H1234 — An Act relative to pharmacy benefit managers

Summary

An Act relative to pharmacy benefit managers

Bill Text

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The bill establishes new requirements and definitions for pharmacy benefit managers and carriers, particularly concerning rebate disclosures and the handling of cost-sharing.

• Chapter 176O, Section 31

  As used in this section, the following words shall, unless the context clearly requires otherwise, have the following meanings: “Cost-sharing”, as defined in section 1 of chapter 176Y. “Estimated rebate”, any: (i) negotiated price concessions, whether described as a rebate or otherwise, including, but not limited to, base price concessions, and reasonable estimates of any price protection rebates and performance-based price concessions that may accrue, directly or indirectly, to a carrier, pharmacy benefit manager or other party on a carrier’s behalf during a carrier’s plan year from a pharmaceutical manufacturing company, dispensing pharmacy or other party to the transaction based on the amounts the carrier received in the prior quarter or reasonably expects to receive in the current quarter; and (ii) reasonable estimates of any price concessions, fees and other administrative costs that are passed through, or are reasonably anticipated to be passed through to the carrier, pharmacy benefit manager or other party on the carrier’s behalf and that serve to reduce the carrier’s prescription drug liabilities for the plan year based on the amounts the carrier received in the prior quarter or reasonably expects to receive in the current quarter. “Pharmacy benefit manager”, as defined in section 1 of chapter 176Y. “Price protection rebate”, a negotiated price concession that accrues directly or indirectly to the carrier, or other party on behalf of the carrier, including a pharmacy benefit manager, in the event of an increase in the wholesale acquisition cost of a drug that is greater than a specified threshold.

  This establishes new definitions related to cost-sharing and rebates within the context of pharmacy benefit management.

• Chapter 176O, Section 31

  A carrier, or any pharmacy benefit manager, shall make available to an insured at least 80 per cent of the estimated rebates received by such carrier, or any pharmacy benefit manager, by reducing the amount of defined cost-sharing that the carrier would otherwise charge at the point of sale, except that the reduction amount shall not result in a credit at the point of sale. Neither the insured nor the carrier shall be responsible for any difference between the estimated rebate amount and the actual rebate amount the carrier receives; provided, that such estimates were calculated in good faith.

  This mandates that at least 80% of estimated rebates be passed on to insured individuals in the form of reduced cost-sharing.

• Chapter 176O, Section 31

  Annually, not later than April 1, a carrier shall file with the division a report in the manner and form determined by the commissioner demonstrating the manner in which the carrier has complied with this section. If the commissioner determines that a carrier has not complied with 1 or more requirements of this section, the commissioner shall notify the carrier of such noncompliance and a date by which the carrier must demonstrate compliance. If the carrier does not come into compliance by such date, the division shall impose a fine not to exceed $5,000 for each day during which such noncompliance continues.

  This requires carriers to submit annual compliance reports regarding their handling of rebates and imposes fines for noncompliance.

• Chapter 176Y, Section 1

  “Clean claim”, a claim that has no defect or impropriety, including a lack of any required substantiating documentation, or other circumstance requiring special treatment that prevents timely payment from being made on the claim.

  This adds a definition for 'clean claim' to clarify what constitutes a claim without defects.

• Chapter 176Y, Section 1

  “Cost-sharing”, any copayment, coinsurance, deductible or any other amount owed by an insured under the terms of the insured’s health benefit plan, or as required by a pharmacy benefit manager.

  This provides a definition for 'cost-sharing' to clarify what out-of-pocket expenses are considered.

• Chapter 176Y, Section 1

  “Spread pricing”, model of prescription drug pricing in which the pharmacy benefits manager charges a health benefit plan a contracted price for prescription drugs, and the contracted price for the prescription drugs differs from the amount the pharmacy benefits manager directly or indirectly pays the pharmacy.

  This introduces a definition for 'spread pricing' to detail a specific pricing model used in pharmacy benefits.

• Chapter 176Y, Section 1

  “Third-party administrator”, any person that directly or indirectly solicits or effects coverage of, underwrites, collects charges or premiums from, arranges alternative access to or funding for prescription drugs, or adjusts or settles claims on behalf of residents of the commonwealth or residents of another state from offices in this commonwealth, in connection with health insurance coverage.

  This defines 'third-party administrator' to outline roles in health insurance related to pharmacy benefits.

Sponsors

• Jr. John J. Lawn · Primary

Subjects