81R7759 PB-F
By: Hegar S.B. No. 1416
A BILL TO BE ENTITLED
AN ACT
relating to certain contracts between pharmacy benefit managers and
the Employees Retirement System of Texas, the Teacher Retirement
System of Texas, The Texas A&M University System, or The University
of Texas System.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter B, Chapter 1551, Insurance Code, is
amended by adding Section 1551.067 to read as follows:
Sec. 1551.067. PHARMACY BENEFIT MANAGER CONTRACTS. (a) In
awarding a contract to provide pharmacy benefit manager services
under this chapter the board of trustees is not required to select
the lowest bid, but must select a contract that meets the criteria
established by this section.
(b) The contract must state whether the pharmacy benefit
manager may or may not engage in therapeutic interchange by
substituting a prescription drug with a different prescription drug
preferred by the pharmacy benefit manager. If the contract
authorizes therapeutic interchange as described by this
subsection, the contract must provide that the pharmacy benefit
manager shall maintain documentation of each instance in which
therapeutic interchange is used.
(c) The contract must state that the pharmacy benefit
manager shall disclose in writing the financial and medical reasons
for the addition, removal, or change in placement of a prescription
drug from the drug formulary used by the pharmacy benefit manager.
The disclosure required by this subsection must be made not later
than the 30th day before the date that the addition, removal, or
change in placement becomes effective.
(d) The contract must identify the specialty drugs on the
drug formulary used by the pharmacy benefit manager and state the
specialty drug's associated costs, discounts, and other fees that
apply to the pharmacy benefit manager's services performed under
the contract.
(e) The contract must disclose any policy, practice, or
business relationship of the pharmacy benefit manager that could
conflict with the performance of the pharmacy benefit manager's
duties under the contract.
(f) The contract must describe cost savings initiatives
used by the pharmacy benefit manager, including the methodology and
data used to compute any rebate amount that the board of trustees
receives from the pharmacy benefit manager.
(g) The contract must include a statement defining the
maximum allowable cost, or MAC, price list to be used by the
pharmacy benefit manager in performing the contract.
(h) The contract must identify and label the specific
information contained in the contract that is considered
proprietary information belonging to the pharmacy benefit manager.
(i) The contract must state whether the pharmacy benefit
manager has a revenue-sharing agreement concerning the sale of data
related to the services performed under the contract or whether the
data can be sold by the pharmacy benefit manager. If data may be
sold, the contract must:
(1) disclose the conditions under which the pharmacy
benefit manager may sell the data; and
(2) state that the pharmacy benefit manager may not
disclose any data in connection with the sale of the data before the
30th day after the date the pharmacy benefit manager has provided
written notice of that sale to the board of trustees.
(j) The contract must state that:
(1) the board of trustees is entitled to audit the
pharmacy benefit manager to verify costs and discounts associated
with drug claims, pharmacy benefit manager compliance with contract
requirements, and services provided by subcontractors;
(2) the audit must be conducted by an independent
auditor in accordance with established auditing standards; and
(3) to conduct the audit, the board of trustees and the
independent auditor are entitled access to information related to
the services and the costs associated with the services performed
under the contract, including access to the pharmacy benefit
manager's facilities, records, contracts, medical records, and
agreements with subcontractors.
(k) The contract must define the information that the
pharmacy benefit manager is required to provide to the board of
trustees concerning the audit of the retail, independent, and mail
order pharmacies performing services under the contract and
describe how the results of these audits must be reported to the
board of trustees, including how often the results must be
reported. The contract must state whether the pharmacy benefit
manager is required to return recovered overpayments to the board
of trustees.
(l) The contract must state that any audit of a mail order
pharmacy owned by the pharmacy benefit manager must be conducted by
an independent auditor selected by the board of trustees in
accordance with established auditing standards.
SECTION 2. Subchapter C, Chapter 1575, Insurance Code, is
amended by adding Section 1575.110 to read as follows:
Sec. 1575.110. PHARMACY BENEFIT MANAGER CONTRACTS. (a) In
awarding a contract to provide pharmacy benefit manager services
under this chapter the trustee is not required to select the lowest
bid, but must select a contract that meets the criteria established
by this section.
(b) The contract must state whether the pharmacy benefit
manager may or may not engage in therapeutic interchange by
substituting a prescription drug with a different prescription drug
preferred by the pharmacy benefit manager. If the contract
authorizes therapeutic interchange as described by this
subsection, the contract must provide that the pharmacy benefit
manager shall maintain documentation of each instance in which
therapeutic interchange is used.
(c) The contract must state that the pharmacy benefit
manager shall disclose in writing the financial and medical reasons
for the addition, removal, or change in placement of a prescription
drug from the drug formulary used by the pharmacy benefit manager.
The disclosure required by this subsection must be made not later
than the 30th day before the date that the addition, removal, or
change in placement becomes effective.
(d) The contract must identify the specialty drugs on the
drug formulary used by the pharmacy benefit manager and state the
specialty drug's associated costs, discounts, and other fees that
apply to the pharmacy benefit manager's services performed under
the contract.
(e) The contract must disclose any policy, practice, or
business relationship of the pharmacy benefit manager that could
conflict with the performance of the pharmacy benefit manager's
duties under the contract.
(f) The contract must describe cost savings initiatives
used by the pharmacy benefit manager, including the methodology and
data used to compute any rebate amount that the trustee receives
from the pharmacy benefit manager.
(g) The contract must include a statement defining the
maximum allowable cost, or MAC, price list to be used by the
pharmacy benefit manager in performing the contract.
(h) The contract must identify and label the specific
information contained in the contract that is considered
proprietary information belonging to the pharmacy benefit manager.
(i) The contract must state whether the pharmacy benefit
manager has a revenue-sharing agreement concerning the sale of data
related to the services performed under the contract or whether the
data can be sold by the pharmacy benefit manager. If data may be
sold, the contract must:
(1) disclose the conditions under which the pharmacy
benefit manager may sell the data; and
(2) state that the pharmacy benefit manager may not
disclose any data in connection with the sale of the data before the
30th day after the date the pharmacy benefit manager has provided
written notice of that sale to the trustee.
(j) The contract must state that:
(1) the trustee is entitled to audit the pharmacy
benefit manager to verify costs and discounts associated with drug
claims, pharmacy benefit manager compliance with contract
requirements, and services provided by subcontractors;
(2) the audit must be conducted by an independent
auditor in accordance with established auditing standards; and
(3) to conduct the audit, the trustee and the
independent auditor are entitled access to information related to
the services and the costs associated with the services performed
under the contract, including access to the pharmacy benefit
manager's facilities, records, contracts, medical records, and
agreements with subcontractors.
(k) The contract must define the information that the
pharmacy benefit manager is required to provide to the trustee
concerning the audit of the retail, independent, and mail order
pharmacies performing services under the contract and describe how
the results of these audits must be reported to the trustee,
including how often the results must be reported. The contract must
state whether the pharmacy benefit manager is required to return
recovered overpayments to the trustee.
(l) The contract must state that any audit of a mail order
pharmacy owned by the pharmacy benefit manager must be conducted by
an independent auditor selected by the trustee in accordance with
established auditing standards.
SECTION 3. Subchapter B, Chapter 1601, Insurance Code, is
amended by adding Section 1601.064 to read as follows:
Sec. 1601.064. PHARMACY BENEFIT MANAGER CONTRACTS. (a) In
awarding a contract to provide pharmacy benefit manager services
under this chapter a system is not required to select the lowest
bid, but must select a contract that meets the criteria established
by this section.
(b) The contract must state whether the pharmacy benefit
manager may or may not engage in therapeutic interchange by
substituting a prescription drug with a different prescription drug
preferred by the pharmacy benefit manager. If the contract
authorizes therapeutic interchange as described by this
subsection, the contract must provide that the pharmacy benefit
manager shall maintain documentation of each instance in which
therapeutic interchange is used.
(c) The contract must state that the pharmacy benefit
manager shall disclose in writing the financial and medical reasons
for the addition, removal, or change in placement of a prescription
drug from the drug formulary used by the pharmacy benefit manager.
The disclosure required by this subsection must be made not later
than the 30th day before the date that the addition, removal, or
change in placement becomes effective.
(d) The contract must identify the specialty drugs on the
drug formulary used by the pharmacy benefit manager and state the
specialty drug's associated costs, discounts, and other fees that
apply to the pharmacy benefit manager's services performed under
the contract.
(e) The contract must disclose any policy, practice, or
business relationship of the pharmacy benefit manager that could
conflict with the performance of the pharmacy benefit manager's
duties under the contract.
(f) The contract must describe cost savings initiatives
used by the pharmacy benefit manager, including the methodology and
data used to compute any rebate amount that the system receives from
the pharmacy benefit manager.
(g) The contract must include a statement defining the
maximum allowable cost, or MAC, price list to be used by the
pharmacy benefit manager in performing the contract.
(h) The contract must identify and label the specific
information contained in the contract that is considered
proprietary information belonging to the pharmacy benefit manager.
(i) The contract must state whether the pharmacy benefit
manager has a revenue-sharing agreement concerning the sale of data
related to the services performed under the contract or whether the
data can be sold by the pharmacy benefit manager. If data may be
sold, the contract must:
(1) disclose the conditions under which the pharmacy
benefit manager may sell the data; and
(2) state that the pharmacy benefit manager may not
disclose any data in connection with the sale of the data before the
30th day after the date the pharmacy benefit manager has provided
written notice of that sale to the system.
(j) The contract must state that:
(1) the system is entitled to audit the pharmacy
benefit manager to verify costs and discounts associated with drug
claims, pharmacy benefit manager compliance with contract
requirements, and services provided by subcontractors;
(2) the audit must be conducted by an independent
auditor in accordance with established auditing standards; and
(3) to conduct the audit, the system and the
independent auditor are entitled access to information related to
the services and the costs associated with the services performed
under the contract, including access to the pharmacy benefit
manager's facilities, records, contracts, medical records, and
agreements with subcontractors.
(k) The contract must define the information that the
pharmacy benefit manager is required to provide to the system
concerning the audit of the retail, independent, and mail order
pharmacies performing services under the contract and describe how
the results of these audits must be reported to the system,
including how often the results must be reported. The contract must
state whether the pharmacy benefit manager is required to return
recovered overpayments to the system.
(l) The contract must state that any audit of a mail order
pharmacy owned by the pharmacy benefit manager must be conducted by
an independent auditor selected by the system in accordance with
established auditing standards.
SECTION 4. The change in law made by this Act applies only
to a contract with a pharmacy benefit manager executed or renewed on
or after the effective date of this Act.
SECTION 5. This Act takes effect September 1, 2009.