H. B. 2331
(By Delegate Perdue)
[Introduced February 13, 2013; referred to the
Committee on Health and Human Resources then Finance.]
A BILL to amend the Code of West Virginia, 1931, as amended, by
adding thereto a new article, designated §33-25H-1, §33-25H-2,
§33-25H-3, §33-25H-4, §33-25H-5, §33-25H-6, §33-25H-7,
§33-25H-8, §33-25H-9, §33-25H-10, §33-25H-11, §33-25H-12,
§33-25H-13 and §33-25H-14, all relating to creating the
"Pharmacy Benefit Manager Licensing and Regulation Act;"
establishing standards and criteria for the licensing and
regulation of pharmacy benefit managers;
requiring a filing
defining terms; requiring the disclosure of ownership or
affiliation and certain agreements
; establishing fees;
requiring the retention of records; providing for annual
statements; authorizing access to records; establishing a
special revenue account designated the "Pharmacy Benefit
Managers Licensure Fund;"
requiring certain information be
maintained as confidential;
establishing criminal and civil penalties, including felonies; authorizing rule-making;
requiring annual reports to the Legislature and Governor; and
setting an effective date.
Be it enacted by the Legislature of West Virginia:
That the Code of West Virginia, 1931, as amended, be amended
by adding thereto a new article, designated §33-25H-1, §33-25H-2,
§33-25H-3, §33-25H-4, §33-25H-5, §33-25H-6, §33-25H-7, §33-25H-8,
§33-25H-9, §33-25H-10, §33-25H-11, §33-25H-12, §33-25H-13 and
§33-25H-14, all to read as follows:
ARTICLE 25H. PHARMACY BENEFIT MANAGER LICENSING AND REGULATION.
§33-25H-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.
__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
__(2) "Covered entity" means a nonprofit hospital or medical
service corporation, health insurer, health benefit plan or health
maintenance organization having been issued a certificate of
authority pursuant to 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 self-funded plan that is
exempt from state regulation pursuant to the federal Employee
Retirement Income Security Act (ERISA), 29 U.S.C. §1001 et seq., a
health plan that provides coverage only for accidental injury,
specified disease, hospital indemnity, Medicare supplement,
disability income, long-term care or other limited benefit health
insurance policies and contracts.
__(3) "Covered person" or "covered individual" means a member,
participant, enrollee, contract holder or policy holder or
beneficiary of a covered entity who is provided health coverage by
the covered entity. "Covered individual" 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 procurement of
prescription drugs at a negotiated rate for dispensation within
this state to covered individuals, the administration or management of prescription drug benefits provided by a covered entity for the
benefit of covered individuals or 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
__(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. "Pharmacy benefit manager" 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
§33-25H-3. Applicability and scope.
__This article 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
§33-25H-4. Licensing requirement.
__(a) A person or organization may not act or operate as a
pharmacy benefit manager in this state without obtaining a
certificate of licensure from the commissioner. Renewal of
certificates of licensure are 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
__(3) Annual audited statements for the most recent year, or
other information the commissioner requires in order to review the
current financial condition of the applicant;
__(4) If the applicant is not currently acting as a pharmacy benefit manager, a statement of the amounts and sources of funds
available for organization expenses and the proposed arrangements
for reimbursement and compensation of incorporators for other
__(5) The name and address of the agent for service of process
in the state;
__(6) 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;
__(7) Any other information the commissioner requires; and
__(8) A filing fee of $200.
__(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.
__(e) The commissioner may require a surety bond in an amount
and in a form as the commissioner considers appropriate to ensure
the financial solvency of the pharmacy benefit manager.
§33-25H-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
_____(b) A pharmacy benefit manager shall notify the commissioner
in writing within thirty days of any material change in its
_____(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 formula 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
_____(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.
§33-25H-6. Maintenance of records; access; confidentiality;
_____(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.
§33-25H-7. Annual statement and filing fee required.
_____(a) Each pharmacy benefit manager with a license shall file
with the commissioner an annual audited statement on or before June
1 of each year. The statement shall be in the form and contain
information and material the commissioner prescribes and shall
include the filing fee of $200. 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.
_____(b) The statement shall disclose all incentive arrangements 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 formula
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
§33-25H-8. Confidentiality of submitted information.
_____Any information submitted in compliance with this article that
the pharmacy benefit manager believes is proprietary information
shall be clearly marked as such. The commissioner is only entitled
to disclose that information in accordance with state and federal
§33-25H-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 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
§33-25H-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.
_____Section eleven, article three of this chapter apply to any
violations of this article by a pharmacy benefit manager.
§33-25H-12. Promulgation of rules.
_____The commissioner may propose rules for legislative approval in
accordance with article three, chapter twenty-nine-a of this code,
including emergency rules, pursuant to article three, chapter
twenty-nine-a of this code to implement this article, and the rules
may include the establishment of fees.
§33-25H-13. Commissioner's reporting requirements.
_____On or before January 1, 2014, and every year after that, 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 identified or 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
_____(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;
_____(5) The aggregate amount of rebates, discounts or
disbursements returned to the client; and
_____(6) Any other information the commissioner considers necessary
§33-25H-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
NOTE: The purpose of this bill is to create the "Pharmacy
Benefit Manager Licensing and Regulation Act."
The bill establishes
standards and criteria for the licensing and regulation of pharmacy
benefit managers. The bill
requires a filing fee. The bill
terms. The bill requires the disclosure of ownership or affiliation
and certain agreements
. The bill establishes fees. The bill
requires retention of records. The bill provides for annual
statements. The bill authorizes access to records. The bill
establishes a special revenue account designated as the "Pharmacy
Benefit Managers Licensure Fund." The bill
information be maintained as confidential. The bill
criminal and civil penalties, including felonies. The bill
authorizes rule-making. The bill requires annual reports be made to
the Legislature and Governor. The bill sets an effective date.
This article is new; therefore, it has been completely