Read the full stored bill text
As Introduced
136th
General Assembly
Regular
Session
S. B. No. 210
2025-2026
Senator Blessing
To
amend section 3959.01 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,
3957.17, 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
section 3959.01 be amended 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, 3957.17, and
3957.99 of the Revised Code be enacted to read as follows:
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)
"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.
(D)
"Pharmacist" means an individual licensed to engage in the
practice of pharmacy, as defined in section 4729.01 of the Revised
Code.
(E)
"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.
(F)
"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.
(G)(1)
"Rebate" means a discount or other price concession, or a
payment that is both of the following:
(a)
Based on utilization of a prescription drug;
(b)
Paid by a manufacturer or third party, directly or indirectly, to a
pharmacy benefit manager, pharmacy services administrative
organization, or pharmacy after a claim has been processed and paid
at a pharmacy.
(2)
"Rebate" includes all of the following:
(a)
Incentives, disbursements, and reasonable estimates of a volume-based
discount;
(b)
Incentives or credits regardless of categorization, market share
incentives, promotional allowances, commissions, educational grants,
market share of utilization, drug pull-through programs,
implementation allowances, clinical detailing, rebate submission
fees, and administrative or management fees;
(c)
Bona fide fees, including manufacturer administrative fees or
corporate fees that any vendor, affiliate, or subcontractor,
including any group purchasing organization, receives from a
pharmaceutical manufacturer for administrative costs including
formulary placement and access.
(3)
"Rebate" does not include pharmacy purchase discounts and
related service fees a vendor or a vendor's affiliates receive from a
manufacturer or third party that are attributable to or based on the
purchase of product to stock, or the dispensing of products from, a
vendor's affiliated mail order and specialty drug pharmacies.
(H)
"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 January 1, 2027.
(I)
"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.
(J)
"Drug product reimbursement," "fiduciary,"
"fiscal year," "insurer," "pharmacy benefit
manager," "plan," "plan sponsor," and
"self-insurance program" have the same meanings as in
section 3959.01 of the Revised Code.
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.
Sec.
3957.03.
(A)
On and after January 1, 2027, no person shall knowingly solicit a
plan or sponsor of a plan 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 the person is licensed under this chapter.
(B)
No person shall knowingly provide pharmacy benefit management
services pursuant to an agreement subject to this chapter unless the
person is licensed under this chapter.
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.
(B)
All applications for a pharmacy benefit manager license shall be
accompanied by a nonrefundable filing fee of two thousand dollars per
application.
(C)
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.
Sec.
3957.05.
The
superintendent of insurance shall approve or deny an application for
a license under this chapter within thirty days 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 the notice is sent.
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 and issue a certificate
of authority to operate as a pharmacy benefit manager in this state.
The license is effective on the date the application is approved by
the superintendent and expires annually on the thirtieth day of June.
If the application is approved in May or June, the license expires on
the thirtieth day of June the following year. All licenses may be
renewed, annually, 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 person licensed under this chapter not later than the first day
of May each year.
(B)
A person licensed under this chapter may renew the 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.
(C)
In the event that a person licensed under this chapter fails to apply
for renewal and pay the renewal fee before the date the license
expires, the superintendent shall cancel the person's certificate of
authority to operate as a pharmacy benefit manager in this state. A
person whose license is expired may apply to reinstate the license in
the same manner as an original application under section 3957.04 of
the Revised Code, except that the filing fee is the product of two
hundred fifty dollars times the number of months the reinstated
license will be in effect.
Sec.
3957.09.
(A)
Except as otherwise provided in division (G) of this section, no
person shall act as a pharmacy benefit manager on or after January 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 books and records of all
transactions and information relative to covered persons or
beneficiaries. The pharmacy benefit manager shall maintain such books
and records either electronically or in physical form at the pharmacy
benefit manager's principal office or branch office.
(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 duly 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.
An
insurer that enters into an agreement subject to this chapter with a
pharmacy benefit manager to perform any services related to
prescription drug benefits shall ensure that, under the agreement,
the pharmacy benefit manager acts as the insurer's agent and owes a
fiduciary duty to the insurer in the pharmacy benefit manager's
performance of services related to the insurer's prescription drug
benefits.
Sec.
3957.11.
(A)
Upon notice and hearing in accordance with Chapter 119. of the
Revised Code, the superintendent of insurance may suspend for a
period not exceeding two years, revoke, or refuse to renew any
license issued under this chapter, or impose a monetary fine against
a licensee, or both, if upon investigation and proof the
superintendent finds that the licensee has done any of the following:
(1)
Knowingly violated any provision of this chapter or any rule
promulgated by the superintendent in accordance with this chapter;
(2)
Knowingly made a material misstatement in the application for
licensure or renewal;
(3)
Obtained or attempted to obtain a license through misrepresentation
or fraud;
(4)
Misappropriated, converted to the licensee's own use, or improperly
withheld insurance company premiums or contributions held by the
licensee in a fiduciary capacity, excluding interest earnings
received by the licensee that are disclosed in writing 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 pharmacy benefit
manager that transacts business in this state and is not licensed
under this chapter;
(8)
Had a license suspended, revoked, or not renewed in any other state,
district, territory, or province on grounds identical to those stated
in this section;
(9)
Been convicted of a financially related felony;
(10)
Failed to report a felony conviction as required by section 3957.12
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 this chapter is ineligible to apply for a pharmacy
benefit manager license for two years after the date the license is
revoked or the application is denied.
(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 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 3957.09 of the Revised Code or any
rule adopted by the superintendent pursuant to or to implement that
section.
Sec.
3957.12.
Any
person that, while licensed as a pharmacy benefit manager under this
chapter, is convicted of a felony, shall report the conviction to the
superintendent of insurance within thirty days after the entry date
of the judgment of conviction. Within that thirty-day period, the
person shall also provide the superintendent with a copy of the
judgment, the commitment order or the order imposing a community
control sanction, as defined in section 2929.01 of the Revised Code,
and any other relevant documents.
Sec.
3957.13.
(A)
On and after January 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
insurance carrier;
(3)
Fail to remit insurance company premiums within the policy period or
within the time agreed to in writing between the insurance company
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.
3957.14.
(A)
On and after July 1, 2027, a pharmacy benefit manger shall do all of
the following:
(1)
Maintain detailed 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 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 books and records described in division (A)(1) of this
section for the period in 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 the purposes of the books and records required by 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 which, 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 January 1, 2027, the superintendent of insurance may
examine the books and records of a pharmacy benefit manager as
necessary to determine the following:
(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 health care payor;
(3)
The aggregate amount of rebates passed on to an enrollee of each
health care payor at the point of sale that reduced the enrollee's
applicable deductible, copayment, coinsurance, or other cost-sharing
amount;
(4)
The individual and aggregate amount paid by a health care payor 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)
This section does not limit the power of the superintendent to
examine or audit the books and records of a pharmacy benefit manager.
(I)
Upon written notification to a pharmacy benefit manager by the
superintendent of insurance that the pharmacy benefit manager has
violated any provision of this chapter, the pharmacy benefit manager
shall correct the violation specified in the notice within sixty
days.
Sec.
3957.15.
(A)
All information and data acquired by the superintendent of insurance
or the department of insurance under this chapter is considered
proprietary and confidential and is not a public record under section
149.43 of the Revised Code.
(B)
On and after January 1, 2027, no pharmacy benefit manager or
representative of a pharmacy benefit manager shall do either of the
following:
(1)
Cause or knowingly permit the use of any advertisement, promotion,
solicitation, representation, proposal, or offer that is untrue,
deceptive, or misleading;
(2)
Reimburse a pharmacy or pharmacist in this state an amount less than
the amount that the pharmacy benefit manager reimburses a pharmacy
benefit manager affiliate for providing the same service.
Sec.
3957.16.
This
chapter does not apply to an employer's self-insurance plan to the
extent that federal law supersedes, preempts, prohibits, or otherwise
precludes its application to such plan.
Sec.
3957.17.
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.
3957.99.
Whoever
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 January 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)
"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)
"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)
"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)
"Multiple employer welfare arrangement" has the same
meaning as in section 1739.01 of the Revised Code.
(N)
"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.
(O)
"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)
"Plan sponsor" means the person who establishes the plan.
(Q)
"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)
"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)
"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)
"Third-party payer" has the same meaning as in section
3901.38 of the Revised Code.
Section
2.
That
existing section 3959.01 of the Revised Code is hereby repealed.