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STATE OF OKLAHOMA
2nd Session of the 59th Legislature (2024)
COMMITTEE SUBSTITUTE
FOR
SENATE BILL 1670 By: McCortney, Prieto, and Jett
of the Senate
and
McEntire of the House
COMMITTEE SUBSTITUTE
An Act relating to pharmacy benefits management;
amending 59 O.S. 2021, Sections 356.1, 356.2, 356.3,
357, 358, and 360, which relate to the Pharmacy Audit
Integrity Act and pharmacy reimbursement; providing
for rule promulgation; modifying audit notice
requirements; requiring notice and reporting to the
Office of the Attorney General; providing for fines
and fees; modifying definitions; requiring certain
recouped funds from audit to be paid to patients
first; making certain audits null and void ; requiring
certain notice to include certain dec laration;
modifying definition ; modifying reimbursement appeal
process; requiring reimbursement at certain rate
under certain circumstances; updating statutory
references; and declaring an emergency.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 59 O.S. 2021, Section 356.1, is
amended to read as follows:
Section 356.1. A. For purposes of the Pharmacy Audit Integrity
Act, “pharmacy benefits manager ” or “PBM” means a person, business,
or other entity that performs pharmacy benefits management. The
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term includes a person or entity acting for a PBM in a contractual
or employment relationship in the performance of pharmacy benefits
management for a managed care company, nonprofit hospital, medical
service organization, insuran ce company, third-party payor, or a
health program administered by a dep artment of this state.
B. The purpose of the Pharmacy Audit Integrity Act is to
establish minimum and uniform standar ds and criteria for the audit
of pharmacy records by or on behalf of certain entities.
C. The Pharmacy Audit Integrity Act shall apply to any audit of
the records of a pharmacy conducted by a managed care company,
nonprofit hospital, medical service organization, insurance company,
third-party payor, pharmacy benefits m anager, a health program
administered by a department of this state, or any entity that
represents these companies, groups, or departments.
D. The Attorney General may promulgate rules to i mplement the
provisions of the Ph armacy Audit Integrity Act.
SECTION 2. AMENDATORY 59 O.S. 2021, Section 356.2, is
amended to read as follows:
Section 356.2. A. The entity conducting an audit of a pharmacy
shall:
1. Identify and specifically describe the audit and appeal
procedures in the pha rmacy contract. Prescription claim
documentation and record -keeping requirements shall not exceed the
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requirements set forth by the Oklahoma Pharmacy Act or other
applicable state or federal law s or regulations;
2. Give the pharmacy written notice by certified letter to the
pharmacy and the pharmacy ’s contracting agent, including
identification of specific prescription numbers and fill dates to be
audited, at least two (2) weeks fourteen (14) calendar days prior to
conducting the audit, including, but not limited to, an on -site
audit, a desk audit, or a wholesale purchase audit, request for
documentation related to the dispensing of a prescription drug or
any reimbursed activity by a pharmacy prov ider; provided, however,
that wholesale purchase au dits shall require a minimum of thirty
(30) calendar days’ written notice. For an on-site audit, the audit
date shall be the date the on-site audit occurs. For all other
audit types, the audit date shall be the date the pharmacy provides
the documentation requested in the audit notice. The pharmacy shall
have the opportunity to reschedule the audit no more than seven (7)
calendar days from the date designated on the original audit
notification;
3. Not interfere with the delivery of pharmacist services to a
patient and shall utilize every reasonable effort to m inimize
inconvenience and disruption to pharmacy operations during the audit
process;
4. Conduct any audit involving clinical or professional
judgment by means of or in consultation with a licensed pharmacist;
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5. Not consider as fraud any clerical or record -keeping error,
such as a typographical error, scrivener ’s error or computer error,
including, but not limited to, a miscalculated day supply,
incorrectly billed prescr iption written date or prescription origin
code, and such errors shall not be subject to recoupment . The
pharmacy shall have the right to submit amended claims
electronically to correct clerical or record -keeping errors in lieu
of recoupment. To the extent that an audit results in the
identification of any clerical or record -keeping errors such as
typographical errors, scrivener’s errors or computer errors i n a
required document or record, the pharmacy shall not be subject to
recoupment of funds by the ph armacy benefits manager unless the
pharmacy benefits manager can provide proof of intent to commit
fraud. A person shall not be subject to criminal penalties for
errors provided for in this paragraph without proof of intent to
commit fraud;
6. Permit a pharmacy to use the records of a hospital,
physician, or other authorized practitioner of the healing art s for
drugs or medicinal supplies written or transmit ted by any means of
communication for purposes of validating the pharmacy r ecord with
respect to orders or refills of a legend or narcotic drug;
7. Not include the dispensing fee amount or the actual invoice
cost of the prescription dispensed in a finding of an audit
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recoupment unless a prescription was not act ually dispensed or a
physician denied authorization of a dispensing order ;
8. Audit each pharmacy under identical standards, regularity
and parameters as other similarly situated pharmacies and all
pharmacies owned or managed by the pharmacy benefits manager
conducting or having conducted the audit;
9. Not exceed one (1) year from the date the claim was
submitted to or adjudicated by a managed care company, nonprofit
hospital or medical service organization, insurance company, third -
party payor, pharmacy benefits manager, a health program
administered by a department of this state, or any entit y that
represents the companies, groups, or departments for the period
covered by an audit;
10. Not schedule or initiate an audit during the first seven
(7) calendar days of any mont h unless otherwise consented to by the
pharmacy;
11. Disclose to any plan sponsor whose claims were included in
the audit any money recouped in the audit ; and
12. Not require pharmacists to break open packaging labeled
“for single-patient-use only”. Packaging labeled “for single-
patient-use only” shall be deemed to be the s mallest package size
available; and
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13. Upon recoupment of funds from a pharmacy, refund first to
the patient the portion of the recovered funds that were originally
paid by the patient.
B. 1. Any entity that conducts wholesale purchase review
during an audit of a pharmacist or pharmacy shall not require the
pharmacist or pharmacy to provide a full d ispensing report.
Wholesaler invoice reviews shall be li mited to verification of
purchase inventory specifi c to the pharmacy claims paid by the
health benefits plan or pharmacy benefits manage r conducting the
audit.
2. Any entity conducting an audit sha ll not identify or label a
prescription claim as an audit discrepancy when:
a. the National Drug Code for the dis pensed drug is in a
quantity that is a subunit or multiple of the drug
purchased by the pharmacist or pharmacy as supported
by a wholesale invoice,
b. the pharmacist or pharmacy dispensed the correct
quantity of the drug according to the prescription,
and
c. the drug dispensed by the pharmacist or pharmacy
shares all but the last two d igits of the Nationa l
Drug Code of the drug reflected on th e supplier
invoice.
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3. An entity conducting an audit shall a ccept as evidence,
subject to validation, to support th e validity of a pharmacy claim
related to a dispensed drug:
a. redacted copies of supplier invoices in the
pharmacist’s or pharmacy’s possession, or
b. invoices and any supporting documents from any
supplier as authorized by federal or state law to
transfer ownership of the drug acquired by the
pharmacist or pharmacy.
4. An entity conducting an audit sha ll provide, no later than
five (5) business days after the date of a request by the pharmacist
or pharmacy, all supporting docum ents the pharmacist’s or pharmacy’s
purchase suppliers provided to the health benefits plan issuer or
pharmacy benefits manager.
C. A pharmacy shall be allowed to provide the pharmacy ’s
computerized patterned medical records or the records of a hospital,
physician, or other aut horized practitioner of the healing arts for
drugs or medicinal supp lies written or transmitted by any me ans of
communication for purposes of supporting the pharmacy record with
respect to orders or refill s of a legend or narcotic dr ug.
D. The entity conducting the audit shall not audit more tha n
fifty prescriptions, with specific date of service, per calendar
year. The annual limit to t he number of prescription claims audited
shall be inclusive of all audits, including any prescription -related
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documentation requests from the health insurer, pharmacy benefits
manager or any third-party company conducting aud its on behalf of
any health insurer or pharmacy benefits manager during a calendar
year.
E. If paper copies of records are requ ested by the entity
conducting the audit, the entity shall pay twenty -five cents ($0.25)
per page to cover the costs incurred by the pharmacy . The entity
conducting the audit shall pro vide the pharmacy with accurate
instructions, including any required form for obtaining
reimbursement for the copied records.
F. The entity conducting the audit shall:
1. Deliver a preliminary audi t findings report to the pharmacy
and the pharmacy’s contracting agent within forty-five (45) calendar
days of conducting the audit;
2. Allow the pharmacy at least ninety (90) calendar days
following receipt of the preliminary audit findings report in which
to produce documentation to address any discrepancy found during the
audit; provided, however, a pharmacy may request an extension, not
to exceed an additional forty-five (45) calendar days;
3. Deliver a final audit findings report to the pharmacy and
the pharmacy’s contracting agent signed by the auditor withi n ten
(10) calendar days after receipt of additional documentation
provided by the pharmacy , as provided for in Section 356.3 of this
title;
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4. Allow the pharmacy to reverse and resubmit claims
electronically within thir ty (30) days of receipt of the final audit
report in lieu of the auditing entity recouping discrepant claim
amounts from the pharmacy;
5. Not recoup any disputed funds until after final disposition
of the audit findings, including the appeals process as provided for
in Section 356.3 of this title; and
6. Not accrue interest d uring the audit and appeal per iod.
G. Each entity conducting an audit shall provide a copy of the
final audit results, and a final audit report upon request, after
completion of any review process to the plan sponsor.
H. 1. The full amount of any recoup ment on an audit shall be
refunded to the plan sponso r. Except as provided for in paragraph 2
of this subsection, a char ge or assessment for an audit shall n ot be
based, directly or indirectly, on amounts recouped.
2. This subsection does not prevent the entity conducting the
audit from charging or assessing t he responsible party, directly or
indirectly, based on amounts recouped if both of the following
conditions are met:
a. the plan sponsor and the entity conducting the audit
have a contract that expli citly states the percentage
charge or assessment to t he plan sponsor, and
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b. a commission to an agent or employee of the entity
conducting the audit is not ba sed, directly or
indirectly, on amounts recouped.
I. Unless superseded by state or federal law, a uditors shall
only have access to previous audit reports on a particular pharmacy
conducted by the auditing entity for the same pharmacy benefits
manager, health plan or insur er. An auditing vendor contracting
with multiple pharmacy benefits managers or h ealth insurance plans
shall not use audit reports or other information gained from an
audit on a pharmacy to conduct anot her audit for a different
pharmacy benefits manager or health insurance plan.
J. An audit shall be considered null and void if the entity
conducting the audit fails to follow any of the requi rements under
this section. Any violation of this section by a pharmacy benefits
manager or auditing entity shall be deemed a violation of the
Pharmacy Audit Integrity Act.
SECTION 3. AMENDATORY 59 O.S. 2021, Section 356.3, i s
amended to read as follows:
Section 356.3. A. Each entity conducting an audit shall
establish a written appeals process under which a pharmacy may
appeal an unfavorable preliminary audit report and/ or final audit
report to the entity.
B. Following an appeal, if the entity finds that an unfavorable
audit report or any portion thereof is unsubstantiated, the entity
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shall dismiss the audit report or the unsubstantiated portion of the
audit report without any further action.
C. Any final audit report , following the final audit appeal
period, with a finding of fraud or wil lful misrepresentation shall
be referred to the district attorney having proper jur isdiction or
the Attorney General for prosecution u pon completion of the appeals
process.
D. This act does section and Section 356.2 of this title do not
apply to any audit, review or investigation that is initiated based
on or that involves fraud, willful misrepresentation or abuse so
long as the auditing entity provides in writing at the time of the
audit, a clear and conspicuous declaration that the audit is being
conducted under suspicion of fraud, willful misrepresentation, or
abuse and a statement of facts that supports the reasonable
suspicion. Any monies recouped from a null and void audit shall be
returned to the affected pharmacy within fourteen (14) calendar
days.
E. Any entity conducting an audit based on or that involves
fraud, willful misrepresentation , or abuse shall provide to the
Office of the Attorney General :
1. Notice at least two (2) business days prior to beginning
performance of an audit under this section;
2. A preliminary report within thirty (30) days of performing
the audit; and
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3. A final report within thirty (30) days following the closure
of the final audit appeal period .
F. The Attorney General shall have unrestricted access to any
documents relevant to an audit that is based on or that involves
fraud, willful misrepresentation, or abuse.
G. The Attorney General may levy a civil or administrative fine
not less than One Hundred Dollars ($100.00) and not greater than Ten
Thousand Dollars ($10,000.00) for each violation of this section and
assess any other penalty or remedy authorized by law.
SECTION 4. AMENDATORY 59 O.S. 2021, Section 357, is
amended to read as follows:
Section 357. As used in this act section through Section 360 of
this title:
1. “Covered entity” means a nonprofit hospital or medical
service organization, insurer, health coverage benefit plan, or
health maintenance organization; a, health program administered by
the state in the capacity of provider of providing health coverage;,
or an employer, labor union, or other entity organized in the state
group of persons that provides health coverage to covered
individuals who are employed or res ide in the persons in this state.
This term does not include a health benefit plan that provides
coverage only for accidental injury, specified disease , hospital
indemnity, disability income, or other limited benefit health
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insurance policies and contracts that do not include prescription
drug coverage;
2. “Covered individual” means a member, participant, e nrollee,
contract holder or p olicy holder or beneficiary of a covered entity
who is provided health coverage by the covered entity. A covered
individual includes any dependent or other person provided health
coverage through a p olicy, contract or plan for a covered
individual;
3. “Department” means the Oklahoma Insurance Department;
4. “Maximum allowable cost ”, or “MAC”, or “MAC list” means the
list of drug products delineating the maximum per -unit reimbursement
for multiple-source prescription drugs, me dical product products, or
device devices including, but not limited to:
a. average acquisition cost, including the nati onal drug
acquisition cost,
b. average manufacturer price,
c. average wholesale price,
d. brand effective rate or generic effective rate ,
e. discount indexing,
f. federal upper limits,
g. wholesale acquisition cost, and
h. any other term that a pharmacy benefi ts manager or an
insurer of a health benefit plan may use to establish
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reimbursement rates to a pharmac ist or pharmacy for
pharmacist services;
5. “Multisource drug product r eimbursement” (reimbursement)
means the total amount paid to a pharmacy inclusive of any reduction
in payment to the pharmacy, excluding prescription dispense fees;
6. “Office” means the Office of the Attorney General ;
7. “Pharmacy benefits management ” means a service provided to
covered entities to facilitate the provisio n of prescription drug
benefits to covered individuals within the state, including
negotiating pricing and other terms with drug manufacturers and
providers. Pharmacy benefits management may include any or all of
the following services:
a. claims processing, retail network management and
payment of claims to pharmacies for prescription drugs
dispensed to covered individuals,
b. administration or management of pharmacy discount
cards or programs,
c. clinical formulary development and management
services,
c. d. rebate contracting and adm inistration,
d. e. certain patient compliance, t herapeutic intervention
and generic substitution programs, or
e. f. administration or management of mai l-order pharmacy
programs, or
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g. disease management programs;
7. 8. “Pharmacy benefits manager ” or “PBM” means a person,
business, or other entity that performs pharmacy b enefits
management. The term includes shall include a person or entity
acting for on behalf of a PBM in a contractual or employment
relationship in the performance of pharmacy benefits man agement for
a managed care company, nonprofit hospital, medical service
organization, insurance company, third -party payor, or a health
program administered by an agency or department of this state;
8. 9. “Plan sponsor” means the employers, insurance companies,
unions and health maintenance organizations or any other entity
responsible for establishing, maintainin g, or administering a health
benefit plan on behalf of covered individuals; and
9. 10. “Provider” means a pharmacy licensed by the State Board
of Pharmacy, or an agent or representative of a pharmacy, including,
but not limited to, the pharmacy ’s contracting agent, which
dispenses prescription drugs or devices to covered individuals.
SECTION 5. AMENDATORY 59 O.S. 2021, Section 35 8, is
amended to read as follows:
Section 358. A. In order to provide pharmacy benefits
management or any of the services included under the definit ion of
pharmacy benefits management in this state, a pharmac y benefits
manager or any entity actin g as one in a contractual or employment
relationship for a covered entity shall first obtain a license from
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the Oklahoma Insurance Department, and the Departm ent may charge a
fee for such licensure.
B. The Department shall establish, by regulation, licensure
procedures, required disclosures for p harmacy benefits managers
(PBMs) and other rules as may be necessary for carrying out and
enforcing the provisions of this act the Oklahoma Pharmacy Act . The
licensure procedures shall, at a minimum, i nclude the completion of
an application form that shall include the name and address of an
agent for service of process, the payment of a requisite fee, and
evidence of the procurement of a suret y bond.
C. The Department may subpoena witnesses and informa tion. Its
compliance officers may take and copy recor ds for investigative use
and prosecutions. Nothing in this subsection shall limit the Office
of the Attorney General from using its investigative demand
authority to investigate and prosecute violation s of the law.
D. The Department may suspend, revoke or refuse to issue or
renew a license for noncompliance with any of the provisions hereby
established or with the rules promulgated by the D epartment; for
conduct likely to mislead, deceive or defraud th e public or the
Department; for unfair or deceptive bu siness practices or for
nonpayment of a renewal fee or fine . The Department may also levy
administrative fines for each count of which a PBM has been
convicted in a Department hearing.
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E. The Attorney General may promulgate rules to implement the
provisions of Sections 357 through 360 of this title.
SECTION 6. AMENDATORY 59 O.S. 2021, Section 360, is
amended to read as follows:
Section 360. A. The pharmacy benefits manager shall, with
respect to contracts between a pharmacy benefits manag er and a
provider, including a pharmacy service admi nistrative organization :
l. Include in such contracts the specific sources utilized to
determine the maximum allowable cost (MAC) pricing of the pharm acy,
update MAC pricing at least every seven (7) calendar days, and
establish a process for providers to readily access the MAC list
specific to that provider;
2. In order to place a drug on the MAC list, ensure that the
drug is listed as “A” or “B” rated in the most recent version of the
FDA’s Approved Drug Products with Therapeutic Equivalence
Evaluations, also known as the Orange Book, and the drug is
generally available for purchase by pharmacies in the state from
national or regional wholesalers and i s not obsolete;
3. Ensure dispensing fees are not included in the c alculation
of MAC price reimbursement to phar macy providers;
4. Provide a reasonable administration appeal s procedure to
allow a provider, a provider’s representative and a pharmacy service
administrative organization to contest reimburseme nt amounts within
fourteen (14) business days of the final adjusted payment d ate. The
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pharmacy benefits manager shall not prevent the pharmacy or the
pharmacy service administrative organization from fi ling
reimbursement appeals in an electronic batch format . The pharmacy
benefits manager must respond to a provid er, a provider’s
representative and a pharmacy service administra tive organization
who have contested a reimbursement amount through this procedure
within ten (10) business days . The pharmacy benefits manager must
respond in an electronic batch fo rmat to reimbursement app eals filed
in an electronic batch format . The pharmacy benefits manager shall
not require a pharmacy or pharmacy services adm inistrative
organization to log into a system to upload individual c laim appeals
or to download individual appeal responses. If a price update is
warranted, the pharmacy benefit s manager shall make the change in
the reimbursement amount, permit th e dispensing pharmacy to reverse
and rebill the claim in ques tion, and make the reimbursement amount
change retroactive and effective for all contracted providers; and
5. If a below-cost reimbursement appeal is denied, the PBM
shall provide the reason for the den ial, including the National Drug
Code (NDC) number from and the name of the specific national or
regional wholesalers doing business in this state where the drug is
currently in stock and available for purchase b y the dispensing
pharmacy at a price below the PBM’s reimbursement price. If the
pharmacy benefits manager cannot provide a specific national or
regional wholesaler where the drug can be purchased by the
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dispensing pharmacy at a price below the pharmacy be nefits manager’s
reimbursement price If the NDC number provided by the pharmacy
benefits manager is not availab le below the acquisition cost
obtained from the pharmaceutical wholesal er from whom the dispensing
pharmacy purchases the majority of the prescription drugs that are
dispensed, the pharmacy benefits manager shall immediately adjust
the reimbursement amount, permit the dispensing pharmacy to r everse
and rebill the claim in question, and make the reimbursemen t amount
adjustment retroactive and effective for all con tracted providers.
B. The pharmacy benefits manager shall not place a drug on a
MAC list, unless there are at least two therapeutically equi valent,
multiple-source drugs, generally available for purchase b y
dispensing retail pharmacies from national or regional wholesale rs.
C. In the event that a drug is placed on the FDA Drug Shortages
Database, pharmacy benefits managers shall reimbu rse claims to
pharmacies at no less than the whole sale acquisition cost for the
specific NDC number being dispensed.
D. The pharmacy benefits manager shall not require
accreditation or licensing of providers , or any entity licensed or
regulated by the State Boar d of Pharmacy, other than by the State
Board of Pharmacy or federal government entity as a condition for
participation as a network provider.
D. E. A pharmacy or pharmacist may decline to provide the
pharmacist clinical or dispensing services to a patient or pharmacy
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benefits manager if the pharmacy or pharmacist is to be paid less
than the pharmacy’s cost for providing the pharmacist cli nical or
dispensing services.
E. F. The pharmacy benefits manager shall pro vide a dedicated
telephone number, email add ress and names of the personnel with
decision-making authority regarding MA C appeals and pricing .
SECTION 7. It being immediately nece ssary for the preservation
of the public peace, health or safety, an emergency is hereby
declared to exist, by reason whereof this act shall take effect and
be in full force from and after its passage and approval.
59-2-3567 RD 2/27/2024 2:10:20 PM