE CARRIE R, INCLUDING A PHARMACY BENEFITS MANAGER ; AND 26
2. REDUCE THE CARRIER’S REIMBURSEMENT FOR A 27
PRESCRIPTION DRUG . 28
SENATE BILL 1019 9
[(t)] (V) “Rebate sharing contract” means a contract between a pharmacy 1
benefits manager and a purchaser under which the pharmacy benefits manager agrees to 2
share manufacturer payments with the purchaser. 3
[(u)] (W) (1) “Therapeutic interchange” means any change from one 4
prescription drug to another. 5
(2) “Therapeutic interchange” does not include: 6
(i) a change initiated pursuant to a drug utilization review; 7
(ii) a change initiated for patient safety reasons; 8
(iii) a change required due to market unavailability of the currently 9
prescribed drug; 10
(iv) a change from a brand name drug to a generic drug in accordance 11
with § 12–504 of the Health Occupations Article; or 12
(v) a change required for coverage reasons because the originally 13
prescribed drug is not covered by the beneficiary’s formulary or plan. 14
[(v)] (X) “Therapeutic interchange solicitation” means any communication by a 15
pharmacy benefits manager for the purpose of requesting a therapeutic interchange. 16
[(w)] (Y) “Trade secret” has the meaning stated in § 11–1201 of the Commercial 17
Law Article. 18
15–1611.3. 19
(A) (1) IN THIS SECTION THE F OLLOWING WORDS HAVE THE MEANINGS 20
INDICATED. 21
(2) “CARRIER” MEANS AN ENTITY SUBJ ECT TO THE JURISDICTION OF 22
THE COMMISSIONER THAT CON TRACTS, OR OFFERS TO CONTRAC T, TO PROVIDE, 23
DELIVER, ARRANGE FOR , PAY FOR, OR REIMBURSE ANY OF THE COSTS OF HEALTH 24
CARE SERVICES UNDER A HEALTH BENEFIT PLA N IN THE STATE. 25
(3) (I) “HEALTH BENEFIT PLAN ” MEANS A POLI CY, CONTRACT, 26
CERTIFICATION , OR AGREEMENT OFFERED OR ISSUED BY AN ADMI NISTRATOR OR A 27
CARRIER TO PROVIDE , DELIVER, ARRANGE FOR , PAY FOR, OR REIMBURSE ANY OF 28
THE COSTS OF HEALTH CARE SERVICES . 29
(II) “HEALTH BENEFIT PLAN ” DOES NOT INCLUDE : 30
10 SENATE BILL 1019
1. A LOCAL GOVERNMENT HEALTH PL AN; OR 1
2. THE STATE EMPLOYEE AND RETIREE HEALTH AND 2
WELFARE BENEFITS PROGRAM. 3
(B) THIS SECTION APPLIES ONLY TO A PHARMACY B ENEFITS MANAGER 4
THAT PROVIDES PHARMA CY BENEFITS MANAGEME NT SERVICES ON BEHAL F OF A 5
CARRIER. 6
(C) (1) SUBJECT TO PARAGRAPH (2) OF THIS SUBSECTION , THE 7
CALCULATION OF AN ENROLLEE ’S CONTRIBUTION TO AN APPLICABLE COST 8
SHARING REQUIREMENT FOR A PRESCRIPTION D RUG SHALL BE BASED O N THE LIST 9
PRICE OF THE PRESCRI PTION DRUG REDUCED BY AT LEAST 85% OF THE TOTAL 10
AMOUNT OF REBATES RECEIVED OR EXPECTED TO BE RE CEIVED BY THE CARRIE R 11
OR PHARMACY BENEFITS MANAGER, FOR THE DISPENSING O R ADMINISTRATION OF 12
THE PRESCRIPTION DRU G. 13
(2) (I) THE CONTRIBUTION SHAL L BE CALCULATED AT T HE POINT 14
OF SALE. 15
(II) THE CARRIER OR PHARMA CY BENEFITS MANAGER MAY 16
REDUCE THE LIST PRIC E OF A PRESCRIPTION DRUG BY MORE THAN 85% OF THE 17
REASONABLE ESTIMATED TOTAL AMOUNT OF REBA TES RECEIVED, OR EXPECTED TO 18
BE RECEIVED, FOR THE DISPENSING O R ADMINISTRATION OF THE PRESCRIPTION 19
DRUG. 20
(D) IN ADDITION TO ANY OTHER ENFORCE MENT ACTION TAKEN BY THE 21
COMMISSIONER UNDER TH IS ARTICLE, THE COMMISSIONER MAY IMPO SE A CIVIL 22
PENALTY NOT EXCEEDIN G $10,000 FOR EACH VIOLATION O F THIS SECTION. 23
(E) (1) IN COMPLYING WITH THE PROVISIONS OF THIS S ECTION, A 24
CARRIER MAY N OT PUBLISH OR OTHERW ISE MAKE PUBLIC INFO RMATION 25
REGARDING THE ACTUAL AMOUNT OF REBATES A CARRIER RECEIVES : 26
(I) ON A PRESCRIPTION DR UG OR THERAPEUTIC CL ASS OF 27
PRESCRIPTION DRUGS ; 28
(II) FROM A MANUFACTURER ; OR 29
(III) UNDER A CONTRACT WIT H A SPECIFIC PHARMACY . 30
(2) THE INFORMATION DESCR IBED UNDER PARAGRAPH (1) OF THIS 31
SUBSECTION: 32 SENATE BILL 1019 11
(I) IS PROPRIETARY INFOR MATION; AND 1
(II) IS NOT SUBJECT TO DI SCLOSURE UNDER THE PUBLIC 2
INFORMATION ACT. 3
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall apply to all 4
policies, contracts, and health benefit plans issued, delivered, or renewed in the State on or 5
after January 1, 2025. 6
SECTION 3. AND BE IT FURTHER ENACTED, That this Act shall take effect 7
January 1, 2025. 8