AB173: Bill Text

For further information see the state fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB173,1 Section 1. 40.51 (8) of the statutes is amended to read:

AB173,2,6 40.51 (8) Every health care coverage plan offered by the state under sub. (6) shall comply with ss. 631.89, 631.90, 631.93 (2), 631.95, 632.72 (2), 632.722, 632.729, 632.746 (1) to (8) and (10), 632.747, 632.748, 632.798, 632.83, 632.835, 632.85, 632.853, 632.855, 632.861, 632.862, 632.867, 632.87 (3) to (6), 632.885, 632.89, 632.895 (5m) and (8) to (17), and 632.896.

AB173,2 Section 2. 40.51 (8m) of the statutes is amended to read:

AB173,2,11 40.51 (8m) Every health care coverage plan offered by the group insurance board under sub. (7) shall comply with ss. 631.95, 632.722, 632.729, 632.746 (1) to (8) and (10), 632.747, 632.748, 632.798, 632.83, 632.835, 632.85, 632.853, 632.855, 632.861, 632.862, 632.867, 632.885, 632.89, and 632.895 (11) to (17).

AB173,3 Section 3. 66.0137 (4) of the statutes is amended to read:

AB173,2,19 66.0137 (4) Self-insured health plans. If a city, including a 1st class city, or a village provides health care benefits under its home rule power, or if a town provides health care benefits, to its officers and employees on a self-insured basis, the self-insured plan shall comply with ss. 49.493 (3) (d), 631.89, 631.90, 631.93 (2), 632.722, 632.729, 632.746 (10) (a) 2. and (b) 2., 632.747 (3), 632.798, 632.85, 632.853, 632.855, 632.861, 632.862, 632.867, 632.87 (4) to (6), 632.885, 632.89, 632.895 (9) to (17), 632.896, and 767.513 (4).

AB173,4 Section 4. 120.13 (2) (g) of the statutes is amended to read:

AB173,3,2 120.13 (2) (g) Every self-insured plan under par. (b) shall comply with ss. 49.493 (3) (d), 631.89, 631.90, 631.93 (2), 632.722, 632.729, 632.746 (10) (a) 2. and (b) 2., 632.747 (3), 632.798, 632.85, 632.853, 632.855, 632.861, 632.862, 632.867, 632.87 (4) to (6), 632.885, 632.89, 632.895 (9) to (17), 632.896, and 767.513 (4).

AB173,5 Section 5. 185.983 (1) (intro.) of the statutes is amended to read:

AB173,3,11 185.983 (1) (intro.) Every voluntary nonprofit health care plan operated by a cooperative association organized under s. 185.981 shall be exempt from chs. 600 to 646, with the exception of ss. 601.04, 601.13, 601.31, 601.41, 601.42, 601.43, 601.44, 601.45, 611.26, 611.67, 619.04, 623.11, 623.12, 628.34 (10), 631.17, 631.89, 631.93, 631.95, 632.72 (2), 632.722, 632.729, 632.745 to 632.749, 632.775, 632.79, 632.795, 632.798, 632.85, 632.853, 632.855, 632.861, 632.862, 632.867, 632.87 (2) to (6), 632.885, 632.89, 632.895 (5) and (8) to (17), 632.896, and 632.897 (10) and chs. 609, 620, 630, 635, 645, and 646, but the sponsoring association shall:

AB173,6 Section 6. 609.83 of the statutes is amended to read:

AB173,3,16 609.83 Coverage of drugs and devices; application of payments. Limited service health organizations, preferred provider plans, and defined network plans are subject to ss. 632.853, 632.861, 632.862, and 632.895 (16t) and (16v).

AB173,7 Section 7. 632.861 (1m) of the statutes is created to read:

AB173,3,21 632.861 (1m) Required disclosures. A disability insurance policy or self- insured health plan that provides a prescription drug benefit shall make the formulary and all drug costs associated with the formulary available to plan sponsors and individuals prior to selection or enrollment.

AB173,8 Section 8. 632.861 (3g) of the statutes is created to read:

AB173,4,6 632.861 (3g) Choice of provider; penalty prohibited. No insurer, self- insured health plan, or pharmacy benefit manager may require, or penalize a person who is covered under a disability insurance policy or self-insured health plan for using or for not using, a specific retail, specific mail-order, or other specific pharmacy provider within the network of pharmacy providers under the policy or plan. A prohibited penalty under this subsection includes an increase in premium, deductible, copayment, or coinsurance.

AB173,9 Section 9. 632.861 (3r) of the statutes is created to read:

AB173,4,14 632.861 (3r) Pharmacy networks. (a) If an enrollee utilizes a pharmacy or pharmacist in a preferred network of pharmacies or pharmacists, no disability insurance policy or self-insured health plan that provides a prescription drug benefit or pharmacy benefit manager that provides services under a contract with a policy or plan may require the enrollee to pay any amount or impose on the enrollee any condition that would not be required if the enrollee utilized a different pharmacy or pharmacist in the same preferred network.

AB173,4,19 (b) Any disability insurance policy or self-insured health plan that provides a prescription drug benefit, or any pharmacy benefit manager that provides services under a contract with a policy or plan, that has established a preferred network of pharmacies or pharmacists shall reimburse each pharmacy or pharmacist in the same network at the same rates.

AB173,10 Section 10. 632.861 (4) (a) of the statutes is amended to read:

AB173,5,12 632.861 (4) (a) Except as provided in par. (b) and subject to par. (e), a disability insurance policy that offers a prescription drug benefit, a self-insured health plan that offers a prescription drug benefit, or a pharmacy benefit manager acting on behalf of a disability insurance policy or self-insured health plan shall provide to an enrollee advanced written notice of a formulary change that removes a prescription drug from the formulary of the policy or plan or that reassigns a prescription drug to a benefit tier for the policy or plan that has a higher deductible, copayment, or coinsurance. The advanced written notice of a formulary change under this paragraph shall be provided no fewer than 30 90 days before the expected date of the removal or reassignment and shall include information on the procedure for the enrollee to request an exception to the formulary change. The policy, plan, or pharmacy benefit manager is required to provide the advanced written notice under this paragraph only to those enrollees in the policy or plan who are using the drug at the time the notification must be sent according to available claims history.

AB173,11 Section 11. 632.861 (4) (e) of the statutes is created to read:

AB173,5,17 632.861 (4) (e) No disability insurance policy, self-insured health plan, or pharmacy benefit manager acting on behalf of a disability insurance policy or self- insured health plan may remove a prescription drug from the formulary except at the time of coverage renewal.

AB173,12 Section 12. 632.862 of the statutes is created to read:

AB173,5,20 632.862 Application of prescription drug payments. (1) Definitions. In this section:

AB173,5,21 (a) “Brand name” has the meaning given in s. 450.12 (1) (a).

AB173,5,22 (b) “Brand name drug” means any of the following:

AB173,6,2 1. A prescription drug that contains a brand name and that has no medically appropriate generic equivalent.

AB173,6,5 2. A prescription drug that contains a brand name and that has a medically appropriate generic equivalent but to which the enrollee or other covered individual has obtained access through any of the following:

AB173,6,6 a. Prior authorization.

AB173,6,7 b. A step therapy protocol.

AB173,6,9 c. The exceptions and appeals process of the disability insurance policy, self- insured health plan, or pharmacy benefit manager.

AB173,6,11 (c) “Cost-sharing requirement” means a deductible, copayment, or coinsurance.

AB173,6,12 (d) “Disability insurance policy” has the meaning given in s. 632.895 (1) (a).

AB173,6,14 (e) “Generic equivalent” means a drug product equivalent, as defined in s. 450.13 (1e), that is nationally available.

AB173,6,15 (f) “Pharmacy benefit manager” has the meaning given in s. 632.865 (1) (c).

AB173,6,16 (g) “Self-insured health plan” has the meaning given in s. 632.85 (1) (c).

AB173,7,4 (2) Application of payments. Except as provided in sub. (4), a disability insurance policy that offers a prescription drug benefit, a self-insured health plan, or a pharmacy benefit manager acting on behalf of a disability insurance policy or self-insured health plan shall apply to any cost-sharing requirement or to any calculation of an out-of-pocket maximum amount of the disability insurance policy or self-insured health plan, including the annual limitations on cost sharing established under 42 USC 18022 (c) and 42 USC 300gg-6 (b), any amounts paid by an enrollee or other individual covered under the disability insurance policy or self- insured health plan, or by any person on behalf of the enrollee or individual, for brand name drugs that are covered under the disability insurance policy or self- insured health plan.

AB173,7,15 (3) Calculation of cost-sharing annual limitations. For purposes of calculating an enrollee’s contribution to the annual limitations on cost sharing under 42 USC 18022 (c) and 42 USC 300gg-6 (b), a disability insurance policy that offers a prescription drug benefit, a self-insured health plan, or a pharmacy benefit manager acting on behalf of a disability insurance policy or self-insured health plan shall include expenditures for any item or service covered under the disability insurance policy or self-insured health plan if the item or service is included within a category of essential health benefits, as described in 42 USC 18022 (b) (1), and regardless of whether the disability insurance policy, self-insured health plan, or pharmacy benefit manager classifies the item or service as an essential health benefit.

AB173,8,2 (4) Exception; high deductible health plans. If applying the requirement under sub. (2) to payments made by or on behalf of an enrollee or other individual covered under a high deductible health plan, as defined under 26 USC 223 (c) (2), would result in the enrollee failing to meet the definition of an eligible individual under 26 USC 223 (c) (1), the disability insurance policy, self-insured health plan, or pharmacy benefit manager shall begin applying the requirement under sub. (2) to the disability insurance policy or self-insured health plan’s deductible after the enrollee has satisfied the minimum deductible requirement under 26 USC 223 (c) (2) (A) (i). This subsection does not apply to any amounts paid for items or services that are preventive care, as described in 26 USC 223 (c) (2) (C).

AB173,13 Section 13. 632.865 (1) (ab) and (ac) of the statutes are created to read:

AB173,8,5 632.865 (1) (ab) “340B covered entity” has the meaning given for “covered entity” under 42 USC 256b (a) (4).

AB173,8,7 (ac) “340B drug” has the meaning given for “covered drug” under 42 USC 256b (b) (2).

AB173,14 Section 14. 632.865 (1) (ae) of the statutes is amended to read:

AB173,8,12 632.865 (1) (ae) “Health benefit plan” has the meaning given means a health benefit plan, as defined in s. 632.745 (11), that is not prescription drug coverage provided under part D of medicare under Title XVIII of the federal Social Security Act, 42 USC 1395 to 1395lll.

AB173,15 Section 15. 632.865 (1) (an), (aq) and (at) of the statutes are created to read:

AB173,8,18 632.865 (1) (an) “Maximum allowable cost list” means a list of pharmaceutical products that sets forth the maximum amount a pharmacy benefit manager will pay to a pharmacy or pharmacist for dispensing a pharmaceutical product. The list may directly establish the maximum amounts or set forth a method for how the maximum amounts are calculated.

AB173,8,21 (aq) “Pharmaceutical product” means a prescription generic drug, prescription brand-name drug, prescription biologic, or other prescription drug, vaccine, or device.

AB173,9,2 (at) “Pharmaceutical wholesaler” means a person that sells and distributes, directly or indirectly, a pharmaceutical product and that offers to deliver the pharmaceutical product to a pharmacy or pharmacist.

AB173,16 Section 16. 632.865 (1) (bm) of the statutes is created to read:

AB173,9,6 632.865 (1) (bm) “Pharmacy acquisition cost” means the amount that a pharmaceutical wholesaler charges a pharmacy or pharmacist for a pharmaceutical product as listed on the pharmacy’s or pharmacist’s billing invoice.

AB173,17 Section 17. 632.865 (1) (cg) and (cr) of the statutes are created to read:

AB173,9,9 632.865 (1) (cg) “Pharmacy benefit manager affiliate” means a pharmacy or pharmacist that is an affiliate of a pharmacy benefit manager.

AB173,9,13 (cr) “Pharmacy services administrative organization” means an entity that provides contracting and other administrative services to pharmacies or pharmacists to assist them in their interactions with 3rd-party payers, pharmacy benefit managers, pharmaceutical wholesalers, and other entities.

AB173,18 Section 18. 632.865 (2) of the statutes is repealed.

AB173,19 Section 19. 632.865 (2d) of the statutes is created to read:

AB173,9,19 632.865 (2d) Pharmaceutical product reimbursements. (ag) Contents of maximum allowable cost lists. A pharmacy benefit manager that uses a maximum allowable cost list shall include all of the following information on the maximum allowable cost list:

AB173,9,22 1. The average acquisition cost of each pharmaceutical product and the cost of the pharmaceutical product set forth in the national average drug acquisition cost data published by the federal centers for medicare and medicaid services.

AB173,9,23 2. The average manufacturer price of each pharmaceutical product.

AB173,10,1 3. The average wholesale price of each pharmaceutical product.

AB173,10,3 4. The brand effective rate or generic effective rate for each pharmaceutical product.

AB173,10,4 5. Any applicable discount indexing.

AB173,10,6 6. The federal upper limit for each pharmaceutical product published by the federal centers for medicare and medicaid services.

AB173,10,7 7. The wholesale acquisition cost of each pharmaceutical product.

AB173,10,8 8. Any other terms that are used to establish the maximum allowable costs.

AB173,10,12 (ar) Regulation of maximum allowable cost lists. A pharmacy benefit manager may place or continue a particular pharmaceutical product on a maximum allowable cost list only if all of the following apply to the pharmaceutical product:

AB173,10,15 1. The pharmaceutical product is listed as a drug product equivalent, as defined in s. 450.13 (1e), or is rated by a nationally recognized reference, such as Medi-Span or Gold Standard Drug Database, as “not rated” or “not available.”

AB173,10,18 2. The pharmaceutical product is available for purchase by all pharmacies and pharmacists in this state from national or regional pharmaceutical wholesalers operating in this state.

AB173,10,20 3. The pharmaceutical product has not been determined by the drug manufacturer to be obsolete.

AB173,10,22 (b) Access and update obligations. A pharmacy benefit manager that uses a maximum allowable cost list shall do all of the following:

AB173,11,2 1. Provide access to the maximum allowable cost list to each pharmacy or pharmacist subject to the maximum allowable cost list.

AB173,11,3 2. Update the maximum allowable cost list on a timely basis.

AB173,11,5 3. Update the maximum allowable cost list no later than 7 days after any of the following occurs:

AB173,11,8 a. The pharmacy acquisition cost of a pharmaceutical product increases by 10 percent or more from at least 60 percent of the pharmaceutical wholesalers doing business in this state.

AB173,11,10 b. There is a change in the methodology on which the maximum allowable cost list is based or in the value of a variable involved in the methodology.

AB173,11,13 4. Provide a process for a pharmacy or pharmacist subject to the maximum allowable cost list to receive prompt notification of an update to the maximum allowable cost list.

AB173,11,17 (c) Appeal process. 1. A pharmacy benefit manager that uses a maximum allowable cost list shall provide a process for a pharmacy or pharmacist to appeal and resolve disputes regarding claims that the maximum payment amount for a pharmaceutical product is below the pharmacy acquisition cost.

AB173,11,19 2. A pharmacy benefit manager required to provide an appeal process under subd. 1. shall do all of the following:

AB173,11,21 a. Provide a dedicated telephone number and email address or website that a pharmacy or pharmacist may use to submit an appeal.

AB173,11,23 b. Allow a pharmacy or pharmacist to submit an appeal directly on the pharmacy’s or pharmacist’s own behalf.

AB173,12,2 c. Allow a pharmacy services administrative organization to submit an appeal on behalf of a pharmacy or pharmacist.

AB173,12,5 d. Provide at least 7 business days after a customer transaction for a pharmacy or pharmacist to submit an appeal under this paragraph concerning a pharmaceutical product involved in the transaction.

AB173,12,9 3. A pharmacy benefit manager that receives an appeal from or on behalf of a pharmacy or pharmacist under this paragraph shall resolve the appeal and notify the pharmacy or pharmacist of the pharmacy benefit manager’s determination no later than 7 business days after the appeal is received by doing any of the following:

AB173,12,16 a. If the pharmacy benefit manager grants the relief requested in the appeal, the pharmacy benefit manager shall make the requested change in the maximum allowable cost; allow the pharmacy or pharmacist to reverse and rebill the relevant claim; provide to the pharmacy or pharmacist the national drug code number published in a directory by the federal food and drug administration on which the increase or change is based; and make the change effective for each similarly situated pharmacy or pharmacist subject to the maximum allowable cost list.

AB173,13,2 b. If the pharmacy benefit manager denies the relief requested in the appeal, the pharmacy benefit manager shall provide to the pharmacy or pharmacist a reason for the denial, the national drug code number published in a directory by the federal food and drug administration for the pharmaceutical product to which the claim relates, and the name of a national or regional pharmaceutical wholesaler operating in this state that has the pharmaceutical product currently in stock at a price below the amount specified in the pharmacy benefit manager’s maximum allowable cost list.

AB173,13,16 4. Notwithstanding subd. 3. b., a pharmacy benefit manager may not deny a pharmacy’s or pharmacist’s appeal under this paragraph if the relief requested in the appeal relates to the maximum allowable cost for a pharmaceutical product that is not available for the pharmacy or pharmacist to purchase at a cost that is below the pharmacy acquisition cost from the pharmaceutical wholesaler from which the pharmacy or pharmacist purchases the majority of pharmaceutical products for resale. If this subdivision applies, the pharmacy benefit manager shall revise the maximum allowable cost list to increase the maximum allowable cost for the pharmaceutical product to an amount equal to or greater than the pharmacy’s or pharmacist’s pharmacy acquisition cost and allow the pharmacy or pharmacist to reverse and rebill each claim affected by the pharmacy’s or pharmacist’s inability to procure the pharmaceutical product at a cost that is equal to or less than the maximum allowable cost that was the subject of the pharmacy’s or pharmacist’s appeal.