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Senate
File
315
-
Introduced
SENATE
FILE
315
BY
COMMITTEE
ON
HEALTH
AND
HUMAN
SERVICES
(SUCCESSOR
TO
SSB
1017)
A
BILL
FOR
An
Act
relating
to
pharmacy
benefits
manager
reverse
auctions
1
and
group
insurance
for
public
employees
and
including
2
effective
date
provisions.
3
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
4
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Section
1.
NEW
SECTION
.
8A.319
Pharmacy
benefits
manager
1
reverse
auctions.
2
1.
This
section
may
be
cited
as
the
“Iowa
Competitive
3
Pharmacy
Benefits
Managers
Marketplace
Act”
.
4
2.
As
used
in
this
section,
unless
the
context
otherwise
5
requires:
6
a.
“Market
check”
means
a
technology-driven
evaluation
of
an
7
incumbent
pharmacy
benefits
manager’s
prescription
drug
pricing
8
based
on
benchmark
comparators
derived
from
pharmacy
benefits
9
manager
reverse
auction
processes
conducted
in
the
United
10
States
over
the
immediately
preceding
twelve
months.
11
b.
“Participant
bidding
agreement”
means
an
online
12
agreement
that
details
common
definitions,
prescription
drug
13
classifications,
rules,
data
access
and
use
rights,
and
other
14
optimal
contract
terms
that
benefit
the
state
and
that
all
15
bidders
must
accept
as
a
prerequisite
for
participation
in
a
16
pharmacy
benefits
manager
reverse
auction.
17
c.
“Pharmacy
benefits
manager”
means
the
same
as
defined
in
18
section
510B.1.
19
d.
“Pharmacy
benefits
manager
reverse
auction”
means
a
20
transparent
and
competitive
bidding
process
conducted
online
21
that
starts
with
an
opening
round
of
bids
and
allows
qualified
22
pharmacy
benefits
manager
bidders
to
counteroffer
a
lower
price
23
for
as
many
rounds
of
bidding
as
determined
by
the
department
24
for
a
multiple
health
plan
prescription
drug
purchasing
group.
25
e.
“Price”
means
the
projected
cost
of
a
pharmacy
benefits
26
manager’s
bid
to
provide
prescription
drug
benefits
to
allow
27
direct
comparison
of
the
comparably
calculated
costs
of
28
competing
pharmacy
benefits
managers’
proposals
over
the
29
duration
of
the
pharmacy
benefits
manager’s
services
contract.
30
f.
“Self-funded
public
sector
health
plan”
means
any
group
31
benefit
plan
under
chapter
509A.
32
3.
Consistent
with
section
8A.311,
and
notwithstanding
any
33
other
law
to
the
contrary,
the
department
shall
enter
into
a
34
contract
for
the
services
of
a
pharmacy
benefits
manager
for
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the
administration
of
benefits
of
self-funded
public
sector
1
health
plans
in
compliance
with
this
section.
2
4.
Prior
to
November
1,
2025,
the
department
shall
procure
3
all
of
the
following
based
on
price,
capabilities,
and
other
4
factors
deemed
relevant
by
the
department:
5
a.
A
technology
platform
with
the
capabilities
to
conduct
6
a
pharmacy
benefits
manager
reverse
auction.
The
department
7
shall
ensure
that
the
technology
platform
possesses,
at
a
8
minimum,
the
capacity
to
do
all
of
the
following:
9
(1)
Conduct
an
online
reverse
auction
of
pharmacy
10
benefits
manager
services
using
a
software
application
and
11
high-performance
data
infrastructure
to
intake,
cleanse,
and
12
normalize
pharmacy
benefits
manager
data
with
development
13
methods
and
information
security
standards
that
have
been
14
validated
by
receiving
service
organization
control
2
and
15
national
institute
of
standards
and
technology
certification,
16
or
successor
information
technology
security
certifications,
as
17
identified
by
the
office
of
the
chief
information
officer.
18
(2)
Automate
repricing
of
diverse
and
complex
pharmacy
19
benefits
managers’
prescription
drug
pricing
proposals
to
allow
20
direct
comparison
by
the
state
of
the
comparably
calculated
21
costs
of
pharmacy
benefits
managers’
bids
using
one
hundred
22
percent
of
annual
prescription
drug
claims
data
available
23
for
state-funded
health
plans,
or
a
multiple
health
plan
24
prescription
drug
purchasing
group,
and
using
code-based
25
classification
of
drugs
from
nationally
accepted
drug
sources.
26
(3)
Simultaneously
evaluate
diverse
and
complex
multiple
27
proposals
from
full-service
pharmacy
benefits
managers,
28
including
average
wholesale
price,
guaranteed
net
cost,
and
29
national
average
drug
acquisition
cost
pricing
models,
as
30
well
as
proposals
from
pharmacy
benefits
administrators
and
31
specialty
drug
and
rebate
carve-out
service
providers.
32
(4)
Produce
an
automated
report
and
analysis
of
pharmacy
33
benefits
managers’
bids,
including
ranking
of
pharmacy
benefits
34
managers’
bids
based
on
comparative
costs
and
qualitative
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aspects
of
the
bids
following
the
close
of
each
round
of
1
reverse
auction
bidding.
2
(5)
Perform
electronic,
line-by-line,
claim-by-claim
review
3
of
one
hundred
percent
of
invoiced
pharmacy
benefits
managers’
4
prescription
drug
claims,
and
identify
all
deviations
from
the
5
specific
terms
of
the
pharmacy
benefits
manager’s
services
6
contract
that
resulted
from
the
reserve
auction
process.
7
b.
Related
services
from
the
operator
of
the
technology
8
platform
identified
in
paragraph
“a”
,
which
at
a
minimum
shall
9
include
all
of
the
following:
10
(1)
Evaluation
of
the
qualifications
of
pharmacy
benefits
11
manager
bidders.
12
(2)
Pharmacy
benefits
manager
reverse
auction
services
to
13
support
the
department
in
comparing
pricing
for
the
pharmacy
14
benefits
manager
procurement.
15
(3)
Related
professional
services.
16
5.
The
department
shall
not
award
a
contract
for
the
17
technology
platform
and
technology
operator
services
to
a
18
vendor
that
is
a
pharmacy
benefits
manager
or
to
a
vendor
that
19
is
managed
by,
or
a
subsidiary
or
affiliate
of,
a
pharmacy
20
benefits
manager.
21
6.
The
vendor
awarded
the
contract
by
the
department
22
shall
not
outsource
any
part
of
the
pharmacy
benefits
manager
23
reverse
auction
or
any
part
of
the
electronic,
line-by-line,
24
claim-by-claim
review
of
invoiced
pharmacy
benefits
manager
25
prescription
drug
claims.
26
7.
With
technical
assistance
and
support
provided
by
the
27
technology
platform
operator,
the
department
shall
specify
the
28
terms
of
the
participant
bidding
agreement.
The
terms
of
the
29
participant
bidding
agreement
shall
not
be
modified
except
by
30
specific
consent
of
the
department.
31
8.
a.
The
technology
platform
used
to
conduct
the
reverse
32
auction
shall
be
repurposed
over
the
duration
of
the
pharmacy
33
benefits
manager’s
services
contract
as
a
pharmacy
claims
34
adjudication
engine
to
perform
electronic,
line-by-line,
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claim-by-claim
review
of
one
hundred
percent
of
invoiced
1
pharmacy
benefits
manager’s
prescription
drug
claims,
and
to
2
identify
all
deviations
from
the
specific
terms
of
the
pharmacy
3
benefits
manager’s
services
contract.
4
b.
The
department
shall
reconcile
the
electronically
5
adjudicated
pharmacy
claims,
as
described
in
paragraph
“a”
,
6
with
pharmacy
benefits
manager’s
invoices
on
a
monthly
or
7
quarterly
basis
to
ensure
that
state
payments
shall
not
exceed
8
the
terms
specified
in
any
pharmacy
benefits
manager’s
services
9
contract.
10
9.
a.
The
first
pharmacy
benefits
manager
reverse
auction
11
shall
be
completed
and
the
services
contract
shall
be
awarded
12
to
the
winning
pharmacy
benefits
manager
with
an
effective
13
date
beginning
January
1,
2026.
Subsequent
contracts
must
14
be
awarded
no
later
than
three
months
prior
to
termination
15
or
expiration
of
the
current
pharmacy
benefits
manager’s
16
services
contract
for
a
covered
group,
such
as
the
state
17
employees
benefits
group,
that
includes
only
active
employees
18
and
dependents,
but
does
not
include
retiree
participants
19
in
a
Medicare
part
D
employer
group
waiver
program
pursuant
20
to
the
federal
Medicare
Prescription
Drug,
Improvement,
and
21
Modernization
Act
of
2003,
Pub.
L.
No.
108-173.
22
b.
In
the
event
an
eligible
covered
group
that
includes
23
retiree
participants
in
a
Medicare
part
D
employer
group
24
waiver
program
pursuant
to
the
federal
Medicare
Prescription
25
Drug,
Improvement,
and
Modernization
Act
of
2003,
Pub.
L.
No.
26
108-173,
opts
to
use
the
processes
and
procedures
under
this
27
section,
the
relevant
pharmacy
benefits
manager
reverse
auction
28
shall
be
completed
and
the
pharmacy
benefits
manager
services
29
contract
shall
be
awarded
to
the
winning
pharmacy
benefits
30
manager
no
later
than
six
months
prior
to
termination
or
31
expiration
of
the
pharmacy
benefits
manager’s
services
contract
32
currently
covering
the
retiree
employer
group
waiver
program
33
participants.
34
10.
The
department
may
perform
a
market
check
for
providing
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pharmacy
benefits
manager
services
during
the
term
of
the
1
current
pharmacy
benefits
manager’s
services
contract
in
order
2
to
ensure
continuing
competitiveness
of
incumbent
prescription
3
drug
pricing
during
the
term
of
a
pharmacy
benefits
manager’s
4
services
contract.
5
11.
a.
Three
years
after
the
first
services
contract
is
6
awarded
to
a
pharmacy
benefits
manager
pursuant
to
subsection
7
9,
paragraph
“a”
,
any
self-funded
public
sector
health
plan
8
shall
have
the
option
to
conduct
a
pharmacy
benefits
manager
9
reverse
auction
for
the
specific
self-funded
public
sector
10
health
plan
utilizing
the
technology
platform
and
technology
11
operator
services
selected
by
the
department
under
this
12
section.
13
b.
This
section
shall
not
apply
to
nonprofit,
14
nongovernmental
health
maintenance
organizations
with
respect
15
to
managed
care
plans
that
provide
a
majority
of
covered
health
16
care
services
through
a
single
contracted
medical
group.
17
c.
Any
self-funded
public
sector
health
plans
that
opt
18
to
conduct
a
pharmacy
benefits
manager
reverse
auction
shall
19
retain
full
autonomy
over
determination
of
the
individual
20
health
plan’s
respective
prescription
drug
formularies
and
21
pharmacy
benefit
designs,
and
shall
not
be
required
to
adopt
22
a
common
prescription
drug
formulary
or
common
prescription
23
pharmacy
benefit
design.
24
12.
Notwithstanding
subsection
3,
the
department
may
elect
25
to
vacate
the
outcome
of
a
pharmacy
benefits
manager
reverse
26
auction
if
the
lowest-cost
pharmacy
benefits
manager’s
bid
27
is
not
less
than
the
projected
cost
trend
for
the
incumbent
28
pharmacy
benefits
manager’s
services
contract
as
verified
by
29
the
department.
The
department
may
utilize
a
consultant
to
30
conduct
the
verification.
The
cost
trend
shall
be
projected
31
by
the
technology
platform
operator
using
industry-recognized
32
data
sources
and
shall
be
subject
to
review
and
approval
by
33
the
department
in
advance
of
the
pharmacy
benefits
manager
34
reverse
auction.
Methodology
shall
be
applied
consistently
in
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projection
of
cost
and
savings
to
the
state
with
regard
to
the
1
incumbent
pharmacy
benefits
manager’s
services
contract
and
2
competing
pharmacy
benefits
manager
reverse
auction
bids.
3
Sec.
2.
EFFECTIVE
DATE.
This
Act,
being
deemed
of
immediate
4
importance,
takes
effect
upon
enactment.
5
EXPLANATION
6
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
7
the
explanation’s
substance
by
the
members
of
the
general
assembly.
8
This
bill
relates
to
pharmacy
benefits
manager
reverse
9
auctions
and
group
insurance
for
public
employees.
10
“Pharmacy
benefits
manager
reverse
auction”
(reverse
11
auction)
is
defined
in
the
bill
as
a
transparent
and
12
competitive
bidding
process
conducted
online
that
starts
13
with
an
opening
round
of
bids
and
allows
qualified
pharmacy
14
benefits
manager
(PBM)
bidders
to
counter-offer
a
lower
price
15
for
as
many
rounds
of
bidding
as
determined
by
the
department
16
of
administrative
services
(DAS)
for
a
multiple
health
plan
17
prescription
drug
purchasing
group.
“Price”
is
defined
as
18
the
projected
cost
of
a
PBM’s
bid
to
provide
prescription
19
drug
benefits
to
allow
direct
comparison
of
the
comparably
20
calculated
costs
of
competing
PBMs’
proposals
over
the
duration
21
of
the
PBM’s
services
contract.
22
Consistent
with
Code
section
8A.311,
and
notwithstanding
23
any
other
law
to
the
contrary,
the
department
shall
enter
into
24
a
contract
for
the
services
of
a
PBM
for
the
administration
25
of
benefits
of
self-funded
public
sector
health
plans.
26
“Self-funded
public
sector
health
plans”
is
defined
as
27
any
group
benefit
plan
under
Code
chapter
509A.
Prior
to
28
November
1,
2025,
DAS
shall
procure
a
technology
platform
with
29
capabilities
to
conducting
a
PBM
reverse
auction,
and
related
30
services
from
the
operator
of
the
technology
platform.
The
31
requirements
for
the
technology
platform
and
for
the
related
32
services
are
detailed
in
the
bill.
33
DAS
is
prohibited
from
awarding
a
contract
for
either
34
the
technology
platform
or
the
technology
operator
services
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to
a
vendor
that
is
a
PBM
or
a
vendor
that
is
managed
by,
1
or
a
subsidiary
or
affiliate
of,
a
PBM.
The
vendor
awarded
2
the
contract
by
DAS
shall
not
outsource
any
part
of
the
3
PBM
reverse
auction
or
of
the
electronic,
line-by-line,
4
claim-by-claim
review
of
invoiced
PBM
prescription
drug
5
claims.
With
technical
assistance
and
support
provided
by
the
6
technology
platform
operator,
DAS
shall
specify
the
terms
of
7
the
participant
bidding
agreement.
8
The
technology
platform
used
to
conduct
the
reverse
auction
9
shall
be
repurposed
over
the
duration
of
the
PBM’s
services
10
contract
as
a
pharmacy
claims
adjudication
engine
to
perform
11
electronic,
line-by-line,
claim-by-claim
review
of
100
percent
12
of
invoiced
PBM
drug
claims,
and
to
identify
all
deviations
13
from
the
specific
terms
of
the
PBM’s
services
contract.
14
DAS
is
required
to
reconcile
the
electronically
adjudicated
15
pharmacy
claims
with
PBM
invoices
on
a
monthly
or
quarterly
16
basis
to
ensure
that
state
payments
shall
not
exceed
the
terms
17
specified
in
any
PBM’s
services
contract.
18
The
first
PBM
reverse
auction
shall
be
completed
and
the
19
PBM
services
contract
shall
be
awarded
to
the
winning
PBM
20
with
an
effective
date
beginning
January
1,
2026.
Subsequent
21
services
contracts
must
be
awarded
no
later
than
three
months
22
prior
to
termination
or
expiration
of
the
current
PBM’s
23
services
contract
for
a
covered
group,
such
as
the
state
24
employees
benefits
group,
that
includes
only
active
employees
25
and
dependents,
but
does
not
include
retiree
participants
in
26
a
Medicare
part
D
employer
group
waiver
program
(Medicare
27
employer
group)
pursuant
to
the
federal
Medicare
Prescription
28
Drug,
Improvement,
and
Modernization
Act
of
2003
(Medicare
29
Act).
If
an
eligible
covered
group
that
includes
retiree
30
participants
in
a
Medicare
employer
group
pursuant
to
the
31
Medicare
Act
opts
to
use
the
processes
and
procedures
under
the
32
bill,
the
relevant
PBM
reverse
auction
shall
be
completed
and
33
the
PBM
services
contract
shall
be
awarded
to
the
winning
PBM
34
no
later
than
six
months
prior
to
termination
or
expiration
35
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S.F.
315
of
the
current
PBM’s
services
contract
covering
the
Medicare
1
employer
group.
2
DAS
may
perform
a
market
check
for
providing
PBM
services
3
during
the
term
of
the
current
PBM’s
services
contract.
4
“Market
check”
is
defined
in
the
bill.
5
Three
years
after
the
first
services
contract
is
awarded
6
to
a
PBM,
self-funded
public
sector
health
plans
shall
have
7
the
option
to
conduct
a
PBM
reverse
auction.
Any
self-funded
8
public
sector
health
plans
that
opt
to
conduct
a
PBM
reverse
9
auction
shall
retain
full
autonomy
as
detailed
in
the
bill.
10
The
bill
shall
not
apply
to
nonprofit,
nongovernmental
11
health
maintenance
organizations
with
respect
to
managed
care
12
plans
that
provide
a
majority
of
covered
health
care
services
13
through
a
single
contracted
medical
group.
14
DAS
may
elect
to
vacate
the
outcome
of
a
PBM
reverse
auction
15
if
the
lowest-cost
PBM
bid
is
not
less
than
the
projected
cost
16
trend
for
the
incumbent
PBM
contract
as
verified
by
DAS
or
by
17
a
consultant
retained
by
DAS.
18
The
bill
takes
effect
upon
enactment.
19
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