HB2328 H&HR AM 1-31 #1
The Committee on Health and Human Resources moved to amend the
bill on page two, by striking everything following the enacting
section and inserting in lieu thereof the following:
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ARTICLE 25G. PHARMACY BENEFIT MANAGER LICENSING AND
REGULATION.
§33-25G-1. Short title and purpose.
(a) This article may be cited as the "Pharmacy Benefit Manager
Licensing and Regulation Act."
(b) The purpose of this article is to establish standards and
criteria for the licensing and regulation of pharmacy benefit
managers. This article is designed to promote, preserve, and
protect the public health, safety, and welfare by and through
licensing and effective regulation of pharmacy benefit managers.
§33-25G-2. Definitions.
As used in this article, unless the context otherwise
indicates, the following terms have the following meanings:
(1) "Commissioner" means the Insurance Commissioner of West
Virginia;
(2) "Covered entity" means a nonprofit hospital or medical
service corporation, health insurer, health benefit plan or health
maintenance organization licensed pursuant to the provisions of article twenty-five-a of this chapter; a health program
administered by the state in the capacity of provider of health
coverage; or an employer, labor union or other group of persons
organized in the state that provides health coverage to covered
individuals who are employed or reside in the state. "Covered
entity" does not include a health plan that provides coverage only
for accidental injury; specified disease; hospital indemnity;
medicare supplement, as defined in section five-b, article twenty-
eight, of this chapter; disability income; long-term care; or other
limited benefit health insurance policies and contracts.
(3) "Covered person" means a member, participant, enrollee,
contract holder or policy holder or beneficiary who is provided
health coverage by the covered entity. "Covered person" includes
a dependent or other person provided health coverage through a
policy, contract or plan for a covered individual.
(4) "Pharmacy benefit management" means the claims
administration of prescription drugs at a negotiated rate for
dispensation within this state to covered persons, the
administration or management of prescription drug benefits provided
by a covered entity for the benefit of covered persons, including
any of the following services provided with regard to the
administration of pharmacy benefits:
(A) Mail service pharmacy;
(B) Claims processing, retail network management and payment of claims to pharmacies for prescription drugs dispensed to covered
persons;
(C) Clinical formulary development and management services;
(D) Rebate contracting and administration;
(E) Certain patient compliance, therapeutic intervention and
generic substitution programs; and
(F) Disease management programs.
(5) "Pharmacy benefit manager" means an entity that performs
pharmacy benefit management and includes a person or entity acting
for a pharmacy benefit manager in a contractual or employment
relationship in the performance of pharmacy benefit management
services, including mail service pharmacy. "Pharmacy benefit
manager" does not include a pharmacy benefit manager who is
affiliated with an insurer and who only performs the contractual
duties, between the pharmacy benefit manager and the insurer, of
the pharmacy benefit manager for the direct and assumed business of
the affiliated insurer. The insurer is responsible for the acts of
the pharmacy benefit manager and is responsible for providing all
of the pharmacy benefit manager's books and records to the
Insurance Commissioner, upon a request from the Insurance
Commissioner. For purposes of this subdivision, "insurer" means a
licensed insurance company, prepaid hospital or medical care plan,
health maintenance organization or a health care corporation.
§33-25G-3. Applicability and scope.
This act applies to a pharmacy benefit manager that provides
claims processing services, other prescription drug or device
services, or both, to covered persons who are residents of this
state.
§33-25G-4. Licensing requirement.
(a) No person or organization may act or operate as a pharmacy
benefit manager in this state without obtaining a license from the
commissioner. Renewal of the license is required on an annual
basis.
(b) Each person or organization seeking licensure shall file
an application, furnished by the commissioner, which shall include,
but is not limited to the following:
(1) All basic organizational documents, including the articles
of incorporation, articles of association, bylaws, partnership
agreement, trade name certification, trust agreement, shareholder
agreement and other applicable documents, including amendments;
(2) The names, addresses, official positions and professional
qualifications of the individuals who are responsible for the
conduct of the affairs of the pharmacy benefit manager, including
all members of the board of directors, board of trustees, executive
committee, other governing board or committee, the principal
officers in the case of a corporation, the partners or members in
the case of a partnership or association and any other person who
exercises control or influence over the affairs of the pharmacy benefit manager;
(3) Audited annual financial statements or reports for the two
most recent fiscal years that prove that the applicant has a
positive net worth. If the applicant has been in existence for
less than two fiscal years, the application shall include financial
statements or reports, certified by an officer of the applicant and
prepared in accordance with GAAP, for any completed fiscal years
and for any month during the current fiscal year for which the
financial statements or reports have been completed. An audited
financial/annual report prepared on a consolidated basis shall
include a columnar consolidating or combining worksheet that shall
be filed with the report and include the following:
(A) Amounts shown on the consolidated audited financial report;
(B) Amounts for each entity stated separately; and
(C) Explanations of consolidating and eliminating entries.
The applicant shall also include any other information required by
the commissioner in order to review the current financial condition
of the applicant;
(4) The name and address of the agent for service of process
in the state;
(5) A detailed description of the claims processing services,
pharmacy services, insurance services, other prescription drug or
device services, audit procedures for network pharmacies or other
administrative services to be provided;
(6) Any other information the commissioner requires; and
(7) A filing fee of two hundred dollars.
(c) The applicant shall make available for inspection by the
commissioner, copies of all contracts with insurers, pharmaceutical
manufacturers or other persons using the services of the pharmacy
benefit manager for pharmacy benefit management services.
(d) The commissioner may withhold or revoke a license if it is
determined that the pharmacy benefit manager or any principal of
the manager is not financially sound or has had a license revoked
or denied for cause in any state.
§33-25G-5.
Disclosure of ownership or affiliation and certain
agreements.
(a) Each pharmacy benefit manager shall disclose to the
commissioner any ownership interest or affiliation of any kind with
any insurance company responsible for providing benefits directly
or through reinsurance to any plan for which the pharmacy benefit
manager provides services or any parent companies, subsidiaries and
other entities or businesses relative to the provision of pharmacy
services, other prescription drug or device services or a
pharmaceutical manufacturer.
(b) A pharmacy benefit manager shall notify the commissioner
in writing within thirty days of any material change in its
ownership.
(c) A pharmacy benefit manager shall disclose the following agreements, and any changes to the agreements, within thirty days
of the change:
(1) All incentive arrangement or programs such as rebates,
discounts, disbursements, or any other similar financial program or
arrangement relating to income or consideration received or
negotiated, directly or indirectly, with any pharmaceutical
company, that relates to prescription drug or device services,
including at a minimum, information on the formulary or other
method for calculation and amount of the incentive arrangements,
rebates or other disbursements, the identity of the associated drug
or device and the dates and amounts of the disbursements;
(2) Any agreement with a pharmaceutical manufacturer to share
manufacturer rebates and discounts with the pharmacy benefit
manager or to pay money or other economic benefits to the pharmacy
benefit manager;
(3) Any agreement or practice to bill a health plan for
prescription drugs at a cost higher than the pharmacy benefit
manager pays the pharmacy;
(4) Any agreement to share revenue with a mail order or
internet pharmacy company; and
(5) Any agreement to sell prescription drug data including
data concerning the prescribing practices of the health care
providers in the state.
§33-25G-6. Maintenance of records; access; financial examination.
(a) A pharmacy benefit manager shall maintain all books and
records of all transactions between the pharmacy benefit manager,
insurers and covered entities for three years beyond the
termination of the contract period, unless any other law prescribes
a greater time period.
(b) The pharmacy benefit manager shall give the commissioner
access to the books and records maintained by the pharmacy benefit
manager for the purposes of examination, audit and inspection.
(c) The commissioner may conduct examinations of any pharmacy
benefit manager in this state whenever the commissioner considers
it necessary to ensure an appropriate level of regulatory
oversight. The pharmacy benefit manager shall pay the cost of the
examination which shall be deposited into the special revenue fund,
created in section nine of this article, to provide all expenses
for the regulation under this article.
(d) In conducting examinations pursuant to this section, the
commissioner has the same powers set forth in subsection (h),
section nine, article two of this chapter.
§33-25G-7. Annual audited statement and fees required.
Each pharmacy benefit manager with a license shall file with
the commissioner an annual audited statement on or before the first
day of June of each year. The statement shall be in the form and
contain information and material the commissioner prescribes and
shall include the annual fee of two hundred dollars. The statement must include the total number of persons subject to management by
the pharmacy benefit manager during the previous year, or portion
of the year, and the dollar value of the claims processed.
§33-25G-8.
Confidentiality.
(a) Documents, materials or other information in the
possession or control of the office of the insurance commissioner
that are provided pursuant to sections five and six of this article
or obtained by the commissioner in an investigation of alleged
fraudulent acts related to the business of insurance shall be
confidential by law and privileged, shall not be subject to the
provisions of chapter twenty-nine-b of this code, shall not be open
to public inspection, shall not be subject to subpoena, and shall
not be subject to discovery or admissible in evidence in any
private civil action. The commissioner may use the documents,
materials or other information in the furtherance of any regulatory
or legal action brought as a part of the commissioner's official
duties. The commissioner may use the documents, materials or other
information if they are required for evidence in criminal
proceedings or other action by the state or federal government and
in such context may be discoverable as ordered by a court of
competent jurisdiction exercising its discretion.
(b) Neither the commissioner nor any person who receives
documents, materials or other information while acting under the
authority of the commissioner may be permitted or required to testify in any private civil action concerning any confidential
documents, materials or information subject to subsection (a) of
this section except as ordered by a court of competent
jurisdiction.
§33-25G-9. Special revenue account.
There is created in the State Treasury a special revenue
account, designated the "Pharmacy Benefit Managers Licensure Fund",
which is an interest bearing account and may be invested in the
manner permitted by the provisions of article six, chapter twelve
of this code, with the interest income a proper credit to the fund.
The account shall contain any funds received by the commissioner
pursuant to this article and any funds appropriated by the
Legislature. The commissioner may expend funds received in the
Pharmacy Benefit Managers Licensure Fund only for the purposes of
administration of this article.
§33-25G-10. Unauthorized business.
The unauthorized conduct of the business of a pharmacy benefit
manager shall be treated as unauthorized insurance business and is
subject to the same criminal and civil penalties as provided in
article forty-four of this chapter for violation of the
unauthorized insurers act.
§33-25G-11. Violations.
The provisions of section eleven, article three of this
chapter apply to any violations of this article by a pharmacy benefit manager.
§33-25G-12. Promulgation of rules.
The commissioner shall propose rules for legislative approval
in accordance with the provisions of article three, chapter
twenty-nine-a of this code, including emergency rules, pursuant to
the provisions of article three, chapter twenty-nine-a of this code
to implement the provisions of this article, and the rules may
include the establishment of fees.
§33-25G-13. Commissioner's reporting requirements.
On or before the first day of January, two thousand nine, and
every year thereafter, the commissioner shall submit a report to
the Legislature and the Governor detailing the implementation of
the licensure process and the information collected. All
information contained in the report shall be de-identified and
reported as aggregate data only. The report shall include, but is
not limited to, the following information:
(1) The number of pharmacy benefit managers licensed in this
state;
(2) The number of persons in this state served by the pharmacy
benefit manager annually;
(3) The number of contracts to provide services in this state;
(4) The aggregate amount of rebates, discounts or
disbursements received from pharmaceutical manufacturers, based on
its book of business within this state;
(5) The aggregate amount of rebates, discounts or
disbursements returned to the client(s) within this state; and
(6) Any other information the commissioner considers necessary
to report.
§33-25G-14. Effective date.
Any pharmacy benefit manager doing business within this state
shall obtain a license as required in section four of this article
within one hundred twenty days from the effective date of this
article.
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