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AB-29 Pharmacy benefit managers. (2017-2018)

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Date Published: 03/28/2017 09:00 PM
AB29:v98#DOCUMENT

Amended  IN  Assembly  March 28, 2017

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill No. 29


Introduced by Assembly Member Nazarian

December 05, 2016


An act relating to pharmacy benefit managers. to add Division 121 (commencing with Section 152000) to the Health and Safety Code, relating to pharmacy benefit managers.


LEGISLATIVE COUNSEL'S DIGEST


AB 29, as amended, Nazarian. Pharmacy benefit managers.
Existing law requires a pharmacy benefit manager that reimburses a contracting pharmacy for a drug on a maximum allowable cost basis to provide the contracting pharmacy with specified information regarding the data used to determine the maximum allowable cost of a drug.
This bill would require, except as provided, a pharmacy benefit manager to disclose certain information to a purchaser or prospective purchaser, including, among other things, the aggregate amount of rebates, retrospective utilization discounts, and other income that the pharmacy benefit manager would receive from a pharmaceutical manufacturer or labeler in connection with drug benefits related to the purchaser or prospective purchaser. The bill would excuse a pharmacy benefit manager from making these disclosures unless the purchaser or prospective purchaser agrees to keep any proprietary information disclosed to it pursuant to these provisions confidential, as specified.

Existing law imposes specified requirements on an audit of pharmacy services provided to beneficiaries of a health benefit plan and defines a “pharmacy benefit manager” for those purposes as a person, business, or other entity that, pursuant to a contract or under an employment relationship with a carrier, health benefit plan sponsor, or other 3rd-party payer, either directly or through an intermediary, manages the prescription drug coverage provided by the carrier, plan sponsor, or other 3rd-party payer.

This bill would state the intent of the Legislature to enact legislation relating to pharmacy benefit managers.

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: NO   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Division 121 (commencing with Section 152000) is added to the Health and Safety Code, to read:

DIVISION 121. Pharmacy Benefit Management

152000.
 For the purposes of this division, the following definitions shall apply:
(a) “Labeler” means a person who receives prescription drugs from a manufacturer or wholesaler and repackages those drugs for later retail sale and who has a labeler code from the federal Food and Drug Administration under Section 207.20 of Title 21 of the Code of Federal Regulations.
(b) “Pharmacy benefit management” means the administration or management of prescription drug benefits. Pharmacy benefit management shall include the procurement of prescription drugs at a negotiated rate for dispensation within this state, the processing of prescription drug claims, and the administration of payments related to prescription drug claims.
(c) “Pharmacy benefit manager” means a person, business, or other entity described in subdivision (j) of Section 4430 of the Business and Professions Code, except that it shall not include a health care service plan or health insurer if the health care service plan or health insurer offers or provides pharmacy benefit management services and if those services are offered or provided only to enrollees, subscribers, policyholders, or insureds who are also covered by health benefits offered or provided by that health care service plan or health insurer, nor shall it include an affiliate, subsidiary, or other related entity of the health care service plan or health insurer that would otherwise qualify as a pharmacy benefit manager as long as the services offered or provided by the related entity are offered or provided only to enrollees, subscribers, policyholders, or insureds who are also covered by the health benefits offered or provided by that health care service plan or health insurer.
(d) “Prospective purchaser” means a person to whom a pharmacy benefit manager offers to provide pharmacy benefit management services.
(e) “Purchaser” means a person who enters into an agreement with a pharmacy benefit manager for the provision of pharmacy benefit management services.

152001.
 A pharmacy benefit manager shall disclose to a purchaser, in writing and no less frequently than on a quarterly basis, all of the following:
(a) The aggregate amount of all rebates and other retrospective utilization discounts that the pharmacy benefit manager receives, directly or indirectly, from a pharmaceutical manufacturer or labeler in connection with prescription drug benefits specific to the purchaser.
(b) The aggregate amount for each therapeutic class of all rebates and other retrospective utilization discounts that the pharmacy benefit manager receives, directly or indirectly, from a pharmaceutical manufacturer or labeler for each therapeutic class of drugs related to prescription drug benefits specific to the purchaser. A therapeutic class shall include at least two drugs.
(c) The nature, type, and amount of all other revenue that the pharmacy benefit manager receives, directly or indirectly, from a pharmaceutical manufacturer or labeler in connection with prescription drug benefits related to the purchaser.
(d) Prescription drug utilization information related to utilization by the purchaser’s enrollees or insureds or the aggregate utilization data that is not specific to an individual consumer, prescriber, or purchaser.
(e) Administrative or other fees charged by the pharmacy benefit manager to the purchaser.
(f) Arrangements with prescribing providers, medical groups, individual practice associations, pharmacists, or other entities that are associated with activities of the pharmacy benefit manager to encourage formulary compliance or otherwise manage prescription drug benefits.

152002.
 A pharmacy benefit manager shall disclose to a prospective purchaser, in writing, all of the following:
(a) The aggregate amount of all rebates and other retrospective utilization discounts that the pharmacy benefit manager estimates it would receive, directly or indirectly, from a pharmaceutical manufacturer or labeler in connection with prescription drug benefits related to the prospective purchaser, if that prospective purchaser were to contract with the pharmacy benefit manager.
(b) The aggregate amount of all rebates and other retrospective utilization discounts that the pharmacy benefit manager estimates it would receive, directly or indirectly, from a pharmaceutical manufacturer or labeler for each therapeutic class of drugs related to prescription drug benefits specific to the prospective purchaser, if that prospective purchaser were to contract with the pharmacy benefit manager. A therapeutic class shall include at least two drugs.
(c) The nature, type, and amount of all other revenue that the pharmacy benefit manager estimates it would receive, directly or indirectly, from pharmaceutical manufacturers or labelers in connection with prescription drug benefits related to the prospective purchaser, if that prospective purchaser were to contract with the pharmacy benefit manager.
(d) Administrative or other fees charged by the pharmacy benefit manager to the prospective purchaser.
(e) Arrangements with prescribing providers, medical groups, individual practice associations, pharmacists, or other entities that are associated with activities of the pharmacy benefit manager to encourage formulary compliance or otherwise manage prescription drug benefits.

152003.
 Except for utilization information, a pharmacy benefit manager need not make the disclosures required Sections 152001 and 152002 unless and until the purchaser or prospective purchaser agrees, in writing, to maintain as confidential any proprietary information. That agreement may provide for equitable and legal remedies in the event of a violation of the agreement. That agreement may also include persons or entities with whom the purchaser or prospective purchaser contracts to provide consultation regarding pharmacy services. Proprietary information includes trade secrets, and information on pricing, costs, revenues, taxes, market share, negotiating strategies, customers, and personnel held by a pharmacy benefit manager and used for its business purposes.

152004.
 All disclosures made pursuant to this division shall comply with the privacy standards of the federal Health Insurance Portability and Accountability Act of 1996 (Public Law 104-191)(HIPAA).

SECTION 1.

It is the intent of the Legislature to enact legislation relating to pharmacy benefit managers.