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STATE OF OKLAHOMA
1st Session of the 58th Legislature (2021)
COMMITTEE SUBSTITUTE
FOR
SENATE BILL 737 By: McCortney of the Senate
and
McEntire of the House
COMMITTEE SUBSTITUTE
An Act relating to the Patient’s Right to Pharmacy
Choice Act; amending Section 3, Chapter 426, O.S.L.
2019 (36 O.S. Supp. 2020, Secti on 6960), which
relates to definitions; adding definition s; amending
Section 5, Chapter 426, O.S.L. 2019 (3 6 O.S. Supp.
2020, Section 6962), which relates to compliance
review; updating references; adding prohibited
activity; amending Section 8, Chapter 426, O.S.L.
2019 (36 O.S. Supp. 2020, Section 6965), which
relates to power to investigate; modifying time frame
of certain required response; amending Section 9,
Chapter 426, O.S.L. 2019 (36 O.S. Supp. 2020, Section
6966), which relates to Patient ’s Right to Pharmacy
Choice Advisory Committee; modifying powers of
advisory committee; requiring committee make ce rtain
recommendation to Insurance Commissioner; modifying
terms of persons nominated to committee; modifying
procedures and requirements for hearings on violation
of act; authorizing Commissioner to censure, suspend
or revoke license of certain persons for violating
act; specifying amount of certain civil fine;
authorizing Commissioner to enforce provi sions of
act; providing that fees and costs of hearing
examiner be assessed against respondent ; authorizing
right of appeal for certain pharmacy benefit
managers; establishing standard of judicial review
for appeal; authorizing Commissioner to require
reports from certain pharmacy benefits managers;
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providing for codification; and providing an
effective date.
BE IT ENACTED BY THE PEOPLE OF THE STAT E OF OKLAHOMA:
SECTION 1. AMENDATORY Section 3, Chapter 426, O.S.L.
2019 (36 O.S. Supp. 2020, Section 6960), is amended to read as
follows:
Section 6960. For purposes of the Patient’s Right to Pharmacy
Choice Act:
1. “Health insurer” means any corporation, association, benefit
society, exchange, partnership or individual licensed by the
Oklahoma Insurance Code;
2. “Mail-order pharmacy” means a pharmacy licensed by th is
state that primarily dispenses and delivers covered drugs vi a common
carrier;
3. “Pharmacy benefits manager ” or “PBM” means a person that
performs pharmacy benefits management and any other person acting
for such person under a contractual or employmen t relationship in
the performance of pharmacy benefits manageme nt for a managed-care
company, nonprofit hospital, medical service organization, insurance
company, third-party payor or a health program administered by a
department of this state;
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4. “Pharmacy and therapeutics committee ” or “P&T committee”
means a committee at a hospital or a health insurance plan that
decides which drugs will appear on that entity ’s drug formulary;
5. “Provider” means a pharmacy, as defined in Section 353.1 of
Title 59 of the Oklahoma Statutes, licensed by the Stat e Board of
Pharmacy or an agent or representative of a pharmacy including but
not limited to the contracting agent of a pharmacy who dispenses
prescription drugs or devices to covered individuals;
6. “Retail pharmacy network” means retail pharmacy providers
contracted with a PBM in which the pharm acy primarily fills and
sells prescriptions via a retail, storefront location;
6. 7. “Rural service area” means a five-digit ZIP code in which
the population density is less than one thousand (1,0 00) individuals
per square mile;
8. “Spread pricing” shall mean the model of prescription drug
pricing in which the pharmacy benefit manager charges a health
benefit plan a contracted price for prescription drugs, and the
contracted price for the prescription drugs differs from the amount
the pharmacy benefit manager directly or indirectly pays the
pharmacy or pharmacist for providing pharmacy services;
7. 9. “Suburban service area” means a five-digit ZIP code in
which the population density is between one thousand (1,000) and
three thousand (3,000) individuals per s quare mile; and
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8. 10. “Urban service area” means a five-digit ZIP code in
which the population density is greater than three thousand (3,000)
individuals per square mile.
SECTION 2. AMENDATORY Section 5, Chapter 426, O.S.L.
2019 (36 O.S. Supp. 2020, Section 6962), is amen ded to read as
follows:
Section 6962. A. The Oklahoma Insurance Department shall
review and approve retail pharmacy network access for all pharmacy
benefits managers (PBMs) to ensure compliance with Section 4 of this
act 6961 of this title.
B. A PBM, or an agent of a PBM, shall n ot:
1. Cause or knowingly permit the use of advertisement,
promotion, solicitation, representation, proposal or offer that is
untrue, deceptive or misleading;
2. Charge a pharmacist o r pharmacy a fee rela ted to the
adjudication of a claim, including without limitation a fee for:
a. the submission of a claim,
b. enrollment or participation in a retail pharmacy
network, or
c. the development or management of claims processing
services or claims payment servi ces related to
participation in a retail pharmacy network;
3. Reimburse a pharmacy or pharmacist in the state an amount
less than the amount that the PBM reimburses a pharmacy owned by or
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under common ownership with a PBM for providin g the same covered
services. The reimbursem ent amount paid to the phar macy shall be
equal to the reimbursement amount calculated on a per -unit basis
using the same generic product identifier or generic code number
paid to the PBM-owned or PBM-affiliated pharmacy;
4. Deny a pharmacy the opportunity to participate in any
pharmacy network at preferred participation status if the pharmacy
is willing to accept the terms and conditions that the PBM has
established for other pharmacies as a condition of preferre d network
participation status;
5. Deny, limit or terminate a pharmacy ’s contract based on
employment status of any employee who has an active license to
dispense, despite probation status, with the State Board of
Pharmacy;
6. Retroactively deny or reduc e reimbursement for a covered
service claim after returning a paid clai m response as part of the
adjudication of the claim, unless:
a. the original claim was submitted fraudulently, or
b. to correct errors identified in an audit, so long as
the audit was conducted in complianc e with Sections
356.2 and 356.3 of Title 59 of the Oklahoma Statutes;
or
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7. Fail to make any payment due to a pharmacy or pharmacist for
covered services properly rendered in the event a PBM terminates a
pharmacy or pharmacist from a pharmacy benefits man ager network; or
8. Conduct spread pricing, as defined in Section 6960 of this
title, in this state .
C. The prohibitions under this sect ion shall apply to contracts
between pharmacy benefits managers and pharmacists or pharmacies for
participation in ret ail pharmacy networks.
1. A PBM contract shall:
a. not restrict, directly or indirectly, any pharmacy
that dispenses a prescription drug from informing, or
penalize such pharmacy for informing, an individual of
any differential betwee n the individual’s out-of-
pocket cost or coverage with respect to acquisition of
the drug and the amount an individual would pay to
purchase the drug directly, and
b. ensure that any entity that provides pharmacy benefits
management services under a contra ct with any such
health plan or health insur ance coverage does not,
with respect to such plan or coverage, restrict,
directly or indirectly, a pharmacy that di spenses a
prescription drug from informing, or penalize such
pharmacy for informing, a covered in dividual of any
differential between the ind ividual’s out-of-pocket
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cost under the plan or coverage with respect to
acquisition of the drug and the amount an i ndividual
would pay for acquisition of the drug without using
any health plan or health insurance coverage.
2. A pharmacy benefits manager ’s contract with a participating
pharmacist or pharmacy shall not prohibit, restrict or limit
disclosure of informati on to the Insurance Commissioner, law
enforcement or state and federal governmental officials
investigating or examini ng a complaint or condu cting a review of a
pharmacy benefits manager ’s compliance with the requirements under
the Patient’s Right to Pharmacy Choice Act.
3. A pharmacy benefits manager shall establish and maintain an
electronic claim inquiry processing sy stem using the National
Council for Prescription Drug Programs ’ current standards to
communicate information to pharmacies submitting clai m inquiries.
SECTION 3. AMENDATORY Section 8, Chapter 426, O.S.L.
2019 (36 O.S. Supp. 2020, Section 6965), is amended to read as
follows:
Section 6965. A. The Insurance Commissioner shall have power
to examine and investigate into the affairs of every pharmacy
benefits manager (PBM) engaged in pharmacy benefits managem ent in
this state in order to determine whether s uch entity is in
compliance with the Patient’s Right to Pharmacy Choice Act.
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B. All PBM files and r ecords shall be subject to examination by
the Insurance Commissioner or by duly appointed designees. The
Insurance Commissioner, au thorized employees and e xaminers shall
have access to any of a PBM’s files and records that may relate to a
particular complaint under investigation or to an inquiry or
examination by the Insurance Department.
C. Every officer, di rector, employee or agent of the PBM, upon
receipt of any inquiry from the Commissione r shall, within thirty
(30) twenty (20) days from the date the inquiry is sent, furnish the
Commissioner with an adequate response to the inquiry.
D. When making an exa mination under this sectio n, the Insurance
Commissioner may retain subject matter experts, attorneys,
appraisers, independent actuaries, independent c ertified public
accountants or an accounting firm or individual holding a permit to
practice public accoun ting, certified financial examiners or other
professionals and specialists as examiner s, the cost of which shall
be borne by the PBM which is the subj ect of the examination.
SECTION 4. AMENDATORY Section 9, Chapter 426, O.S.L.
2019 (36 O.S. Supp. 2020, Sec tion 6966), is amended t o read as
follows:
Section 6966. A. The Insurance Commissioner shall provide for
the receiving and processing of individual complaints alleging
violations of the provisions of t he Patient’s Right to Pharmacy
Choice Act.
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B. The Commissioner shall establi sh a Patient’s Right to
Pharmacy Choice Advisory Committee to advise the Commissioner and
serve at his or her discretion. The Advisory Committee shall review
complaints, hold hearings, subpoena witnesses and rec ords, initiate
prosecution, reprimand, place on probation, suspend, revoke and/or
levy fines not to exceed Ten Thousand Dollars ($10,000.00 ) for each
count for which alleging any pharmacy benefits manager (PBM) has
violated a provision of this act the Patient’s Right to Pharmacy
Choice Act. The Advisory Committee may impose as part of any
disciplinary action the payment of costs expended by the Insurance
Department for any legal fees and costs including, but not limited
to, staff time, salary and travel ex pense, witness fees and attorney
fees. The Advisory Committee may take such actions singly o r in
combination, as the nature of the viol ation requires After review,
the Advisory Committee shall make a recommendation to the
Commissioner as to administrative action to be taken against the
pharmacy benefits manager pursuant to subsections B and C of Section
5 of this act.
C. The Advisory Com mittee shall consist of seven (7) persons
appointed as follows:
1. Two persons who shall be nominated appointed by the Oklahoma
Pharmacists Association;
2. Two consumer members not employed or related to insurance,
pharmacy or PBM nominated appointed by the Office of the Governor;
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3. Two persons representing the PBM or insurance industry
nominated appointed by the Insurance Commissioner; an d
4. One person representing the Office of the Attorney General
nominated appointed by the Attorney General.
D. Committee members shall be appointed for terms of five (5)
years; provided, that of the members first appointed, the two
members appointed by the Office of the Governor shall serve for one
(1) year, the two members appointed by the Oklahoma Pharmacists
Association shall serve for two (2) years, the two members appointed
by the Insurance Commissioner shall serve for three (3) years and
the one member appointed by the Attorney General shall serve for
four (4) years. The terms of the members of the Advisory Committee
shall expire on the thirtieth day of June of the year designated for
the expiration of the term for which ap pointed, but the member shall
serve until a qualified successor has been duly appointed. No
person shall be appointed to serve more than two consecu tive terms.
E. Hearings shall be held in the In surance Commissioner ’s
offices or at such other place as th e Insurance Commissioner may
deem convenient.
F. The Insurance Commissioner shall issue and serve upon the
PBM a statement of the charges and a noti ce of hearing in accordance
with the Administrat ive Procedures Act, Sections 250 through 323 of
Title 75 of the Oklahoma Statutes.
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G. At the time and place fixed for a hearing, the PBM shall
have an opportunity to be heard and to show cause why the Insura nce
Commissioner or his or her duly appointed he aring examiner should
not revoke or suspend the PBM ’s license and levy administrative
fines for each violation. Upon good cause shown, the Commissioner
shall permit any person to intervene, appear and be hea rd at the
hearing by counsel or in person.
H. All hearings will be public and held in accordance with, and
governed by, Sections 250 through 323 of Title 75 of the Oklahoma
Statutes.
I. The Insurance Com missioner, upon written request reasonably
made by the licensed PBM affected by the hearing and at such PBM’s
expense shall cause a full stenographic record o f the proceedings to
be made by a competent court reporter.
J. If the Insurance Commissioner dete rmines, based on an
investigation of complaints, th at a PBM has engaged in violations of
this act with such frequency as to indicate a general business
practice and that such PBM should be subjected to closer supervision
with respect to such practices, the Insurance Commissioner may
require the PBM to file a report at such periodic intervals as the
Insurance Commissioner deems necessary.
SECTION 5. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 6966.1 of Title 36, unless there
is created a duplication in numbering, reads as follows:
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A. The Insurance Commissioner may censure, suspend , revoke or
refuse to renew a license of or levy a civil penalty against any
person licensed under the insurance laws of this state for any
violation of the Patient’s Right to Pharmacy Choice Act, Section
6958 et seq. of Title 36 of the Oklahoma Statutes.
B. The license of a pharmacy benefits manager m ay be censured,
suspended or revoked if the Commissioner finds, after notice and
opportunity for a hearing, that the pharmacy benefits manager
violated one or more provisions of the Patient’s Right to Pharmacy
Choice Act.
C. In addition to or in lieu of any censure, suspension or
revocation of a license, a pharmacy benefits ma nager may, after
notice and opportunity for a heari ng, be subject to a civil fine of
not less than One Hundred Dollars ($100.00) and not greater than Ten
Thousand Dollars ($10,000.00) for each violation. The penalty may
be enforced in the same manner in w hich civil judgments may be
enforced.
D. The Commissioner shall be authorized to enforce the
provisions of the Patient’s Right to Pharmacy Choice Act and impose
any penalty or remedy authorized under the act against a pharmacy
benefits manager under inves tigation for or charged with a violation
of the act or any provision of Title 36 of the Oklahoma Statutes ,
notwithstanding whether the license of the pharmacy benefits manager
has been surrendered or lapsed by operation of law.
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E. 1. All hearings shall b e public and held in accordance with
the Administrative Procedures Act.
2. Hearings shall be held at the office of the Insurance
Commissioner or at any other place as the Commissione r may deem
convenient.
3. The Commissioner, upon written request reasona bly made by
the pharmacy benefits manager affected by the hearing, shall cause a
full stenographic record of the proceeding s to be made by a
competent court reporter. This record sha ll be at the expense of
the pharmacy benefits manager.
4. The ordinary fees and costs of the hearing examiner
appointed pursuant to Section 319 of Title 36 of the Okla homa
Statutes may be assessed by the hearing examiner against t he
respondent unless the respondent is the prevailing party.
F. Any pharmacy benefits manage r whose license has been
censured, suspended, revoked or denied renewal, or who has had a
fine levied against him or her, shall have the right of appeal from
the final order of the Commiss ioner, pursuant to Section 318 et seq.
of Title 75 of the Oklahoma Statut es.
G. If the Insurance Commissioner determines, b ased upon an
investigation of complaints, that a phar macy benefits manager has
engaged in violations of the provisions of the Patient’s Right to
Pharmacy Choice Act with such frequency as to indicate a gen eral
business practice, and that the pharmacy benef its manager should be
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subjected to closer supervision with respect to such practices, the
Commissioner may require the pharmacy bene fits manager to file a
report at any periodic intervals the Commissioner deems necessary.
SECTION 6. This act shall become effective November 1, 2021.
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