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(136th General Assembly)
(Substitute
House Bill Number 229)
AN
ACT
To amend sections 1751.92,
3905.24, 3923.87, 3959.01, 3959.111, 3959.12, and 3959.20; to amend,
for the purpose of adopting new section numbers as indicated in
parentheses, sections 3959.111 (3957.25), 3959.20 (3957.26), and
3959.22 (3957.27); and to enact sections 3957.01, 3957.02, 3957.03,
3957.04, 3957.05, 3957.06, 3957.07, 3957.08, 3957.09, 3957.10,
3957.11, 3957.12, 3957.13, 3957.14, 3957.15, 3957.16, and 3957.99 of
the Revised Code to establish a stand-alone licensing process and new
contractual requirements for pharmacy benefit managers.
Be
it enacted by the General Assembly of the State of Ohio:
Section
1.
That
sections
1751.92,
3905.24
,
3923.87,
3959.01
,
3959.111, 3959.12, and 3959.20 be amended; sections 3959.111
(3957.25), 3959.20 (3957.26), and 3959.22 (3957.27)
be amended
for
the purpose of adopting new section numbers as indicated in
parentheses;
and
sections 3957.01, 3957.02, 3957.03, 3957.04, 3957.05, 3957.06,
3957.07, 3957.08, 3957.09, 3957.10, 3957.11, 3957.12, 3957.13,
3957.14, 3957.15, 3957.16, and 3957.99 of the Revised Code be enacted
to read as follows:
Sec.
1751.92.
Each
health insuring corporation shall comply with the requirements of
section
3959.20
3957.26
of
the Revised Code as they pertain to health plan issuers.
As
used in this section, "health plan issuer" has the same
meaning as in section 3922.01 of the Revised Code.
Sec.
3905.24.
(A)(1)
All records and other information obtained by the superintendent of
insurance or the superintendent's deputies, examiners, assistants, or
other employees, or agents relating to an investigation of an
applicant for licensure under this chapter, or of an agent,
solicitor, broker, or other person licensed or appointed under this
chapter or Chapter 3951.
,
3957.,
or 3959. of the Revised Code, are confidential and are not public
records as defined in section 149.43 of the Revised Code until the
applicant, licensee, or appointee is provided notice and opportunity
for hearing pursuant to Chapter 119. of the Revised Code with respect
to such records or information. If no administrative action is
initiated with respect to a particular matter about which the
superintendent obtained records or other information as part of an
investigation, all such records and information relating to that
matter shall remain confidential for three years after the file on
the matter is closed.
(2)
Division (A)(1) of this section applies only to investigations that
could result in administrative action under Title XVII or XXXIX or
Chapter 119. of the Revised Code.
(B)
The records and other information described in division (A) of this
section shall remain confidential for all purposes except when it is
appropriate for the superintendent and the superintendent's deputies,
examiners, assistants, or other employees, or agents to take official
action regarding the affairs of the applicant, licensee, or appointee
or in connection with actual or potential criminal proceedings.
(C)
Notwithstanding divisions (A) and (B) of this section, the
superintendent may do either of the following:
(1)
Share records and other information that are the subject of this
section with the chief deputy rehabilitator, the chief deputy
liquidator, other deputy rehabilitators and liquidators, and any
other person employed by, or acting on behalf of, the superintendent
pursuant to Chapter 3901. or 3903. of the Revised Code, with other
local, state, federal, and international regulatory and law
enforcement agencies, with local, state, and federal prosecutors, and
with the national association of insurance commissioners and its
affiliates and subsidiaries, provided that the recipient agrees to
maintain the confidential status of the confidential record or other
information and has authority to do so;
(2)
Disclose records and other information that are the subject of this
section in the furtherance of any regulatory or legal action brought
by or on behalf of the superintendent or the state, resulting from
the exercise of the superintendent's official duties.
(D)
Notwithstanding divisions (A), (B), and (C) of this section, the
superintendent may authorize the national association of insurance
commissioners and its affiliates and subsidiaries by agreement to
share confidential records and other information received pursuant to
division (C)(1) of this section with local, state, federal, and
international regulatory and law enforcement agencies and with local,
state, and federal prosecutors, provided that the recipient agrees to
maintain the confidential status of the confidential record or other
information and has authority to do so.
(E)
Notwithstanding divisions (A), (B), and (C) of this section, the
chief deputy rehabilitator, the chief deputy liquidator, and other
deputy rehabilitators and liquidators may disclose records and other
information that are the subject of this section in the furtherance
of any regulatory or legal action brought by or on behalf of the
superintendent, the rehabilitator, the liquidator, or the state
resulting from the exercise of the superintendent's official duties
in any capacity.
(F)
Nothing in this section shall prohibit the superintendent from
receiving records and other information in accordance with section
3901.045 of the Revised Code.
(G)(1)
No waiver of any applicable privilege or claim of confidentiality in
the records and other information that are the subject of this
section shall occur as a result of sharing or receiving records or
other information as authorized in divisions (C)(1), (D), and (F) of
this section.
(2)
The disclosure of records or other information in connection with a
regulatory or legal action pursuant to divisions (C)(2) and (E) of
this section does not prohibit an insurer or any other person from
taking steps to limit the dissemination of the record or other
information to persons not involved in or the subject of the
regulatory or legal action on the basis of any recognized privilege
arising under any other section of the Revised Code or the common
law.
(H)
Employees or agents of the department of insurance shall not be
required by any court in this state to testify in a civil action, if
the testimony concerns any matter related to records or other
information considered confidential under this section of which they
have knowledge.
Sec.
3923.87.
Each
sickness and accident insurer or public employee benefit plan shall
comply with the requirements of section
3959.20
3957.26
of
the Revised Code as they pertain to health plan issuers.
As
used in this section, "health plan issuer" has the same
meaning as in section 3922.01 of the Revised Code.
Sec.
3957.01.
As
used in this chapter:
(A)
"Claims processing services" means administrative services
performed in connection with processing and adjudicating claims
relating to pharmacist services, including both of the following:
(1)
Receiving payments for pharmacist services;
(2)
Making payments to pharmacists or pharmacies for pharmacist services.
(B)
"Contracted pharmacy" or "pharmacy" means a
pharmacy, as defined in section 4729.01 of the Revised Code, located
in this state and participating in either the network of a pharmacy
benefit manager or in a health care or pharmacy benefit plan through
a direct contract or through a contract with a pharmacy services
administration organization, group purchasing organization, or
another contracting agent.
(C)
"Drug product reimbursement" means the amount paid by a
pharmacy benefit manager to a contracted pharmacy for the cost of the
drug dispensed to a patient and does not include a dispensing or
professional fee.
(D)
"Fiscal year," "plan," "plan sponsor,"
and "self-insurance program" have the same meanings as in
section 3959.01 of the Revised Code.
(E)
"Health benefit plan" and "health plan issuer"
have the same meanings as in section 3922.01 of the Revised Code.
(F)
"Insurance" has the same meaning as in section 3905.01 of
the Revised Code.
(G)
"Insurer" has the same meaning as in section 3901.32 of the
Revised Code.
(H)
"Licensee" means a person licensed as a pharmacy benefit
manager under this chapter.
(I)
"Maximum allowable cost" means a maximum drug product
reimbursement for an individual drug or for a group of
therapeutically and pharmaceutically equivalent multiple source drugs
that are listed in the United States food and drug administration's
approved drug products with therapeutic equivalence evaluations,
commonly referred to as the orange book.
(J)
"Maximum allowable cost list" means a list of the drugs for
which a pharmacy benefit manager imposes a maximum allowable cost.
(K)
"Other prescription drug or device services" means services
other than claims processing services, provided directly or
indirectly, whether in connection with or separate from claims
processing services, including all of the following:
(1)
Negotiating rebates, discounts, or other financial incentives and
arrangements with drug companies;
(2)
Disbursing or distributing rebates;
(3)
Managing or participating in incentive programs or arrangements for
pharmacist services;
(4)
Negotiating or entering into contractual arrangements with
pharmacists or pharmacies, or both;
(5)
Developing formularies;
(6)
Designing prescription benefit programs;
(7)
Advertising or promoting services.
(L)
"Pharmacist" means an individual licensed to engage in the
practice of pharmacy, as defined in section 4729.01 of the Revised
Code.
(M)
"Pharmacy benefit manager" means an entity that contracts
with pharmacies on behalf of an employer, a multiple employer welfare
arrangement, public employee benefit plan, state agency, insurer,
managed care organization, or other third-party payer to provide
claims processing services, pharmacy benefit management services or
administration, or other prescription drug or device services.
"Pharmacy benefit manager" includes the state pharmacy
benefit manager selected under section 5167.24 of the Revised Code.
(N)
"Pharmacy benefit manager affiliate" means a pharmacy or
pharmacist that directly or indirectly, through one or more
intermediaries, owns or controls, is owned or controlled by, or is
under common ownership or control with a pharmacy benefit manager.
(O)
"Pharmacy benefit management services" means services
provided by a pharmacy benefit manager on behalf of an employer, a
multiple employer welfare arrangement, public employee benefit plan,
state agency, insurer, managed care organization, or other
third-party payer to provide claims processing services,
administrative support or efficiencies, contracting, or other
prescription drug or device services.
(P)
"Pharmacy services administrative organization" means an
organization that helps community pharmacies and pharmacy benefit
managers or third-party payers achieve administrative efficiencies,
including contracting and payment efficiencies.
(Q)
"Rebate" means a discount or other price concession, or a
payment attributable to the utilization of prescription drugs in this
state, that is paid by a drug manufacturer directly to a pharmacy
benefit manager after a claim has been processed and paid at a
pharmacy.
(R)
"Subject to this chapter" means, in the context of an
agreement involving a pharmacy benefit manager, that the agreement is
entered into, amended, or renewed on or after July 1, 2027.
(S)
"Third-party payer" has the same meaning as in section
3901.38 of the Revised Code, except that the term does not include a
pharmacy benefit manager subject to this chapter.
Sec.
3957.02.
The
superintendent of insurance shall establish by rule, adopted in
accordance with Chapter 119. of the Revised Code, and administer a
process for licensing pharmacy benefit managers in this state. The
superintendent may adopt any other rules the superintendent deems
necessary for the administration, implementation, and enforcement of
this chapter. When adopting rules pursuant to this section, the
superintendent shall consider standards and procedures that have been
found to be the best practices relative to the use and regulation of
pharmacy benefit managers.
Sec.
3957.03.
(A)
On and after July 1, 2027, no person shall solicit a plan or plan
sponsor that is domiciled in this state or has its principal
headquarters or principal administrative office in this state to act
as a pharmacy benefit manager for the plan or plan sponsor unless
licensed under this chapter.
(B)
No person shall provide pharmacy benefit management services pursuant
to an agreement subject to this chapter unless licensed under this
chapter.
(C)
No person shall solicit a plan, act as a pharmacy benefit manager, or
otherwise provide pharmacy benefit management services while the
person's pharmacy benefit manager license is expired pursuant to
division (C) of section 3957.08 of the Revised Code.
Sec.
3957.04.
(A)
A person that seeks to be licensed as a pharmacy benefit manager
shall file an application with the superintendent of insurance in the
form and manner prescribed by the superintendent. The application
shall include all the information the superintendent considers
necessary to process the application, including evidence satisfactory
to the superintendent that the applicant meets the requirements
specified in division (C) of this section.
(B)
All applications for a pharmacy benefit manager license shall be
accompanied by a nonrefundable filing fee of two thousand dollars per
application. All fees collected under this section and section
3957.08 of the Revised Code shall be paid into the state treasury to
the credit of the department of insurance operating fund created
under section 3901.021 of the Revised Code.
(C)
To be eligible to receive a pharmacy benefit manager license, an
applicant shall demonstrate to the superintendent that the applicant
meets the requirements of this division.
(1)
For an applicant seeking a pharmacy benefit manager license as an
individual, the applicant shall meet all of the following
requirements:
(a)
The applicant must be at least eighteen years of age.
(b)
The applicant must not have been previously convicted of a
financially related felony.
(c)
The applicant must not have committed any act that is grounds for the
denial, suspension, or revocation of a license under this chapter.
(d)
The applicant must consent to a criminal records check, and the
results of the check must be determined to be satisfactory by the
superintendent pursuant to section 9.79 of the Revised Code.
(e)
The applicant must provide proof of United States citizenship or
proof of legal authorization to work in the United States.
(f)
The applicant must provide any additional information or documents
required by the superintendent.
(2)
For an applicant seeking a pharmacy benefit manager license as a
business entity, the applicant shall meet all of the following
requirements:
(a)
The applicant must be domiciled or maintain its principal place of
business in this state, as evidenced by a certificate of good
standing issued by the secretary of state.
(b)
The applicant must identify all officers, directors, partners, or
members of the business entity and must identify any owners or
members that hold five per cent or more ownership in the entity.
(c)
The applicant must identify an officer, director, partner, or member
responsible for the entity's compliance with this chapter.
(d)
The applicant must not have been, and not have any officer, director,
partner, or member that has been, previously convicted of a
financially related felony.
(e)
The applicant must not have committed, and not have any officer,
director, partner, or member that has committed, any act that is
grounds for the denial, suspension, or revocation of a license under
this chapter.
(f)
The applicant must provide any additional information or documents
requested by the superintendent.
(3)
An individual or business entity applicant may seek a nonresident
pharmacy benefit manager license instead of a license under division
(C)(1) or (2) of this section if the individual or entity holds a
current, valid license in another state and meets all of the
following requirements:
(a)
The applicant must submit a complete application for a pharmacy
benefit manager license to the superintendent in accordance with
division (A) of this section.
(b)
The applicant must not have committed any act that is grounds for the
denial, suspension, or revocation of a license under this chapter.
(c)
If the applicant is a business entity, the applicant must provide a
certificate of good standing for a foreign corporation issued by the
secretary of state.
(d)
If the applicant is a business entity, the applicant must identify
all officers, directors, partners, or members of the business entity,
and must identify any owners or members that hold five per cent or
more ownership in the entity.
(e)
The applicant must not have committed, and must not have any officer,
director, partner, or member that has committed, any act that is
grounds for the denial, suspension, or revocation of a license under
this chapter.
(f)
The applicant must be licensed in a state that issues nonresident
pharmacy benefit manager licenses to residents of this state on the
same basis as set forth in this section.
(g)
The applicant must provide any additional information or documents
requested by the superintendent.
(4)
An individual or business entity applicant that does not meet the
requirements of division (C)(3) of this section for a nonresident
license must meet the requirements under division (C)(1) or (2) of
this section.
Sec.
3957.05.
The
superintendent of insurance shall approve or deny an application for
a license under this chapter within a reasonable time after receipt.
Sec.
3957.06.
Within
thirty days after denying an application for a license under this
chapter, the superintendent of insurance shall notify the applicant
of the denial and the reasons for the denial. The superintendent
shall include a statement in the notice advising that the applicant
is entitled to a hearing, in accordance with Chapter 119. of the
Revised Code, if the applicant requests such a hearing within thirty
days after receipt of the notice.
Sec.
3957.07.
Upon
approving an application for a license under this chapter and
receiving payment of the associated filing fee, the superintendent of
insurance shall grant the applicant a license to operate as a
pharmacy benefit manager in this state. The initial license is
effective on the date the application is approved by the
superintendent and expires annually on the thirtieth day of June. If
the initial license application is approved in May or June, the
license expires on the thirtieth day of June the following year. The
superintendent shall renew an initial license in accordance with
section 3957.08 of the Revised Code.
Sec.
3957.08.
(A)
The superintendent of insurance shall provide a renewal notice to
each licensee not later than the first day of May each year.
(B)
A licensee may renew its pharmacy benefit manager license by applying
to the superintendent, in the form and manner prescribed by the
superintendent, and paying a renewal fee of three thousand dollars
before the date the license expires. A licensee shall not apply for a
license renewal more than ninety days before the date the license
expires.
(C)
In the event that a licensee fails to apply for renewal and pay the
renewal fee before the date the license expires, the license shall
expire on the expiration date, and the former licensee is not
authorized to operate as a pharmacy benefit manager in this state
beginning on that date. A person whose license is expired may apply
to reinstate the license in the same manner as a license renewal
under division (B) of this section, except that the filing fee is one
and one-half times the renewal fee under division (B) of this
section.
Sec.
3957.09.
(A)
Except as provided in division (G) of this section, no person shall
act as a pharmacy benefit manager on or after July 1, 2027, without
first entering into a written agreement with a plan sponsor.
(B)
The pharmacy benefit manager shall retain the written agreement as
part of the pharmacy benefit manager's official records for the
duration of the agreement and for five years thereafter. Each
agreement shall include, at a minimum, all of the following:
(1)
The term of the agreement;
(2)
An explanation of the services to be performed by the pharmacy
benefit manager;
(3)
The method and rate of compensation to be paid by the plan sponsor to
the pharmacy benefit manager for services rendered;
(4)
Provisions for the renewal and termination of the agreement.
(C)
A pharmacy benefit manager shall maintain, for the duration of the
agreement with the plan sponsor, customary and relevant books and
records of all transactions and information relative to covered
persons or beneficiaries. The pharmacy benefit manager shall maintain
such customary and relevant books and records either electronically
or in physical form at the pharmacy benefit manager's principal
office or branch office and shall make those books and records
available to the superintendent or the superintendent's designee at
any time upon request. Any protected health information received from
the request shall be maintained in compliance with all applicable
federal and state privacy laws, including the "Health Insurance
Portability and Accountability Act of 1996," 42 U.S.C. 1320d, et
seq. and the regulations adopted under that act.
(D)
A pharmacy benefit manager shall account, annually or more
frequently, to the plan sponsor for any pricing discounts, rebates of
any kind, inflationary payments, credits, claw backs, fees, grants,
charge backs, drug product reimbursements, or other benefits received
by the pharmacy benefit manager. The pharmacy benefit manager shall
give the plan sponsor access to all financial and utilization
information used by the pharmacy benefit manager in relation to
pharmacy benefit management services provided to the plan sponsor.
(E)
A pharmacy benefit manager shall disclose, in writing, to the plan
sponsor the terms and conditions of any contract or arrangement
between the pharmacy benefit manager and any other party relating to
pharmacy benefit management services provided by the pharmacy benefit
manager to the plan sponsor, including pharmacy benefit management
services provided to group purchasing organizations.
(F)
A pharmacy benefit manager shall disclose, in writing, to the plan
sponsor any activity, policy, practice, contract, or arrangement of
the pharmacy benefit manager that directly or indirectly presents any
conflict of interest concerning the pharmacy benefit manager's
relationship with or obligation to the plan sponsor.
(G)
Divisions (A) to (F) of this section apply to agreements subject to
this chapter and pharmacy benefit management services provided
pursuant to those agreements. Nothing in those divisions applies to
pharmacy benefit management services provided pursuant to an
agreement that is not subject to this chapter.
(H)
A pharmacy benefit manager licensed under this chapter shall, at all
times, maintain any required insurance coverage or bond as provided
for and mandated by the "Employee Retirement and Income Security
Act of 1974," 29 U.S.C. 1001.
Sec.
3957.10.
(A)
Upon notice and hearing in accordance with Chapter 119. of the
Revised Code, the superintendent of insurance may take any of the
actions enumerated in division (C) of this section if the
superintendent finds that a licensee has done any of the following:
(1)
Violated any provision of this chapter, any rule adopted by the
superintendent, or any consent agreement or order of the
superintendent;
(2)
Provided incorrect, misleading, incomplete, or materially false
information in the licensure or renewal application;
(3)
Obtained or attempted to obtain a license through misrepresentation
or fraud;
(4)
Misappropriated, converted, or improperly withheld insurance company
premiums or contributions, excluding interest earnings received by
the licensee that are disclosed in writing to the plan sponsor;
(5)
In the transaction of business in this or another state, has been
convicted of using fraudulent, coercive, or dishonest practices or
has demonstrated incompetence, untrustworthiness, or financial
irresponsibility;
(6)
Failed to appear in response to a subpoena, examination, warrant, or
other order lawfully issued by the superintendent;
(7)
Is affiliated with, or is under the same general management or
interlocking directorate or ownership of, another pharmacy benefit
manager that transacts business in this state and that is not
licensed under this chapter;
(8)
Had a license or its equivalent denied, suspended, revoked, or not
renewed in any other state, district, territory, or province;
(9)
Has been, or has an owner that has been, convicted of a financially
related felony;
(10)
Has been, or has an owner that has been, convicted of or pleaded
guilty to or no contest to a felony, regardless of whether a judgment
of conviction has been entered by the court.
(B)(1)
If the superintendent has information, in the department of
insurance's files, from a complaint, or otherwise, that a person has
engaged in or is about to engage in conduct described in division (A)
of this section, or if the superintendent believes it to be in the
best interest of the public, insurers, and plan sponsors, the
superintendent may do either of the following:
(a)
Investigate the person, as authorized under this section or in rules
adopted by the superintendent;
(b)
Issue subpoenas to any person for the purpose of compelling the
attendance and testimony of witnesses or the production of books,
accounts, papers, records, or documents.
(2)
If the person fails to comply with an order or a subpoena issued
pursuant to division (B)(1) of this section, upon application of the
superintendent, a judge of the court of common pleas of the county in
which the individual resides or the entity is located, upon
application of the superintendent, shall compel obedience by
attachment proceedings for contempt, as in the case of disobedience
with respect to the requirements of a subpoena issued from the court
or a refusal to testify in the court.
(C)
If the superintendent determines that a pharmacy benefit manager
licensed under this chapter has engaged in any of the conduct
described in division (A) of this section or if the superintendent
believes it to be in the best interest of the public, insurers, and
plan sponsors, the superintendent may take one or more of the
following actions against the pharmacy benefit manager:
(1)
Assess a civil penalty in an amount not to exceed fifteen thousand
dollars per violation;
(2)
Assess administrative costs to cover the expenses incurred by the
department in the administrative action, including costs incurred in
the investigation and hearing process. Any costs collected shall be
paid into the state treasury to the credit of the department of
insurance operating fund created in section 3901.021 of the Revised
Code.
(3)
Suspend the pharmacy benefit manager's license;
(4)
Permanently revoke the pharmacy benefit manager's license;
(5)
Refuse to issue a license under this chapter to an applicant;
(6)
Refuse to renew a pharmacy benefit manager's license;
(7)
Prohibit the pharmacy benefit manager licensee from engaging in the
business of insurance, or if the licensee is an individual, being
employed by a pharmacy benefit manager entity licensed under this
chapter. The superintendent may, in the superintendent's discretion,
determine the nature, conditions, and duration of these restrictions.
(8)
Order corrective action in lieu of or in addition to the other
penalties listed in this division. An order for corrective action may
provide for the suspension of a civil penalty, license revocation,
license suspension, or refusal to issue or renew a license, if the
pharmacy benefit manager complies with the terms and conditions of
the corrective action order.
(9)
Accept a license surrender for cause by the pharmacy benefit manager.
The surrender for cause shall be for at least five years and shall
prohibit the pharmacy benefit manager from seeking any license
authorized under Title XXXIX of the Revised Code during that time
period. A surrender for cause is in lieu of a license revocation or
suspension and may include a corrective action order described in
division (C)(8) of this section.
(D)
Upon receipt of notice of an order of suspension in accordance with
sections 119.05 and 119.07 of the Revised Code, the pharmacy benefit
manager shall promptly deliver its license to the superintendent,
unless the order of suspension is appealed under section 119.12 of
the Revised Code.
(E)(1)
If a person engages in conduct that is a violation described in
division (A) of this section and that has caused, is causing, or is
about to cause substantial and material harm, or if the
superintendent believes it to be in the best interest of the public,
insurers, and plan sponsors, the superintendent may issue an order
requiring the person to cease and desist from engaging in the
conduct.
(2)
Immediately after issuing a cease and desist order under division
(E)(1) of this section, the superintendent shall provide notice of
the order to all persons known to be involved in the conduct. The
notice may be served in accordance with section 119.05 of the Revised
Code. Thereafter, the superintendent may publicize or otherwise
notify all interested parties that the order has been issued. A
notice issued under this division shall specify the particular act,
omission, practice, or transaction that is the subject of the cease
and desist order, and shall set a date, not more than fifteen days
after the date of the order, for a hearing on the continuation or
revocation of the order. Each person shall comply with the cease and
desist order immediately upon receipt of the notice.
(3)
The superintendent shall hold a hearing on the cease and desist order
in accordance with Chapter 119. of the Revised Code, to the extent
that chapter does not conflict with the procedures otherwise set
forth in this section. Upon the application of a party and for good
cause shown, the superintendent may continue the hearing. The
superintendent shall issue a final order within fifteen days after
objections are submitted for the hearing officer's report and
recommendation either confirming or revoking the cease and desist
order. The final order may be appealed, as provided under section
119.12 of the Revised Code.
(4)
A cease and desist order issued under division (E)(1) of this section
is cumulative and concurrent with the other remedies available under
this section and does not prevent the exercise of any other of those
remedies.
(F)
If the superintendent has reasonable cause to believe that a person
has violated an order issued pursuant to this section, in whole or in
part, the superintendent may request that the attorney general
commence and prosecute an appropriate action or proceeding in the
name of the state against the person. In an action brought pursuant
to this division, the court may impose a civil penalty of not more
than fifteen thousand dollars for each violation, injunctive relief,
restitution, and any other appropriate relief.
Sec.
3957.11.
(A)
A pharmacy benefit manager shall notify the superintendent of
insurance if the pharmacy benefit manager, or any owner of the
pharmacy benefit manager, is subject to administrative action by a
government entity having professional, occupational, or financial
authority in this or another state while the pharmacy benefit manager
holds a license under this chapter. The notice shall be provided not
later than thirty days after the entry date of final disposition in
the matter and shall include a copy of the order, consent order, or
any other relevant documents related to the matter.
(B)
A pharmacy benefit manager shall notify the superintendent of
insurance if the pharmacy benefit manager, or any owner of the
pharmacy benefit manager, is subject to a criminal prosecution in
this or another state, other than a misdemeanor traffic offense,
while the pharmacy benefit manager holds a license under this
chapter. The notice shall be provided not later than thirty days
after the person initially appears before a judge or magistrate and
shall include a certified copy of the charging document. Not later
than thirty days after final disposition of the criminal prosecution,
the pharmacy benefit manager shall provide to the superintendent a
certified copy of the court's entry or order that reflects the final
disposition of the prosecution and any other relevant document
related to the prosecution.
Sec.
3957.12.
(A)
On and after July 1, 2027, no pharmacy benefit manager shall do any
of the following:
(1)
Use plan sponsor funds for any purpose not specifically set forth in
writing by the pharmacy benefit manager;
(2)
Fail to disclose in written solicitation materials and at least once
annually to contracted plan sponsors any ownership relationship of
five per cent or more between the pharmacy benefit manager and an
insurer;
(3)
Fail to remit insurance premiums within the policy period or within
the time agreed to in writing between the insurer and the pharmacy
benefit manager;
(4)
Fail to disclose in writing the method of collecting and holding a
plan sponsor's funds.
(B)
This section does not apply to the extent that it conflicts with an
agreement that is not subject to this chapter.
Sec.
3957.13.
(A)
On and after July 1, 2027, a pharmacy benefit manger shall do all of
the following:
(1)
Maintain relevant books and records that reflect all transactions
administered by the pharmacy benefit manager pursuant to agreements
that are subject to this chapter, specifically in regard to premiums
or contributions received and deposited, and claims and authorized
expenses paid.
(2)
Prepare, journalize, and post the relevant books and records
described in division (A)(1) of this section in accordance with the
terms and conditions of the service agreement between the pharmacy
benefit manager and the insurer or plan sponsor and in accordance
with the "Employee Retirement and Income Security Act of 1974,"
29 U.S.C. 1001.
(3)
Maintain the relevant books and records described in division (A)(1)
of this section for the period during which the pharmacy benefit
manager provides services for the applicable insurer or plan sponsor
and for ten years thereafter.
(4)
Maintain a cash receipts register of all premiums or contributions
received, including, at minimum, the date such contributions are
received and deposited.
(B)
For purposes of the relevant books and records described in division
(A)(1) of this section, a pharmacy benefit manager's description of a
disbursement shall be in sufficient detail to identify the source
document substantiating the purpose of the disbursement, and shall
include all of the following:
(1)
The check number;
(2)
The date of disbursement;
(3)
The person to whom the disbursement was made;
(4)
The amount disbursed and, if the amount disbursed does not align with
the amount billed or authorized, a written record as to the
application for the disbursement;
(5)
If the disbursement is for the earned pharmacy benefit manager fee or
commission, a written record reflecting the identifying deposit from
which the fee is matched.
(C)
A pharmacy benefit manager shall support all journal entries for
receipts and disbursements with evidence that is referenced in the
journal entry so that it may be traced for verification.
(D)
A pharmacy benefit manager shall prepare and maintain monthly
financial institution account reconciliations if requested by an
insurer or plan sponsor as provided in any service agreement by and
between the pharmacy benefit manager and the insurer or plan sponsor
that is subject to this chapter.
(E)
A pharmacy benefit manager shall prepare a report to be filed with
the insurer or plan sponsor with which the pharmacy benefit manager
has an agreement subject to this chapter within ninety days after the
end of the fiscal year of the plan that, at minimum, discloses all of
the following:
(1)
The total premiums or contributions received from the plan sponsor,
covered persons, or beneficiaries;
(2)
The total administration fees withdrawn by the pharmacy benefit
manager pursuant to the written service agreement;
(3)
The total claim payments made during the reporting period.
(F)
A pharmacy benefit manager shall pay return premiums or contributions
to the insurer or plan sponsor with which the pharmacy benefit
manager has an agreement subject to this chapter, or credit such
return premiums or contributions to the account of the insurer or
plan sponsor, within thirty days after receipt by the pharmacy
benefit manager. If the pharmacy benefit manager credits the return
premium or contribution to the insurer or plan sponsor, the pharmacy
benefit manager shall show and apply the credit to the next billing
statement sent to the insurer or plan sponsor.
(G)
On and after July 1, 2027, the superintendent of insurance may
examine the relevant books and records described in division (A)(1)
of this section of a pharmacy benefit manager as necessary to
determine the following related to any contracts involving a pharmacy
benefit manager and a plan sponsor of a health benefit plan or health
plan issuer:
(1)
The aggregate amount of rebates received by a pharmacy benefit
manager;
(2)
The aggregate amount of rebates distributed by a pharmacy benefit
manager to an appropriate plan sponsor of a health benefit plan or
health plan issuer;
(3)
The aggregate amount of rebates passed on to a covered person under
the health benefit plan at the point of sale that reduced the
person's applicable deductible, copayment, coinsurance, or other
cost-sharing amount;
(4)
The individual and aggregate amount paid by a plan sponsor of a
health benefit plan or health plan issuer to the pharmacy benefit
manager for pharmacist services itemized by pharmacy, product, and
goods and services, including other prescription drug or device
services;
(5)
The individual and aggregate amount a pharmacy benefit manager paid
for pharmacist services itemized by pharmacy, product, and goods and
services, including other prescription drug or device services.
(H)
To carry out the duties of division (G) of this section, the
superintendent may contract with a third party to examine the
relevant books and records described in division (A)(1) of this
section of a pharmacy benefit manager.
(I)
A pharmacy benefit manager shall pay all expenses associated with the
examination functions authorized or required by this section,
including any expenses related to a contract with a third party to
conduct that examination. The superintendent shall provide the
pharmacy benefit manager with an itemized statement of the expenses
incurred in the performance of those functions and, upon receipt of
that statement, the pharmacy benefit manager shall remit the full
amount of such expenses to the superintendent. The superintendent
shall remit amounts received under this division to the treasurer of
state pursuant to section 3901.021 of the Revised Code for deposit in
the department of insurance operating fund.
(J)
Upon written notification to a pharmacy benefit manager by the
superintendent of insurance that the pharmacy benefit manager has
violated any provision of this section, the pharmacy benefit manager
shall correct the violation specified in the notice within sixty
days.
Sec.
3957.14.
(A)
All information and data acquired by the superintendent of insurance
or the department of insurance under this chapter is considered
proprietary and confidential under section 3905.24 of the Revised
Code and is not a public record under section 149.43 of the Revised
Code.
(B)
On and after July 1, 2027, no pharmacy benefit manager or
representative of a pharmacy benefit manager shall cause or knowingly
permit the use of any advertisement, promotion, solicitation,
representation, proposal, or offer that is untrue, deceptive, or
misleading.
Sec.
3957.15.
For
purposes of licensure, this chapter does not apply to an employer's
self-insurance program or fully insured plan to the extent that
federal law supersedes, preempts, prohibits, or otherwise precludes
its application to such plan.
Sec.
3957.16.
On
receipt of a notice pursuant to section 3123.43 of the Revised Code,
the superintendent of insurance shall comply with sections 3123.41 to
3123.50 of the Revised Code and any applicable rules adopted under
section 3123.63 of the Revised Code with respect to a license issued
pursuant to this chapter.
Sec.
3959.111
3957.25
.
(A)(1)(a)
In each contract between a pharmacy benefit manager and a pharmacy,
the pharmacy shall be given the right to obtain from the pharmacy
benefit manager, within ten days after any request, a current list of
the sources used to determine maximum allowable cost pricing. In each
contract between a pharmacy benefit manager and a pharmacy, the
pharmacy benefit manager shall be obligated to update and implement
the pricing information at least every seven days and provide a means
by which contracted pharmacies may promptly review maximum allowable
cost pricing updates in an electronic format that is readily
available, accessible, and secure and that can be easily searched.
Subject
to division (A)(1) of this section, a pharmacy benefit manager shall
utilize the most up-to-date pricing data when calculating drug
product reimbursements for all contracting pharmacies within one
business day of any price update or modification.
(b)
A pharmacy benefit manager shall maintain a written procedure to
eliminate products from the list of drugs subject to maximum
allowable cost pricing in a timely manner. The written procedure, and
any updates, shall promptly be made available to a pharmacy upon
request.
(2)
In each contract between a pharmacy benefit manager and a pharmacy, a
pharmacy benefit manager shall be obligated to ensure that all of the
following conditions are met prior to placing a prescription drug on
a maximum allowable cost list:
(a)
The drug is listed as "A" or "B" rated in the
most recent version of the United States food and drug
administration's approved drug products with therapeutic equivalence
evaluations, or has an "NR" or "NA" rating or
similar rating by nationally recognized reference.
(b)
The drug is generally available for purchase by pharmacies in this
state from a national or regional wholesaler and is not obsolete.
(3)
Each contract between a pharmacy benefit manager and a pharmacy shall
include an electronic process to appeal, investigate, and resolve
disputes regarding maximum allowable cost pricing that includes all
of the following:
(a)
A twenty-one-day limit on the right to appeal following the initial
claim;
(b)
A requirement that the appeal be investigated and resolved within
twenty-one days after the appeal;
(c)
A telephone number at which the pharmacy may contact the pharmacy
benefit manager to speak to a person responsible for processing
appeals;
(d)
A requirement that a pharmacy benefit manager provide a reason for
any appeal denial, including the national drug code and the identity
of the national or regional wholesalers from whom the drug was
generally available for purchase at or below the benchmark price
determined by the pharmacy benefit manager;
(e)
A requirement that if the appeal is upheld or granted, then the
pharmacy benefit manager shall adjust the drug product reimbursement
to the pharmacy's upheld appeal price;
(f)
A requirement that a pharmacy benefit manager make an adjustment not
later than one day after the date of determination of the appeal. The
adjustment shall be retroactive to the date the appeal was made and
shall apply to all situated pharmacies as determined by the pharmacy
benefit manager. This requirement does not prohibit a pharmacy
benefit manager from retroactively adjusting a claim for the
appealing pharmacy or for any other similarly situated pharmacies.
(B)(1)(a)
A pharmacy benefit manager shall disclose to the plan sponsor whether
or not the pharmacy benefit manager uses the same maximum allowable
cost list when billing a plan sponsor as it does when reimbursing a
pharmacy.
(b)
If a pharmacy benefit manager uses multiple maximum allowable cost
lists, the pharmacy benefit manager shall disclose in the aggregate
to a plan sponsor any differences between the amount paid to a
pharmacy and the amount charged to a plan sponsor.
(2)
The disclosures required under division (B)(1) of this section shall
be made within ten days of a pharmacy benefit manager and a plan
sponsor signing a contract or on a quarterly basis.
(3)(a)
Division (B) of this section does not apply to plans governed by the
"Employee Retirement Income Security Act of 1974," 29
U.S.C. 1001, et seq. or medicare part D.
(b)
As used in this division, "medicare part D" means the
voluntary prescription drug benefit program established under Part D
of Title XVIII of the "Social Security Act," 42 U.S.C.
1395w-101, et seq.
(C)
Notwithstanding division (B)(5) of section 3959.01 of the Revised
Code, a health insuring corporation or a sickness and accident
insurer shall comply with the requirements of this section and is
subject to the penalties under section 3959.12 of the Revised Code if
the corporation or insurer is a pharmacy benefit manager, as defined
in section 3959.01 of the Revised Code.
(D)
The
superintendent may impose a monetary fine against a licensee if, upon
investigation and after notice and opportunity for hearing in
accordance with Chapter 119. of the Revised Code, the superintendent
finds that the licensee has violated any provision of section 3957.26
of the Revised Code or any rule adopted by the superintendent
pursuant to or to implement that section.
(E)
The
superintendent of insurance shall adopt rules as necessary to
implement the requirements of this section.
Sec.
3959.20
3957.26
.
(A)
As used in this section
and section 3957.27 of the Revised Code
:
(1)
"Administrator"
has the same meaning as in section 3959.01 of the Revised Code.
(2)
"Cost-sharing"
means the cost to an individual insured under a health benefit plan
according to any coverage limit, copayment, coinsurance, deductible,
or other out-of-pocket expense requirements imposed by the plan.
(2)
"Health benefit plan" and "health plan issuer"
have the same meanings as in section 3922.01 of the Revised Code.
(3)
"Pharmacy audit" has the same meaning as in section 3901.81
of the Revised Code.
(4)
"Pharmacy benefit manager" and "administrator"
have the same meanings as in section 3959.01 of the Revised Code.
(B)
No health plan issuer, pharmacy benefit manager, or any other
administrator shall require cost-sharing in an amount, or direct a
pharmacy to collect cost-sharing in an amount, greater than the
lesser of either of the following from an individual purchasing a
prescription drug:
(1)
The amount an individual would pay for the drug if the drug were to
be purchased without coverage under a health benefit plan;
(2)
The net reimbursement paid to the pharmacy for the prescription drug
by the health plan issuer, pharmacy benefit manager, or
administrator.
(C)(1)
No health plan issuer, pharmacy benefit manager, or administrator
shall retroactively adjust a pharmacy claim for reimbursement for a
prescription drug unless the adjustment is the result of either of
the following:
(a)
A pharmacy audit conducted in accordance with sections 3901.811 to
3901.814 of the Revised Code;
(b)
A technical billing error.
(2)
No health plan issuer, pharmacy benefit manager, or administrator
shall charge a fee related to a claim unless the amount of the fee
can be determined at the time of claim adjudication.
(D)
The department of insurance shall create a web form that consumers
can use to submit complaints relating to violations of this section.
(E)
Any pharmacy benefit manager license issued under this chapter may be
suspended for a period not to exceed two years, revoked, or not
renewed by the superintendent of insurance after notice to the
licensee and hearing in accordance with Chapter 119. of the Revised
Code, if upon investigation and proof the superintendent finds that
the licensee has knowingly violated this section.
Sec.
3959.22
3957.27
.
No
health plan issuer, pharmacy benefit manager, or any other
administrator shall prohibit a pharmacy from mailing or delivering
drugs to patients as an ancillary service.
Sec.
3957.99.
Whoever
knowingly violates section 3957.03 of the Revised Code is guilty of a
misdemeanor of the fourth degree.
Sec.
3959.01.
As
used in this chapter:
(A)
"Administration fees" means any amount charged a covered
person for services rendered. "Administration fees"
includes commissions earned or paid by any person relative to
services performed by an administrator.
(B)
"Administrator" means any person who adjusts or settles
claims on, residents of this state in connection with life, dental,
health, prescription drugs, or disability insurance or self-insurance
programs. "Administrator" includes a pharmacy benefit
manager
,
except as described in division (B)(6) of this section
.
"Administrator" does not include any of the following:
(1)
An insurance agent or solicitor licensed in this state whose
activities are limited exclusively to the sale of insurance and who
does not provide any administrative services;
(2)
Any person who administers or operates the workers' compensation
program of a self-insuring employer under Chapter 4123. of the
Revised Code;
(3)
Any person who administers pension plans for the benefit of the
person's own members or employees or administers pension plans for
the benefit of the members or employees of any other person;
(4)
Any person that administers an insured plan or a self-insured plan
that provides life, dental, health, or disability benefits
exclusively for the person's own members or employees;
(5)
Any health insuring corporation holding a certificate of authority
under Chapter 1751. of the Revised Code or an insurance company that
is authorized to write life or sickness and accident insurance in
this state
;
(6)
On and after July 1, 2027, a pharmacy benefit manager licensed under
Chapter 3957. of the Revised Code but only with respect to agreements
that are entered into, amended, or renewed on or after that date
.
(C)
"Aggregate excess insurance" means that type of coverage
whereby the insurer agrees to reimburse the insured employer or trust
for all benefits or claims paid during an agreement period on behalf
of all covered persons under the plan or trust which exceed a stated
deductible amount and subject to a stated maximum.
(D)
"Contracted pharmacy" or "pharmacy" means a
pharmacy located in this state participating in either the network of
a pharmacy benefit manager or in a health care or pharmacy benefit
plan through a direct contract or through a contract with a pharmacy
services administration organization, group purchasing organization,
or another contracting agent.
(E)
"Contributions" means any amount collected from a covered
person to fund the self-insured portion of any plan in accordance
with the plan's provisions, summary plan descriptions, and contracts
of insurance.
(F)
"Drug
product reimbursement" means the amount paid by a pharmacy
benefit manager to a contracted pharmacy for the cost of the drug
dispensed to a patient and does not include a dispensing or
professional fee.
(G)
"Fiduciary"
has the meaning set forth in section 1002(21)(A) of the "Employee
Retirement Income Security Act of 1974," 88 Stat. 829, 29 U.S.C.
1001, as amended.
(H)
(G)
"Fiscal year" means the twelve-month accounting period
commencing on the date the plan is established and ending twelve
months following that date, and each corresponding twelve-month
accounting period thereafter as provided for in the summary plan
description.
(I)
(H)
"Insurer" means an entity authorized to do the business of
insurance in this state or, for the purposes of this section, a
health insuring corporation authorized to issue health care plans in
this state.
(J)
(I)
"Managed care organization" means an entity that provides
medical management and cost containment services and includes a
medicaid managed care organization, as defined in section 5167.01 of
the Revised Code.
(K)
"Maximum allowable cost" means a maximum drug product
reimbursement for an individual drug or for a group of
therapeutically and pharmaceutically equivalent multiple source drugs
that are listed in the United States food and drug administration's
approved drug products with therapeutic equivalence evaluations,
commonly referred to as the orange book.
(L)
"Maximum allowable cost list" means a list of the drugs for
which a pharmacy benefit manager imposes a maximum allowable cost.
(M)
(J)
"Multiple employer welfare arrangement" has the same
meaning as in section 1739.01 of the Revised Code.
(N)
(K)
"Pharmacy benefit manager"
means
an entity that contracts with pharmacies on behalf of an employer, a
multiple employer welfare arrangement, public employee benefit plan,
state agency, insurer, managed care organization, or other
third-party payer to provide pharmacy health benefit services or
administration. "Pharmacy benefit manager" includes the
state pharmacy benefit manager selected under section 5167.24 of the
Revised Code
has
the same meaning as in section 3957.01 of the Revised Code
.
(O)
(L)
"Plan" means any arrangement in written form for the
payment of life, dental, health, or disability benefits to covered
persons defined by the summary plan description and includes a drug
benefit plan administered by a pharmacy benefit manager.
(P)
(M)
"Plan sponsor" means the person who establishes the plan.
(Q)
(N)
"Self-insurance program" means a program whereby an
employer provides a plan of benefits for its employees without
involving an intermediate insurance carrier to assume risk or pay
claims. "Self-insurance program" includes but is not
limited to employer programs that pay claims up to a prearranged
limit beyond which they purchase insurance coverage to protect
against unpredictable or catastrophic losses.
(R)
(O)
"Specific excess insurance" means that type of coverage
whereby the insurer agrees to reimburse the insured employer or trust
for all benefits or claims paid during an agreement period on behalf
of a covered person in excess of a stated deductible amount and
subject to a stated maximum.
(S)
(P)
"Summary plan description" means the written document
adopted by the plan sponsor which outlines the plan of benefits,
conditions, limitations, exclusions, and other pertinent details
relative to the benefits provided to covered persons thereunder.
(T)
(Q)
"Third-party payer" has the same meaning as in section
3901.38 of the Revised Code.
Sec.
3959.12.
(A)
Any license issued under sections 3959.01 to 3959.16 of the Revised
Code may be suspended for a period not to exceed two years, revoked,
or not renewed by the superintendent of insurance after notice to the
licensee and hearing in accordance with Chapter 119. of the Revised
Code. The superintendent may suspend, revoke, or refuse to renew a
license if upon investigation and proof the superintendent finds that
the licensee has done any of the following:
(1)
Knowingly violated any provision of sections 3959.01 to 3959.16
or
3959.20
of
the Revised Code or any rule promulgated by the superintendent;
(2)
Knowingly made a material misstatement in the application for the
license;
(3)
Obtained or attempted to obtain a license through misrepresentation
or fraud;
(4)
Misappropriated or converted to the licensee's own use or improperly
withheld insurance company premiums or contributions held in a
fiduciary capacity, excluding, however, any interest earnings
received by the administrator as disclosed in writing by the
administrator to the plan sponsor;
(5)
In the transaction of business under the license, used fraudulent,
coercive, or dishonest practices;
(6)
Failed to appear without reasonable cause or excuse in response to a
subpoena, examination, warrant, or other order lawfully issued by the
superintendent;
(7)
Is affiliated with or under the same general management or
interlocking directorate or ownership of another administrator that
transacts business in this state and is not licensed under sections
3959.01 to 3959.16 of the Revised Code;
(8)
Had a license suspended, revoked, or not renewed in any other state,
district, territory, or province on grounds identical to those stated
in sections 3959.01 to 3959.16 of the Revised Code;
(9)
Been convicted of a financially related felony;
(10)
Failed to report a felony conviction as required under section
3959.13 of the Revised Code.
(B)
Upon receipt of notice of the order of suspension in accordance with
sections 119.05 and 119.07 of the Revised Code, the licensee shall
promptly deliver the license to the superintendent, unless the order
of suspension is appealed under section 119.12 of the Revised Code.
(C)
Any person whose license is revoked or whose application is denied
pursuant to sections 3959.01 to 3959.16 of the Revised Code is
ineligible to apply for an administrators license for two years.
(D)
The superintendent may impose a monetary fine against a licensee if,
upon investigation and after notice and opportunity for hearing in
accordance with Chapter 119. of the Revised Code, the superintendent
finds that the licensee has
done
either of the following:
(1)
Committed
committed
fraud
or engaged in any illegal or dishonest activity in connection with
the administration of pharmacy benefit management services
;
(2)
Violated any provision of section 3959.111 of the Revised Code or any
rule adopted by the superintendent pursuant to or to implement that
section
.
Section
2.
That
existing sections
1751.92,
3905.24
,
3923.87,
3959.01
,
3959.111, 3959.12, 3959.20, and 3959.22
of the Revised Code are hereby repealed.
Speaker
___________________ of the House of Representatives.
President
___________________ of the Senate.
Passed
________________________, 20____
Approved
________________________, 20____
Governor.
The section numbering of law
of a general and permanent nature is complete and in conformity with
the Revised Code.
Director, Legislative
Service Commission.
Filed
in the office of the Secretary of State at Columbus, Ohio, on the
____ day of ___________, A. D. 20____.
Secretary of State.
File
No. _________ Effective Date ___________________