SB3: Bill Text

Analysis by the Legislative Reference Bureau

This bill generally requires pharmacy benefit managers to be licensed with the commissioner of insurance or to have an employee benefit plan administrator license under current law. The bill also establishes certain requirements on pharmacy benefit managers and certain health plans regarding their interactions with pharmacies and pharmacists. Under the bill, a pharmacy benefit manager is an entity that contracts to administer or manage prescription drug benefits on behalf of an insurer, a cooperative, or another entity that provides prescription drug benefits to Wisconsin residents.

Licensure of pharmacy benefit managers

The bill requires a pharmacy benefit manager to be licensed either as a pharmacy benefit manager or as an employee benefit plan administrator, which is an existing license under current law, in order to perform the activities of a pharmacy benefit manager. The bill specifies that an entity that is both an employee benefit plan administrator and a pharmacy benefit manager need only have a single license as an administrator. To obtain a license, the pharmacy benefit manager must pay the applicable fee; supply a bond; provide its federal employer identification number; and show to the commissioner that the pharmacy benefit manager intends to act in good faith in compliance with applicable laws, rules, and commissioner's orders through certain competent and trustworthy individuals, to designate an individual to directly administer the prescription drug benefits, and, if not organized in Wisconsin, to agree to be subject to the jurisdiction of the commissioner and Wisconsin courts. Under the bill, pharmacy benefit manager licenses may be limited, suspended, or revoked for the same reasons as for employee benefit plan administrator licenses, which include that the pharmacy benefit manager is unqualified; repeatedly or knowingly violates laws, rules, or commissioner's orders; endangers enrollees or the public; or has inadequate financial resources. After a pharmacy benefit manager's license is ordered suspended or revoked, the commissioner may allow the pharmacy benefit manager to continue to provide services for the purpose of providing continuity of care to existing enrollees. In addition to powers the commissioner has generally to implement and enforce insurance-related laws, the bill allows the commissioner to examine, audit, or accept an audit of a pharmacy benefit manager in the same manner as employee benefit plan administrators and insurers and to promulgate any rules to implement licensure of pharmacy benefit managers.

Pharmacy benefit manager regulation

Unless federal law requires otherwise, 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, the pharmacy services were not rendered by the pharmacist or pharmacy, the pharmacist or pharmacy violated state or federal law, or the reduction is permitted by contract and is related to a quality program. The bill limits recovery for an incorrect payment to the amount that exceeds the allowable claim. The bill requires every pharmacy benefit manager to submit annual transparency reports containing information specified in the bill to the commissioner. The bill sets requirements on a pharmacy benefit manager; insurer; defined network plan, such as a health maintenance organization; or a self-insured governmental health plan that is conducting an audit of a pharmacist or pharmacy.

Certain health plans, or pharmacy benefit managers on behalf of health plans, may require a pharmacy to fulfill certification or accreditation requirements in order to participate in the plan's network of providers. The bill requires a pharmacy benefit manager or a representative of a pharmacy benefit manager to provide to a pharmacy, within 30 days of receipt of a written request from the pharmacy, written notice of the certification or accreditation requirements as a determinant of network participation. The bill prohibits a pharmacy benefit manager or representative from changing its accreditation requirements more frequently than once every 12 months.

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.

Disclosures to consumers; cost-sharing limitation

Under the bill, a health insurance policy or a governmental self-insured health plan may not, and a policy or plan must ensure that a pharmacy benefit manager does not, restrict a pharmacy from or penalize a pharmacy for informing an enrollee under the policy or plan of any differential between the out-of-pocket cost of a drug to the enrollee under the policy or plan and the cost an individual would pay for the drug without using insurance. Health insurance policies are referred to in the bill as disability insurance policies. The bill prohibits a policy, plan, or pharmacy benefit manager from requiring an enrollee under the policy or plan to pay more for a covered drug than either the cost-sharing amount for the prescription drug under the policy or plan or the amount the enrollee would pay for the drug without using insurance, whichever amount is lower.

The bill requires pharmacies to post a sign describing the pharmacist's ability to substitute a less expensive drug product equivalent or interchangeable biological product for the prescribed drug or biological product unless the consumer or the prescribing practitioner indicates otherwise. Under current law, a pharmacist is required to dispense either the prescribed drug or biological product or, if lower in price, a drug product equivalent or interchangeable biological product. The pharmacist is currently required to inform the consumer of the options available in dispensing the prescription. The bill requires each pharmacy to have available for the public a listing of the retail price, updated monthly or more often, of the 100 most commonly prescribed prescription drugs available for purchase at the pharmacy. The bill also requires pharmacies to make available for the public information on how to access a list, created by the Pharmacy Examining Board, of the 100 most commonly prescribed generic drugs with the corresponding brand name, and the federal Food and Drug Administration's list of currently approved interchangeable biological products, which the Pharmacy Examining Board currently has to provide a link to on its Internet site.

Drug substitution

The bill requires a health insurance policy, governmental self-insured health plan, or pharmacy benefit manager to provide advanced written notice to an enrollee of a formulary change that either removes a prescription drug from the formulary or reassigns a prescription drug to a higher benefit tier. A higher benefit tier is a tier with a higher deductible, copayment, or coinsurance than the tier the prescription drug had been assigned. The advanced notice required by the bill must be provided no fewer than 30 days before the expected formulary change, must include information on the procedure for the enrollee to request an exception to the formulary change, and need only be provided to those enrollees who are using the drug at the time the notification must be sent. A policy, plan, or pharmacy benefit manager is not required to provide advanced written notice if the prescription drug is no longer approved by the federal Food and Drug Administration; is the subject of a notice, guidance, warning, announcement, or other statement from the FDA relating to concerns about the safety of the drug; or is approved by the FDA for use without a prescription. A policy, plan, or pharmacy benefit manager is also not required to provide advanced written notice for the removal or reassignment of a prescription drug if the policy, plan, or pharmacy benefit manager adds to the formulary at the same or a lower benefit tier a generic prescription drug that is approved by the FDA for use as an alternative to the prescription drug or a prescription drug in the same pharmacologic class or with the same mechanism of action. A lower benefit tier has a lower deductible, copayment, or coinsurance than the prescription drug's current benefit tier.

The bill requires a pharmacist or pharmacy to notify an enrollee in a policy or plan if a prescription drug for which an enrollee is filling or refilling a prescription is removed from the formulary and the policy or plan or a pharmacy benefit manager acting on behalf of a policy or plan adds to the formulary at the same or a lower cost-sharing tier a generic prescription drug or a prescription drug in the same pharmacologic class or with the same mechanism of action. If an enrollee has had an adverse reaction to the prescription drug that is being substituted for an originally prescribed drug, the bill allows the pharmacist or pharmacy to extend the prescription order for the originally prescribed drug to fill one 30-day supply of the originally prescribed drug for the cost-sharing amount that applies to the prescription drug at the time of the substitution.

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:

SB3,1 Section 1 . 40.51 (8) of the statutes is amended to read:

SB3,5,5 40.51 (8) Every health care coverage plan offered by the state under sub. (6) shall comply with ss. 631.89, 631.90, 631.93 (2), 631.95, 632.72 (2), 632.729, 632.746 (1) to (8) and (10), 632.747, 632.748, 632.798, 632.83, 632.835, 632.85, 632.853, 632.855, 632.861, 632.867, 632.87 (3) to (6), 632.885, 632.89, 632.895 (5m) and (8) to (17), and 632.896.

SB3,2 Section 2 . 40.51 (8m) of the statutes is amended to read:

SB3,5,10 40.51 (8m) Every health care coverage plan offered by the group insurance board under sub. (7) shall comply with ss. 631.95, 632.729, 632.746 (1) to (8) and (10), 632.747, 632.748, 632.798, 632.83, 632.835, 632.85, 632.853, 632.855, 632.861, 632.867, 632.885, 632.89, and 632.895 (11) to (17).

SB3,3 Section 3 . 40.51 (15m) of the statutes is repealed.

SB3,4 Section 4 . 66.0137 (4) of the statutes is amended to read:

SB3,5,19 66.0137 (4) Self-insured health plans. If a city, including a 1st class city, or a village provides health care benefits under its home rule power, or if a town provides health care benefits, to its officers and employees on a self-insured basis, the self-insured plan shall comply with ss. 49.493 (3) (d), 631.89, 631.90, 631.93 (2), 632.729, 632.746 (10) (a) 2. and (b) 2., 632.747 (3), 632.798, 632.85, 632.853, 632.855, 632.861, 632.867, 632.87 (4) to (6), 632.885, 632.89, 632.895 (9) to (17), 632.896, and 767.513 (4).

SB3,5 Section 5 . 120.13 (2) (g) of the statutes is amended to read:

SB3,5,24 120.13 (2) (g) Every self-insured plan under par. (b) shall comply with ss. 49.493 (3) (d), 631.89, 631.90, 631.93 (2), 632.729, 632.746 (10) (a) 2. and (b) 2., 632.747 (3), 632.798, 632.85, 632.853, 632.855, 632.861, 632.867, 632.87 (4) to (6), 632.885, 632.89, 632.895 (9) to (17), 632.896, and 767.513 (4).

SB3,6 Section 6 . 185.983 (1) (intro.) of the statutes is amended to read:

SB3,6,8 185.983 (1) (intro.) Every voluntary nonprofit health care plan operated by a cooperative association organized under s. 185.981 shall be exempt from chs. 600 to 646, with the exception of ss. 601.04, 601.13, 601.31, 601.41, 601.42, 601.43, 601.44, 601.45, 611.26, 611.67, 619.04, 623.11, 623.12, 628.34 (10), 631.17, 631.89, 631.93, 631.95, 632.72 (2), 632.729, 632.745 to 632.749, 632.775, 632.79, 632.795, 632.798, 632.85, 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 the sponsoring association shall:

SB3,7 Section 7 . 450.13 (5m) of the statutes is created to read:

SB3,6,14 450.13 (5m) Disclosures to consumers. (a) Each pharmacy shall post in a prominent place at or near the place where prescriptions are dispensed a sign that clearly describes a pharmacist's ability under this state's law to substitute a less expensive drug product equivalent under sub. (1s) unless the consumer or the prescribing practitioner has indicated otherwise under sub. (2).

SB3,6,19 (b) The pharmacy examining board shall create a list of the 100 most commonly prescribed generic drug product equivalents, including the generic and brand names of the drugs, and provide, either directly or on the department's Internet site, the list to each pharmacy on an annual basis. Each pharmacy shall make available to the public information on how to access the list under this paragraph.

SB3,6,24 (c) Each pharmacy shall have available for the public a listing of the retail price, updated no less frequently than monthly, of the 100 most commonly prescribed prescription drugs, which includes brand name and generic equivalent drugs and biological products and interchangeable biological products, that are available for purchase at the pharmacy.

SB3,8 Section 8 . 450.135 (8m) of the statutes is created to read:

SB3,7,5 450.135 (8m) Disclosure to consumers. (a) Each pharmacy shall post in a prominent place at or near the place where prescriptions are dispensed a sign that clearly describes a pharmacist's ability under this state's law to substitute a less expensive interchangeable biological product under sub. (2) unless the consumer or the prescribing practitioner has indicated otherwise under sub. (3).

SB3,9 Section 9 . 450.135 (9) of the statutes is amended to read:

SB3,7,12 450.135 (9) Links to be maintained by board. The board shall maintain links on the department's Internet site to the federal food and drug administration's lists of all currently approved interchangeable biological products. Each pharmacy shall make available for the public information on how to access the federal food and drug administration's lists of all currently approved interchangeable biological products through the department's Internet site.

SB3,10 Section 10 . 601.31 (1) (w) of the statutes is amended to read:

SB3,7,15 601.31 (1) (w) For initial issuance and for each annual renewal of a license as an administrator or pharmacy benefit manager under ch. 633, $100.

SB3,11 Section 11 . 601.46 (3) (b) of the statutes is amended to read:

SB3,7,19 601.46 (3) (b) A general review of the insurance business in this state, including a report on emerging regulatory problems, developments and trends , including trends related to prescription drugs;

SB3,12 Section 12 . 609.83 of the statutes is amended to read:

SB3,7,23 609.83 Coverage of drugs and devices. Limited service health organizations, preferred provider plans, and defined network plans are subject to ss. 632.853, 632.861, and 632.895 (16t) and (16v).

SB3,13 Section 13 . 616.09 (1) (a) 2. of the statutes is amended to read:

SB3,8,4 616.09 (1) (a) 2. Plans authorized under s. 616.06 are subject to s. 610.21, 1977 stats., s. 610.55, 1977 stats., s. 610.57, 1977 stats., and ss. 628.34 to 628.39, 1977 stats., to chs. 600, 601, 620, 625, 627 and 645, to ss. 632.72, 632.755, 632.86 632.861 and 632.87 and to this subchapter except s. 616.08.

SB3,14 Section 14 . 632.86 of the statutes is repealed.

SB3,15 Section 15 . 632.861 of the statutes is created to read:

SB3,8,7 632.861 Prescription drug charges. (1) Definitions. In this section:

SB3,8,8 (a) “Disability insurance policy” has the meaning given in s. 632.895 (1) (a).

SB3,8,10 (b) “Enrollee” means an individual who is covered under a disability insurance policy or a self-insured health plan.

SB3,8,11 (c) “Pharmacy benefit manager” has the meaning given in s. 632.865 (1) (c).

SB3,8,12 (d) “Prescription drug” has the meaning given in s. 450.01 (20).

SB3,8,13 (e) “Prescription drug benefit” has the meaning given in s. 632.865 (1) (e).

SB3,8,14 (f) “Self-insured health plan” has the meaning given in s. 632.85 (1) (c).

SB3,8,22 (2) Allowing disclosures. (a) A disability insurance policy or self-insured health plan that provides a prescription drug benefit may not restrict, directly or indirectly, any pharmacy that dispenses a prescription drug to an enrollee in the policy or plan from informing, or penalize such pharmacy for informing, an enrollee of any differential between the out-of-pocket cost to the enrollee under the policy or plan with respect to acquisition of the drug and the amount an individual would pay for acquisition of the drug without using any health plan or health insurance coverage.

SB3,9,6 (b) A disability insurance policy or self-insured health plan that provides a prescription drug benefit shall ensure that any pharmacy benefit manager that provides services under a contract with the policy or plan does not, with respect to such policy or plan, restrict, directly or indirectly, any pharmacy that dispenses a prescription drug to an enrollee in the policy or plan from informing, or penalize such pharmacy for informing, an enrollee of any differential between the out-of-pocket cost to the enrollee under the policy or plan with respect to acquisition of the drug and the amount an individual would pay for acquisition of the drug without using any health plan or health insurance coverage.

SB3,9,11 (3) Cost-sharing limitation. (a) A disability insurance policy or self-insured health plan that provides a prescription drug benefit or a pharmacy benefit manager that provides services under a contract with a policy or plan may not require an enrollee to pay at the point of sale for a covered prescription drug an amount that is greater than the lowest of all of the following amounts:

SB3,9,13 1. The cost-sharing amount for the prescription drug for the enrollee under the policy or plan.

SB3,9,16 2. The amount a person would pay for the prescription drug if the enrollee purchased the prescription drug at the dispensing pharmacy without using any health plan or health insurance coverage.

SB3,9,25 (4) Drug substitution. (a) Except as provided in par. (b), a disability insurance policy that offers a prescription drug benefit, a self-insured health plan that offers a prescription drug benefit, or a pharmacy benefit manager acting on behalf of a disability insurance policy or self-insured health plan shall provide to an enrollee advanced written notice of a formulary change that removes a prescription drug from the formulary of the policy or plan or that reassigns a prescription drug to a benefit tier for the policy or plan that has a higher deductible, copayment, or coinsurance. The advanced written notice of a formulary change under this paragraph shall be provided no fewer than 30 days before the expected date of the removal or reassignment and shall include information on the procedure for the enrollee to request an exception to the formulary change. The policy, plan, or pharmacy benefit manager is required to provide the advanced written notice under this paragraph only to those enrollees in the policy or plan who are using the drug at the time the notification must be sent according to available claims history.

SB3,10,8 (b) 1. A disability insurance policy, self-insured health plan, or pharmacy benefit manager is not required to provide advanced written notice under par. (a) if the prescription drug that is to be removed or reassigned is any of the following:

SB3,10,9 a. No longer approved by the federal food and drug administration.

SB3,10,12 b. The subject of a notice, guidance, warning, announcement, or other statement from the federal food and drug administration relating to concerns about the safety of the prescription drug.

SB3,10,14 c. Approved by the federal food and drug administration for use without a prescription.

SB3,10,22 2. A disability insurance policy, self-insured health plan, or pharmacy benefit manager is not required to provide advanced written notice under par. (a) if, for the prescription drug that is being removed from the formulary or reassigned to a benefit tier that has a higher deductible, copayment, or coinsurance, the policy, plan, or pharmacy benefit manager adds to the formulary a generic prescription drug that is approved by the federal food and drug administration for use as an alternative to the prescription drug or a prescription drug in the same pharmacologic class or with the same mechanism of action at any of the following benefit tiers:

SB3,10,24 a. The same benefit tier from which the prescription drug is being removed or reassigned.

SB3,11,2 b. A benefit tier that has a lower deductible, copayment, or coinsurance than the benefit tier from which the prescription drug is being removed or reassigned.

SB3,11,10 (c) A pharmacist or pharmacy shall notify an enrollee in a disability insurance policy or self-insured health plan if a prescription drug for which an enrollee is filling or refilling a prescription is removed from the formulary and the policy or plan or a pharmacy benefit manager acting on behalf of a policy or plan adds to the formulary a generic prescription drug that is approved by the federal food and drug administration for use as an alternative to the prescription drug or a prescription drug in the same pharmacologic class or with the same mechanism of action at any of the following benefit tiers:

SB3,11,12 1. The same benefit tier from which the prescription drug is being removed or reassigned.

SB3,11,14 2. A benefit tier that has a lower deductible, copayment, or coinsurance than the benefit tier from which the prescription drug is being removed or reassigned.

SB3,11,21 (d) If an enrollee has had an adverse reaction to the generic prescription drug or the prescription drug in the same pharmacologic class or with the same mechanism of action that is being substituted for an originally prescribed drug, the pharmacist or pharmacy may extend the prescription order for the originally prescribed drug to fill one 30-day supply of the originally prescribed drug for the cost-sharing amount that applies to the prescription drug at the time of the substitution.

SB3,16 Section 16 . 632.865 (1) (a) of the statutes is renumbered 632.865 (1) (aw).

SB3,17 Section 17 . 632.865 (1) (ae) and (ak) of the statutes are created to read:

SB3,11,24 632.865 (1) (ae) “Health benefit plan” has the meaning given in s. 632.745 (11).

SB3,11,25 (ak) “Health care provider” has the meaning given in s. 146.81 (1).

SB3,18 Section 18. 632.865 (1) (c) of the statutes is renumbered 632.865 (1) (c) (intro.) and amended to read:

SB3,12,5 632.865 (1) (c) (intro.) “Pharmacy benefit manager" means an entity doing business in this state that contracts to administer or manage prescription drug benefits on behalf of any of the following:

SB3,12,6 1. An insurer or other.

SB3,12,8 3. Another entity that provides prescription drug benefits to residents of this state.

SB3,19 Section 19 . 632.865 (1) (c) 2. of the statutes is created to read:

SB3,12,10 632.865 (1) (c) 2. A cooperative, as defined in s. 185.01 (2).

SB3,20 Section 20 . 632.865 (1) (dm) of the statutes is created to read:

SB3,12,12 632.865 (1) (dm) “Prescription drug" has the meaning given in s. 450.01 (20).

SB3,21 Section 21 . 632.865 (3) to (7) of the statutes are created to read:

SB3,12,16 632.865 (3) License required. No person may perform any activities of a pharmacy benefit manager without being licensed by the commissioner as an administrator or pharmacy benefit manager under s. 633.14.

SB3,12,23 (4) Accreditation for network participation. A pharmacy benefit manager or a representative of a pharmacy benefit manager shall provide to a pharmacy, within 30 days of receipt of a written request from the pharmacy, a written notice of any certification or accreditation requirements used by the pharmacy benefit manager or its representative as a determinant of network participation. A pharmacy benefit manager or a representative of a pharmacy benefit manager may change its accreditation requirements no more frequently than once every 12 months.

SB3,13,3 (5) Retroactive claim reduction. Unless required otherwise by federal law, a pharmacy benefit manager may not retroactively deny or reduce a pharmacist's or pharmacy's claim after adjudication of the claim unless any of the following is true:

SB3,13,4 (a) The original claim was submitted fraudulently.