HB 23-1227

HB 23-1227, which has been signed into law and will take effect on August 7, 2023, aims to regulate pharmacy benefit managers (PBMs) by prohibiting them from engaging in certain practices that could harm pharmacies or patients. These include requiring mail-order prescriptions, charging pharmacies for processing claims, and reducing payments after a sale. The bill also mandates PBMs to provide clear cost information to patients and allow pharmacists to inform patients about more affordable drug alternatives. This law will affect PBMs, pharmacies, and insured individuals by ensuring fair practices and transparency in the prescription drug process.

Official Summary

Under current law, pharmacy benefit managers (PBMs) are required to perform certain acts and are prohibited from engaging in certain acts. Specifically, PBMs are prohibited from: Requiring patients to obtain their prescription drugs through mail order; Charging pharmacies fees to adjudicate claims; Requiring pharmacies to obtain accreditations or certifications that are different than what the PBM requires of its affiliated pharmacies; Retroactively reducing a payment made to a pharmacy on a drug claim after the point of sale or reimbursing a pharmacy in an amount that is less than the amount reimbursed to its own affiliated pharmacy for the same pharmacy service; Modifying the prescription drug formulary under a health benefit plan during the plan year; With regard to audits, using specified techniques in calculating a recoupment or penalty, subjecting a pharmacy to recoupment when a clerical error is discovered, and requiring pharmacies to be audited more than once a year; Prohibiting a pharmacy or pharmacist from, or penalizing a pharmacy or pharmacist for, providing information to patients about more affordable, therapeutically equivalent alternatives to a prescribed drug; or Requiring a pharmacy or pharmacist to charge or collect a copayment from an insured patient that exceeds the total charge submitted by the pharmacy for the prescription drug. Additionally, PBMs are required to: Provide pharmacies 7 days' written notice before an audit, conduct an audit by or in consultation with a pharmacist, allow the pharmacy to supplement claims documentation, and establish an appeals process; Provide an insured individual, the insured's health-care provider, or a third party acting on behalf of the insured or provider with up-to-date and real-time cost, benefit, and coverage information under the terms of the insured's health benefit plan; and Provide contracted pharmacies with the list of sources the PBM used in determining maximum allowable cost pricing, update the information every 7 days, allow pharmacies the ability to readily review the information, follow specified requirements when placing a drug on the maximum allowable cost list, and establish an appeals process to resolve disputes. The act specifies that the commissioner of insurance (commissioner) has the power to enforce these prohibitions and requirements and impose penalties on PBMs for failing to comply with these prohibitions and requirements. The commissioner is also authorized to adopt rules as necessary to implement and enforce these prohibitions and requirements. Additionally, the act requires PBMs to register with and pay a registration fee to the commissioner and authorizes the commissioner to deny, suspend, revoke, or refuse to issue, continue, or renew a PBM registration or to issue a cease-and-desist order if the commissioner finds that a PBM has engaged in specified activities, including violating an insurance law. The PBM registration fees imposed under the act are to be used to fund the costs of the division of insurance in enforcing requirements and prohibitions on PBMs. The act appropriates $206,647 from the division of insurance cash fund to the department of regulatory agencies for use by the division of insurance for personal services and operating expenses related to implementing the act. APPROVED by Governor May 10, 2023 EFFECTIVE August 7, 2023 NOTE: This act was passed without a safety clause and takes effect 90 days after sine die. (Note: This summary applies to this bill as enacted.)

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