Official Summary Text
AB 910, as amended, Bonta.
Pharmacy benefit management.
Existing law requires a pharmacy benefit manager engaging in business with a health care service plan or health insurer to secure a license from the Department of Managed Health Care on or after January 1, 2027, or the date on which the department has established the licensure process, whichever is later. Existing law requires a complaint about a pharmacy benefit manager to be considered as a complaint against the contracting health care service plan and authorizes it to be considered a complaint against the contracting health insurer.
Existing law requires the Department of Health Care Access and Information to establish a Health Care Payments Data Program to collect information regarding health care costs, utilization, quality, and equity. Existing law
requires a pharmacy benefit manager to provide specified information to the Department of Health Care Access and Information for inclusion in the program and requires the department to include specified information in an annual analysis. Existing law also requires the Department of Health Care Access and Information to notify the Department of Managed Health Care or the Department of Insurance, as appropriate, if a health care service plan or health insurer fails to comply with specified requirements and requires those departments to take appropriate action.
This bill would require the Department of Health Care Access and Information to include data regarding pricing and payments related to prescription drugs in its annual analysis upon completion of specified regulations and to notify the Department of Managed Health Care if a pharmacy benefit manager fails to comply with specified requirements, and would require the Department of Managed Health Care to take
appropriate action. The bill would require the Department of Managed Health Care to post on its internet website links to analyses and reporting published by the Department of Health Care Access and Information.
Existing law provides for the regulation of health care service plans by the Department of Managed Health Care. A willful violation of those provisions is a crime. Existing law requires health care service plans that cover prescription drug benefits and contract with pharmacy providers and pharmacy benefit managers to meet specified requirements, including requiring pharmacy benefit managers with whom they contract to register with the department and exercise good faith and fair dealing, among other requirements.
This bill would modify the above-described requirement that the pharmacy benefit manager exercise good faith and fair dealing to instead require the pharmacy benefit manager to hold a fiduciary duty in the performance of its contractual duties and carry
out that duty in accordance with state and federal law. The bill would require the pharmacy benefit manager to remit 100% of specified rebates, fees, alternative discounts, and other remuneration received to the health care service plan and would prohibit the pharmacy benefit manager from entering into any contract for pharmacy benefit management services that is contrary to that requirement.
Existing law provides for the registration and regulation of pharmacy benefit managers, as defined, that contract with health care service plans to manage their prescription drug coverage. Under existing law, a pharmacy benefit manager is required to submit specified information to the department to apply to register with the department.
To apply to register with the department, this bill would additionally require a pharmacy
benefit manager to submit the name, address, and relationship of any affiliated entity and group purchasing organization in which the pharmacy benefit manager has ownership, control, financial interest, or a contractual relationship. The bill would impose various conditions of registration that a pharmacy benefit manager is required to comply with, including, among other things, prohibiting a pharmacy benefit manager, group purchasing organization, and any affiliated entity from deriving income from spread pricing. The bill would require compensation arrangements governed by these conditions to be open for inspection and audit by the department.
This bill would require a pharmacy benefit manager to, beginning October 1, 2026, annually report specified information to the department regarding the covered drugs dispensed at a pharmacy and specified information about the pharmacy benefit manager’s revenue, expenses, health care service plan
contracts, the scope of services provided to the health care service plan, and the number of enrollees that the pharmacy benefit manager serves. The bill would require the department to compile this reported information and make the report publicly available, as specified, but would exempt records other than the report from public disclosure. The bill would include in the requirements that health care service plans are required to impose on a pharmacy benefit manager with which they contract, the requirement that the pharmacy benefit manager comply with these reporting requirements. Because a willful violation of these provisions by a health care service plan would be a crime, this bill would impose a state-mandated local program.
This bill would define various terms for purposes of these provisions.
The
California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.
This bill would make legislative findings to that effect.