Drug formularies
This bill makes several changes with respect to drug formularies. Under
current law, 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 must 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 must be provided no fewer than 30 days before the expected date
of the removal or reassignment.
This bill provides that a disability insurance policy or self-insured health plan
that provides a prescription drug benefit shall make the formulary and all drug costs
associated with the formulary available to plan sponsors and individuals prior to
selection or enrollment. Further, the bill provides that no disability insurance policy,
self-insured health plan, or pharmacy benefit manager acting on behalf of a
disability insurance policy or self-insured health plan may remove a prescription
drug from the formulary except at the time of coverage renewal. Finally, the bill
provides that advanced written notice of a formulary change must be provided no
fewer than 90 days before the expected date of the removal or reassignment of a
prescription drug on the formulary.
Pharmacy networks
Under the bill, if an enrollee utilizes a pharmacy or pharmacist in a preferred
network of pharmacies or pharmacists, no disability insurance policy or self-insured
health plan that provides a prescription drug benefit or pharmacy benefit manager
that provides services under a contract with a policy or plan may require the enrollee
to pay any amount or impose on the enrollee any condition that would not be required
if the enrollee utilized a different pharmacy or pharmacist in the same preferred
network. Further, the bill provides that any disability insurance policy or
self-insured health plan that provides a prescription drug benefit, or any pharmacy
benefit manager that provides services under a contract with a policy or plan, that
has established a preferred network of pharmacies or pharmacists must reimburse
each pharmacy or pharmacist in the same network at the same rates.

Audits of pharmacists and pharmacies
This bill makes several changes to audits of pharmacists and pharmacies. The
bill requires an entity that conducts audits of pharmacists and pharmacies to ensure
that each pharmacist or pharmacy audited by the entity is audited under the same
standards and parameters as other similarly situated pharmacists or pharmacies
audited by the entity, that the entity randomizes the prescriptions that the entity
audits and the entity audits the same number of prescriptions in each prescription
benefit tier, and that each audit of a prescription reimbursed under Part D of the
federal Medicare program is conducted separately from audits of prescriptions
reimbursed under other policies or plans. The bill prohibits any pharmacy benefit
manager from recouping reimbursements made to a pharmacist or pharmacy for
errors that involve no actual financial harm to an enrollee, policy, or plan unless the
error is the result of the pharmacist or pharmacy failing to comply with a formal
corrective action plan. The bill further prohibits any pharmacy benefit manager
from using extrapolation in calculating reimbursements that it may recoup, and
instead requires a pharmacy benefit manager to base the finding of errors for which
reimbursements will be recouped on an actual error in reimbursement and not a
projection of the number of patients served having a similar diagnosis or on a
projection of the number of similar orders or refills for similar prescription drugs.
The bill requires that a pharmacy benefit manager that recoups any reimbursements
made to a pharmacist or pharmacy for an error that was the cause of financial harm
must return the recouped reimbursement to the individual or the policy or plan
sponsor who was harmed by the error.
Pharmacy benefit manager fiduciary and disclosure requirements
The bill provides that a pharmacy benefit manager owes a fiduciary duty to a
health benefit plan sponsor. The bill also requires that a pharmacy benefit manager
annually disclose all of the following information to the health benefit plan sponsor:
1. The indirect profit received by the pharmacy benefit manager from owning
a pharmacy or service provider.
2. Any payments made to a consultant or broker who works on behalf of the plan
sponsor.
3. From the amounts received from drug manufacturers, the amounts retained
by the pharmacy benefit manager that are related to the plan sponsor's claims or
bona fide service fees.
4. The amounts received from network pharmacies and pharmacists and the
amount retained by the pharmacy benefit manager.
Discriminatory reimbursement of 340B entities
The bill prohibits a pharmacy benefit manager from taking certain actions with
respect to 340B covered entities, pharmacies and pharmacists contracted with 340B
covered entities, and patients who obtain prescription drugs from 340B covered
entities. The 340B drug pricing program is a federal program that requires
pharmaceutical manufacturers that participate in the federal Medicaid program to
sell outpatient drugs at discounted prices to certain health care organizations that
provide health care for uninsured and low-income patients. Entities that are eligible
for discounted prices under the 340B drug pricing program include

federally-qualified health centers, critical access hospitals, and certain public and
nonprofit disproportionate share hospitals. The bill prohibits pharmacy benefit
managers from doing any of the following:
1. Refusing to reimburse a 340B covered entity or a pharmacy or pharmacist
contracted with a 340B covered entity for dispensing 340B drugs.
2. Imposing requirements or restrictions on 340B covered entities or
pharmacies or pharmacists contracted with 340B covered entities that are not
imposed on other entities, pharmacies, or pharmacists.
3. Reimbursing a 340B covered entity or a pharmacy or pharmacist contracted
with a 340B covered entity for a 340B drug at a rate lower than the amount paid for
the same drug to pharmacies or pharmacists that are not 340B covered entities or
pharmacies or pharmacists contracted with a 340B covered entity.
4. Restricting the access of a 340B covered entity or a pharmacy or pharmacist
contracted with a 340B covered entity to a 3rd-party payer's pharmacy network
solely because the 340B covered entity or the pharmacy or pharmacist contracted
with a 340B covered entity participates in the 340B drug pricing program.
5. Requiring a 340B covered entity or a pharmacy or pharmacist contracted
with a 340B covered entity to contract with a specific pharmacy or pharmacist or
health benefit plan in order to access a 3rd-party payer's pharmacy network.
6. Restricting the methods by which a 340B covered entity or a pharmacy or
pharmacist contracted with a 340B covered entity may dispense or deliver 340B
drugs.
Application of prescription drug payments
Health insurance policies and plans often apply deductibles and out-of-pocket
maximum amounts to the benefits covered by the policy or plan. A deductible is an
amount that an enrollee in a policy or plan must pay out of pocket before attaining
the full benefits of the policy or plan. An out-of-pocket maximum amount is a limit
specified by a policy or plan on the amount that an enrollee pays, and, once that limit
is reached, the policy or plan covers the benefit entirely. The bill generally requires
health insurance policies that offer prescription drug benefits, self-insured health
plans, and pharmacy benefit managers acting on behalf of policies or plans to apply
amounts paid by or on behalf of an individual covered under the policy or plan for
brand name prescription drugs to any cost-sharing requirement or to any
calculation of an out-of-pocket maximum amount of the policy or plan. Health
insurance policies are referred to in the bill as disability insurance policies.
Prohibited retaliation
The bill prohibits a pharmacy benefit manager from retaliating against a
pharmacy or pharmacist for reporting an alleged violation of certain laws applicable
to pharmacy benefit managers or for exercising certain rights or remedies.
Retaliation includes terminating or refusing to renew a contract with a pharmacy or
pharmacist, subjecting a pharmacy or pharmacist to increased audits, or failing to
promptly pay a pharmacy or pharmacist any money that the pharmacy benefit
manager owes to the pharmacy or pharmacist. The bill provides that a pharmacy or
pharmacist may bring an action in court for injunctive relief if a pharmacy benefit
manager is retaliating against the pharmacy or pharmacist as provided in the bill.

In addition to equitable relief, the court may award a pharmacy or pharmacist that
prevails in such an action reasonable attorney fees and costs.
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:
AB773,1 1Section 1 . 40.51 (8) of the statutes is amended to read:
AB773,8,62 40.51 (8) Every health care coverage plan offered by the state under sub. (6)
3shall comply with ss. 631.89, 631.90, 631.93 (2), 631.95, 632.72 (2), 632.729, 632.746
4(1) to (8) and (10), 632.747, 632.748, 632.798, 632.83, 632.835, 632.85, 632.853,
5632.855, 632.861, 632.862, 632.867, 632.87 (3) to (6), 632.885, 632.89, 632.895 (5m)
6and (8) to (17), and 632.896.
AB773,2 7Section 2 . 40.51 (8m) of the statutes is amended to read:
AB773,8,118 40.51 (8m) Every health care coverage plan offered by the group insurance
9board under sub. (7) shall comply with ss. 631.95, 632.729, 632.746 (1) to (8) and (10),
10632.747, 632.748, 632.798, 632.83, 632.835, 632.85, 632.853, 632.855, 632.861,
11632.862, 632.867, 632.885, 632.89, and 632.895 (11) to (17).
AB773,3 12Section 3 . 66.0137 (4) of the statutes is amended to read:
AB773,8,1913 66.0137 (4) Self-insured health plans. If a city, including a 1st class city, or
14a village provides health care benefits under its home rule power, or if a town
15provides health care benefits, to its officers and employees on a self-insured basis,
16the self-insured plan shall comply with ss. 49.493 (3) (d), 631.89, 631.90, 631.93 (2),
17632.729, 632.746 (10) (a) 2. and (b) 2., 632.747 (3), 632.798, 632.85, 632.853, 632.855,
18632.861, 632.862, 632.867, 632.87 (4) to (6), 632.885, 632.89, 632.895 (9) to (17),
19632.896, and 767.513 (4).
AB773,4 20Section 4 . 120.13 (2) (g) of the statutes is amended to read:
AB773,9,4
1120.13 (2) (g) Every self-insured plan under par. (b) shall comply with ss.
249.493 (3) (d), 631.89, 631.90, 631.93 (2), 632.729, 632.746 (10) (a) 2. and (b) 2.,
3632.747 (3), 632.798, 632.85, 632.853, 632.855, 632.861, 632.862, 632.867, 632.87 (4)
4to (6), 632.885, 632.89, 632.895 (9) to (17), 632.896, and 767.513 (4).
AB773,5 5Section 5 . 185.983 (1) (intro.) of the statutes is amended to read:
AB773,9,136 185.983 (1) (intro.) Every voluntary nonprofit health care plan operated by a
7cooperative association organized under s. 185.981 shall be exempt from chs. 600 to
8646, with the exception of ss. 601.04, 601.13, 601.31, 601.41, 601.42, 601.43, 601.44,
9601.45, 611.26, 611.67, 619.04, 623.11, 623.12, 628.34 (10), 631.17, 631.89, 631.93,
10631.95, 632.72 (2), 632.729, 632.745 to 632.749, 632.775, 632.79, 632.795, 632.798,
11632.85, 632.853, 632.855, 632.861, 632.862, 632.867, 632.87 (2) to (6), 632.885,
12632.89, 632.895 (5) and (8) to (17), 632.896, and 632.897 (10) and chs. 609, 620, 630,
13635, 645, and 646, but the sponsoring association shall:
AB773,6 14Section 6 . 609.83 of the statutes is amended to read:
AB773,9,17 15609.83 Coverage of drugs and devices ; application of payments.
16Limited service health organizations, preferred provider plans, and defined network
17plans are subject to ss. 632.853, 632.861, 632.862, and 632.895 (16t) and (16v).
AB773,7 18Section 7 . 632.861 (1m) of the statutes is created to read:
AB773,9,2219 632.861 (1m) Required disclosures. A disability insurance policy or
20self-insured health plan that provides a prescription drug benefit shall make the
21formulary and all drug costs associated with the formulary available to plan sponsors
22and individuals prior to selection or enrollment.
AB773,8 23Section 8. 632.861 (3g) of the statutes is created to read:
AB773,9,2524 632.861 (3g) Choice of provider; penalty prohibited. No insurer, self-insured
25health plan, or pharmacy benefit manager may require, or penalize a person who is

1covered under a disability insurance policy or self-insured health plan for using or
2for not using, a specific retail, specific mail-order, or other specific pharmacy
3provider within the network of pharmacy providers under the policy or plan. A
4prohibited penalty under this subsection includes an increase in premium,
5deductible, copayment, or coinsurance.
AB773,9 6Section 9 . 632.861 (3r) of the statutes is created to read:
AB773,10,137 632.861 (3r) Pharmacy networks. (a) If an enrollee utilizes a pharmacy or
8pharmacist in a preferred network of pharmacies or pharmacists, no disability
9insurance policy or self-insured health plan that provides a prescription drug benefit
10or pharmacy benefit manager that provides services under a contract with a policy
11or plan may require the enrollee to pay any amount or impose on the enrollee any
12condition that would not be required if the enrollee utilized a different pharmacy or
13pharmacist in the same preferred network.
AB773,10,1814 (b) Any disability insurance policy or self-insured health plan that provides a
15prescription drug benefit, or any pharmacy benefit manager that provides services
16under a contract with a policy or plan, that has established a preferred network of
17pharmacies or pharmacists shall reimburse each pharmacy or pharmacist in the
18same network at the same rates.
AB773,10 19Section 10 . 632.861 (4) (a) of the statutes is amended to read:
AB773,11,820 632.861 (4) (a) Except as provided in par. (b) and subject to par. (e), a disability
21insurance policy that offers a prescription drug benefit, a self-insured health plan
22that offers a prescription drug benefit, or a pharmacy benefit manager acting on
23behalf of a disability insurance policy or self-insured health plan shall provide to an
24enrollee advanced written notice of a formulary change that removes a prescription
25drug from the formulary of the policy or plan or that reassigns a prescription drug

1to a benefit tier for the policy or plan that has a higher deductible, copayment, or
2coinsurance. The advanced written notice of a formulary change under this
3paragraph shall be provided no fewer than 30 90 days before the expected date of the
4removal or reassignment and shall include information on the procedure for the
5enrollee to request an exception to the formulary change. The policy, plan, or
6pharmacy benefit manager is required to provide the advanced written notice under
7this paragraph only to those enrollees in the policy or plan who are using the drug
8at the time the notification must be sent according to available claims history.
AB773,11 9Section 11 . 632.861 (4) (e) of the statutes is created to read:
AB773,11,1310 632.861 (4) (e) No disability insurance policy, self-insured health plan, or
11pharmacy benefit manager acting on behalf of a disability insurance policy or
12self-insured health plan may remove a prescription drug from the formulary except
13at the time of coverage renewal.
AB773,12 14Section 12 . 632.862 of the statutes is created to read:
AB773,11,16 15632.862 Application of prescription drug payments. (1) Definitions. In
16this section:
AB773,11,1717 (a) “Brand name” has the meaning given in s. 450.12 (1) (a).
AB773,11,1818 (b) “Brand name drug” means any of the following:
AB773,11,2019 1. A prescription drug that contains a brand name and that has no medically
20appropriate generic equivalent.
AB773,11,2321 2. A prescription drug that contains a brand name and that has a medically
22appropriate generic equivalent but to which the enrollee or other covered individual
23has obtained access through any of the following:
AB773,11,2424 a. Prior authorization.
AB773,11,2525 b. A step therapy protocol.
AB773,12,2
1c. The exceptions and appeals process of the disability insurance policy,
2self-insured health plan, or pharmacy benefit manager.
AB773,12,43 (c) “Cost-sharing requirement” means a deductible, copayment, or
4coinsurance.
AB773,12,55 (d) “Disability insurance policy” has the meaning given in s. 632.895 (1) (a).
AB773,12,76 (e) “Generic equivalent” means a drug product equivalent, as defined in s.
7450.13 (1e), that is nationally available.
AB773,12,88 (f) “Pharmacy benefit manager” has the meaning given in s. 632.865 (1) (c).
AB773,12,99 (g) “Self-insured health plan” has the meaning given in s. 632.85 (1) (c).
AB773,12,20 10(2) Application of payments. Except as provided in sub. (4), a disability
11insurance policy that offers a prescription drug benefit, a self-insured health plan,
12or a pharmacy benefit manager acting on behalf of a disability insurance policy or
13self-insured health plan shall apply to any cost-sharing requirement or to any
14calculation of an out-of-pocket maximum amount of the disability insurance policy
15or self-insured health plan, including the annual limitations on cost sharing
16established under 42 USC 18022 (c) and 42 USC 300gg-6 (b), any amounts paid by
17an enrollee or other individual covered under the disability insurance policy or
18self-insured health plan, or by any person on behalf of the enrollee or individual, for
19brand name drugs that are covered under the disability insurance policy or
20self-insured health plan.
AB773,13,6 21(3) Calculation of cost-sharing annual limitations. For purposes of
22calculating an enrollee's contribution to the annual limitation on cost sharing under
2342 USC 18022 (c) and 42 USC 300gg-6 (b), a disability insurance policy that offers
24a prescription drug benefit, a self-insured health plan, or a pharmacy benefit
25manager acting on behalf of a disability insurance policy or self-insured health plan

1shall include expenditures for any item or service covered under the disability
2insurance policy or self-insured health plan if the item or service is included within
3a category of essential health benefits, as described in 42 USC 18022 (b) (1), and
4regardless of whether the disability insurance policy, self-insured health plan, or
5pharmacy benefit manager classifies the item or service as an essential health
6benefit.
AB773,13,16 7(4) Exception; high deductible health plans. If applying the requirement
8under sub. (2) to payments made by or on behalf of an enrollee or other individual
9covered under a high deductible health plan, as defined under 26 USC 223 (c) (2),
10would result in the enrollee failing to meet the definition of an eligible individual
11under 26 USC 223 (c) (1), the disability insurance policy, self-insured health plan,
12or pharmacy benefit manager shall begin applying the requirement under sub. (2)
13to the disability insurance policy or self-insured health plan's deductible after the
14enrollee has satisfied the minimum deductible requirement under 26 USC 223 (c) (2)
15(A) (i). This subsection does not apply to any amounts paid for items or services that
16are preventive care, as described in 26 USC 223 (c) (2) (C).
AB773,13 17Section 13. 632.865 (1) (ab) and (ac) of the statutes are created to read:
AB773,13,1918 632.865 (1) (ab) “340B covered entity” has the meaning given for “covered
19entity” under 42 USC 256b (a) (4).
AB773,13,2120 (ac) “340B drug” has the meaning given for “covered drug” under 42 USC 256b
21(b) (2).
AB773,14 22Section 14. 632.865 (1) (ae) of the statutes is amended to read:
AB773,14,223 632.865 (1) (ae) “Health benefit plan” has the meaning given means a health
24benefit plan, as defined
in s. 632.745 (11), that is not prescription drug coverage

1provided under part D of medicare under Title XVIII of the federal Social Security
2Act, 42 USC 1395 to 1395lll
.
AB773,15 3Section 15. 632.865 (1) (an), (aq), and (at) of the statutes are created to read:
AB773,14,84 632.865 (1) (an) “Maximum allowable cost list” means a list of pharmaceutical
5products that sets forth the maximum amount a pharmacy benefit manager will pay
6to a pharmacy or pharmacist for dispensing a pharmaceutical product. The list may
7directly establish the maximum amounts or set forth a method for how the maximum
8amounts are calculated.
AB773,14,119 (aq) “Pharmaceutical product” means a prescription generic drug, prescription
10brand-name drug, prescription biologic, or other prescription drug, vaccine, or
11device.
AB773,14,1412 (at) “Pharmaceutical wholesaler” means a person that sells and distributes,
13directly or indirectly, a pharmaceutical product and that offers to deliver the
14pharmaceutical product to a pharmacy or pharmacist.
AB773,16 15Section 16. 632.865 (1) (bm) of the statutes is created to read:
AB773,14,1816 632.865 (1) (bm) “Pharmacy acquisition cost” means the amount that a
17pharmaceutical wholesaler charges a pharmacy or pharmacist for a pharmaceutical
18product as listed on the pharmacy's or pharmacist's billing invoice.
AB773,17 19Section 17. 632.865 (1) (cg) and (cr) of the statutes are created to read:
AB773,14,2120 632.865 (1) (cg) “Pharmacy benefit manager affiliate” means a pharmacy or
21pharmacist that is an affiliate of a pharmacy benefit manager.
AB773,14,2522 (cr) “Pharmacy services administrative organization” means an entity that
23provides contracting and other administrative services to pharmacies or
24pharmacists to assist them in their interactions with 3rd-party payers, pharmacy
25benefit managers, pharmaceutical wholesalers, and other entities.
AB773,18
1Section 18. 632.865 (2) of the statutes is repealed.
AB773,19 2Section 19. 632.865 (2d) of the statutes is created to read:
AB773,15,63 632.865 (2d) Pharmaceutical product reimbursements. (ag) Contents of
4maximum allowable cost lists.
A pharmacy benefit manager that uses a maximum
5allowable cost list shall include all of the following information on the maximum
6allowable cost list:
AB773,15,97 1. The average acquisition cost of each pharmaceutical product and the cost of
8the pharmaceutical product set forth in the national average drug acquisition cost
9data published by the federal centers for medicare and medicaid services.
AB773,15,1010 2. The average manufacturer price of each pharmaceutical product.
AB773,15,1111 3. The average wholesale price of each pharmaceutical product.
AB773,15,1312 4. The brand effective rate or generic effective rate for each pharmaceutical
13product.
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