Rep. Norm Thurston — Voting Record

Bill

Number

H.B. 364 Sixth Substitute (2016GS)

Sponsor

Rep. Last, B.

Final action

House/ filed 3/10/2016

Outcome

Failed / filed without passage

Summary

What it does

• This bill:
• defines terms;
• establishes the Pharmacy Benefit Manager Act;
• requires a person providing pharmacy benefit management services to:
• register with the Division of Occupational and Professional Licensing (DOPL) instead of the Division of Corporations and Commercial Code; and
• self-audit and certify compliance with applicable laws and rules;
• establishes certain requirements for the practice of a pharmacy benefit manager;
• requires DOPL to:
• establish a registration process and requirements;
• investigate noncompliance and complaints;
• establish registration revocation and re-application procedures; and
• notify certain individuals doing business with a person whose pharmacy benefit manager registration is revoked;
• authorizes administrative rules; and
• makes technical changes.

Every vote on this bill

Bill text

PHARMACY BENEFIT MANAGER AMENDMENTS
GENERAL SESSION
STATE OF UTAH
Chief Sponsor: Bradley G. Last
Senate Sponsor: 
____________
LONG TITLE
General Description:
This bill creates registration requirements for pharmacy benefit managers.
Highlighted Provisions:
This bill:
▸ defines terms;
▸ establishes the Pharmacy Benefit Manager Act;
▸ requires a person providing pharmacy benefit management services to:
• register with the Division of Occupational and Professional Licensing (DOPL)
instead of the Division of Corporations and Commercial Code; and
• self-audit and certify compliance with applicable laws and rules;
▸ establishes certain requirements for the practice of a pharmacy benefit manager;
▸ requires DOPL to:
• establish a registration process and requirements;
• investigate noncompliance and complaints;
• establish registration revocation and re-application procedures; and
• notify certain individuals doing business with a person whose pharmacy benefit
manager registration is revoked;
▸ authorizes administrative rules; and
▸ makes technical changes.
Money Appropriated in this Bill:
None
Other Special Clauses:
None
Utah Code Sections Affected:
ENACTS:
58-86-101
, Utah Code Annotated 1953
58-86-102
, Utah Code Annotated 1953
58-86-103
, Utah Code Annotated 1953
58-86-104
, Utah Code Annotated 1953
58-86-105
, Utah Code Annotated 1953
REPEALS AND REENACTS:
31A-22-640
, as last amended by Laws of Utah 2015, Chapter 258
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 
31A-22-640
 is repealed and reenacted to read:
 31A-22-640.
Insurers using pharmacy benefit management services --
Registration required
(1) A person may not perform, offer to perform, or advertise any service as a pharmacy
benefit manager in Utah without a valid registration under Title 58, Chapter 86, Pharmacy
Benefit Manager Act.
(2) A person may not use the pharmacy benefit management services of another if the
person knows or should know that the other does not have the registration required in
Subsection (1).
Section 2. Section 
58-86-101
 is enacted to read:
CHAPTER 86. PHARMACY BENEFIT MANAGER ACT
 58-86-101.
Title.
This chapter is known as the "Pharmacy Benefit Manager Act."
Section 3. Section 
58-86-102
 is enacted to read:
 58-86-102.
Definitions.
As used in this chapter:
(1) "Maximum allowable cost" means:
(a) a maximum reimbursement amount for a group of pharmaceutically and
therapeutically equivalent drugs; or
(b) any similar reimbursement amount that is used by a pharmacy benefit manager to
reimburse pharmacies for multiple source drugs.
(2) "Obsolete" means a product that may be listed in national drug pricing compendia
but is no longer available to be dispensed based on the expiration date of the last lot
manufactured.
(3) "Pharmacy benefit manager" means a person or entity that provides pharmacy
benefit management services, as defined in Section 
49-20-502
, on behalf of an insurer, as
defined in Subsection 
31A-22-636
(1).
Section 4. Section 
58-86-103
 is enacted to read:
 58-86-103.
Insurer and pharmacy benefit management services -- Registration --
Maximum allowable cost -- Audit restrictions.
(1) An insurer and an insurer's pharmacy benefit manager are subject to the pharmacy
audit provisions of Section 
58-17b-622
.
(2) A pharmacy benefit manager may not use maximum allowable cost as a basis for
reimbursement to a pharmacy unless:
(a) the drug is listed as "A" or "B" rated in the most recent version of the United States
Food and Drug Administration's approved drug products with therapeutic equivalent
evaluations, also known as the "Orange Book," or has an "NR" or "NA" rating or similar rating
by a nationally recognized reference; and
(b) the drug is:
(i) generally available for purchase in Utah from a national or regional wholesaler; and
(ii) not obsolete.
(3) A pharmacy benefit manager shall determine maximum allowable cost by using
comparable and current data on drug prices obtained from multiple nationally recognized,
comprehensive data sources, including wholesalers, drug file vendors, and pharmaceutical
manufacturers for drugs that are available for purchase by pharmacies in Utah.
(4) For every drug for which the pharmacy benefit manager uses maximum allowable
cost to reimburse a contracted pharmacy, the pharmacy benefit manager shall:
(a) include information identifying the national drug pricing compendia and other data
sources used to obtain the drug price data in the contract with the pharmacy;
(b) review and make necessary adjustments to the maximum allowable cost, using the
most recent data sources identified in Subsection (4)(a), at least once per week;
(c) provide a process for the contracted pharmacy to appeal the maximum allowable
cost, in accordance with Subsection (5); and
(d) include a process to obtain an update to the pharmacy product pricing files used to
reimburse the pharmacy, in each contract with a contracted pharmacy, in a format that is
readily available and accessible.
(5) (a) (i) A contracted pharmacy may appeal the maximum allowable cost, in
accordance with Subsection (4)(c), within 21 days following the initial claim adjudication.
(ii) The pharmacy benefit manager shall investigate and resolve the appeal within 14
business days.
(b) If an appeal is denied, the pharmacy benefit manager shall provide the contracted
pharmacy with:
(i) the reason for the denial; and
(ii) the identification of the national drug code of the drug for which the pharmacy
appealed that may be purchased by the pharmacy at a price at or below the price determined by
the pharmacy benefit manager.
(6) The pharmacy benefit manager shall ensure that the contract with each pharmacy
contains a dispute resolution mechanism to be used if either party breaches the terms or
conditions of the contract.
(7) (a) To conduct business in the state, a pharmacy benefit manager shall register with
the division and renew the registration annually.
(b) To register under this chapter, the pharmacy benefit manager shall submit to the
division an application containing:
(i) the name of the pharmacy benefit manager;
(ii) the name and contact information for the registered agent for the pharmacy benefit
manager; and
(iii) if applicable, the federal employer identification number for the pharmacy benefit
manager.
(c) The division may establish a fee, in accordance with Title 63J, Chapter 1,
Budgetary Procedures Act, for the initial registration and the annual renewal of the registration.
(d) The division shall:
(i) make rules, in accordance with Title 63G, Chapter 3, Utah Administrative
Rulemaking Act, to establish:
(A) an application process and an application form for registration under this chapter;
(B) procedures that allow a person whose registration has been revoked under Section
58-86-104
 to apply for reinstatement of the registration; and
(C) criteria for reinstatement, in accordance with this Subsection (7)(d)(i); and
(ii) retain the registration fees imposed under Subsection (7)(c) as a dedicated credit, as
defined in Section 
51-5-3
, to the division to pay for the cost of administering this chapter.
(e) The following entities are not required to register as a pharmacy benefit manager
under Subsection (7)(a) when the entity is providing formulary services to the entity's patients,
employees, members, or beneficiaries:
(i) a health care facility licensed under Title 26, Chapter 21, Health Care Facility
Licensing and Inspection Act;
(ii) a pharmacy licensed under Title 58, Chapter 17b, Pharmacy Practice Act;
(iii) a health care professional licensed under Title 58, Occupations and Professions;
and
(iv) a labor union.
(8) This section does not apply to a pharmacy benefit manager when the pharmacy
benefit manager is providing pharmacy benefit management services on behalf of the state
Medicaid program.
Section 5. Section 
58-86-104
 is enacted to read:
 58-86-104.
Self-audit and certification to division -- Complaints.
(1) The division shall make rules, in accordance with Title 63G, Chapter 3, Utah
Administrative Rulemaking Act, that:
(a) for the purpose of ensuring compliance with the provisions of this chapter, require a
self-audit and certification of a person:
(i) registered under this chapter; or
(ii) who engages in activities that require registration under this chapter;
(b) create a form on which a person described in Subsection (1)(a):
(i) certifies that the person is in full compliance with each requirement of this chapter
and any other applicable laws, rules, regulations, or registration conditions; and
(ii) names each insurance carrier with which the person engages as a pharmacy benefit
manager; and
(c) establish procedures to:
(A) receive, evaluate, and investigate complaints regarding failures to comply with this
chapter by a person described in Subsection (1)(a); and
(B) revoke a pharmacy benefit manager registration, in accordance with Section
58-86-104
.
(2) A person described in Subsection (1)(a) shall honestly and in good faith complete
the self-audit and certification process described in Subsections (1)(a) and (b).
Section 6. Section 
58-86-105
 is enacted to read:
 58-86-105.
Revocation of registration -- Notification of insurance carriers.
(1) The director or the director's designee shall promptly revoke a pharmacy benefit
manager's registration if, upon review of the self-audit, certification, or complaints described in
Section 
58-86-103
, and as part of an adjudicative proceeding under Title 63G, Chapter 4,
Administrative Procedures Act, the director or the director's designee finds that:
(a) the person has, on multiple occasions, violated provisions of this chapter, or a rule
or order issued with respect to this chapter;
(b) the violations are part of a pattern of noncompliance; and
(c) disciplinary action is appropriate.
(2) (a) When a registration is revoked under this section, the division shall promptly
give notice that the person's registration is revoked, stating the grounds for the revocation, and
that the person can no longer provide services as a pharmacy benefit manager under this
chapter.
(b) The division shall give notice to.
(i) the person for whom the registration is revoked;
(ii) each insurance carrier with which the person engages as a pharmacy benefit
manager, as identified by the person in accordance with Subsection 
58-86-103
(1)(b)(ii); and
(iii) the Insurance Department, to promote insurer compliance with Section
31A-22-640
.
Legislative Review Note
Office of Legislative Research and General Counsel