HB 226 — An Act relating to insurance; relating to pharmacy benefits managers; relating to dispensing fees; and providing for an effective date.

AS 21.27.901 is amended by adding new subsections to read:

(c) A pharmacy benefits manager (1) shall apply for registration following the same procedures for licensure set out in AS 21.27.040;

(2) is subject to hearings and orders on violations;

denial, nonrenewal, suspension, or revocation of registration;

penalties;

and surrender of registration under the procedures set out in AS 21.27.405 - 21.27.460.

(d) Each day that a pharmacy benefits manager conducts business in the state as a pharmacy benefits manager without being registered is a separate violation of this section, and each separate violation is subject to the maximum civil penalty under AS 21.97.020.

* Sec.

4.

AS 21.27.905(a) is amended to read:

(a) A pharmacy benefits manager shall biennially renew a registration with the director following the procedures for license renewal in AS 21.27.380.

* Sec.

5.

AS 21.27 is amended by adding a new section to read:

Sec.

21.27.907.

Duty of care.

(a) A pharmacy benefits manager owes a duty of care to a plan sponsor, benefits administrator, and covered person.

A pharmacy benefits manager shall adhere to the practices set out in this section.

(b) A pharmacy benefits manager shall (1) perform the manager's duties with care, skill, prudence, diligence, fairness, transparency, and professionalism and in the best interest of the plan sponsor, benefits administrator, and covered person as required by this section;

and (2) notify the plan sponsor in writing of any activity, policy, or practice of the pharmacy benefits manager that directly or indirectly presents any conflict of Enrolled HB 226 -2- interest with the duties imposed by this chapter.

(c) The duty of care owed to a covered person under this section takes precedence over the duty of care owed to any other person.

(d) A pharmacy benefits manager that receives from a drug manufacturer or labeler a payment or benefit of any kind in connection with the use of a prescription drug by a covered person, including a payment or benefit based on volume of sales or market share, shall pass that payment or benefit on in full to the plan sponsor.

(e) Upon request by a plan sponsor, a pharmacy benefits manager shall (1) provide information showing the quantity of drugs purchased by the covered person and the net cost to the covered person for the drugs;

the information must include all rebates, discounts, and other similar payments;

if requested by the plan sponsor, the pharmacy benefits manager shall provide the quantity and net cost information on a drug-by-drug basis by national drug code registration number rather than on an aggregated basis;

and (2) disclose to the plan sponsor all financial terms and arrangements for remuneration of any kind that apply between the pharmacy benefits manager and a prescription drug manufacturer or labeler, including formulary management and drug- substitution programs, educational support, claims processing, and data sales fees.

(f) A pharmacy benefits manager providing information to a plan sponsor under (e) of this section may designate that information as confidential.

Information designated as confidential may not be disclosed by the plan sponsor to another person without the consent of the pharmacy benefits manager, unless ordered by a court.

(g) If a pharmacy dispenses a substitute prescription drug for a prescribed drug to a covered person and the substitute prescription drug costs more than the prescribed drug, the pharmacy benefits manager shall disclose to the plan sponsor the cost of both drugs and any benefit or payment directly or indirectly accruing to the pharmacy benefits manager as a result of the substitution.

The pharmacy benefits manager shall transfer in full to the plan sponsor a benefit or payment received in any form by the pharmacy benefits manager as a result of a prescription drug substitution.

* Sec.

6.

AS 21.27.940 is amended to read:

Sec.

21.27.940.

Pharmacy audits;

restrictions.

The requirements of -3- Enrolled HB 226 AS 21.27.901 - 21.27.975 [21.27.955] do not apply to an audit (1) in which suspected fraudulent activity or other intentional or wilful misrepresentation is evidenced by a physical review, a review of claims data, a statement, or another investigative method;

or (2) of claims paid for under the medical assistance program under AS 47.07.

* Sec.

7.

(5) [(4)] review and update [APPLICABLE]applicable list information at least once every seven [BUSINESS]business days to ensurereflect [REFLECTmodification MODIFICATIONof OF] list HB0226a -3- HB 226 New Text Underlined [DELETED TEXT BRACKETED] 33-LS0955\B pricing reflects current national drug database pricing;

4.8.

(b) Before placing or maintaining a specific drug on the list, a pharmacy benefits manager shall ensure that (1) if the drug is therapeutically equivalent and pharmaceutically equivalent to a prescribed drug, the drug is listed as therticallyttically equivalent and pharmaceutically equivalent "A" or "B" rated in the most recent edition or supplement of the United States Food and Drug Administration's Approved Drug Products with Enrolled HB 226 -4- Therapeutic Equivalence Evaluations, also known as the Orange Book;

(3) the drug is readily available for purchase by each pharmacy in the state from national or regional wholesalers operating in the state;

5.9.

and (3) specify for each drug (A) the national drug code;

and (D) the reimbursement amount.amount;

HBand 226(4) -4-specify HB0226athe Newdate Texton Underlinedwhich [DELETEDa TEXTdrug BRACKETED]is 33-LS0955\Badded (d)to Inor thisremoved section,from (1) "interchangeable biological product" has the meaninglist. given in AS 08.80.480;

(d) In this section, (1) "interchangeable biological product" has the meaning given in AS 08.80.480;

(3) "significant price update or modification" means (A) an increase or decrease of 10 percent or more in the pharmacy acquisition costcost; from 60 percent or more of the pharmaceutical wholesalers doing business in the state;

-5- Enrolled HB 226 (B) a change in the methodology in which the maximum allowable cost for a drug is determined;

6.10.

AS 21.27.950 is repealed and reenacted to read:

Sec.

21.27.950.

Reimbursement.

(a) A pharmacy benefits manager shall reimburse a pharmacy or pharmacist for a drug in an amount not less than the national average drug acquisition cost for the drug on the date that the drug is administered or dispensed.

If the national average drug acquisition cost is not available at the time a drug is administered or dispensed, a pharmacy benefits manager shall reimburse in an amount that is not less than the wholesale acquisition cost of the drug.

If the wholesale acquisition cost of the drug is not available at the time a drug is administered or HB0226a -5- HB 226 New Text Underlined [DELETED TEXT BRACKETED] 33-LS0955\B dispensed, a pharmacy benefits manager shall reimburse in an amount that is not less than the pharmacy acquisition cost of the drug.

(b) In addition to the reimbursement required under (a) of this section, a pharmacy benefits manager shall reimburse the pharmacy or pharmacist for a professional dispensing fee that is not less than the pharmacy dispensing fee applicable to providers in the state as listed in the Alaska Medicaid Fee Schedules and Covered Codes provided by the Department of Health on the date that the drug is administered or dispensed.

* Sec.

7.

Patient choice of pharmacy.

(a) An insurer providing a covered person with a health care insurance plan and its pharmacy benefits manager may not (1) prohibit or limit the person receiving pharmacy services under the insurer's health care insurance plan, including mail-order and specialty pharmacy services, from selecting a pharmacy of the person's choice to provide the pharmacy services if the pharmacy has notified the insurer, or the pharmacy benefits manager authorized to act on the insurer's behalf, of the pharmacy's agreement to accept as payment in full reimbursement for the pharmacy's services at rates applicable to pharmacies that are administered by the insurer or its pharmacy benefits manager, including any copayment required by the insurer's health care insurance plan;

or (2) restrict access to drugs by limiting distribution of a drug through an affiliate, except to the extent necessary to meet limited distribution requirements of the United States Food and Drug Administration or to ensure the appropriate dispensing of a drug that requires extraordinary special handling, provider coordination, or patient education when those requirements cannot be met by a network pharmacy;

an insurer or its pharmacy benefits manager who restricts drug access or limits drug distribution under the exceptions allowed by this paragraph shall, upon request, promptly provide a pharmacy or pharmacist with a complete written description of all extraordinary special handling, provider coordination, and patient education requirements necessary for the distribution or dispensing of a drug;

in this paragraph, "affiliate" means a business, pharmacy, pharmacist, or provider who, directly or indirectly through one or HB 226 -6- HB0226a New Text Underlined [DELETED TEXT BRACKETED] 33-LS0955\B more intermediaries, controls, is controlled by, or is under common control with a pharmacy benefits manager.

(b) An insurer providing a covered person with a health carisurance plan and its pharmacy benefits manager shall permit a pharmacy or pharmacist to enter into a direct service agreement or network pharmacy agreement with the insurer or its pharmacy benefits manager if the pharmacy or pharmacist (1) meets the terms and conditions of participation in the direct service agreement or network pharmacy agreement;

(2) agrees to provide pharmacy services, including drugs, that meet the terms and conditions required under the insurer's health care insurance plan, including the terms of reimbursement;

and (3) not later than 30 days after being requested in writing to do so by the insurer or its pharmacy benefits manager, executes and delivers to the insurer or its pharmacy benefits manager the direct service agreement or network pharmacy agreement that the insurer or its pharmacy benefits manager requires of all its network pharmacies.

(c) An insurer or its pharmacy benefits manager shall act on a pharmacy's or pharmacist's request for a direct service agreement or a network pharmacy agreement not later than 30 days after the insurer or its pharmacy benefits manager receives the pharmacy's or pharmacist's request or, if the insurer or its pharmacy benefits manager requests supplemental information, 30 days after the insurer or its pharmacy benefits manager receives the supplemental information.

(d) A network pharmacy or a pharmacy applying to become a network pharmacy under this section shall be presumed to meet the requirements of a specialty pharmacy upon its assertion that it meets the requirements of a specialty pharmacy.

(e) In this section, (1) "specialty drug" means a drug that is subject to restricted distribution by the United States Food and Drug Administration;

(2) "specialty pharmacy" means a pharmacy capable of meeting the requirements of the United States Food and Drug Administration applicable to specialty drugs.

HB0226a -7- HB 226 New Text Underlined [DELETED TEXT BRACKETED] 33-LS0955\B Sec.

21.27.952.

(a) An insurer or its pharmacy benefits manager may not (1) refuse to authorize, approve, or pay a provider for providing covered clinician-administered drugs and related services to a covered person if the provider has agreed to participate in the insurer's health care insurance planpolicy according to the terms offered by the insurer or its pharmacy benefits manager;

(2) if the criteria for medical necessity isare met, condition, deny, restrict, or refuse to authorize or approve,approve or reduce payment to a provider for a clinician-clinician-administered administered drug because the provider obtained the clinician-administered drug from a pharmacy that is not a network pharmacy in the insurer's or tisits pharmacy benefits manager's network;

(3) impose coverage or benefit limitations or require a coveredpharmacy person to paydispense ana additionalclinician-administered fee,drug adirectly higherto ora additionalcovered copayperson or coinsurance,agent orof athe penaltyinsured whenwith obtainingthe aintention clinician-administeredthat drugthe fromcovered aperson networkor pharmacythe authorizedagent underof the lawsinsured ofwill thistransport statethe medication to dispensea orprovider administerfor theadministration; drug;

(4) require a covered person to pay an additional fee, a highr e or additionalencourage copaythe ordispensing coinsurance, or another form of a priceclinician-administered increasedrug forto a clinician-covered administeredperson drugin whena themanner drugthat is notinconsistent dispensedwith bythe asupply pharmacychain orsecurity acquiredcontrols fromand anchain entityof selecteddistribution set by the21 insurerU.S.C. or its pharmacy benefits manager;

(5) interfere with the right of a covered person to obtain a clinician- administered drug from the provider or pharmacy of the person's choice, including by inducement, steering, or offering or promoting financial or other incentives;

(6) limit or exclude coverage for a clinician-administered drug when not dispensed by a pharmacy or acquired from an entity selected by the insurer or its pharmacy benefits manager when the drug would otherwise be covered;

(7) require a pharmacy to dispense a clinician-administered drug directly to a covered person or agent of the insured with the intention that the covered person or the agent of the insured will transport the medication to a provider for administration;

(8) require or encourage the dispensing of a clinician-administered drug to a covered person in a manner that is inconsistent the supply chain security HB 226 -8- HB0226a New Text Underlined [DELETED TEXT BRACKETED] 33-LS0955\B controls and chain of distribution set by 21 U.S.C.

(9)(5) require that a clinician-administered drug be dispensed or Enrolled HB 226 -6- administered to a covered person in the residence of the covered person or require use of an infusion site external to the office, department, or clinic of the provider of the covered person;

(b) InIf thisa section,health "clinician-administeredinsurance drug"policy meansprovides ain-network drug,and otherout-of-network thanbenefits aand vaccine,there thatis requiresnot administrationan byin-network ahealth care provider andor thathealth thecare Unitedfacility Stateswithin Fooda and50-mile Drugradius Administrationof orthe primary residence of a covered person, the drug'shealth manufacturerinsurance haspolicy notmust approvedprovide coverage to the covered person for self-clinician- administration.administered drugs at the minimum in-network benefit level.

(c) In this section, "clinician-administered drug" means a drug, other than a vaccine, that requires administration by a provider and that the United States Food and Drug Administration or the drug's manufacturer has not approved for self- administration.

21.27.953.21.27.952.

In addition to any other penalty provided by law, if a person violates AS 21.27.945 - 21.27.955,21.27.975, the director may, after notice and hearing, impose a penalty in accordance with AS 21.27.440.

Sec.

21.27.953.

Regulations relating to pharmacy benefits manager claims, grievances, activities, and appeals.

The director shall adopt regulations that provide standards and criteria for (1) the structure and operation of pharmacy benefits manager reimbursement of pharmacy claims under this chapter;

(2) procedures maintained by a pharmacy benefits manager to ensure that a pharmacy has the opportunity for appropriate resolution of grievances;

(3) an independent review of pharmacy benefits manager activities under this title;

and (4) requiring a pharmacy benefits manager to hear pricing appeals.

8.11.

AS 21.27.955(4)21.27 is amended by adding a new section to article 9 to read:

(4)Sec. "list" means a [THE] list of [MULTI-SOURCE GENERIC] drugs for which a pharmacy benefits manager has established predetermined reimbursement amounts, or methods for determining reimbursement amounts, to be paid to a network pharmacy or pharmacist for pharmacy services, [AMOUNT HAS BEEN ESTABLISHED] such as a maximum allowable cost or maximum allowable cost list or any other list of prices used by a pharmacy benefits manager;

*21.27.975. Sec.

9.Definitions.

In AS 21.27.955(6)21.27.901 - 21.27.975, (1) "affiliate" means a business, pharmacy, pharmacist, or pvider who, directly or indirectly through one or more intermediaries, controls, is repealedcontrolled and-7- reenactedEnrolled toHB read:226 by, or is under common control with a pharmacy benefits manager;

(6)(2) "network"audit" pharmacy" means aan pharmacyofficial orexamination pharmacistand who,verification under a contract or agreement with the insurer or its pharmacy benefits manager, has agreed to provide pharmacy services to a covered person with an expectation of receivingaccounts payment,and otherrecords; than in-network coinsurance, copayments, or deductibles, directly or indirectly from the insurer;

*(3) Sec."claim" means a request from a pharmacy or pharmacist to be reimbursed for the cost of filling or refilling a prescription for a drug or for providing a medical supply or device;

10.(4) "covered person" means an individual receiving medication coverage or reimbursement provided by an insurer or its pharmacy benefits manager under a health care insurance policy;

AS(5) 21.27.955"drug" ismeans amendeda byprescription addingdrug; new paragraphs to read:

(11)(6) "covered"extrapolation" person" means anthe individualpractice receivingof medicationinferring coveragea frequency or reimbursementdollar providedamount byof anoverpayments, insurerunderpayments, invalid claims, or itsother pharmacyerrors benefitson managerany HB0226aportion -9-of HBclaims 226submitted, Newbased Texton Underlinedthe [DELETEDfrequency TEXTor BRACKETED]dollar 33-LS0955\Bamount underof aoverpayments, healthunderpayments, careinvalid insuranceclaims, plan;or other errors actually measured in a sample of claims;

(12)(7) "drug""insurer" meanshas athe prescriptionmeaning drug;given to "health care insurer"ni AS 21.54.500;

(13)(8) "health"list" caremeans insurancea plan"list of drugs for which a pharmacy benefitsmanager has theestablished meaningpredetermined givenreimbursement inamounts, ASor 21.54.500;methods for determining reimbursement amounts, to be paid to a network pharmacy or pharmacist for pharmacy services, such as a maximum allowable cost or maximum allowable cost list or any other list of prices used by a pharmacy benefits manager;

(14)(9) "insurer""maximum hasallowable thecost" meaningmeans giventhe inmaximum ASamount 21.97.900that anda includespharmacy abenefits companymanager orwill groupreimburse ofa companiespharmacy underfor commonthe management,cost ownership,of ora control;drug;

(15)(10) "maximum"national allowableaverage drug acquisition cost" means the maximumaverage amountacquisition thatcost afor pharmacyoutpatient benefitsdrugs managercovered willby reimburseMedicaid, as determined by a pharmacymonthly forsurvey of retail pharmacies conducted by the costfederal ofCenters afor drug;Medicare and Medicaid Services;

(16)(11) "national"network" averagemeans drugan acquisitionentity cost"that, meansthrough thecontracts averageor acquisitionagreements costwith providers, provides or arranges for outpatientaccess drugsby groups of covered bypersons Medicaid,to ashealth determinedcare services by aproviders monthlywho surveyare ofnot retailotherwise pharmaciesor conductedindividually bycontracted thedirectly federalEnrolled CentersHB for226 Medicare-8- andwith Medicaidan Services;insurer or its pharmacy benefits manager;

(17)(12) "network""network pharmacy" means ana entitypharmacy that,that through contracts or agreements with providers, provides or arranges for access by groups of covered persons to health care services byor providerssupplies whoto arean notinsured otherwise or individuallya contractedmember directlyunder a contract with ana insurernetwork orplan itsto pharmacyact benefitsas manager;a participating provider;

(18)(13) "provider""pharmacy" meanshas a physician, pharmacist, hospital, clinic, hospital outpatient department, pharmacy under the commonmeaning ownershipgiven or control of a provider, or other person licensed or otherwise authorized in thisAS state08.80.480; to furnish health care services;

(14) "pharmacy acquisition cost" means the amount that a pharmaceutical wholesaler or distributor charges for a pharmaceutical product as listed on the pharmacy's invoice;

(15) "pharmacy benefits manager" means a person that contracts with a pharmacy on behalf of an insurer to process claims or pay pharmacies for prescription drugs or medical devices and supplies or provide network management for pharmacies;

(16) "plan sponsor" has the meaning given in AS 21.54.500;

(17) "provider" means a physician, pharmacist, hospital, clinic, hospital outpatient department, pharmacy, or other person licensed or otherwise authorized in this state to furnish health care services;

(18) "recoupment" means the amount that a pharmacy must remit to a pharmacy benefits manager when the pharmacy benefits manager has determined that an overpayment to the pharmacy has occurred;

11.12.

AS 21.36 is amended by adding a new section to article 5 to read:

21.36.126.21.36.520.

(a) An insurer providing a health care insurance planpolicy or its pharmacy benefits manager may not (1) violateinterfere ASwith 21.27.950;a covered person's right to choose a pharmacy or provider;

(2) interfere with a covered person's right toof chooseaccess to a pharmacyliician- oradministered providerdrug; as provided in AS 21.27.951;

(3) interfere with athe covered person's right of access to a cliician-pharmacy administeredor drugpharmacist trticipate as provideda innetwork ASpharmacy; 21.27.952;

(4) interferereimburse with the right of a pharmacy or pharmacist torticipatean amount less than the -9- Enrolled HB 226 -10-amount HB0226athe Newpharmacy Textbenefits Underlinedmanager [DELETEDreimburses TEXTan BRACKETED]affiliate 33-LS0955\Bfor asproviding athe networksame pharmacy asservices, providedcalculated inon ASa 21.27.951;per-unit basis using the same generic product identifier or generic code number;

(5) reimburseimpose a pharmacyreduction orin pharmacistreimbursement anfor amountpharmacy lessservices thanbecause of the amountperson's thechoice pharmacyamong benefitspharmacies managerthat reimburseshave anagreed affiliateto forparticipate providingin the sameplan pharmacyaccording services,to calculatedthe onterms aoffered per-unitby basis using the sameinsurer generic product identifier or genericits codepharmacy number;benefits manager;

(6) imposeuse a copayment,covered fee,person's orpharmacy conditionservices thatdata iscollected notunder equallythe imposedprovision onof allclaims individualsprocessing inservices for the samepurpose benefitof category,soliciting, class,marketing, or copaymentreferring level, whether or not the benefitsperson areto furnishedan byaffiliate aof the pharmacy orbenefits pharmacistmanager; who is not a network pharmacy;

(7) steer,prohibit invite, or directlimit a patientpharmacy tofrom usemailing, anshipping, affiliate's services through verbal or writtendelivering communication,drugs includingto (A)a onlinepatient messagingas regardingan theancillary affiliate;service;

orhowever, (B)the patient-insurer or prospectiveits patient-specificpharmacy advertising,benefits marketing,manager or(A) promotionis ofnot required to reimburse a delivery fee charged by a pharmacy unless the affiliate;fee is specified in the contract between the pharmacy benefits manager and the pharmacy;

(8)(B) imposemay anynot monetaryrequire advantage,a inducement,patient orsignature penaltyas thatproof couldof affectdelivery orof influence a person'smailed choiceor amongshipped pharmaciesdrug thatif havethe agreedpharmacy to(i) participatemaintains ina themailing planor accordingshipping tolog thesigned termsby offereda byrepresentative of the insurerpharmacy or itskeeps pharmacya benefitsrecord manager,of includingeach anotification higherof ordelivery additionalprovided copaymentby orthe feeUnited orStates promotionmail ofor onea participatingpackage pharmacydelivery overservice; another;

(9) impose a reduction in reimbursement for pharmacy services because of the person's choice among pharmacies that have agreed to participate in the plan according to the terms offered by the insurer or its pharmacy benefits manager;

(10) use a covered person's pharmacy services data collected under the provision of claims processing services for the purpose of soliciting, marketing, or referring the person to an affiliate of the pharmacy benefits manager;

(11) require a covered person, as a condition of payment or reimbursement, to purchase pharmacist services or products, including drugs, through a mail-order pharmacy or pharmacy benefits manager affiliate;

(12) prohibit or limit a network pharmacy from mailing, shipping, or delivering drugs to a patient as an ancillary service;

however, the insurer or its pharmacy benefits manager HB0226a -11- HB 226 New Text Underlined [DELETED TEXT BRACKETED] 33-LS0955\B (A) is not required to reimburse a delivery fee charged by a pharmacy unless the fee is specified in the contract between the pharmacy benefits manager and the pharmacy;

(B) may not require a patient signature as proof of delivery of a mailed or shipped drug if the network pharmacy (i) maintains a mailing or shipping log signed by a representative of the pharmacy or keeps a record of each notification of delivery provided by the United States mail or a package delivery service;

(13)(8) imposeprohibit onor limit a pharmacistnetwork or pharmacy seekingfrom toinforming remainan orinsured becomeperson aof networkthe providerdifference credentialingbetween standardsthe thatout-of-pocket arecost moreto strict than the licensingcovered standardsperson setto bypurchase thea Boarddrug, ofmedical Pharmacydevice, or chargesupply ausing the covered person's pharmacy abenefits feeand inthe connectionpharmacy's withusual networkand enrollment;customary charge for the drug, medical device, or supply;

(14)(9) prohibitconduct or limitparticipate ain networkspread pharmacypricing fromin informing an insured person of the differencestate; between the out-of-pocket cost to the covered person to purchase a drug, medical device, or supply using the covered person's pharmacy benefits and the pharmacy's usual and customary charge for the drug, medical device, or supply;

(15)(10) conductassess, charge, or participatecollect ina spreadform pricingof remuneration that passes from Enrolled HB 226 -10- a pharmacy or a pharmacist in a pharmacy network to the state;pharmacy benefits manager, including claim processing fees, performance-based fees, network participation fees, or accreditation fees;

(16)(11) assess,reverse charge,and orresubmit collectthe claim of a formpharmacy ofmore remunerationthan that90 passesdays fromafter athe pharmacydate orthe aclaim pharmacistwas infirst aadjudicated, pharmacyand networkmay tonot reverse and resubmit the claim of a pharmacy benefitsunless managerthe includinginsurer claimor processingpharmacy fees,benefits performance-basedmanager fees,(A) networkprovides participationprior fees,written ornotification accreditationto fees.the pharmacy;

(B) has just cause;

(C) first attempts to reconcile the claim with the pharmacy;

and (D) provides to the pharmacy, at the time of the reversal and resubmittal, a written description that includes details of and justification for the reversal and resubmittal.

HB 226 -12- HB0226a New Text Underlined [DELETED TEXT BRACKETED] 33-LS0955\B (d) For purposes of this section, a violation has occurred each time a prohibited act is committed.

(e) Nothing in this section may interfere with or violate a patient's right under AS 08.80.297 to know where the patient may have access to the lowestlowest-cost cost drugs or the requirement that a patient must receive notice of a change to a pharmacy network, including the addition of a new pharmacy or removal of an existing pharmacy from a pharmacy network.

(f) InThe thisdirector section,may (1)adopt "affiliate"regulations hasto theprovide meaningan givenappeals inprocess ASfor 21.27.951(a)(2);claims adjudicated under this section.

(2)(g) "clinician-administeredIn drug"this section, (1) "affiliate" has the meaning given in AS 21.27.952(b);21.27.975;

(3)(2) "covered"clinician-administered person"drug" has the meaning given in AS 21.27.955;21.27.951(c);

(4)(3) "drug""covered person" has the meaning given in AS 21.27.955;21.27.975;

(5)-11- "healthEnrolled careHB insurance226 plan"(4) "drug" has the meaning given in AS 21.54.500;21.27.975;

(6)(5) "insurer" has the meaning given into "health care insurer"ni AS 21.27.955;21.54.500;

(7)(6) "mail-order"network pharmacy" meanshas a pharmacy whose primary business is to receive drugs by mail or through electronic submission and to dispense medication to a covered person through the usemeaning ofgiven thein UnitedAS States21.27.975; mail or other common or contract carrier services and that may provide consultation with a covered person electronically rather than face-to-face;

(8)(7) "network"out-of-pocket pharmacy"cost" hasmeans a deductible, coinsurance, copayment, or similar expense owed by a covered person under the meaningterms givenof inthe AScovered 21.27.955;person's health care insurance policy;

(9)(8) "out-of-pocket"provider" cost"has means a deductible, coinsurance, copayment, or similar expense owed by a covered person under the termsmeaning ofgiven thein coveredAS person's21.27.975; health care insurance plan;

(10)(9) "provider""spread haspricing" means the meaningmethod givenof pricing a drug in ASwhich 21.27.955;the contracted price for a drug that a pharmacy benefits manager arges a health care insurance policy differs from the amount the pharmacy benefits manager directly or indirectly pays the pharmacist or pharmacy for pharmacist services.

(11) "spread pricing" means the method of pricing a drug in which the contracted price for a drug that a pharmacy benefits manager arges a health care insurance plan differs from the amount the pharmacy benefits manager directly or indirectly pays the pharmacist or pharmacy for pharmacist services.

12.

AS 29.10.200 is amended by adding a new paragraph to read:

HB0226a -13- HB 226 New Text Underlined [DELETED TEXT BRACKETED] 33-LS0955\B (68) AS 29.20.420 (health care insurance plans).

* Sec.

AS 29.2021.27.950 isand amended21.27.955 byare addingrepealed. a new section to article 5 to read:

Sec.

29.20.420.

Health care insurance plans.

(a) If a municipality offers a group health care insurance plan covering municipal employees, including by means of self-insurance, the municipal health care insurance plan, including the administration and management of pharmacy benefits under the plan, is subject to the requirements of AS 21.27.901 - 21.27.955 and AS 21.36.126.

(b) This section applies to home rule and general law municipalities.

(c) In this section, "health care insurance plan" has the meaning given in AS 21.54.500.

ASThe 39.30.090(a)uncodified law of the State of Alaska is amended by adding a new section to read:

(a)APPLICABILITY. The Department of Administration may obtain a policy or policies of group insurance covering state employees, persons entitled to coverage under AS 14.25.168, 14.25.480, AS 22.25.090, AS 39.35.535, 39.35.880, or former AS 39.37.145, employees of other participating governmental units, or persons entitled to coverage under AS 23.15.136, subject to the following conditions:

(1)This aAct groupapplies to an insurance policy shallor providecontract, oneincluding a contract between a pharmacy benefits manager and a pharmacy orpharmacist, issued, delivered, entered into, renewed, or moreamended ofon or after the followingeffective benefits:date of secs.

life1 insurance,- accidental13 deathof andthis dismembermentAct. insurance, weekly indemnity insurance, hospital expense insurance, surgical expense insurance, dental expense insurance, audiovisual insurance, or other medical care insurance;

(2) each eligible employee of the state, the spouse and the unmarried children chiefly dependent on the eligible employee for support, and each eligible employee of another participating governmental unit shall be covered by the group policy, unless exempt under regulations adopted by the commissioner of administration;

(3) a governmental unit may participate under a group policy if (A) its governing body adopts a resolution authorizing participation and payment of required premiums;

(B) a certified copy of the resolution is filed with the Department of Administration;

and (C) the commissioner of administration approves the HB 226 -14- HB0226a New Text Underlined [DELETED TEXT BRACKETED] 33-LS0955\B participation in writing;

(4) in procuring a policy of group health or group life insurance as provided under this section or excess loss insurance as provided in AS 39.30.091, the Department of Administration shall comply with the dual choice requirements of AS 21.86.310, and shall obtain the insurance policy from an insurer authorized to transact business in the state under AS 21.09, a hospital or medical service corporation authorized to transact business in this state under AS 21.87, or a health maintenance organization authorized to operate in this state under AS 21.86;

an excess loss insurance policy may be obtained from a life or health insurer authorized to transact business in this state under AS 21.09 or from a hospital or medical service corporation authorized to transact business in this state under AS 21.87;

(5) the Department of Administration shall make available bid specifications for desired insurance benefits or for administration of benefit claims and payments to (A) all insurance carriers authorized to transact business in this state under AS 21.09 and all hospital or medical service corporations authorized to transact business under AS 21.87 who are qualified to provide the desired benefits;

and (B) insurance carriers authorized to transact business in this state under AS 21.09, hospital or medical service corporations authorized to transact business under AS 21.87, and third-party administrators licensed to transact business in this state and qualified to provide administrative services;

the specifications shall be made available at least once every five years;

the lowest responsible bid submitted by an insurance carrier, hospital or medical service corporation, or third-party administrator with adequate servicing facilities shall govern selection of a carrier, hospital or medical service corporation, or third-party administrator under this section or the selection of an insurance carrier or a hospital or medical service corporation to provide excess loss insurance as provided in AS 39.30.091;

(6) if the aggregate of dividends payable under the group insurance policy exceeds the governmental unit's share of the premium, the excess shall be applied by the governmental unit for the sole benefit of the employees;

(7) a person receiving benefits under AS 14.25.110, AS 22.25, AS 39.35, or former AS 39.37 may continue the life insurance verage that was in HB0226a -15- HB 226 New Text Underlined [DELETED TEXT BRACKETED] 33-LS0955\B effect under this section at the time of termination of employment with the state or participating governmental unit;

(8) a person electing to have insurance under (7) of this subsection shall pay the cost of this insurance;

(9) for each permanent part-time employee electing coverage under this section, the state shall contribute one-half the state contribution rate for permanent full-time state employees, and the permanent part-time employee shall contribute the other one-half;

(10) a person receiving benefits under AS 14.25, AS 22.25, AS 39.35, or former AS 39.37 may obtain auditory, visual, and dental insurance for that person and eligible dependents under this section;

the level of coverage for persons over 65 shall be the same as that available before reaching age 65 except that the benefits payable shall be supplemental to any benefits provided under the federal old age, survivors, and disability insurance program;

a person electing to have insurance under this paragraph shall pay the cost of the insurance;

the commissioner of administration shall adopt regulations implementing this paragraph;

(11) a person receiving benefits under AS 14.25, AS 22.25, AS 39.35, or former AS 39.37 may obtain long-term care insurance for that person and eligible dependents under this section;

a person who elects insurance under this paragraph shall pay the cost of the insurance premium;

the commissioner of administration shall adopt regulations to implement this paragraph;

(12) each licensee holding a current operating agreement for a vending facility under AS 23.15.010 - 23.15.210 shall be covered by the group policy that applies to governmental units other than the state;

(13) a group health insurance policy covering employees of a participating governmental unit must meet the requirements of AS 21.27.901 - 21.27.955 and AS 21.36.126, including requirements relating to administration and management of pharmacy benefits under the policy.

ASThe 39.30.091uncodified law of the State of Alaska is amended by adding a new section to read:

Sec.TRANSITION:

39.30.091.REGULATIONS.

AuthorizationThe fordirector self-insuranceof andthe excessdivision lossof insurance.insurance may adopt regulations necessary to implement the changes made by this Act under AS 21.06.090.

NotwithstandingThe ASregulations 21.86.310take oreffect under AS 39.30.090,44.62 the(Administrative DepartmentProcedure ofAct), Administrationbut HBnot 226before -16-the HB0226aeffective Newdate Text Underlined [DELETED TEXT BRACKETED] 33-LS0955\B may provide, by means of self-insurance, one or more of the benefitslaw listedimplemented inby AS 39.30.090(a)(1) for state employees eligible for the benefitsregulation. by law or under a collective bargaining agreement and for persons receiving benefits under AS 14.25, AS 22.25, AS 39.35, or former AS 39.37, and their dependents.

The department shall procure any necessary excess loss insurance under AS 39.30.090.

A self-insured group medical plan covering active state employees provided under this section is subject to the requirements of AS 21.27.901 - 21.27.955 and AS 21.36.126, including requirements relating to administration and management of pharmacy benefits under the plan.

ASSection 45.50.471(b)15 isof amendedthis byAct addingtakes aeffect newimmediately paragraphunder toAS read:01.10.070(c).

(58) violating AS 21.36.126(a) (insurers and pharmacy benefits managers), if the violation is committed or performed with a frequency that indicates a general business practice.

ASExcept 21.27.901(b)(3),as 21.27.901(b)(4),provided andin 21.27.955(5)sec. are repealed.

*16 Sec.of this Act, this Act takes effect January 1, 2025.

18.Enrolled HB 226 -12-

The uncodified law of the State of Alaska is amended by adding a new section to read:

APPLICABILITY.

This Act applies to a contract between a pharmy acbenefits manager and a pharmacy or pharmacist entered into, renewed, or amended on or after the effective date of this Act.

* Sec.

19.

This Act takes effect July 1, 2024.

HB0226a -17- HB 226 New Text Underlined [DELETED TEXT BRACKETED]