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STATE OF OKLAHOMA
2nd Session of the 59th Legislature (2024)
COMMITTEE SUBSTITUTE
FOR ENGROSSED
SENATE BILL NO. 1670 By: McCortney, Prieto, Jett,
Coleman, Hamilton, and
Alvord of the Senate
and
McEntire of the House
COMMITTEE SUBSTITUTE
[ pharmacy benefits management - pharmacy
reimbursement - rule promulgation - audit - notice
and reporting - fines and fees - recouped funds -
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 b enefits management. The
term includes a person or entity acting for a PBM in a contractual
or employment relationship in the perfo rmance of pharmacy benefits
management for a managed care compa ny, nonprofit hospital, medical
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service organization, insuranc e company, third-party payor, or a
health program administered by a department of this state shall have
the same meaning as in Section 6960 of Title 36 of the Oklahoma
Statutes.
B. The purpose of the Pharmacy Audit Integrity Act is to
establish minimum and uniform standards 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, medi cal service organization, insurance company,
third-party payor, pharmacy benefits manager, a health program
administered by a department of this state, or any entity that
represents these compan ies, groups, or departments.
D. The Attorney General may promu lgate rules to implement the
provisions of the Pharmacy 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 pharmacy contract. Prescription claim
documentation and record -keeping requirements shall not exceed the
requirements set forth by the Oklahoma Pharmacy Act or other
applicable state or federal laws or regulations;
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2. Give the pharmacy written notice by certified letter to the
pharmacy and the pharmacy ’s contracting agent, including
identification of specific prescr iption 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 t o the dispensing of a prescription drug or
any reimbursed activ ity by a pharmacy provider; provided, however,
that wholesale purchase audits shall require a minimum of thirty
(30) days’ 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 minimize
inconvenience and disruption to pharmacy operatio ns during the audit
process;
4. Conduct any audit involving clini cal or professional
judgment by means of or in consultation with a licensed pharmacist;
5. Not consider as fraud any clerical or record -keeping error,
such as a typographical error, scriven er’s error or computer err or,
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including, but not limited to, a mis calculated day supply,
incorrectly billed prescription written date or prescription origin
code, and such errors shall not be subject to recoupment. The
pharmacy shall have the right to sub mit 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 in a
required document or record, the pharmacy shall not be subject to
recoupment of funds by the pharmacy benefits manager unless the
pharmacy benefits manager can provide proof of intent to commit
fraud. A person shall not be subject to cr iminal 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 arts for
drugs or medicinal supplies writ ten or transmitted by any means of
communication for purposes of v alidating the pharmacy record 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 dispens ed in a finding of an audi t
recoupment unless a prescription was n ot actually dispensed or a
physician denied authorization of a dispensing order;
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8. Audit each pharmacy under identical standards, regularity
and parameters as other similarly situated phar macies and all
pharmacies owned or managed by the pharmacy benefit s 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, i nsurance company, third -
party payor, pharmacy benefits manager, a health program
administered by a department of this state, or any entity that
represents the companies, groups, or departments for the period
covered by an audit;
10. Not schedule or initia te an audit during the first seven
(7) calendar days of any month 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 smallest package size
available; and
13. Upon recoupment of funds from a pharmacy, refund firs t to
the patient the porti on of the recovered funds that were orig inally
paid by the patient, provided such funds were part of the
recoupment.
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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 dispensing re port.
Wholesaler invoice reviews shall be limited to verification of
purchase inventory specific to the pharmacy claims paid by the
health benefits plan or pharmacy benefits manager conduct ing the
audit.
2. Any entity conducting an audit shall not identi fy or label a
prescription claim as an audit discrepancy when:
a. the National Drug Code for the dispensed 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 digits of the National
Drug Code of the drug reflected on the supplier
invoice.
3. An entity conducting an audit shall accept as evidence,
subject to validation, to support the validity of a pharmacy claim
related to a dispensed drug:
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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 a n audit shall provide, no later than
five (5) business calendar days after the date of a request by the
pharmacist or pharmacy, all supporting documents 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 th e pharmacy’s
computerized patterned medical records or the records of a hospital,
physician, or other authorized practitioner of the healing arts for
drugs or medicinal supplies written or t ransmitted by any means of
communication for purposes of supportin g the pharmacy record with
respect to orders or refills of a legend or narcotic drug.
D. The entity conducting the audit shall not audit more than
fifty prescriptions, with specific date of service, per calendar
year. The annual limit to the number of pr escription claims audited
shall be inclusive of all audits, including any prescription -related
documentation requests from the health insurer, pharmacy benefits
manager or any third -party company conducting audits on behalf of
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any health insurer or pharmac y benefits manager during a calendar
year.
E. If paper copies of records are requested 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 provide 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 audit 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 fi ndings report in which
to produce documentation to address any dis crepancy found during the
audit; provided, however, a pharm acy 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 within ten
(10) calendar days after receipt of additional documentation
provided by the pharmacy, as provided for in Section 356.3 of this
title;
4. Allow the pharmacy to reverse a nd resubmit claims
electronically within thirty (30) calendar days of receipt of the
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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 during the audit and appeal period.
G. Each entity conducting an audit shall provide a copy of the
final audit results, and a fin al audit report upon request, after
completion of any review proce ss to the plan sponsor.
H. 1. The full amount of any recoupment on an audit shall be
refunded to the plan sponsor. Except as provided for in paragraph 2
of this subsection, a charge or as sessment for an audit shall not be
based, directly or indirectly, on amounts recouped.
2. This subsection does not prevent the entity conducting the
audit from charging or assessing the 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 explicitly s tates the percentage
charge or assessment to the plan sponsor, and
b. a commission to an agent or employee of the entity
conducting the audit is not based, directly or
indirectly, on amoun ts recouped.
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I. Unless superseded by state or federal law, auditors shall
only have access to previous audit reports on a particular pharmacy
conducted by the auditing entity for the same p harmacy benefits
manager, health plan or insurer. An auditing ven dor contracting
with multiple pharmacy benefits managers or health i nsurance plans
shall not use audit reports or other information gained from an
audit on a pharmacy to conduct another audi t for a different
pharmacy benefits manager or health insurance pl an.
J. If the Attorney General, after notice and opportunity for
hearing, finds that the entity conducting the audit fail ed to follow
any of the requirements pursuant to this section, the audit shall be
considered null and void. Any monies recouped from a null and void
audit shall be returned to the affected pharmacy within fourteen
(14) calendar days. Any violation of this section by a pharmacy
benefits manager or auditing entity shall be deemed a violation of
the Pharmacy Audit Integr ity Act.
SECTION 3. AMENDATORY 59 O.S. 2021, Section 356.3, is
amended to read as follows:
Section 356.3. A. Each entity conducting an audit sh all
establish a written appeals proce ss 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 willful misrepresen tation shall
be referred to the distr ict attorney having proper jurisdiction or
the Attorney General for prosecution upon 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 misrepresentatio n or abuse so
long as the auditing entity provides, in writing, at the time of the
audit, a clear and conspicuous declaration to the pharmacy being
audited that the audit is being conducted under suspicion of fraud,
willful misrepresentation, or abuse and a statement of fac ts that
supports the reasonable suspicion .
E. Any entity conducting an audit that is based on or involves
fraud, willful misrepresentation, or ab use shall provide to the
Office of the Attorney General:
1. Notice at least two (2) calendar days prior to beginning
performance of an audit pursuant to this section;
2. A preliminary report within thirty (30) calendar days of
performing the audit pursuant to this section ; and
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3. A final report within thirty (30) calendar days following
the closure of the final appeal period for an audit performed
pursuant to this section.
F. The Attorney General , authorized employees, and examiners
shall have access to any pharmacy benefit manager's files and
records that may relate to an audit that is based on or involves
fraud, willful misrepresentation, or abuse.
G. The Attorney General may levy a civil or administrative fine
of 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. A. As used in this act Sections 357 through
Section 360 of this title :
1. “Covered entity” means a nonprofit hospital or medical
service organization, for-profit hospital or medical service
organization, insurer, health coverage benefit plan or, health
maintenance organization ; a, health program administered by the
state in the capacity o f 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 employe d or reside in the persons in this state.
This term does not include a health benefit plan that provides
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coverage only for accidental injury, speci fied disease, hospital
indemnity, disability income, or other limi ted benefit health
insurance policies and contracts that do not include prescription
drug coverage;
2. “Covered individual” means a member, participant, enrollee,
contract holder or policy 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 he alth
coverage through a policy, contract or plan for a covere d
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, medical pro duct, or device;
5. “Multisource drug product reimbursement ” (reimbursement)
means the total amount paid to a pharmacy inclusive of a ny reduction
in payment to the pharmacy, excluding prescripti on dispense fees;
6. “Office” means the Office of the Attorn ey General;
7. “Pharmacy benefits management” means a service provided to
covered entities to facilitate the provision of prescriptio n drug
benefits to covered individuals within the state, incl uding
negotiating pricing and other terms with drug manufactu rers and
providers. Pharmacy benefits management may include any or all of
the following services:
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a. claims processing, retail netwo rk management and
payment of claims to pharmacies for prescri ption drugs
dispensed to covered individuals,
b. administration or management of pharmac y discount
cards or programs,
c. clinical formulary development and management
services, or
c.
d. rebate contracting and administration ,
d. certain patient compliance, therapeutic intervention
and generic substitution programs, or
e. disease management pr ograms;
7. 8. “Pharmacy benefits manager ” or “PBM” means a person,
business, or other entity that performs pharmacy benefits
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 management 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 an y other entity
responsible for establishing, maintaining, or administering a health
benefit plan on behalf of covered individuals; and
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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 co vered individuals.
B. Nothing in the definition of pharmacy benefits management or
pharmacy benefits manager in the Patient's Right to Pha rmacy Choice
Act, Pharmacy Audit Integrity Act, or Sections 357 through 360 of
this title shall deem the followi ng entities to be a pharmacy
benefits manager:
1. An employer with its own self-funded health benefit plan,
except, to the extent permitted by applicable law, where the
employer, without the utilization of a third party and unrelated to
the employer’s own ph armacy:
a. negotiates directly with d rug manufacturers,
b. processes claims on behalf of its members, or
c. manages its own retail network of pharmacies; or
2. A pharmacy providing a patient with a discount card or
program that is for exclusive use a t the pharmacy making the
discount offering.
SECTION 5. AMENDATORY 59 O.S. 2021, Section 358, is
amended to read as f ollows:
Section 358. A. In order to provide pharmacy bene fits
management or any of the services included under the definitio n of
pharmacy benefits management in this state, a pha rmacy benefits
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manager or any entity acting as one in a contractual or emplo yment
relationship for a covered entity shall first obtain a license from
the Oklahoma Insurance Department, and the Departmen t may charge a
fee for such licensure.
B. The Department shall establish, by regulation, licensure
procedures, required disclosur es for pharmacy 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, include the completion of
an application form t hat 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 surety bond.
C. The Department may subpoena witnesses and information. Its
compliance officers may take and co py records 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 violations of the law.
D. The Department or the Office of the Attorney General may
suspend, revoke or refuse to i ssue or renew a license for
noncompliance with any of the provision s hereby established or with
the rules promulgated by the Department; for conduct likely to
mislead, deceive or defraud the public or the Department; for unfair
or deceptive business practi ces or for nonpayment of a an
application or renewal fee or fine. The Department may also levy
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administrative fines for each count of w hich a PBM has been
convicted in a Depart ment hearing.
E. 1. The Office of the Attorney General, after notice and
opportunity for hearing, may instruct the Insurance Commissioner
that the PBM’s license be censured, suspended, or revoked for
conduct likely to mislead, deceive , or defraud the public or the
State of Oklahoma; or for unfair or deceptive business practices , or
for any violation of the Patient's Right to Pharmacy Choice Act, the
Pharmacy Audit Integrity Act, or Sections 357 through 360 of this
title. The Office of the Attorney General may also levy
administrative fines for each count of which a PBM has been
convicted following a hearing before the Attorney Ge neral. If the
Attorney General makes such instruction, the Commissioner shall
enforce the instructed action within thirty (30) calendar days.
2. In addition to or in lieu of any censure, suspension, or
revocation of a license by the Commissioner, the Attorney General
may levy a civil or administrative fine of not less than One Hundred
Dollars ($100.00) and not greater than Ten Thousand Dollars
($10,000.00) for each violation of this subsection and/or assess any
other penalty or remedy authorized by this section. For purposes of
this section, each day a PBM fails to comply with an investigation
or inquiry may be considered a separate violation.
F. The Attorney General may promulgate rules to implement the
provisions of Sections 357 through 360 of this title.
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SECTION 6. AMENDATORY 59 O.S. 2 021, Section 360, is
amended to read as follows:
Section 360. A. The pharmacy benefit s manager shall, with
respect to contracts between a pharma cy benefits manager and a
provider, including a pharmacy service administrat ive organization:
l. Include in such contracts the specific sources utilized to
determine the maximum allowable cost (MAC) pricing of the pharmacy,
update MAC pricing at least eve ry 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 d rug is
generally available for purchase by pharmacies in the state f rom
national or regional wholesalers and is not obsolete;
3. Ensure dispensin g fees are not included in the calculation
of MAC price reimbursement to pha rmacy providers;
4. Provide a reasonable administration appe als procedure to
allow a provider, a provider ’s representative and a pharmacy service
administrative organization to co ntest reimbursement amounts within
fourteen (14) business calendar days of the final adjusted payment
date. The pharmacy benefits manager shall n ot prevent the pharmacy
or the pharmacy service administrative organization from filing
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reimbursement appeals in an electronic batch format. The pharmacy
benefits manager must respond to a provi der, a provider’s
representative and a pharmacy service admin istrative organization
who have contested a reimbur sement amount through this procedure
within ten (10) business calendar days. The pharmacy benefits
manager must respond in an electronic batch format to reimbursement
appeals filed in an electronic batch format. The pharmacy benefits
manager shall not require a pharmacy or pharmacy services
administrative organi zation to log into a system to upload
individual claim appeals or to download individual appea l responses.
If a price update is warranted, the pharmacy be nefits manager shall
make the change in th e reimbursement amount, permit the dispensing
pharmacy to reverse and rebill the claim in question, and make the
reimbursement amount change retroactive and effective for all
contracted providers; and
5. If a below-cost reimbursement appeal is denied, th e PBM
shall provide the reason for the denial, 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 by 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 pu rchased by the
dispensing pharmacy at a price below the pharmacy be nefits manager’s
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reimbursement price If the NDC number prov ided by the pharmacy
benefits manager is not available below the acquisition cost
obtained from the pharmaceutical wholesaler from whom the dispensing
pharmacy purchases the majority of the prescri ption drugs that are
dispensed, the pharmacy benefits manag er shall immediately adjust
the reimbursement amount, permit the dispensing pharmacy to reverse
and rebill the claim in question, and make the reimbursement amount
adjustment retroactive and effect ive for all contracted providers.
B. The reimbursement app eal requirements in this section shall
apply to all drugs, medical products, or devices reimbursed
according to any payment methodology, including, but not limited to:
1. Average acquisition cost , including the National Average
Drug Acquisition Cost;
2. Average manufacturer price;
3. Average wholesale price ;
4. Brand effective rate or generic effective rate ;
5. Discount indexing;
6. Federal upper limits;
7. Wholesale acquisition cost ; and
8. Any other term that a pharmacy benefits manager or an
insurer of a health benefit plan may use to establish reimbursement
rates to a pharmacist or pharmacy for pharmacist servic es.
C. The pharmacy benefits manager shall not place a drug on a
MAC list, unless there are at least two therapeutically equivalent,
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multiple-source drugs, generally available for purch ase by
dispensing retail pharmacies from national or regional whol esalers.
C. D. In the event that a drug is placed on the FDA Drug
Shortages Database, pharmacy benefits managers shall reimburse
claims to pharmacies at no less than the wholesale acquisition cost
for the specific NDC number being di spensed.
E. The pharmacy benefits manager shall not require
accreditation or licensing of providers, o r any entity licensed or
regulated by the State Board of Ph armacy, other than by the State
Board of Pharmacy or federal government entity as a condition for
participation as a network provider.
D. F. A pharmacy or pharmacist may decline to provide the
pharmacist clinical or dispensing services to a patient or pha rmacy
benefits manager if the pharmacy or pharmacist is to be paid less
than the pharmacy’s cost for providing the p harmacist clinical or
dispensing services.
E. G. The pharmacy benefits manager s hall provide a dedicated
telephone number, email address an d names of the personnel with
decision-making authority regarding MAC appeals and pricing.
SECTION 7. It being immediately necessary for the preservation
of the public peace, healt h or safety, an emergency is hereby
declared to exist, by r eason whereof this act shall take effect and
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be in full force from and after its passage and a pproval.
59-2-10859 TJ 04/03/24