HB2328 H&HR AM 1-31

HB2328 H&HR AM 1-31 #1

The Committee on Health and Human Resources moved to amend the bill on page two, by striking everything following the enacting section and inserting in lieu thereof the following:
" ARTICLE 25G. PHARMACY BENEFIT MANAGER LICENSING AND REGULATION.
§33-25G-1. Short title and purpose.
(a) This article may be cited as the "Pharmacy Benefit Manager Licensing and Regulation Act."
(b) The purpose of this article is to establish standards and criteria for the licensing and regulation of pharmacy benefit managers. This article is designed to promote, preserve, and protect the public health, safety, and welfare by and through licensing and effective regulation of pharmacy benefit managers.
§33-25G-2. Definitions.
As used in this article, unless the context otherwise indicates, the following terms have the following meanings:
(1) "Commissioner" means the Insurance Commissioner of West Virginia;
(2) "Covered entity" means a nonprofit hospital or medical service corporation, health insurer, health benefit plan or health maintenance organization licensed pursuant to the provisions of article twenty-five-a of this chapter; a health program administered by the state in the capacity of provider of health coverage; or an employer, labor union or other group of persons organized in the state that provides health coverage to covered individuals who are employed or reside in the state. "Covered entity" does not include a health plan that provides coverage only for accidental injury; specified disease; hospital indemnity; medicare supplement, as defined in section five-b, article twenty- eight, of this chapter; disability income; long-term care; or other limited benefit health insurance policies and contracts.
(3) "Covered person" means a member, participant, enrollee, contract holder or policy holder or beneficiary who is provided health coverage by the covered entity. "Covered person" includes a dependent or other person provided health coverage through a policy, contract or plan for a covered individual.
(4) "Pharmacy benefit management" means the claims administration of prescription drugs at a negotiated rate for dispensation within this state to covered persons, the administration or management of prescription drug benefits provided by a covered entity for the benefit of covered persons, including any of the following services provided with regard to the administration of pharmacy benefits:
(A) Mail service pharmacy;
(B) Claims processing, retail network management and payment of claims to pharmacies for prescription drugs dispensed to covered persons;
(C) Clinical formulary development and management services;
(D) Rebate contracting and administration;
(E) Certain patient compliance, therapeutic intervention and generic substitution programs; and
(F) Disease management programs.
(5) "Pharmacy benefit manager" means an entity that performs pharmacy benefit management and includes a person or entity acting for a pharmacy benefit manager in a contractual or employment relationship in the performance of pharmacy benefit management services, including mail service pharmacy. "Pharmacy benefit manager" does not include a pharmacy benefit manager who is affiliated with an insurer and who only performs the contractual duties, between the pharmacy benefit manager and the insurer, of the pharmacy benefit manager for the direct and assumed business of the affiliated insurer. The insurer is responsible for the acts of the pharmacy benefit manager and is responsible for providing all of the pharmacy benefit manager's books and records to the Insurance Commissioner, upon a request from the Insurance Commissioner. For purposes of this subdivision, "insurer" means a licensed insurance company, prepaid hospital or medical care plan, health maintenance organization or a health care corporation.
§33-25G-3. Applicability and scope.
This act applies to a pharmacy benefit manager that provides claims processing services, other prescription drug or device services, or both, to covered persons who are residents of this state.
§33-25G-4. Licensing requirement.
(a) No person or organization may act or operate as a pharmacy benefit manager in this state without obtaining a license from the commissioner. Renewal of the license is required on an annual basis.
(b) Each person or organization seeking licensure shall file an application, furnished by the commissioner, which shall include, but is not limited to the following:
(1) All basic organizational documents, including the articles of incorporation, articles of association, bylaws, partnership agreement, trade name certification, trust agreement, shareholder agreement and other applicable documents, including amendments;
(2) The names, addresses, official positions and professional qualifications of the individuals who are responsible for the conduct of the affairs of the pharmacy benefit manager, including all members of the board of directors, board of trustees, executive committee, other governing board or committee, the principal officers in the case of a corporation, the partners or members in the case of a partnership or association and any other person who exercises control or influence over the affairs of the pharmacy benefit manager;
(3) Audited annual financial statements or reports for the two most recent fiscal years that prove that the applicant has a positive net worth. If the applicant has been in existence for less than two fiscal years, the application shall include financial statements or reports, certified by an officer of the applicant and prepared in accordance with GAAP, for any completed fiscal years and for any month during the current fiscal year for which the financial statements or reports have been completed. An audited financial/annual report prepared on a consolidated basis shall include a columnar consolidating or combining worksheet that shall be filed with the report and include the following: (A) Amounts shown on the consolidated audited financial report; (B) Amounts for each entity stated separately; and (C) Explanations of consolidating and eliminating entries. The applicant shall also include any other information required by the commissioner in order to review the current financial condition of the applicant;
(4) The name and address of the agent for service of process in the state;
(5) A detailed description of the claims processing services, pharmacy services, insurance services, other prescription drug or device services, audit procedures for network pharmacies or other administrative services to be provided;
(6) Any other information the commissioner requires; and
(7) A filing fee of two hundred dollars.
(c) The applicant shall make available for inspection by the commissioner, copies of all contracts with insurers, pharmaceutical manufacturers or other persons using the services of the pharmacy benefit manager for pharmacy benefit management services.
(d) The commissioner may withhold or revoke a license if it is determined that the pharmacy benefit manager or any principal of the manager is not financially sound or has had a license revoked or denied for cause in any state.

§33-25G-5. Disclosure of ownership or affiliation and certain agreements.

(a) Each pharmacy benefit manager shall disclose to the commissioner any ownership interest or affiliation of any kind with any insurance company responsible for providing benefits directly or through reinsurance to any plan for which the pharmacy benefit manager provides services or any parent companies, subsidiaries and other entities or businesses relative to the provision of pharmacy services, other prescription drug or device services or a pharmaceutical manufacturer.
(b) A pharmacy benefit manager shall notify the commissioner in writing within thirty days of any material change in its ownership.
(c) A pharmacy benefit manager shall disclose the following agreements, and any changes to the agreements, within thirty days of the change:
(1) All incentive arrangement or programs such as rebates, discounts, disbursements, or any other similar financial program or arrangement relating to income or consideration received or negotiated, directly or indirectly, with any pharmaceutical company, that relates to prescription drug or device services, including at a minimum, information on the formulary or other method for calculation and amount of the incentive arrangements, rebates or other disbursements, the identity of the associated drug or device and the dates and amounts of the disbursements;
(2) Any agreement with a pharmaceutical manufacturer to share manufacturer rebates and discounts with the pharmacy benefit manager or to pay money or other economic benefits to the pharmacy benefit manager;
(3) Any agreement or practice to bill a health plan for prescription drugs at a cost higher than the pharmacy benefit manager pays the pharmacy;
(4) Any agreement to share revenue with a mail order or internet pharmacy company; and
(5) Any agreement to sell prescription drug data including data concerning the prescribing practices of the health care providers in the state.

§33-25G-6. Maintenance of records; access; financial examination.

(a) A pharmacy benefit manager shall maintain all books and records of all transactions between the pharmacy benefit manager, insurers and covered entities for three years beyond the termination of the contract period, unless any other law prescribes a greater time period.
(b) The pharmacy benefit manager shall give the commissioner access to the books and records maintained by the pharmacy benefit manager for the purposes of examination, audit and inspection.
(c) The commissioner may conduct examinations of any pharmacy benefit manager in this state whenever the commissioner considers it necessary to ensure an appropriate level of regulatory oversight. The pharmacy benefit manager shall pay the cost of the examination which shall be deposited into the special revenue fund, created in section nine of this article, to provide all expenses for the regulation under this article.
(d) In conducting examinations pursuant to this section, the commissioner has the same powers set forth in subsection (h), section nine, article two of this chapter.
§33-25G-7. Annual audited statement and fees required.
Each pharmacy benefit manager with a license shall file with the commissioner an annual audited statement on or before the first day of June of each year. The statement shall be in the form and contain information and material the commissioner prescribes and shall include the annual fee of two hundred dollars. The statement must include the total number of persons subject to management by the pharmacy benefit manager during the previous year, or portion of the year, and the dollar value of the claims processed.
§33-25G-8. Confidentiality.
(a) Documents, materials or other information in the possession or control of the office of the insurance commissioner that are provided pursuant to sections five and six of this article or obtained by the commissioner in an investigation of alleged fraudulent acts related to the business of insurance shall be confidential by law and privileged, shall not be subject to the provisions of chapter twenty-nine-b of this code, shall not be open to public inspection, shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private civil action. The commissioner may use the documents, materials or other information in the furtherance of any regulatory or legal action brought as a part of the commissioner's official duties. The commissioner may use the documents, materials or other information if they are required for evidence in criminal proceedings or other action by the state or federal government and in such context may be discoverable as ordered by a court of competent jurisdiction exercising its discretion.
(b) Neither the commissioner nor any person who receives documents, materials or other information while acting under the authority of the commissioner may be permitted or required to testify in any private civil action concerning any confidential documents, materials or information subject to subsection (a) of this section except as ordered by a court of competent jurisdiction.

§33-25G-9. Special revenue account.

There is created in the State Treasury a special revenue account, designated the "Pharmacy Benefit Managers Licensure Fund", which is an interest bearing account and may be invested in the manner permitted by the provisions of article six, chapter twelve of this code, with the interest income a proper credit to the fund. The account shall contain any funds received by the commissioner pursuant to this article and any funds appropriated by the Legislature. The commissioner may expend funds received in the Pharmacy Benefit Managers Licensure Fund only for the purposes of administration of this article.
§33-25G-10. Unauthorized business.
The unauthorized conduct of the business of a pharmacy benefit manager shall be treated as unauthorized insurance business and is subject to the same criminal and civil penalties as provided in article forty-four of this chapter for violation of the unauthorized insurers act.
§33-25G-11. Violations.
The provisions of section eleven, article three of this chapter apply to any violations of this article by a pharmacy benefit manager.
§33-25G-12. Promulgation of rules.
The commissioner shall propose rules for legislative approval in accordance with the provisions of article three, chapter twenty-nine-a of this code, including emergency rules, pursuant to the provisions of article three, chapter twenty-nine-a of this code to implement the provisions of this article, and the rules may include the establishment of fees.
§33-25G-13. Commissioner's reporting requirements.
On or before the first day of January, two thousand nine, and every year thereafter, the commissioner shall submit a report to the Legislature and the Governor detailing the implementation of the licensure process and the information collected. All information contained in the report shall be de-identified and reported as aggregate data only. The report shall include, but is not limited to, the following information:
(1) The number of pharmacy benefit managers licensed in this state;
(2) The number of persons in this state served by the pharmacy benefit manager annually;
(3) The number of contracts to provide services in this state;
(4) The aggregate amount of rebates, discounts or disbursements received from pharmaceutical manufacturers, based on its book of business within this state;
(5) The aggregate amount of rebates, discounts or disbursements returned to the client(s) within this state; and
(6) Any other information the commissioner considers necessary to report.
§33-25G-14. Effective date.
Any pharmacy benefit manager doing business within this state shall obtain a license as required in section four of this article within one hundred twenty days from the effective date of this article. "