TJD:cdc

2021 - 2022 LEGISLATURE

2021 Senate BILL 3

January 15, 2021 - Introduced by Senators Felzkowski, Roth, Erpenbach, Bernier, Cowles, Darling, Feyen, Marklein, Ringhand, Smith, Wanggaard, Wirch, Ballweg, Jacque, Larson, Nass and L. Taylor, cosponsored by Representatives Schraa, Dittrich, Duchow, Horlacher, Krug, Ramthun, Novak, J. Rodriguez, Spiros, Tauchen, Tittl, Armstrong, Brooks, Cabral-Guevara, Callahan, Edming, Gundrum, James, Kitchens, Kuglitsch, Loudenbeck, Magnafici, Moses, Mursau, Petersen, Plumer, Rozar, Skowronski, Snyder, Sortwell, Swearingen, Thiesfeldt, Tranel, Vorpagel and Zimmerman. Referred to Committee on Health.

SB3,1,12 An Act to repeal 40.51 (15m) and 632.86; to renumber 632.865 (1) (a); to renumber and amend 632.865 (1) (c) and 633.01 (4); to amend 40.51 (8), 40.51 (8m), 66.0137 (4), 120.13 (2) (g), 185.983 (1) (intro.), 450.135 (9), 601.31 (1) (w), 601.46 (3) (b), 609.83, 616.09 (1) (a) 2., chapter 633 (title), 633.01 (1) (intro.) and (c), 633.01 (3), 633.01 (5), 633.04 (intro.), 633.05, 633.06, 633.07, 633.09 (4) (b) 2. and 3., 633.11, 633.12 (1) (intro.), (b) and (c), 633.13 (1) and (3), 633.14 (2) (intro.) and (c) 1. and 3. and (3), 633.15 (1) (a), (1m), and (2) (a) 1., 2. and 3. and (b) 1., 633.15 (2) (b) 2. and 633.16; and to create 450.13 (5m), 450.135 (8m), 632.861, 632.865 (1) (ae) and (ak), 632.865 (1) (c) 2., 632.865 (1) (dm), 632.865 (3) to (7), 633.01 (2r), 633.01 (4g), 633.01 (4r), 633.01 (6), 633.15 (2) (b) 1. d. and 633.15 (2) (f) of the statutes; relating to: pharmacy benefit managers, prescription drug benefits, and granting rule-making authority.

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. Under the bill, a pharmacy benefit manager is an entity that contracts to administer or manage prescription drug benefits on behalf of an insurer, a cooperative, or another entity that provides prescription drug benefits to Wisconsin residents.

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 under current law, 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 administrator 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.

Certain health plans, or pharmacy benefit managers on behalf of health plans, may require a pharmacy to fulfill certification or accreditation requirements in order to participate in the plan's network of providers. 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 12 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 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. Health insurance policies are referred to in the bill as disability insurance policies. 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, whichever amount is lower.

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. The pharmacist is currently 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, governmental self-insured health 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 higher benefit tier. A higher benefit tier is a tier with a higher deductible, copayment, or coinsurance than the tier the prescription drug had been assigned. The advanced notice required by the bill must be provided no fewer than 30 days before 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 benefit 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. A lower benefit tier has a lower deductible, copayment, or coinsurance than the prescription drug's current benefit tier.

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 prescription drug 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.