LRB-4450/1
TJD:emw
2017 - 2018 LEGISLATURE
November 8, 2017 - Introduced by Senators Erpenbach and Carpenter,
cosponsored by Representatives Kolste, Sargent, Zamarripa, Anderson,
Berceau, Pope, Subeck, Spreitzer, Considine, Billings, Horlacher,
Brostoff, Fields, Hesselbein, Vruwink, Ohnstad, Hintz, Young, Shankland,
Zepnick, Riemer, Crowley, Genrich and Sinicki. Referred to Committee on
Health and Human Services.
SB532,1,3 1An Act to amend 601.43 (1) (a); and to create chapter 649 of the statutes;
2relating to: registration of pharmacy benefit managers, granting rule-making
3authority, and providing a penalty.
Analysis by the Legislative Reference Bureau
This bill generally allows the commissioner of insurance to regulate pharmacy
benefit managers. A pharmacy benefit manager is an entity that procures
prescription drugs at a negotiated rate for dispensation; administers or manages
prescription drug benefits; performs mail service pharmacy services; processes
pharmacy benefit claims; develops clinical formularies and performs management
services; contracts and administers prescription drug rebates; or conducts disease
management programs or patient compliance, therapeutic intervention, and generic
substitution programs.
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 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.
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:
SB532,1 1Section 1. 601.43 (1) (a) of the statutes is amended to read:
SB532,2,92 601.43 (1) (a) Insurers, other licensees and other persons subject to regulation.
3Whenever the commissioner deems it necessary in order to inform himself or herself
4about any matter related to the enforcement of chs. 600 to 647 and 649, the
5commissioner may examine the affairs and condition of any licensee or, permittee,
6or registrant
under chs. 600 to 647 and 649 or applicant for a license or, permit, or
7registration
of any person or organization of persons doing or in process of organizing
8to do an insurance business in this state, and of any advisory organization serving
9any of the foregoing in this state.
SB532,2 10Section 2. Chapter 649 of the statutes is created to read:
SB532,2,1211 Chapter 649
12 pharmacy benefit managers
SB532,2,13 13649.01 Definitions. In this chapter:
SB532,2,14 14(1) “Pharmacy benefit manager" means an entity that does any of the following:
SB532,2,1615 (a) Procures prescription drugs at a negotiated rate for dispensation in this
16state to an insured.
SB532,2,1717 (b) Administers or manages prescription drug benefits provided to an insured.
SB532,3,2
1(c) Performs any of the following services with regard to the administration of
2pharmacy benefits:
SB532,3,33 1. Mail service pharmacy.
SB532,3,54 2. Claims processing or retail network management and payment of claims to
5pharmacies for prescription drugs dispensed to an insured.
SB532,3,66 3. Clinical formulary development and management services.
SB532,3,77 4. Prescription drug rebate contracting and administration.
SB532,3,98 5. Patient compliance, therapeutic intervention, and generic substitution
9programs.
SB532,3,1010 6. Disease management programs.
SB532,3,11 11(2) “Prescription drug” has the meaning given in s. 450.01 (20).
SB532,3,13 12(3) “Registrant" means a pharmacy benefit manager that is registered under
13this chapter.
SB532,3,17 14649.05 Registration of pharmacy benefit managers. (1) (a) Except as
15provided in par. (b), no person may perform any activities of a pharmacy benefit
16manager in this state without first registering with the commissioner under this
17chapter.
SB532,3,1918 (b) A pharmacy benefit manager who is an insurer with a current certificate
19of authority issued under s. 601.04 is not required to register under this section.
SB532,3,2120 (c) 1. Any pharmacy benefit manager that is required to obtain a license under
21s. 450.06, 450.065, or 450.071 shall also register under this chapter.
SB532,3,2522 2. If the pharmacy examining board revokes a license that had been granted
23under s. 450.06, 450.065, or 450.071 to a registrant, the registrant shall notify the
24commissioner of the revocation. The commissioner shall revoke the registration
25under this chapter.
SB532,4,2
1(2) An applicant for registration as a pharmacy benefit manager shall do all
2of the following:
SB532,4,43 (a) File with the commissioner an application on a form that the commissioner
4provides.
SB532,4,55 (b) Pay any registration fee set by the commissioner.
SB532,4,10 6(3) The commissioner shall register any pharmacy benefit manager that meets
7the requirements of this chapter and any requirements the commissioner requires
8of applicants. Registration under this section is valid for one year unless registration
9is suspended or revoked. The commissioner may refuse to register any pharmacy
10benefit manager for which a previous registration was suspended or revoked.
SB532,4,12 11649.10 Powers of the commissioner. The commissioner may do any of the
12following:
SB532,4,13 13(1) Promulgate rules necessary to carry out the intent of this chapter.
SB532,4,15 14(2) Use authority granted under ss. 601.41, 601.42, 601.43, 601.44, 601.61,
15601.62, 601.63, and 601.64 to enforce this chapter.
SB532,4,19 16649.20 Suspension or revocation of registration; penalty. (1) The
17commissioner, after a hearing, may suspend or revoke the registration of a
18registrant, if the registrant or an officer, director, or employee of the registrant does
19any of the following:
SB532,4,2220 (a) Knowingly makes or causes to be made a false statement or
21misrepresentation of a material fact in an application for registration under s.
22649.05.
SB532,4,2423 (b) Obtains or attempts to obtain a registration under s. 649.05 through
24misrepresentation or fraud.
SB532,5,4
1(c) Misappropriates or converts to the registrant's own use or improperly
2withholds insurance premiums or contributions held in a fiduciary capacity, except
3for any interest earnings received by the pharmacy benefit manager and disclosed
4to the entity with which it has a contract to provide services.
SB532,5,65 (d) Commits fraudulent, coercive, or dishonest practices in the transaction of
6business as a pharmacy benefit manager.
SB532,5,97 (e) Has a license or registration suspended, revoked, or not renewed in any
8other state, district, territory, or province that impacts business conducted in this
9state.
SB532,5,1110 (f) Knowingly violates a requirement of this chapter or a rule promulgated
11under this chapter.
SB532,5,14 12(2) Any person who performs activities of a pharmacy benefit manager in this
13state without a valid registration under s. 649.05 is subject to a forfeiture of $500 for
14each day of violation.
SB532,3 15Section 3. Effective date.
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