WEST virginia legislature

2024 regular session

Committee Substitute

for

Senate Bill 453

By Senators Tarr, Woodrum, Grady, Rucker, Stuart, and Phillips

[Originating in the Committee on Health and Human Resources; reported  February 2, 2024]

A BILL to amend and reenact §5-16-9 of the Code of West Virginia, 1931, as amended, relating to the Public Employees Insurance Agency; prohibiting a pharmacy benefit manager from reimbursing a pharmacy or pharmacist in an amount less than the national average drug acquisition cost for a prescription drug or pharmacy service; requiring the pharmacy benefit manager to pay a dispensing fee at least equal to the fee paid by West Virginia Medicaid; providing for alternative payment calculation in the event that the national average drug acquisition cost is not available; defining terms; providing effective date; requiring additional pharmacy data variables be reported to the Public Employees Insurance Agency; removing language requiring data provided by the pharmacy benefit manager to be kept confidential; requiring the director of the Public Employees Insurance Agency to report on an annual basis; requiring the Public Employees Insurance Agency to require specific terms in its contract with a pharmacy benefit manager; and requiring the Public Employees Insurance Agency to issue a request for proposal for pharmacy benefit manager services with an effective date of July 1, 2025, and at least every three years thereafter.

Be it enacted by the Legislature of West Virginia:

ARTICLE 16. WEST VIRGINIA PUBLIC EMPLOYEES INSURANCE ACT.

§5-16-9. Authorization to execute contracts.

(a) The director is given exclusive authorization to execute such contract or contracts as are necessary to carry out the provisions of this article.

(b) The provisions of §5A-3-1 et seq. of this code, relating to the Division of Purchasing of the Department of Finance and Administration, shall not apply to any contracts for any insurance coverage or professional services authorized to be executed under the provisions of this article. Before entering into any contract for any insurance coverage, as authorized in this article, the director shall invite competent bids from all qualified and licensed insurance companies or carriers that may wish to offer plans for the insurance coverage desired. The director shall negotiate and contract directly with health care providers and other entities, organizations, and vendors in order to secure competitive premiums, prices, and other financial advantages. The director shall deal directly with insurers or health care providers and other entities, organizations, and vendors in presenting specifications and receiving quotations for bid purposes. No commission or finder’s fee, or any combination thereof, shall be paid to any individual or agent: Provided, That this shall not preclude an underwriting insurance company or companies, at their own expense, from appointing a licensed resident agent within this state to service the companies’ contracts awarded under the provisions of this article. Commissions reasonably related to actual service rendered for the agent or agents may be paid by the underwriting company or companies. In no event shall payment be made to any agent or agents when no actual services are rendered or performed. The director shall award the contract or contracts on a competitive basis. In awarding the contract or contracts the director shall take into account consider the experience of the offering agency, corporation, insurance company, or service organization in the group hospital and surgical insurance field, group major medical insurance field, group prescription drug field, and group life and accidental death insurance field, and its facilities for the handling of claims. In evaluating these factors, the director may employ the services of impartial, professional insurance analysts or actuaries, or both. Any contract executed by the director with a selected carrier shall be a contract to govern all eligible employees subject to the provisions of this article. Nothing contained in this article shall prohibit any insurance carrier from soliciting employees covered hereunder to purchase additional hospital and surgical, major medical, or life and accidental death insurance coverage.

(c) The director may authorize the carrier with whom a primary contract is executed to reinsure portions of the contract with other carriers which elect to be a reinsurer and who are legally qualified to enter into a reinsurance agreement under the laws of this state.

(d) Each employee who is covered under any contract or contracts shall receive a statement of benefits to which the employee, his or her spouse, and his or her dependents are entitled under the contract, setting forth the information as to whom the benefits are payable, to whom claims shall be submitted, and a summary of the provisions of the contract or contracts as they affect the employee, his or her spouse, and his or her dependents.

(e) The director may at the end of any contract period discontinue any contract or contracts it has executed with any carrier and replace the same with a contract or contracts with any other carrier or carriers meeting the requirements of this article.

(f) The director shall include language in all contracts for pharmacy benefits management, as defined by §33-51-3 of this code, requiring the pharmacy benefit manager to report quarterly monthly to the agency the following:

(1) The overall total amount charged to the agency for all claims processed by the pharmacy benefit manager during the quarter month;

(2) The overall total amount of reimbursements paid to pharmacy providers during the quarter month;

(3) The overall total number of claims in which the pharmacy benefits manager reimbursed a pharmacy provider for more or less than the amount charged to the agency for all claims processed by the pharmacy benefit manager during the quarter month; and

(4) For all pharmacy claims, the total amount paid to the pharmacy provider per claim, including, but not limited to, the following:

(A) The cost of drug reimbursement;

(B) Dispensing fees;

(C) Copayments; and

(D) The amount charged to the agency for each claim by the pharmacy benefit manager;

(E) Date of Service;

(F) NDC-11;

(G) Drug Name;

(H) Drug Strength;

(I) Quantity;

(J) Days of Therapy;

(K) Rx Count;

(L) Mail/Retail Code;

(M) Brand/Generic Indicator;

(N) Specialty Drug Indicator;

(O) Compound Indicator;

(P) Formulary Indicator;

(Q) Gross Cost;

(R) Member Cost;

(S) Plan Cost;

(T) Dispense as Written;

(U) Pharmacy NPI Number;

(V) Pharmacy Claim ID;

(W) Prescriber NPI Number;

(X) Pharmacy Name; and

(Y) Ingredient Cost.

In the event there is a difference between the amount for any pharmacy claim paid to the pharmacy provider and the amount reimbursed to the agency, the pharmacy benefit manager shall report an itemization of all administrative fees, rebates, or processing charges associated with the claim. All data and information provided by the pharmacy benefit manager shall be kept secure, and notwithstanding any other provision of this code to the contrary, the agency shall maintain the confidentiality of the proprietary information and not share or disclose the proprietary information contained in the report or data collected with persons outside the agency. All data and information provided by the pharmacy benefit manager shall be considered proprietary and confidential and exempt from disclosure under the West Virginia Freedom of Information Act pursuant to §29B-1-4(a)(1) of this code. Only those agency employees involved in collecting, securing, and analyzing the data for the purpose of preparing the report provided for herein shall have access to the proprietary data. The director shall provide a quarterly an annual report to the Joint Committee on Health detailing the information required by this section, including any difference or spread between the overall amount paid by pharmacy benefit managers to the pharmacy providers and the overall amount charged to the agency for each claim by the pharmacy benefit manager. To the extent necessary, the director shall use aggregated, nonproprietary data only: Provided, That the director must provide a clear and concise summary of the total amounts charged to the agency and reimbursed to pharmacy providers on a quarterly an annual basis.

(g) If the information required herein is not provided, the agency may terminate the contract with the pharmacy benefit manager and the Office of the Insurance Commissioner shall discipline the pharmacy benefit manager as provided in §33-51-8(e) of this code.

(h) The Public Employees Insurance Agency shall contract with networks to provide care to its members out of state.

(i) The Public Employees Insurance Agency shall require each of the following in its requests for proposals and contracts with a pharmacy benefit manager:

(1) A per member per month guarantee that is entirely based on the total pharmacy program cost, with the pharmacy benefit manager contractually agreeing to an at-risk administrative fee model if the total pharmacy program cost guarantee is not met.

(2) The pharmacy benefit manager shall disclose all information and data related to contracting, reimbursement, networks, rebates, fees, and any other information and data requested by the Public Employees Insurance Agency, Legislature, and vendors, for the purpose of performing study and analysis.

(3) A pharmacy benefit manager shall not reimburse a West Virginia pharmacy or pharmacist for a prescription drug or pharmacy service in an amount less than the national average drug acquisition cost for a prescription drug or pharmacy service at the time the drug is administered or dispensed, plus a professional dispensing fee at least equal to the professional dispensing fee paid by West Virginia Medicaid for outpatient drugs.  Increases to the professional dispensing fee may be set by the Director in accordance with this subdivision.  Provided, That if the national average drug acquisition cost is not available at the time a drug is administered or dispensed, a pharmacy benefit manager may not reimburse a West Virginia pharmacy or pharmacist in an amount that is less than the wholesale acquisition cost of the drug, as defined in 42 U.S.C. § 1395w-3a(c)(6)(B), plus a dispensing fee as described in this subdivision.  A West Virginia pharmacy is a domestic business entity as registered with the West Virginia Secretary of State.  A foreign pharmacy is a foreign business entity as registered with the West Virginia Secretary of State.  The provision in this subdivision shall be effective for the Public Employees Insurance Agency plan year beginning on July 1, 2024.

(4) 100 percent of drug manufacturer Rebates shall be passed entirely to the Public Employees Insurance Agency.

(5) "Rebate" means any and all payments that accrue to a pharmacy benefits manager or its health plan client, directly or indirectly, from a pharmaceutical manufacturer, including, but not limited to, discounts, administration fees, credits, incentives, or penalties associated directly or indirectly in any way with claims administered on behalf of a health plan client. The term "rebate" does not include any discount or payment that may be provided, or made, to any 340B entity through such program.

(6) A pharmacy benefit manager must offer network participation to all licensed West Virginia pharmacies seeking participation in the pharmacy network.

(7) A pharmacy benefit manager shall not utilize any manner of spread pricing, clawbacks, fees, or make any formulary changes or decisions that favor brand or specialty pharmaceuticals over generic pharmaceuticals.

(8) The Public Employees Insurance Agency shall require all Specialty drugs to be dispensed or administered by a West Virginia pharmacy. Provided, That a non-West Virginia pharmacy may be used to dispense or administer drugs to protect pharmacy network adequacy and reasonable patient access to drugs.  "Specialty drug" means a drug used to treat chronic and complex, or rare medical conditions and requiring special handling or administration, provider care coordination, or patient education that cannot be provided by a non-specialty pharmacy or pharmacist.

(j) The Public Employees Insurance Agency shall issue a request for proposal for pharmacy benefit manager services, with an effective date of July 1, 2025, and at least every three years thereafter.

NOTE: The purpose of this bill is to require any pharmacy benefit manager ("PBM") who contracts with PEIA to be entirely transparent in providing its full data around pricing and payments for drugs and to pharmacies.

Strike-throughs indicate language that would be stricken from a heading or the present law and underscoring indicates new language that would be added.