25.1281.04000
Sixty-ninth
Legislative Assembly
of North Dakota
Introduced by
Representatives Kasper, Koppelman, Lefor, Steiner, Vigesaa, Warrey
Senators Barta, Boehm, Boschee, Hogue, Klein
A BILL for an Act to create and enact four new sections to chapter 26.1-27.1 of the North
Dakota Century Code, relating to pharmacy benefits managers and a pharmacy benefit
manager enforcement fund; to amend and reenact subsection 1 of section 26.1-01-07, sections
26.1-27.1-01, 26.1-27.1-02, 26.1-27.1-04, 26.1-27.1-06 and 26.1-27.1-07 of the North Dakota
Century Code, relating to pharmacy benefits managers; to repeal section 26.1-27-01.1 and
chapter 26.1-36.10 of the North Dakota Century Code, relating to pharmacy benefits managers
and prescription drug costs; to provide a penalty; to provide an appropriation; to provide for a
transfer; to provide an effective date; to provide an expiration date; and to declare an
emergency.
BE IT ENACTED BY THE LEGISLATIVE ASSEMBLY OF NORTH DAKOTA:
SECTION 1. AMENDMENT. Subsection 1 of section 26.1-01-07 of the North Dakota
Century Code is amended and reenacted as follows:
1.The commissioner shall charge and collect the following fees:
a.For filing articles of incorporation, or copies, or amendments thereof, twenty-five
dollars.
b.For each original certificate of authority issued upon admittance and for each
annual renewal thereof, one hundred dollars and for amendment to certificate of
authority, or certified copy thereof, fifty dollars.
c.For issuing an annual reciprocal exchange license, the same fees as those
applicable to the issuance of a certificate of authority in subsection 2.
d.For filing an annual report of a fraternal benefit society, and issuing a license or
permit to the society, and for each renewal thereof, one hundred dollars.
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ENGROSSED HOUSE BILL NO. 1584
FIRST ENGROSSMENT
with Senate Amendments
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e.For filing of articles of merger, or copies thereof, thirty dollars.
f.For filing an annual statement, twenty-five dollars.
g.For filing the abstract of the annual statement of an insurance company for
publication, thirty dollars.
h.For an official examination, the expenses of the examination at the rate adopted
by the department. The rates must be reasonably related to the direct and
indirect costs of the examination, including actual travel expenses, including hotel
and other living expenses, compensation of the examiner and other persons
making the examination, and necessary attendant administrative costs of the
department directly related to the examination and must be paid by the examined
insurer together with compensation upon presentation by the department to the
insurer of a detailed account of the charges and expenses after a detailed
statement has been filed by the examiner and approved by the department.
i.For issuing a certificate to a domestic insurance company showing a compliance
with the compulsory reserve provisions of this title and the maintenance of proper
security deposits and for any renewal of the certificate, twenty-five dollars.
j.For a written licensee's examination not administered by the office of the
commissioner under a contract with a testing service, the actual cost of the
examination, subject to approval of the commissioner, which must be paid to the
testing service.
k.For issuing a surplus lines insurance producer's or insurance consultant's
license, one hundred dollars. For each annual renewal of a surplus lines
insurance producer's or insurance consultant's license, twenty-five dollars.
l.For issuing an insurance producer's license, one hundred dollars.
m.For issuing a duplicate of any license or registration issued under this title, ten
dollars.
n.For each insurance company appointment and renewal of an appointment of an
insurance producer, ten dollars.
o.For each company application for admission, five hundred dollars, except
applications for admission for county mutual, fraternal benefit, and surplus lines
companies must be one hundred dollars.
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p.For issuing a license and each annual renewal of a license to an insurance
premium finance company, one hundred dollars.
q.For examining or investigating an insurance premium finance company, the
actual expense and per diem incurred; but the per diem charge may not exceed
fifty dollars.
r.For issuing and each annual renewal of a license to an advisory organization, fifty
dollars.
s.For filing an individual insurance producer licensing continuation, twenty-five
dollars.
t.For services provided by the state fire marshal.
u.For the initial application fee for a pharmacy benefit manager, an amount
determined by the commissioner, which may not exceed ten thousand dollars.
For each annual renewal, an amount to be determined by the commissioner,
which may not exceed ten thousand dollars.
SECTION 2. AMENDMENT. Section 26.1-27.1-01 of the North Dakota Century Code is
amended and reenacted as follows:
26.1-27.1-01. Definitions.
In this chapter, unless the context otherwise requires:
1."Covered entity" means a nonprofit hospital or a medical service corporation; a health
insurer; a health benefit plan; a health maintenance organization; a health program
administered by the state in the capacity of provider of health coverage; or an
employer, a labor union, or other entity organized in the state which provides health
coverage to covered individuals who are employed or reside in the state. The term
does not include a self-funded plan that is exempt from state regulation pursuant to
the Employee Retirement Income Security Act of 1974 [Pub. L. 93-406; 88 Stat. 829;
29 U.S.C. 1001 et seq.]; a plan issued for coverage for federal employees; or a health
plan that provides coverage only for accidental injury, specified disease, hospital
indemnity, Medicare supplement, disability income, long-term care, or other
limited-benefit health insurance policypolicies or contractcontracts that do not include
prescription drug coverage.
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2."Covered individual" means a member, a participant, an enrollee, a contractholder, a
policyholder, or a beneficiary of a covered entity who is provided health coverage by
the covered entity. The term includes a dependent or other individual provided health
coverage through a policy, contract, or plan for a covered individual.
3."De-identified information" means information from which the name, address,
telephone number, and other variables have been removed in accordance with
requirements of title 45, Code of Federal Regulations, part 164, section 512,
subsections (a) or (b).
4."Generic drug" means a drug that is chemically equivalent to a brand name drug for
which the patent has expired.
5."Labeler" means a person that has been assigned a labeler code by the federal food
and drug administration under title 21, Code of Federal Regulations, part 207,
section 20, and that receives prescription drugs from a manufacturer or wholesaler
and repackages those drugs for later retail sale.
6.5."Payment received by the pharmacy benefits manager" means the aggregate amount
of the following types of payments:
a.A rebate collected by the pharmacy benefits manager or a rebate aggregator
which is allocated to a covered entity, or retained by the pharmacy benefits
manager;
b.An administrative fee collected from the manufacturer in consideration of an
administrative service provided by the pharmacy benefits manager to the
manufacturer;
c.A pharmacy network fee;, pharmacy price concessions, and any other financial
payment made by a pharmacy to a pharmacy benefits manager; and
d.Any other fee or amount collected by the pharmacy benefits manager from a
manufacturer or labeler for a drug switch program, formulary management
program, mail service pharmacy, educational support, data sales related to a
covered individual, or any other administrative function.
7.6."Pharmacy benefits management" means the procurement of prescription drugs at a
negotiated rate for dispensation within this state to covered individuals; the
administration or management of prescription drug benefits provided by a covered
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entity for the benefit of covered individuals; or the providing of any of the following
services with regard to the administration of the following pharmacy benefits:
a.Claims processing, retailpharmacy network management, and payment of claims
to a pharmacy for prescription drugs dispensed to a covered individual;
b.Clinical formulary development and management services; or
c.Rebate contracting and administration.
8.7."Pharmacy benefits manager" means a person thatwho performs pharmacy benefits
management, as a third party, under a contract or other financial arrangement with a
covered entity. The term includesdoes not include a person acting for a health benefit
plan that manages or directs its own pharmacy benefits manager in a contractual or
employment relationship in the performance of pharmacy benefits management for a
covered entity. The term does not include a public self-funded pool or a private
single-employer self-funded plan that provides benefits or services directly to its
beneficiaries. The term does not include a health carrier licensed under title 26.1 if the
health carrier is providing pharmacy benefits management to its insureds.
9.8."Rebate" means a retrospective reimbursement of a monetary amount by a
manufacturer under a manufacturer's discount program with a pharmacy benefits
manager for drugs dispensed to a covered individual.
10.9."Utilization information" means de-identified information regarding the quantity of drug
prescriptions dispensed to members of a health plan during a specified time period.
SECTION 3. AMENDMENT. Section 26.1-27.1-02 of the North Dakota Century Code is
amended and reenacted as follows:
26.1-27.1-02. Licensing - Terms and fee - Application.
1.A person may not performestablish or actoperate as a pharmacy benefits manager in
this state unless that person holdswithout first obtaining a certificate of
registrationlicense as an administrator under chapter 26.1-27from the commissioner
under this section. A person violating this subsection is guilty of a class C felony .
2.A person applying for a pharmacy benefits manager license shall submit an application
to the commissioner. The commissioner shall make an application form available on its
website which includes a request for the following information:
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a.The identity, address, electronic mail address, and telephone number of the
applicant;
b.The name, business address, electronic mail address, and telephone number of
the contact person for the applicant;
c.If applicable, the federal employer identification number for the applicant; and
d.Any other information the commissioner considers necessary and appropriate to
establish the qualifications to receive a license as a pharmacy benefits manager
to complete the licensure process.
3.The term of licensure is one year from April thirtieth through March thirty - first.
4.The pharmacy benefits manager shall pay an annual renewal fee no later than April
thirtieth.
5.The applicant shall submit the fee with the initial application or renewal application for
licensure. The initial application fee and renewal fee are nonrefundable.
6.Each application for a license, and subsequent renewal for a license, must be
accompanied by evidence of financial responsibility in an amount of one million
dollars.
7.Upon receipt of a completed application, evidence of financial responsibility, and fee,
the commissioner shall review each application and issue a license if the applicant is
qualified in accordance with the provisions of this section and the rules promulgated
by the commissioner under this section. The commissioner may require additional
information or submissions from an applicant and may obtain any documents or
information reasonably necessary to verify the information contained in the application.
8.The license may be in paper or electronic form. The license is nontransferable, and
must prominently list the expiration date.
SECTION 4. AMENDMENT. Section 26.1-27.1-04 of the North Dakota Century Code is
amended and reenacted as follows:
26.1-27.1-04. Prohibited practices.
1.A pharmacy benefits manager shall comply with sections 19 - 02.1 - 01, 19 - 02.1 - 02,
19 - 02.1 - 14.2, 19 - 02.1 - 16, 19 - 02.1 - 16.1, 19 - 02.1 - 16.2, 19 - 02.1 - 16.3, 19 - 02.1 - 16.4,
19 - 02.1 - 16.5, and 19 - 02.1 - 16.6 in chapter 19-02.1 regarding the substitution of one
prescription drug for another.
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2.A pharmacy benefits manager may not require a pharmacist or pharmacy to
participate in one contract in order to participate in another contract. The pharmacy
benefits manager may not exclude an otherwise qualified pharmacist or pharmacy
from participation in a particular network if the pharmacist or pharmacy accepts the
terms, conditions, and reimbursement rates of the pharmacy benefits manager's
contract.
3.A pharmacy benefits manager shall offer pharmacy contracts that are opt - in contracts
with at least thirty days to respond and signatures must be obtained from the
pharmacy or an entity contracting on behalf of the pharmacy.
4.A pharmacy may opt - out of a pharmacy benefits managers contract by providing at
least a ninety - day notice.
SECTION 5. AMENDMENT. Section 26.1-27.1-06 of the North Dakota Century Code is
amended and reenacted as follows:
26.1-27.1-06. Examination of insurer-covered entity.
1.During an examination of a covered entity as provided for in chapter 26.1-03, 26.1-17,
or 26.1-18.1, the commissioner shall examine any contract between the covered entity
and a pharmacy benefits manager and any related record to determine if the payment
received by the pharmacy benefits manager which the covered entity received from
the pharmacy benefits manager has been applied toward reducing the covered entity's
rates or has been distributed to covered individuals.
2.To facilitate the examination, the covered entity shall disclose annually to the
commissioner the benefits of the payment received by the pharmacy benefits manager
received under any contract with a pharmacy benefits manager and shall describe the
manner in which the payment received by the pharmacy benefits manager is applied
toward reducing rates or is distributed to covered individuals.
3.Any information disclosed to the commissioner under this section is considered a trade
secret under chapter 47-25.1. This section does not prevent the disclosure of a final
order issued against a pharmacy benefits manager. Such order is an open record.
SECTION 6. AMENDMENT. Section 26.1-27.1-07 of the North Dakota Century Code is
amended and reenacted as follows:
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26.1-27.1-07. Rulemaking authority.
The commissioner shall adopt rules as necessary before implementation ofto implement
this chapter.
SECTION 7. A new section to chapter 26.1-27.1 of the North Dakota Century Code is
created and enacted as follows:
Enforcement.
1.All powers granted to the commissioner under title 26.1 and chapter 28 - 32 are
available in enforcing chapter 26.1 - 27.1, including subpoena power.
2.This section does not limit the attorney general from investigating and prosecuting
violations of the law.
3.This section does not prohibit the commissioner, state board of pharmacy, or
department of health and human services from collaborating through joint exercise of
common powers agreements.
SECTION 8. A new section to chapter 26.1-27.1 of the North Dakota Century Code is
created and enacted as follows:
Administrative penalties.
1.A pharmacy benefits manager found to be in violation of this chapter or any rules
adopted under this chapter is subject to:
a.A monetary penalty of up to ten thousand dollars per violation;
b.Suspension or revocation of license; and
c.A civil penalty of up to fifty thousand dollars for a second or subsequent violation.
2.The commissioner may require a pharmacy benefits manager to provide restitution to
affected covered entities, pharmacies, or individuals for losses incurred as a result of
the violation.
3.A pharmacy benefits manager subject to penalties under this section is entitled to a
hearing conducted in accordance with chapter 28 - 32.
SECTION 9. A new section to chapter 26.1-27.1 of the North Dakota Century Code is
created and enacted as follows:
Proceedings by commissioner - Service of process - Procedure.
The commissioner shall serve process upon any licensee in any action or proceeding
instituted by the commissioner under this chapter by electronic mail to the electronic mail
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address maintained in section 26.1 - 27.1 - 02 or by United States mail to the licensee at the
licensee's last - known address of record or principal place of business. Service of process under
this section is complete upon electronic mailing or United States mailing.
SECTION 10. A new section to chapter 26.1-27.1 of the North Dakota Century Code is
created and enacted as follows:
Pharmacy benefit manager enforcement fund - State board of pharmacy wholesaler
and virtual wholesaler license fees - Revenue deposits or transfers.
The pharmacy benefit manager enforcement fund is a special fund in the state treasury.
The fund consists of moneys transferred to or deposited in the fund by legislative action and
moneys transferred to or deposited in the fund by the state board of pharmacy. The state board
of pharmacy may deposit or transfer up to six hundred dollars of every eligible wholesaler
license fee and every virtual wholesaler license fee collected by the board under section
43 - 15.3 - 12 to the pharmacy benefit manager enforcement fund. Moneys in the fund are
available to the insurance commissioner, subject to legislative appropriations, for enforcing the
provisions of this chapter.
SECTION 11. REPEAL. Section 26.1-27-01.1 and chapter 26.1-36.10 of the North Dakota
Century Code are repealed.
SECTION 12. TRANSFER - DRUG PRICING FUND TO PHARMACY BENEFIT
MANAGER ENFORCEMENT FUND. On the effective date of this Act, the office of management
and budget shall transfer the balance in the drug pricing fund to the pharmacy benefit manager
enforcement fund for the purpose of enforcing the provisions of chapter 26.1-27.1.
SECTION 13. APPROPRIATION - INSURANCE COMMISSIONER - PHARMACY
BENEFIT MANAGER ENFORCEMENT FUND. There is appropriated out of any moneys in the
pharmacy benefit manager enforcement fund in the state treasury, not otherwise appropriated,
the sum of $1,200,000, or so much of the sum as may be necessary, to the insurance
commissioner for the purpose of enforcing the provisions of chapter 26.1-27.1 and conducting
an actuarial analysis of the effect of the policies contained in this Act on health insurance
premiums and consumer drug prices, for the period beginning with the effective date of this Act
and ending June 30, 2027. The insurance commissioner is authorized three full-time equivalent
positions, including an attorney, a pharmacist, and an investigator, for this purpose.
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SECTION 14. EFFECTIVE DATE. Section 3 of this Act becomes effective on January 1,
2026.
SECTION 15. EXPIRATION DATE. Section 10 of this Act is effective through June 30,
2029, and after that date is ineffective.
SECTION 16. EMERGENCY. This Act is declared to be an emergency measure.
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