AB114,9,2320 2. A health care provider who prescribed the prescribed drug or device states,
21in writing, that the prescribed drug or device is more suitable for the insured's or plan
22participant's condition than alternative drugs or devices that are covered under the
23policy or plan.
AB114,14 24Section 14. 632.865 (title) and (1) of the statutes are repealed.
AB114,15 25Section 15. 632.865 (2) of the statutes is renumbered 649.30 (1).
1Section 16. Chapter 649 of the statutes is created to read:
AB114,10,32 Chapter 649
3 pharmacy benefit managers
AB114,10,4 4649.01 Definitions. In this chapter:
AB114,10,5 5(1) “Health benefit plan” has the meaning given in s. 632.745 (11).
AB114,10,6 6(2) “Health care provider” has the meaning given in s. 146.81 (1).
AB114,10,9 7(3) “Maximum allowable cost” means the maximum amount that a pharmacy
8benefit manager will pay a pharmacist or pharmacy toward the cost of a prescribed
9drug or device.
AB114,10,10 10(4) “Pharmacist" has the meaning given in s. 450.01 (15).
AB114,10,11 11(5) “Pharmacy" means an entity licensed under s. 450.06 or 450.065.
AB114,10,19 12(6) “Pharmacy benefit manager" means an entity doing business in this state
13that contracts to provide claims processing services, to otherwise administer or
14manage prescription drug benefits, or both on behalf of any insurer or other entity
15that provides prescription drug benefits to residents of this state. “Pharmacy benefit
16manager” does not include a health care provider except for a health care provider
17that is required to obtain a license under s. 450.06, 450.065, or 450.071 and does not
18include an entity that provides claims processing services or other administration of
19prescription drug only for the Medical Assistance program under subch. IV of ch. 49.
AB114,10,20 20(7) “Prescribed drug or device" has the meaning given in s. 450.01 (18).
AB114,10,22 21(8) “Prescription drug benefit" means coverage of or payment or assistance for
22prescribed drugs or devices.
AB114,10,24 23(9) “Registrant" means a pharmacy benefit manager that is registered under
24this chapter.
1649.05 Registration of pharmacy benefit managers. (1) (a) Except as
2provided in par. (b), no person may perform any activities of a pharmacy benefit
3manager in this state without first registering with the commissioner under this
AB114,11,65 (b) A pharmacy benefit manager that is an insurer with a current certificate
6of authority issued under s. 601.04 is not required to register under this section.
AB114,11,87 (c) 1. Any pharmacy benefit manager that is required to obtain a license under
8s. 450.06, 450.065, or 450.071 shall also register under this chapter.
AB114,11,129 2. If the pharmacy examining board revokes a license that had been granted
10under s. 450.06, 450.065, or 450.071 to a registrant, the registrant shall notify the
11commissioner of the revocation. The commissioner shall revoke the registration
12under this chapter.
AB114,11,14 13(2) An applicant for registration as a pharmacy benefit manager shall do all
14of the following:
AB114,11,1615 (a) File with the commissioner an application on a form that the commissioner
AB114,11,1717 (b) Pay any registration fee set by the commissioner.
AB114,11,22 18(3) The commissioner shall register any pharmacy benefit manager that meets
19the requirements of this chapter and any requirements the commissioner requires
20of applicants. Registration under this section is valid for one year unless registration
21is suspended or revoked. The commissioner may refuse to register any pharmacy
22benefit manager for which a previous registration was suspended or revoked.
AB114,11,24 23649.10 Powers and duties of the commissioner. (1) The commissioner
24may do any of the following:
AB114,11,2525 (a) Promulgate rules necessary to carry out the intent of this chapter.
1(b) Use authority granted under ss. 601.41, 601.42, 601.43, 601.44, 601.61,
2601.62, 601.63, and 601.64 to enforce this chapter, s. 628.36, and ch. 632 as it relates
3to pharmacy benefit managers.
AB114,12,7 4(2) The commissioner shall promulgate rules regarding all of the following
5using as a model the prescription drug benefit management model act of the National
6Association of Insurance Commissioners for the 2nd quarter of 2018 to the extent the
7model act does not conflict with this chapter or ch. 632:
AB114,12,138 (a) Requirements for the development and maintenance of prescription drug
9formularies and other pharmacy benefit manager procedures, except that the
10commissioner may not allow a health benefit plan, self-insured health plan, or
11pharmacy benefit manager to require a consumer to obtain a prescription drug at a
12mail order pharmacy because the prescription drug requires special handling,
13provider coordination, or patient education.
AB114,12,1714 (b) Information that the pharmacy benefit manager is required to provide to
15a person who is covered or who seeks to be covered under a health benefit plan or
16self-insured health plan, a prescriber of prescription drugs, or a pharmacist or
AB114,12,1918 (c) Requirements and procedures for a medical exceptions approval process
19that is standardized among pharmacy benefit managers.
AB114,12,2020 (d) Requirements for nondiscrimination in prescription drug benefit design.
AB114,12,2221 (e) Requirements for record keeping and reporting by a pharmacy benefit
AB114,12,2423 (f) Responsibilities for the pharmacy benefit manager in oversight and
1(g) Required disclosures by a health benefit plan or self-insured health plan
2or a pharmacy benefit manager.
AB114,13,6 3649.20 Suspension or revocation of registration; penalty. (1) The
4commissioner, after a hearing, may suspend or revoke the registration of a
5registrant, if the registrant or an officer, director, or employee of the registrant does
6any of the following:
AB114,13,97 (a) Knowingly makes or causes to be made a false statement or
8misrepresentation of a material fact in an application for registration under s.
AB114,13,1110 (b) Obtains or attempts to obtain a registration under s. 649.05 through
11misrepresentation or fraud.
AB114,13,1612 (c) Misappropriates or converts for the registrant's own use or improperly
13withholds insurance premiums or contributions held in a fiduciary capacity, except
14for any interest earnings received by the pharmacy benefit manager and disclosed
15to the pharmacist, pharmacy, or health benefit plan sponsor with which the
16pharmacy benefit manager has a contract to provide services.
AB114,13,1817 (d) Commits fraudulent, coercive, or dishonest practices in the transaction of
18business as a pharmacy benefit manager.
AB114,13,2119 (e) Uses, or knowingly permits the use of, any advertisement, promotion,
20solicitation, representation, proposal, or offer that is untrue, deceptive, or
AB114,13,2422 (f) Has a license or registration suspended, revoked, or not renewed in any
23other state, district, territory, or province that impacts business conducted in this
1(g) Knowingly violates a requirement of this chapter or ch. 632 or a rule
2promulgated under this chapter or ch. 632.
AB114,14,5 3(2) Any person who performs the activities of a pharmacy benefit manager in
4this state without a valid registration under s. 649.05 is subject to a forfeiture of $500
5for each day of violation.
AB114,14,6 6649.30 Pricing transparency; prohibitions; contracts.
AB114,14,8 7(2) Prohibitions. A pharmacy benefit manager or a representative of a
8pharmacy benefit manager may not do any of the following:
AB114,14,129 (a) Unless approved by the commissioner, charge a pharmacist or pharmacy a
10fee related to the adjudication of a claim, including a fee for receiving and processing
11a pharmacy claim, developing or managing claims processing services in a pharmacy
12benefit manager network, or participating in a pharmacy benefit manager network.
AB114,14,1613 (b) Unless approved by the commissioner after consulting with the pharmacy
14examining board, require pharmacist or pharmacy accreditation standards or
15certification requirements in addition to, more stringent than, or inconsistent with
16any requirements of the pharmacy examining board.
AB114,14,2117 (c) Reimburse a pharmacy or pharmacist in this state an amount less than the
18amount that the pharmacy benefit manager reimburses an affiliate of the pharmacy
19benefit manager for providing the same services. To comply with this paragraph, the
20pharmacy benefit manager shall compare the amounts calculated on a per-unit
21basis using the same generic product identifier or generic code number.
AB114,14,2422 (d) After termination of a pharmacy or pharmacist from a pharmacy benefit
23network, fail to make payments to a pharmacist or pharmacy for services that were
24properly rendered and provided before termination.
1(e) Prohibit, restrict, or limit a pharmacy or pharmacist from disclosing
2information to the commissioner, law enforcement, or a state or federal
3governmental official that is investigating or examining a complaint or conducting
4a review of a pharmacy benefit manager's compliance with the requirements under
5this section.
AB114,15,10 6(3) Conflict of interest; business practices. (a) If a pharmacy benefit
7manager makes a formulary substitution in which the substitute drug costs more
8than the originally prescribed drug, the pharmacy benefit manager shall disclose to
9the health benefit plan sponsor the cost of the drugs and any benefit that accrues,
10directly or indirectly, to the pharmacy benefit manager related to the substitution.
AB114,15,1211 (b) A pharmacy benefit manager may not require that a pharmacy or
12pharmacist enter into one contract in order to enter into another contract.
AB114,15,1613 (c) A pharmacy benefit manager shall notify a health benefit plan sponsor in
14writing of any activity, policy, or practice of the pharmacy benefit manager that
15presents a conflict of interest, directly or indirectly, with any requirement of this
AB114,15,19 17(4) Retroactive claim reduction. A pharmacy benefit manager may not
18retroactively deny or reduce a pharmacist's or pharmacy's claim after adjudication
19of the claim unless any of the following is true:
AB114,15,2020 (a) The original claim was submitted fraudulently.
AB114,15,2221 (b) The payment for the original claim was incorrect because the pharmacy or
22pharmacist had already been paid for the pharmacy services.
AB114,15,2323 (c) The pharmacy services were not rendered by the pharmacist or pharmacy.
AB114,16,2 24649.35 Audits of pharmacies or pharmacists. (1) Definition. In this
25section, “entity” means a defined network plan, as defined in s. 609.01 (1b), insurer,

13rd-party payer, or pharmacy benefit manager or a person acting on behalf of a
2defined network plan, insurer, 3rd-party payer, or pharmacy benefit manager.
AB114,16,4 3(2) Audit procedure requirements. An entity conducting an audit of
4pharmacist or pharmacy records shall do all of the following:
AB114,16,75 (a) If the audit is an audit on the premises of the pharmacist or pharmacy, notify
6the pharmacist or pharmacy in writing of the audit at least 2 weeks before conducting
7the audit.
AB114,16,98 (b) Refrain from auditing a pharmacist or pharmacy within the first 7 days of
9a month unless the pharmacist or pharmacy consents to an audit during that time.
AB114,16,1210 (c) If the audit involves clinical or professional judgement, conduct the audit
11by or in consultation with a pharmacist licensed in this state or the pharmacy
12examining board.
AB114,16,1413 (d) Limit the audit review to claims submitted no more than 2 years before the
14date of the audit.
AB114,16,1615 (e) Audit each pharmacist or pharmacy under the same standards and
16parameters as other similarly situated pharmacists or pharmacies.
AB114,16,1817 (f) Establish a written appeals process that allows appeals of preliminary and
18final reports and allows for mediation if either party is dissatisfied with the appeal.
AB114,16,2319 (g) Allow the pharmacist or pharmacy to use records of a hospital, physician,
20or other health care provider to validate the pharmacist's or pharmacy's records and
21use any prescription that complies with requirements of the pharmacy examining
22board to validate claims in connection with a prescription, refill of a prescription, or
23change in prescription.
AB114,16,25 24(3) Results of audit. (a) An entity that has conducted an audit of a pharmacist
25or pharmacy shall do all of the following:
11. Deliver to the pharmacist or pharmacy a preliminary report of the audit
2within 60 days after date of the conclusion of the audit.
AB114,17,53 2. Allow a pharmacist or pharmacy that is the subject of an audit at least 30
4days after the date the pharmacist or pharmacy receives the preliminary report to
5provide documentation to address any discrepancy found in the audit.
AB114,17,86 3. Deliver to the pharmacist or pharmacy a final audit report within 90 days of
7the date the pharmacist or pharmacy receives the preliminary report or the date of
8the final appeal of the audit, whichever is later.
AB114,17,119 4. Refrain from assessing a recoupment or other penalty on a pharmacist or
10pharmacy until the appeal process is exhausted and the final report under subd. 3.
11is delivered to the pharmacist or pharmacy.
AB114,17,1512 5. Base a finding of overpayment or underpayment of a claim on the actual
13overpayment or underpayment and not on a projection based on the number of
14patients served having a similar diagnosis or on the number of similar orders or
15refills for similar drugs.
AB114,17,1616 6. Exclude dispensing fees from calculations of overpayments.
AB114,17,1817 7. Refrain from using extrapolation in calculating the recoupments or penalties
18for an audit.
AB114,17,2019 8. Refrain from charging interest until the final report under subd. 3. has been
AB114,18,221 (b) If an audit of a pharmacist or pharmacy identifies a clerical or
22record-keeping error in a required document or record, the pharmacy benefit
23manager or entity conducting the audit may not request recoupment of funds from
24the pharmacist or pharmacy based on such an error unless the pharmacy benefit
25manager or entity proves the pharmacist or pharmacy intended to commit fraud or

1unless the error by the pharmacist or pharmacy results in actual financial harm to
2the pharmacy benefit manager, a health benefit plan, or a consumer.
AB114,18,63 (c) Information obtained in an audit under this section is confidential and may
4not be shared unless the information is required to be shared under state or federal
5law. An entity conducting an audit may have access to the previous audit reports on
6a particular pharmacy conducted by the same entity.
AB114,18,97 (d) Any entity that conducts an audit shall provide to the health benefit plan
8a copy of the final report of the audit and a disclosure of any recoupment amount
9assessed as a result of the audit.
AB114,18,12 10(5) Payment of auditors. A pharmacy benefit manager or entity conducting an
11audit may not pay an auditor employed by or contracted with the pharmacy benefit
12manager or entity based on a percentage of the amount recovered in an audit.
AB114,18,14 13(6) Applicability. This section does not apply to an investigative audit that is
14initiated as a result of a credible allegation of fraud or willful misrepresentation.
AB114,18,19 15649.40 Transparency reports. (1) Beginning on June 1, 2020, and annually
16thereafter, every pharmacy benefit manager shall submit to the commissioner, the
17joint committee on finance, and, under s. 13.172 (3), each standing committee of the
18legislature with jurisdiction over insurance a report that contains all of the following
19information from the previous calendar year:
AB114,18,2220 (a) The aggregate amount of all rebates that the pharmacy benefit manager
21received from all pharmaceutical manufacturers by each health benefit plan sponsor
22and for all health benefit plan sponsors combined.
AB114,18,2523 (b) The aggregate administrative fee amount that the pharmacy benefit
24manager received from all pharmaceutical manufacturers by each health benefit
25plan sponsor and for all health benefit plan sponsors combined.
1(c) The aggregate rebate amount that the pharmacy benefit manager received
2from all pharmaceutical manufacturers but retained and did not pass through to
3health benefit plan sponsors and the percentage of the aggregate rebate amount that
4is retained rebates.
AB114,19,8 5(2) The commissioner shall publish, within 60 days of receiving the report
6under sub. (1), on the office's Internet site information from the transparency report
7submitted under sub. (1). The commissioner shall publish the report information in
8a manner that does not disclose any trade secrets.
AB114,19,10 9649.45 Network adequacy. A pharmacy benefit manager shall do all of the
AB114,19,15 11(1) Provide a reasonably adequate and accessible pharmacy network for
12providing prescribed drugs or devices for a health benefit plan that allows convenient
13patient access to pharmacies within a reasonable distance from a plan participant's
14residence. A pharmacy benefit manager may not include any mail-order pharmacy
15in its calculations of network adequacy under this subsection.
AB114,19,19 16(2) Submit to the commissioner, at the time and in the manner required by the
17commissioner, a pharmacy benefit manager network adequacy report describing the
18pharmacy benefit manager network and accessibility to the network for health
19benefit plan participants.
AB114,17 20Section 17. Nonstatutory provisions.