2019 - 2020 LEGISLATURE
March 15, 2019 - Introduced by Senators Erpenbach, Roth,
Feyen, Hansen, Johnson, Larson, Marklein, Olsen, Ringhand, Smith, L.
Taylor, Tiffany, Wanggaard, Wirch and Cowles, cosponsored by
Representatives Schraa, Kolste, Anderson, Born, Bowen, Brooks,
Brostoff, Considine, Dittrich, Duchow, Edming, Emerson, Felzkowski,
Fields, Goyke, Gundrum, Hebl, Hesselbein, Horlacher, Hutton, James,
Kitchens, Knodl, Krug, Kuglitsch, Meyers, Murphy, Mursau, Novak,
Ohnstad, Oldenburg, Petersen, Plumer, Quinn, Ramthun, Riemer,
Rodriguez, Rohrkaste, Sargent, Shankland, Sinicki, Sortwell,
Skowronski, Spiros, Spreitzer, Snyder, Stafsholt, Stubbs, Stuck, Subeck,
Summerfield, Swearingen, Tauchen, C. Taylor, Thiesfeldt, Tittl, Tranel,
VanderMeer, Vorpagel and Vruwink. Referred to Committee on Health and
1An Act to repeal
40.51 (15m), 632.86 and 632.865 (title) and (1); to renumber
632.865 (2); to amend
40.51 (8), 40.51 (8m), 66.0137 (4), 120.13 (2) (g), 185.983 3
(1) (intro.), 601.43 (1) (a), 609.83, 616.09 (1) (a) 2. and 628.36 (2m) (e) 1.; and to
628.36 (2m) (a) 2s., 632.861 and chapter 649 of the statutes; relating
5to: registration and regulation of pharmacy benefit managers, drug pricing
6transparency, granting rule-making authority, and providing a penalty.
Analysis by the Legislative Reference Bureau
This bill generally allows the commissioner of insurance to regulate pharmacy
benefit managers by requiring them to register. The bill also establishes certain
price transparency requirements and requirements on contracts the pharmacy
benefit manager enters into with pharmacies, pharmacists, or health benefit plan
sponsors among other requirements.
Registration of pharmacy benefit managers
The bill prohibits a person, except an insurer already regulated by the
commissioner, from performing any activities of a pharmacy benefit manager in this
state without first registering with the commissioner. Certain pharmacy benefit
managers must be licensed by the Pharmacy Examining Board and registered as a
pharmacy benefit manager. If the Pharmacy Examining Board revokes the
pharmacy or distributor license for such a pharmacy benefit manager, the
commissioner must revoke the pharmacy benefit manager's registration. An
applicant for registration as a pharmacy benefit manager must file an appropriate
application and pay any registration fee set by the commissioner. A registration is
valid for one year. The commissioner may refuse to register a pharmacy benefit
manager for which a previous registration was suspended or revoked.
Under the bill, the commissioner, after a hearing, may suspend or revoke a
registration of a pharmacy benefit manager if the registered pharmacy benefit
manager, or an officer, director, or employee of a registered pharmacy benefit
manager, does any of the actions specified in the bill. The commissioner may
promulgate rules necessary to carry out the intent of pharmacy benefit manager
registration. The bill also allows the commissioner to use his or her authority that
is granted to regulate insurers to similarly regulate pharmacy benefit managers,
including the authority to require reports, conduct examinations, and issue orders.
The commissioner is required to promulgate certain rules, including rules regarding
formulary development, required disclosures, and a standardized medical
exceptions approval process, among others.
The bill requires pharmacy benefit managers to provide a reasonably adequate
and accessible network of pharmacies. Pharmacy benefit managers are not allowed
to include mail-order pharmacies in their calculation of network adequacy. The bill
requires pharmacy benefit managers to submit a network adequacy report to the
commissioner. The bill also imposes on pharmacy benefit managers a current law
requirement on health maintenance organizations, limited service health
organizations, and preferred provider plans that provide coverage of pharmaceutical
services when performed by one or more selected pharmacists to provide an annual
period of at least 30 days during which any pharmacist may elect to participate in
the organization or plan under its terms as a selected provider for at least one year.
Pharmacy benefit manager regulation
The bill requires pharmacy benefit managers to refrain from certain actions in
their interactions with pharmacists or pharmacies including charging a pharmacist
or pharmacy a fee related to the adjudication of a claim, requiring pharmacist or
pharmacy accreditation or certification requirements in addition to, more stringent
than, or inconsistent with requirements of the pharmacy examining board,
reimbursing a pharmacist or pharmacy less than the amount reimbursed to an
affiliate of the pharmacy benefit manager for the same services, failing to make
payments for services properly provided by a pharmacist or pharmacy before the
termination of the pharmacist or pharmacy from the network, and restricting or
limiting a pharmacy or pharmacist from disclosing information to a governmental
official or law enforcement that is investigating a complaint or conducting a review.
The bill requires a pharmacy benefit manager to disclose to a health benefit plan
sponsor any activity, policy, or practice that presents a conflict of interest and, if the
pharmacy benefit manager makes a formulary substitution to a higher cost drug, the
cost of the drug and any benefit that accrues to the pharmacy benefit manager
related to the substitution. A pharmacy benefit manager is prohibited in the bill
from retroactively denying a pharmacist's or pharmacy's claim unless the original
claim was fraudulent, the payment of the original claim was incorrect because it had
already been paid, or the pharmacy services were not rendered by the pharmacist or
pharmacy. The bill requires every pharmacy benefit manager to submit annual
transparency reports containing information specified in the bill to the
commissioner and to certain committees of the legislature.
Current law requires pharmacy benefit managers to agree in their contracts to
make certain disclosures regarding prescription drug reimbursement, including
updating maximum allowable cost pricing information for prescribed drugs or
devices at least every seven business days, reimbursing pharmacies or pharmacists
subject to the updated maximum allowable cost pricing, and modifying information
in the maximum allowable cost information in a timely fashion. Pharmacy benefit
managers currently must also include in each contract with a pharmacy a process
to appeal, investigate, and resolve pricing disputes in accordance with the specifics
in current law. These current law requirements are unchanged by the bill.
Audits of pharmacists or pharmacies
The bill sets requirements on a pharmacy benefit manager, insurer, defined
network plan, such as a health maintenance organization, or a third-party payer
that is conducting an audit of pharmacist or pharmacy records, including requiring
at least two weeks' notice of an audit that is on the premises of a pharmacist or
pharmacy, refraining from conducting the audit within the first seven days of the
month unless the pharmacist or pharmacy consents, limiting the audit to claims
submitted no more than two years before the date of the audit, establishing a written
appeals process allowing for appeals of preliminary and final reports and mediation
by either party, and allowing a pharmacist or pharmacy to use health care provider
records to validate records and any prescription that complies with the pharmacy
examining board requirements to validate claims. The bill requires an entity that
has conducted an audit of a pharmacist or pharmacy to comply with certain timing
requirements for delivery of the preliminary and final reports and for allowing a
pharmacist or pharmacy to address any discrepancies and requires the entity to
refrain from using extrapolation in calculating the recoupments or penalties from an
audit among other requirements in the bill. If an audit identifies a clerical or
record-keeping error, the pharmacy benefit manager or entity must prove that the
pharmacist or pharmacy intended to commit fraud or that the error resulted in
actual financial harm before requesting recoupment from the pharmacist or
pharmacy based on the error. A pharmacy benefit manager or other entity
conducting an audit may not pay an auditor based on a percentage of the amount
recovered in an audit.
Allowing disclosures to consumers
This bill prohibits a health insurance policy, referred to in the statutes as a
disability insurance policy, or a governmental self-insured health plan from
including in a contract for pharmacy services, or allowing a pharmacy benefit
manager or another entity to include in a contract for pharmacy services, a provision
that prohibits or penalizes a pharmacist's disclosure to an individual purchasing a
prescribed drug or device of the cost of a prescribed drug or device, a less expensive
therapeutically equivalent drug or device, or a less expensive method of purchasing
the drug or device.
Cost sharing limitation, choice of provider, and drug substitution
The bill sets a limitation on the amount of cost sharing that a person who is
covered under a health insurance policy or self-insured governmental health plan
must pay at the point of sale for a prescription drug as specified in the bill. A policy
or plan or a pharmacy benefit manager may not require a person covered under the
policy or plan to pay an increased amount of cost sharing for a newly prescribed drug
or device if the policy, plan, or pharmacy benefit manager requested the substitution
of the original drug and if the newly prescribed drug or device is therapeutically
equivalent to the originally prescribed drug or device. The bill requires health
insurance policies, self-insured governmental health plans, and pharmacy benefits
managers to develop a procedure to ensure that a policy or plan does not deny
coverage to an insured or plan participant during a plan year or subject the insured
or plan participant to new exclusions, limitations, deductibles, copayments, or
coinsurance if the prescribed drug or device was covered under the policy or plan for
the insured or plan participant when the insured or plan participant either enrolled
in coverage or renewed coverage and if the prescribing health care provider states
that the prescribed drug or device is more suitable for the insured's or plan
participant's condition than alternative drugs or devices that are covered under the
policy or plan. An insurer, self-insured governmental health plan, or pharmacy
benefit manager may not require or penalize a person who is covered under a health
insurance policy or plan to use or for not using a specific retail, specific mail order
pharmacy, or other specific pharmacy within the policy's or plan's provider network.
This proposal may contain a health insurance mandate requiring a social and
financial impact report under s. 601.423, stats.
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
40.51 (8) of the statutes is amended to read:
Every health care coverage plan offered by the state under sub. (6) 3
shall comply with ss. 631.89, 631.90, 631.93 (2), 631.95, 632.72 (2), 632.746 (1) to (8) 4
and (10), 632.747, 632.748, 632.798, 632.83, 632.835, 632.85, 632.853, 632.855, 5632.861,
632.867, 632.87 (3) to (6), 632.885, 632.89, 632.895 (5m) and (8) to (17), and 6
40.51 (8m) of the statutes is amended to read:
Every health care coverage plan offered by the group insurance 2
board under sub. (7) shall comply with ss. 631.95, 632.746 (1) to (8) and (10), 632.747, 3
632.748, 632.798, 632.83, 632.835, 632.85, 632.853, 632.855, 632.861,
632.885, 632.89, and 632.895 (11) to (17).
40.51 (15m) of the statutes is repealed.
66.0137 (4) of the statutes is amended to read:
66.0137 (4) Self-insured health plans.
If a city, including a 1st class city, or 8
a village provides health care benefits under its home rule power, or if a town 9
provides health care benefits, to its officers and employees on a self-insured basis, 10
the self-insured plan shall comply with ss. 49.493 (3) (d), 631.89, 631.90, 631.93 (2), 11
632.746 (10) (a) 2. and (b) 2., 632.747 (3), 632.798, 632.85, 632.853, 632.855, 632.861, 12
632.867, 632.87 (4) to (6), 632.885, 632.89, 632.895 (9) to (17), 632.896, and 767.513 13
120.13 (2) (g) of the statutes is amended to read:
(g) Every self-insured plan under par. (b) shall comply with ss. 16
49.493 (3) (d), 631.89, 631.90, 631.93 (2), 632.746 (10) (a) 2. and (b) 2., 632.747 (3), 17
632.798, 632.85, 632.853, 632.855, 632.861,
632.867, 632.87 (4) to (6), 632.885, 18
632.89, 632.895 (9) to (17), 632.896, and 767.513 (4).
185.983 (1) (intro.) of the statutes is amended to read:
(intro.) Every voluntary nonprofit health care plan operated by a 21
cooperative association organized under s. 185.981 shall be exempt from chs. 600 to 22
646, with the exception of ss. 601.04, 601.13, 601.31, 601.41, 601.42, 601.43, 601.44, 23
601.45, 611.26, 611.67, 619.04, 623.11, 623.12, 628.34 (10), 631.17, 631.89, 631.93, 24
631.95, 632.72 (2), 632.745 to 632.749, 632.775, 632.79, 632.795, 632.798, 632.85, 25
632.853, 632.855, 632.861,
632.867, 632.87 (2) to (6), 632.885, 632.89, 632.895 (5) and
(8) to (17), 632.896, and 632.897 (10) and chs. 609, 620, 630, 635, 645, and 646, but 2
the sponsoring association shall:
601.43 (1) (a) of the statutes is amended to read:
(a) Insurers, other licensees and other persons subject to regulation. 5
Whenever the commissioner deems it necessary in order to inform himself or herself 6
about any matter related to the enforcement of chs. 600 to 647 and 649
, the 7
commissioner may examine the affairs and condition of any licensee
under chs. 600 to 647 and 649
or applicant for a license or,
of any person or organization of persons doing or in process of organizing 10
to do an insurance business in this state, and of any advisory organization serving 11
any of the foregoing in this state.
609.83 of the statutes is amended to read:
13609.83 Coverage of drugs and devices.
Limited service health 14
organizations, preferred provider plans, and defined network plans are subject to ss. 15
and 632.895 (16t).
616.09 (1) (a) 2. of the statutes is amended to read:
(a) 2. Plans authorized under s. 616.06 are subject to s. 610.21, 1977 18
stats., s. 610.55, 1977 stats., s. 610.57, 1977 stats., and ss. 628.34 to 628.39, 1977 19
stats., to chs. 600, 601, 620, 625, 627 and 645, to ss. 632.72, 632.755, 632.86 632.861 20
and 632.87 and to this subchapter except s. 616.08.
628.36 (2m) (a) 2s. of the statutes is created to read:
(a) 2s. “Pharmacy benefit manager” has the meaning given in s. 23
628.36 (2m) (e) 1. of the statutes is amended to read:
(e) 1. A health maintenance organization, limited service health 2
preferred provider plan, or pharmacy benefit manager
that provides 3or administers
coverage of pharmaceutical services when performed by one or more 4
pharmacists who are selected by the organization or
plan, or pharmacy benefit
but who are not full-time salaried employees or partners of the 6
plan, or pharmacy benefit manager
shall provide an annual period 7
of at least 30 days during which any pharmacist registered under ch. 450 may elect 8
to participate in the health maintenance organization, limited service health 9
preferred provider plan, or coverage administered by a pharmacy
under its terms as a selected provider for at least one year.
632.86 of the statutes is repealed.
632.861 of the statutes is created to read:
13632.861 Prescription drug charges; choice of provider. (1) Definitions. 14
In this section:
(a) “Disability insurance policy” has the meaning given in s. 632.895 (1) (a).
(b) “Pharmacist” has the meaning given in s. 450.01 (15).
(c) “Pharmacy benefit manager” has the meaning given in s. 649.01 (6).
(d) “Prescribed drug or device” has the meaning given in s. 450.01 (18).
(e) “Prescription drug benefit” has the meaning given in s. 649.01 (8).
(f) “Self-insured health plan” has the meaning given in s. 632.85 (1) (c).
21(2) Allowing disclosures.
No disability insurance policy or self-insured 22
health plan that provides a prescription drug benefit may include in a contract for 23
pharmacy services, or allow a pharmacy benefit manager or another entity to include 24
in a contract for pharmacy services, a provision that prohibits or penalizes, including 25
by increased utilization review, reduced reimbursement, or other financial
disincentives, a disclosure of any of the following by a pharmacist to an individual 2
purchasing a prescribed drug or device:
(a) The cost of the prescribed drug or device to the individual.
(b) The availability of any therapeutically equivalent alternative prescribed 5
drugs or devices or alternative methods of purchasing the prescribed drug or device, 6
including paying cash, that are less expensive to the individual.
7(3) Cost sharing limitation.
An insurer, self-insured health plan, or a 8
pharmacy benefit manager may not require a person who is covered under a 9
disability insurance policy or self-insured health plan to pay at the point of sale for 10
a covered prescription drug an amount greater than the lowest of all of the following 11
(a) The applicable copayment for the prescription drug.
(b) The allowable claim amount for the prescription drug.
(c) The amount a person who is covered under the disability insurance policy 15
or plan would pay for the prescription drug if the person purchased the prescription 16
drug without using a disability insurance policy or any other source of prescription 17
drug benefits or discounts.
(d) The amount the pharmacist or pharmacy is reimbursed for the prescription 19
drug from the pharmacy benefit manager or insurer.
20(4) Choice of provider; penalty prohibited.
An insurer, self-insured health 21
plan, or pharmacy benefit manager is prohibited from requiring or penalizing a 22
person who is covered under a disability insurance policy or self-insured health plan 23
to use or for not using a specific retail, specific mail order, or other specific pharmacy 24
provider within the network of pharmacy providers under the policy or plan. A
prohibited penalty under this subsection includes an increase in premium, 2
deductible, copayment, or coinsurance.
3(5) Drug substitution.
(a) A disability insurance policy that offers a 4
prescription drug benefit or self-insured health plan or a pharmacy benefit manager 5
acting on behalf of a disability insurance policy or self-insured health plan may not 6
require a person covered under the policy or plan to pay an increased cost-sharing 7
amount for a newly prescribed drug or device if the substitution for the originally 8
prescribed drug or device is suggested by the policy, plan, or pharmacy benefit 9
manager and if the newly prescribed drug or device is therapeutically equivalent to 10
the originally prescribed drug or device being substituted.
(b) Every disability insurance policy that offers a prescription drug benefit, 12
self-insured health plan, and pharmacy benefit manager shall develop a procedure 13
to ensure that a policy or plan does not deny coverage to an insured or plan 14
participant during a plan year or subject the insured or plan participant to new 15
exclusions, limitations, deductibles, copayments, or coinsurance under a 16
circumstance that satisfies all of the following:
1. The prescribed drug or device was covered under the policy or plan for the 18
insured or plan participant when the insured or plan participant either enrolled in 19
coverage or renewed coverage, whichever is later.
2. A health care provider who prescribed the prescribed drug or device states, 21
in writing, that the prescribed drug or device is more suitable for the insured's or plan 22
participant's condition than alternative drugs or devices that are covered under the 23
policy or plan.
632.865 (title) and (1) of the statutes are repealed.
632.865 (2) of the statutes is renumbered 649.30 (1).
Chapter 649 of the statutes is created to read:
pharmacy benefit managers
In this chapter:
“Health benefit plan” has the meaning given in s. 632.745 (11).
“Health care provider” has the meaning given in s. 146.81 (1).
“Maximum allowable cost” means the maximum amount that a pharmacy 8
benefit manager will pay a pharmacist or pharmacy toward the cost of a prescribed 9
drug or device.
“Pharmacist" has the meaning given in s. 450.01 (15).
“Pharmacy" means an entity licensed under s. 450.06 or 450.065.
“Pharmacy benefit manager" means an entity doing business in this state 13
that contracts to provide claims processing services, to otherwise administer or 14
manage prescription drug benefits, or both on behalf of any insurer or other entity 15
that provides prescription drug benefits to residents of this state. “Pharmacy benefit 16
manager” does not include a health care provider except for a health care provider 17
that is required to obtain a license under s. 450.06, 450.065, or 450.071 and does not 18
include an entity that provides claims processing services or other administration of 19
prescription drug only for the Medical Assistance program under subch. IV of ch. 49.
“Prescribed drug or device" has the meaning given in s. 450.01 (18).
“Prescription drug benefit" means coverage of or payment or assistance for 22
prescribed drugs or devices.
“Registrant" means a pharmacy benefit manager that is registered under 24
1649.05 Registration of pharmacy benefit managers. (1)
(a) Except as 2
provided in par. (b), no person may perform any activities of a pharmacy benefit 3
manager in this state without first registering with the commissioner under this 4
(b) A pharmacy benefit manager that is an insurer with a current certificate 6
of authority issued under s. 601.04 is not required to register under this section.
(c) 1. Any pharmacy benefit manager that is required to obtain a license under 8
s. 450.06, 450.065, or 450.071 shall also register under this chapter.