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Please see http://docs.legis.wisconsin.gov for the production version.
Analysis by the Legislative Reference Bureau
This bill generally requires pharmacy benefit managers to be licensed with the
commissioner of insurance or to have an employee benefit plan administrator license
under current law. The bill also establishes certain requirements on pharmacy
benefit managers and certain health plans regarding their interactions with
pharmacies and pharmacists.
Licensure of pharmacy benefit managers
The bill requires a pharmacy benefit manager to be licensed either as a
pharmacy benefit manager or as an employee benefit plan administrator, which is
an existing license, in order to perform the activities of a pharmacy benefit manager.
The bill specifies that an entity that is both an employee benefit plan administrator
and a pharmacy benefit manager need only have a single license as an administrator.
To obtain a license the pharmacy benefit manager must pay the applicable fee;
supply a bond; provide its federal employer identification number; and show to the
commissioner that the pharmacy benefit manager intends to act in good faith in
compliance with applicable laws, rules, and commissioner's orders through certain
competent and trustworthy individuals, to designate an individual to directly
administer the prescription drug benefits, and, if not organized in Wisconsin, to
agree to be subject to the jurisdiction of the commissioner and Wisconsin courts.
Under the bill, pharmacy benefit manager licenses may be limited, suspended, or
revoked for the same reasons as for employee benefit plan administrators licenses,
which include that the pharmacy benefit manager is unqualified, repeatedly or
knowingly violates laws, rules, or commissioner's orders, endangers enrollees or the
public, or has inadequate financial resources. After a pharmacy benefit manager's
license is ordered suspended or revoked, the commissioner may allow the pharmacy
benefit manager to continue to provide services for the purpose of providing
continuity of care to existing enrollees. In addition to powers the commissioner has
generally to implement and enforce insurance-related laws, the bill allows the
commissioner to examine, audit, or accept an audit of a pharmacy benefit manager
in the same manner as employee benefit plan administrators and insurers and to
promulgate any rules to implement licensure of pharmacy benefit managers.
Pharmacy benefit manager regulation
Unless federal law requires otherwise, a pharmacy benefit manager is
prohibited in the bill from retroactively denying a pharmacist's or pharmacy's claim
unless the original claim was fraudulent, the payment of the original claim was
incorrect, the pharmacy services were not rendered by the pharmacist or pharmacy,
the pharmacist or pharmacy violated state or federal law, or the reduction is
permitted by contract and is related to a quality program. The bill limits recovery
for an incorrect payment to the amount that exceeds the allowable claim. The bill
requires every pharmacy benefit manager to submit annual transparency reports

containing information specified in the bill to the commissioner. The bill sets
requirements on a pharmacy benefit manager, insurer, defined network plan, such
as a health maintenance organization, or a self-insured governmental health plan
that is conducting an audit of a pharmacist or pharmacy. The bill requires a
pharmacy benefit manager or a representative of a pharmacy benefit manager to
provide to a pharmacy, within 30 days of receipt of a written request from the
pharmacy, written notice of the certification or accreditation requirements as a
determinant of network participation. The bill prohibits a pharmacy benefit
manager or representative from changing its accreditation requirements more
frequently than once every 24 months.
Current law requires pharmacy benefit managers to agree in their contracts to
make certain disclosures regarding prescription drug reimbursement, including
updating maximum allowable cost pricing information for prescribed drugs or
devices at least every seven business days, reimbursing pharmacies or pharmacists
subject to the updated maximum allowable cost pricing, and modifying information
in the maximum allowable cost information in a timely fashion. Pharmacy benefit
managers currently must also include in each contract with a pharmacy a process
to appeal, investigate, and resolve pricing disputes in accordance with the specifics
in current law. These current law requirements are unchanged by the bill.
Disclosures to consumers; cost-sharing limitation
Under the bill, a health insurance policy, referred to in the statutes as a
disability insurance policy, or a governmental self-insured health plan may not, and
a policy or plan must ensure that a pharmacy benefit manager does not, restrict a
pharmacy from or penalize a pharmacy for informing an enrollee under the policy or
plan of any differential between the out-of-pocket cost of a drug to the enrollee under
the policy or plan and the cost an individual would pay for the drug without using
insurance. The bill prohibits a policy, plan, or pharmacy benefit manager from
requiring an enrollee under the policy or plan to pay more for a covered drug than
either the cost-sharing amount for the prescription drug under the policy or plan or
the amount the enrollee would pay for the drug without using insurance.
The bill requires pharmacies to post a sign describing the pharmacist's ability
to substitute a less expensive drug product equivalent or interchangeable biological
product for the prescribed drug or biological product unless the consumer or the
prescribing practitioner indicates otherwise. Under current law, a pharmacist is
required to dispense either the prescribed drug or biological product or, if lower in
price, a drug product equivalent or interchangeable biological product and is
required to inform the consumer of the options available in dispensing the
prescription. The bill requires each pharmacy to have available for the public a
listing of the retail price, updated monthly or more often, of the 100 most commonly
prescribed prescription drugs available for purchase at the pharmacy. The bill also
requires pharmacies to make available for the public information on how to access
a list, created by the Pharmacy Examining Board, of the 100 most commonly
prescribed generic drugs with the corresponding brand name, and the federal Food
and Drug Administration's list of currently approved interchangeable biological

products, which the Pharmacy Examining Board currently has to provide a link to
on its Internet site.
Drug substitution
The bill requires a health insurance policy, self-insured governmental plan, or
pharmacy benefit manager to provide advanced written notice to an enrollee of a
formulary change that either removes a prescription drug from the formulary or
reassigns a prescription drug to a benefit tier with a higher deductible, copayment,
or coinsurance. The advanced notice required by the bill must be provided no fewer
than 30 days of the expected formulary change, must include information on the
procedure for the enrollee to request an exception to the formulary change, and need
only be provided to those enrollees who are using the drug at the time the notification
must be sent. A policy, plan, or pharmacy benefit manager is not required to provide
advanced written notice if the prescription drug is no longer approved by the federal
Food and Drug Administration, is the subject of a notice, guidance, warning,
announcement, or other statement from the FDA relating to concerns about the
safety of the drug, or is approved by the FDA for use without a prescription. A policy,
plan, or pharmacy benefit manager is also not required to provide advanced written
notice for the removal or reassignment of a prescription drug if the policy, plan, or
pharmacy benefit manager adds to the formulary at the same or a lower cost-sharing
tier a generic prescription drug that is approved by the FDA for use as an alternative
to the prescription drug or a prescription drug in the same pharmacologic class or
with the same mechanism of action.
The bill requires a pharmacist or pharmacy to notify an enrollee in a policy or
plan if a prescription drug for which an enrollee is filling or refilling a prescription
is removed from the formulary and the policy or plan or a pharmacy benefit manager
acting on behalf of a policy or plan adds to the formulary at the same or a lower cost
sharing tier a generic prescription drug or a prescription drug in the same
pharmacologic class or with the same mechanism of action. If an enrollee has had
an adverse reaction to the generic prescription drug or the prescription drug in the
same pharmacologic class or with the same mechanism of action that is being
substituted for an originally prescribed drug, the bill allows the pharmacist or
pharmacy to extend the prescription order for the originally prescribed drug to fill
one 30-day supply of the originally prescribed drug for the cost-sharing amount that
applies to the prescription drug at the time of the substitution.
This proposal may contain a health insurance mandate requiring a social and
financial impact report under s. 601.423, stats.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB114-ASA1,1 1Section 1 . 40.51 (8) of the statutes is amended to read:
AB114-ASA1,5,5
140.51 (8) Every health care coverage plan offered by the state under sub. (6)
2shall comply with ss. 631.89, 631.90, 631.93 (2), 631.95, 632.72 (2), 632.746 (1) to (8)
3and (10), 632.747, 632.748, 632.798, 632.83, 632.835, 632.85, 632.853, 632.855,
4632.861, 632.867, 632.87 (3) to (6), 632.885, 632.89, 632.895 (5m) and (8) to (17), and
5632.896.
AB114-ASA1,2 6Section 2 . 40.51 (8m) of the statutes is amended to read:
AB114-ASA1,5,107 40.51 (8m) Every health care coverage plan offered by the group insurance
8board under sub. (7) shall comply with ss. 631.95, 632.746 (1) to (8) and (10), 632.747,
9632.748, 632.798, 632.83, 632.835, 632.85, 632.853, 632.855, 632.861, 632.867,
10632.885, 632.89, and 632.895 (11) to (17).
AB114-ASA1,3 11Section 3 . 40.51 (15m) of the statutes is repealed.
AB114-ASA1,4 12Section 4 . 66.0137 (4) of the statutes is amended to read:
AB114-ASA1,5,1913 66.0137 (4) Self-insured health plans. If a city, including a 1st class city, or
14a village provides health care benefits under its home rule power, or if a town
15provides health care benefits, to its officers and employees on a self-insured basis,
16the self-insured plan shall comply with ss. 49.493 (3) (d), 631.89, 631.90, 631.93 (2),
17632.746 (10) (a) 2. and (b) 2., 632.747 (3), 632.798, 632.85, 632.853, 632.855, 632.861,
18632.867, 632.87 (4) to (6), 632.885, 632.89, 632.895 (9) to (17), 632.896, and 767.513
19(4).
AB114-ASA1,5 20Section 5 . 120.13 (2) (g) of the statutes is amended to read:
AB114-ASA1,5,2421 120.13 (2) (g) Every self-insured plan under par. (b) shall comply with ss.
2249.493 (3) (d), 631.89, 631.90, 631.93 (2), 632.746 (10) (a) 2. and (b) 2., 632.747 (3),
23632.798, 632.85, 632.853, 632.855, 632.861, 632.867, 632.87 (4) to (6), 632.885,
24632.89, 632.895 (9) to (17), 632.896, and 767.513 (4).
AB114-ASA1,6 25Section 6 . 185.983 (1) (intro.) of the statutes is amended to read:
AB114-ASA1,6,8
1185.983 (1) (intro.) Every voluntary nonprofit health care plan operated by a
2cooperative association organized under s. 185.981 shall be exempt from chs. 600 to
3646, with the exception of ss. 601.04, 601.13, 601.31, 601.41, 601.42, 601.43, 601.44,
4601.45, 611.26, 611.67, 619.04, 623.11, 623.12, 628.34 (10), 631.17, 631.89, 631.93,
5631.95, 632.72 (2), 632.745 to 632.749, 632.775, 632.79, 632.795, 632.798, 632.85,
6632.853, 632.855, 632.861, 632.867, 632.87 (2) to (6), 632.885, 632.89, 632.895 (5) and
7(8) to (17), 632.896, and 632.897 (10) and chs. 609, 620, 630, 635, 645, and 646, but
8the sponsoring association shall:
AB114-ASA1,7 9Section 7. 450.13 (5m) of the statutes is created to read:
AB114-ASA1,6,1410 450.13 (5m) Disclosures to consumers. (a) Each pharmacy shall post in a
11prominent place at or near the place where prescriptions are dispensed a sign that
12clearly describes a pharmacist's ability under this state's law to substitute a less
13expensive drug product equivalent under sub. (1s) unless the consumer or the
14prescribing practitioner has indicated otherwise under sub. (2).
AB114-ASA1,6,1915 (b) The pharmacy examining board shall create a list of the 100 most commonly
16prescribed generic drug product equivalents, including the generic and brand names
17of the drugs, and provide, either directly or on the department's Internet site, the list
18to each pharmacy on an annual basis. Each pharmacy shall make available to the
19public information on how to access the list under this paragraph.
AB114-ASA1,6,2420 (c) Each pharmacy shall have available for the public a listing of the retail price,
21updated no less frequently than monthly, of the 100 most commonly prescribed
22prescription drugs, which includes brand name and generic equivalent drugs and
23biological products and interchangeable biological products, that are available for
24purchase at the pharmacy.
AB114-ASA1,8 25Section 8. 450.135 (8m) of the statutes is created to read:
AB114-ASA1,7,5
1450.135 (8m) Disclosure to consumers. (a) Each pharmacy shall post in a
2prominent place at or near the place where prescriptions are dispensed a sign that
3clearly describes a pharmacist's ability under this state's law to substitute a less
4expensive interchangeable biological product under sub. (2) unless the consumer or
5the prescribing practitioner has indicated otherwise under sub. (3).
AB114-ASA1,9 6Section 9. 450.135 (9) of the statutes is amended to read:
AB114-ASA1,7,127 450.135 (9) Links to be maintained by board. The board shall maintain links
8on the department's Internet site to the federal food and drug administration's lists
9of all currently approved interchangeable biological products. Each pharmacy shall
10make available for the public information on how to access the federal food and drug
11administration's lists of all currently approved interchangeable biological products
12through the department's Internet site.
AB114-ASA1,10 13Section 10. 601.31 (1) (w) of the statutes is amended to read:
AB114-ASA1,7,1514 601.31 (1) (w) For initial issuance and for each annual renewal of a license as
15an administrator or pharmacy benefit manager under ch. 633, $100.
AB114-ASA1,11 16Section 11 . 601.46 (3) (b) of the statutes is amended to read:
AB114-ASA1,7,1917 601.46 (3) (b) A general review of the insurance business in this state, including
18a report on emerging regulatory problems, developments and trends , including
19trends related to prescription drugs
;
AB114-ASA1,12 20Section 12. 609.83 of the statutes is amended to read:
AB114-ASA1,7,23 21609.83 Coverage of drugs and devices. Limited service health
22organizations, preferred provider plans, and defined network plans are subject to ss.
23632.853, 632.861, and 632.895 (16t).
AB114-ASA1,13 24Section 13 . 616.09 (1) (a) 2. of the statutes is amended to read:
AB114-ASA1,8,4
1616.09 (1) (a) 2. Plans authorized under s. 616.06 are subject to s. 610.21, 1977
2stats., s. 610.55, 1977 stats., s. 610.57, 1977 stats., and ss. 628.34 to 628.39, 1977
3stats., to chs. 600, 601, 620, 625, 627 and 645, to ss. 632.72, 632.755, 632.86 632.861
4and 632.87 and to this subchapter except s. 616.08.
AB114-ASA1,14 5Section 14 . 632.86 of the statutes is repealed.
AB114-ASA1,15 6Section 15 . 632.861 of the statutes is created to read:
AB114-ASA1,8,7 7632.861 Prescription drug charges. (1) Definitions. In this section:
AB114-ASA1,8,88 (a) “Disability insurance policy” has the meaning given in s. 632.895 (1) (a).
AB114-ASA1,8,109 (b) “Enrollee” means an individual who is covered under a disability insurance
10policy or a self-insured health plan.
AB114-ASA1,8,1111 (c) “Pharmacy benefit manager” has the meaning given in s. 632.865 (1) (c).
AB114-ASA1,8,1212 (d) “Prescription drug” has the meaning given in s. 450.01 (20).
AB114-ASA1,8,1313 (e) “Prescription drug benefit” has the meaning given in s. 632.865 (1) (e).
AB114-ASA1,8,1414 (f) “Self-insured health plan” has the meaning given in s. 632.85 (1) (c).
AB114-ASA1,8,22 15(2) Allowing disclosures. (a) A disability insurance policy or self-insured
16health plan that provides a prescription drug benefit may not restrict, directly or
17indirectly, any pharmacy that dispenses a prescription drug to an enrollee in the
18policy or plan from informing, or penalize such pharmacy for informing, an enrollee
19of any differential between the out-of-pocket cost to the enrollee under the policy or
20plan with respect to acquisition of the drug and the amount an individual would pay
21for acquisition of the drug without using any health plan or health insurance
22coverage.
AB114-ASA1,9,623 (b) A disability insurance policy or self-insured health plan that provides a
24prescription drug benefit shall ensure that any pharmacy benefit manager that
25provides services under a contract with the policy or plan does not, with respect to

1such policy or plan, restrict, directly or indirectly, any pharmacy that dispenses a
2prescription drug to an enrollee in the policy or plan from informing, or penalize such
3pharmacy for informing, an enrollee of any differential between the out-of-pocket
4cost to the enrollee under the policy or plan with respect to acquisition of the drug
5and the amount an individual would pay for acquisition of the drug without using
6any health plan or health insurance coverage.
AB114-ASA1,9,11 7(3) Cost-sharing limitation. (a) A disability insurance policy or self-insured
8health plan that provides a prescription drug benefit or a pharmacy benefit manager
9that provides services under a contract with a policy or plan may not require an
10enrollee to pay at the point of sale for a covered prescription drug an amount that is
11greater than the lowest of all of the following amounts:
AB114-ASA1,9,1312 1. The cost-sharing amount for the prescription drug for the enrollee under the
13policy or plan.
AB114-ASA1,9,1614 2. The amount a person would pay for the prescription drug if the enrollee
15purchased the prescription drug at the dispensing pharmacy without using any
16health plan or health insurance coverage.
AB114-ASA1,9,25 17(4) Drug substitution. (a) Except as provided in par. (b), a disability insurance
18policy that offers a prescription drug benefit, a self-insured health plan that offers
19a prescription drug benefit, or a pharmacy benefit manager acting on behalf of a
20disability insurance policy or self-insured health plan shall provide to an enrollee
21advanced written notice of a formulary change that removes a prescription drug from
22the formulary of the policy or plan or that reassigns a prescription drug to a benefit
23tier for the policy or plan that has a higher deductible, copayment, or coinsurance.
24The advanced written notice of a formulary change under this paragraph shall be
25provided no fewer than 30 days before the expected date of the removal or

1reassignment and shall include information on the procedure for the enrollee to
2request an exception to the formulary change. The policy, plan, or pharmacy benefit
3manager is required to provide the advanced written notice under this paragraph
4only to those enrollees in the policy or plan who are using the drug at the time the
5notification must be sent according to available claims history.
AB114-ASA1,10,86 (b) 1. A disability insurance policy, self-insured health plan, or pharmacy
7benefit manager is not required to provide advanced written notice under par. (a) if
8the prescription drug that is to be removed or reassigned is any of the following:
AB114-ASA1,10,99 a. No longer approved by the federal food and drug administration.
AB114-ASA1,10,1210 b. The subject of a notice, guidance, warning, announcement, or other
11statement from the federal food and drug administration relating to concerns about
12the safety of the prescription drug.
AB114-ASA1,10,1413 c. Approved by the federal food and drug administration for use without a
14prescription.
AB114-ASA1,10,2215 2. A disability insurance policy, self-insured health plan, or pharmacy benefit
16manager is not required to provide advanced written notice under par. (a) if, for the
17prescription drug that is being removed from the formulary or reassigned to a benefit
18tier that has a higher deductible, copayment, or coinsurance, the policy, plan, or
19pharmacy benefit manager adds to the formulary a generic prescription drug that
20is approved by the federal food and drug administration for use as an alternative to
21the prescription drug or a prescription drug in the same pharmacologic class or with
22the same mechanism of action at any of the following benefit tiers:
AB114-ASA1,10,2423 a. The same benefit tier from which the prescription drug is being removed or
24reassigned.
AB114-ASA1,11,2
1b. A benefit tier that has a lower deductible, copayment, or coinsurance than
2the benefit tier from which the prescription drug is being removed or reassigned.
AB114-ASA1,11,103 (c) A pharmacist or pharmacy shall notify an enrollee in a disability insurance
4policy or self-insured health plan if a prescription drug for which an enrollee is filling
5or refilling a prescription is removed from the formulary and the policy or plan or a
6pharmacy benefit manager acting on behalf of a policy or plan adds to the formulary
7a generic prescription drug that is approved by the federal food and drug
8administration for use as an alternative to the prescription drug or a prescription
9drug in the same pharmacologic class or with the same mechanism of action at any
10of the following benefit tiers:
AB114-ASA1,11,1211 1. The same benefit tier from which the prescription drug is being removed or
12reassigned.
AB114-ASA1,11,1413 2. A benefit tier that has a lower deductible, copayment, or coinsurance than
14the benefit tier from which the prescription drug is being removed or reassigned.
AB114-ASA1,11,2115 (d) If an enrollee has had an adverse reaction to the generic prescription drug
16or the prescription drug in the same pharmacologic class or with the same
17mechanism of action that is being substituted for an originally prescribed drug, the
18pharmacist or pharmacy may extend the prescription order for the originally
19prescribed drug to fill one 30-day supply of the originally prescribed drug for the
20cost-sharing amount that applies to the prescription drug at the time of the
21substitution.
AB114-ASA1,16 22Section 16. 632.865 (1) (a) of the statutes is renumbered 632.865 (1) (aw).
AB114-ASA1,17 23Section 17. 632.865 (1) (ae) and (ak) of the statutes are created to read:
AB114-ASA1,11,2424 632.865 (1) (ae) “Health benefit plan” has the meaning given in s. 632.745 (11).
AB114-ASA1,11,2525 (ak) “Health care provider” has the meaning given in s. 146.81 (1).
AB114-ASA1,18
1Section 18. 632.865 (1) (c) of the statutes is renumbered 632.865 (1) (c) (intro.)
2and amended to read:
AB114-ASA1,12,53 632.865 (1) (c) (intro.) “Pharmacy benefit manager" means an entity doing
4business in this state that contracts to administer or manage prescription drug
5benefits on behalf of any of the following:
AB114-ASA1,12,6 61. An insurer or other.
AB114-ASA1,12,8 73. Another entity that provides prescription drug benefits to residents of this
8state.
AB114-ASA1,19 9Section 19 . 632.865 (1) (c) 2. of the statutes is created to read:
AB114-ASA1,12,1010 632.865 (1) (c) 2. A cooperative, as defined in s. 185.01 (2).
AB114-ASA1,20 11Section 20. 632.865 (1) (dm) of the statutes is created to read:
AB114-ASA1,12,1212 632.865 (1) (dm) “Prescription drug" has the meaning given in s. 450.01 (20).
AB114-ASA1,21 13Section 21. 632.865 (3) to (7) of the statutes are created to read:
AB114-ASA1,12,1614 632.865 (3) License required. No person may perform any activities of a
15pharmacy benefit manager without being licensed by the commissioner as an
16administrator or pharmacy benefit manager under s. 633.14.
AB114-ASA1,12,23 17(4) Accreditation for network participation. A pharmacy benefit manager or
18a representative of a pharmacy benefit manager shall provide to a pharmacy, within
1930 days of receipt of a written request from the pharmacy, a written notice of any
20certification or accreditation requirements used by the pharmacy benefit manager
21or its representative as a determinant of network participation. A pharmacy benefit
22manager or a representative of a pharmacy benefit manager may change its
23accreditation requirements no more frequently than once every 24 months.
AB114-ASA1,13,3
1(5) Retroactive claim reduction. Unless required otherwise by federal law,
2a pharmacy benefit manager may not retroactively deny or reduce a pharmacist's or
3pharmacy's claim after adjudication of the claim unless any of the following is true:
AB114-ASA1,13,44 (a) The original claim was submitted fraudulently.
AB114-ASA1,13,75 (b) The payment for the original claim was incorrect. Recovery for an incorrect
6payment under this paragraph is limited to the amount that exceeds the allowable
7claim.
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