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 1Section 1 . 40.51 (8) of the statutes is amended to read:
SB3,5,5
140.51 (8) Every health care coverage plan offered by the state under sub. (6)
2shall comply with ss. 631.89, 631.90, 631.93 (2), 631.95, 632.72 (2), 632.729, 632.746
3(1) to (8) and (10), 632.747, 632.748, 632.798, 632.83, 632.835, 632.85, 632.853,
4632.855, 632.861, 632.867, 632.87 (3) to (6), 632.885, 632.89, 632.895 (5m) and (8) to
5(17), and 632.896.
SB3,2 6Section 2 . 40.51 (8m) of the statutes is amended to read:
SB3,5,107 40.51 (8m) Every health care coverage plan offered by the group insurance
8board under sub. (7) shall comply with ss. 631.95, 632.729, 632.746 (1) to (8) and (10),
9632.747, 632.748, 632.798, 632.83, 632.835, 632.85, 632.853, 632.855, 632.861,
10632.867, 632.885, 632.89, and 632.895 (11) to (17).
SB3,3 11Section 3 . 40.51 (15m) of the statutes is repealed.
SB3,4 12Section 4 . 66.0137 (4) of the statutes is amended to read:
SB3,5,1913 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, 632.867, 632.87 (4) to (6), 632.885, 632.89, 632.895 (9) to (17), 632.896, and
19767.513 (4).
SB3,5 20Section 5 . 120.13 (2) (g) of the statutes is amended to read:
SB3,5,2421 120.13 (2) (g) Every self-insured plan under par. (b) shall comply with ss.
2249.493 (3) (d), 631.89, 631.90, 631.93 (2), 632.729, 632.746 (10) (a) 2. and (b) 2.,
23632.747 (3), 632.798, 632.85, 632.853, 632.855, 632.861, 632.867, 632.87 (4) to (6),
24632.885, 632.89, 632.895 (9) to (17), 632.896, and 767.513 (4).
SB3,6 25Section 6 . 185.983 (1) (intro.) of the statutes is amended to read:
SB3,6,8
1185.983 (1) (intro.) Every voluntary nonprofit health care plan operated by a
2cooperative association organized under s. 185.981 shall be exempt from chs. 600 to
3646, with the exception of ss. 601.04, 601.13, 601.31, 601.41, 601.42, 601.43, 601.44,
4601.45, 611.26, 611.67, 619.04, 623.11, 623.12, 628.34 (10), 631.17, 631.89, 631.93,
5631.95, 632.72 (2), 632.729, 632.745 to 632.749, 632.775, 632.79, 632.795, 632.798,
6632.85, 632.853, 632.855, 632.861, 632.867, 632.87 (2) to (6), 632.885, 632.89,
7632.895 (5) and (8) to (17), 632.896, and 632.897 (10) and chs. 609, 620, 630, 635, 645,
8and 646, but the sponsoring association shall:
SB3,7 9Section 7 . 450.13 (5m) of the statutes is created to read:
SB3,6,1410 450.13 (5m) Disclosures to consumers. (a) Each pharmacy shall post in a
11prominent place at or near the place where prescriptions are dispensed a sign that
12clearly describes a pharmacist's ability under this state's law to substitute a less
13expensive drug product equivalent under sub. (1s) unless the consumer or the
14prescribing practitioner has indicated otherwise under sub. (2).
SB3,6,1915 (b) The pharmacy examining board shall create a list of the 100 most commonly
16prescribed generic drug product equivalents, including the generic and brand names
17of the drugs, and provide, either directly or on the department's Internet site, the list
18to each pharmacy on an annual basis. Each pharmacy shall make available to the
19public information on how to access the list under this paragraph.
SB3,6,2420 (c) Each pharmacy shall have available for the public a listing of the retail price,
21updated no less frequently than monthly, of the 100 most commonly prescribed
22prescription drugs, which includes brand name and generic equivalent drugs and
23biological products and interchangeable biological products, that are available for
24purchase at the pharmacy.
SB3,8 25Section 8 . 450.135 (8m) of the statutes is created to read:
SB3,7,5
1450.135 (8m) Disclosure to consumers. (a) Each pharmacy shall post in a
2prominent place at or near the place where prescriptions are dispensed a sign that
3clearly describes a pharmacist's ability under this state's law to substitute a less
4expensive interchangeable biological product under sub. (2) unless the consumer or
5the prescribing practitioner has indicated otherwise under sub. (3).
SB3,9 6Section 9 . 450.135 (9) of the statutes is amended to read:
SB3,7,127 450.135 (9) Links to be maintained by board. The board shall maintain links
8on the department's Internet site to the federal food and drug administration's lists
9of all currently approved interchangeable biological products. Each pharmacy shall
10make available for the public information on how to access the federal food and drug
11administration's lists of all currently approved interchangeable biological products
12through the department's Internet site.
SB3,10 13Section 10 . 601.31 (1) (w) of the statutes is amended to read:
SB3,7,1514 601.31 (1) (w) For initial issuance and for each annual renewal of a license as
15an administrator or pharmacy benefit manager under ch. 633, $100.
SB3,11 16Section 11 . 601.46 (3) (b) of the statutes is amended to read:
SB3,7,1917 601.46 (3) (b) A general review of the insurance business in this state, including
18a report on emerging regulatory problems, developments and trends , including
19trends related to prescription drugs
;
SB3,12 20Section 12 . 609.83 of the statutes is amended to read:
SB3,7,23 21609.83 Coverage of drugs and devices. Limited service health
22organizations, preferred provider plans, and defined network plans are subject to ss.
23632.853, 632.861, and 632.895 (16t) and (16v).
SB3,13 24Section 13 . 616.09 (1) (a) 2. of the statutes is amended to read:
SB3,8,4
1616.09 (1) (a) 2. Plans authorized under s. 616.06 are subject to s. 610.21, 1977
2stats., s. 610.55, 1977 stats., s. 610.57, 1977 stats., and ss. 628.34 to 628.39, 1977
3stats., to chs. 600, 601, 620, 625, 627 and 645, to ss. 632.72, 632.755, 632.86 632.861
4and 632.87 and to this subchapter except s. 616.08.
SB3,14 5Section 14 . 632.86 of the statutes is repealed.
SB3,15 6Section 15 . 632.861 of the statutes is created to read:
SB3,8,7 7632.861 Prescription drug charges. (1) Definitions. In this section:
SB3,8,88 (a) “Disability insurance policy” has the meaning given in s. 632.895 (1) (a).
SB3,8,109 (b) “Enrollee” means an individual who is covered under a disability insurance
10policy or a self-insured health plan.
SB3,8,1111 (c) “Pharmacy benefit manager” has the meaning given in s. 632.865 (1) (c).
SB3,8,1212 (d) “Prescription drug” has the meaning given in s. 450.01 (20).
SB3,8,1313 (e) “Prescription drug benefit” has the meaning given in s. 632.865 (1) (e).
SB3,8,1414 (f) “Self-insured health plan” has the meaning given in s. 632.85 (1) (c).
SB3,8,22 15(2) Allowing disclosures. (a) A disability insurance policy or self-insured
16health plan that provides a prescription drug benefit may not restrict, directly or
17indirectly, any pharmacy that dispenses a prescription drug to an enrollee in the
18policy or plan from informing, or penalize such pharmacy for informing, an enrollee
19of any differential between the out-of-pocket cost to the enrollee under the policy or
20plan with respect to acquisition of the drug and the amount an individual would pay
21for acquisition of the drug without using any health plan or health insurance
22coverage.
SB3,9,623 (b) A disability insurance policy or self-insured health plan that provides a
24prescription drug benefit shall ensure that any pharmacy benefit manager that
25provides services under a contract with the policy or plan does not, with respect to

1such policy or plan, restrict, directly or indirectly, any pharmacy that dispenses a
2prescription drug to an enrollee in the policy or plan from informing, or penalize such
3pharmacy for informing, an enrollee of any differential between the out-of-pocket
4cost to the enrollee under the policy or plan with respect to acquisition of the drug
5and the amount an individual would pay for acquisition of the drug without using
6any health plan or health insurance coverage.
SB3,9,11 7(3) Cost-sharing limitation. (a) A disability insurance policy or self-insured
8health plan that provides a prescription drug benefit or a pharmacy benefit manager
9that provides services under a contract with a policy or plan may not require an
10enrollee to pay at the point of sale for a covered prescription drug an amount that is
11greater than the lowest of all of the following amounts:
SB3,9,1312 1. The cost-sharing amount for the prescription drug for the enrollee under the
13policy or plan.
SB3,9,1614 2. The amount a person would pay for the prescription drug if the enrollee
15purchased the prescription drug at the dispensing pharmacy without using any
16health plan or health insurance coverage.
SB3,9,25 17(4) Drug substitution. (a) Except as provided in par. (b), a disability insurance
18policy that offers a prescription drug benefit, a self-insured health plan that offers
19a prescription drug benefit, or a pharmacy benefit manager acting on behalf of a
20disability insurance policy or self-insured health plan shall provide to an enrollee
21advanced written notice of a formulary change that removes a prescription drug from
22the formulary of the policy or plan or that reassigns a prescription drug to a benefit
23tier for the policy or plan that has a higher deductible, copayment, or coinsurance.
24The advanced written notice of a formulary change under this paragraph shall be
25provided no fewer than 30 days before the expected date of the removal or

1reassignment and shall include information on the procedure for the enrollee to
2request an exception to the formulary change. The policy, plan, or pharmacy benefit
3manager is required to provide the advanced written notice under this paragraph
4only to those enrollees in the policy or plan who are using the drug at the time the
5notification must be sent according to available claims history.
SB3,10,86 (b) 1. A disability insurance policy, self-insured health plan, or pharmacy
7benefit manager is not required to provide advanced written notice under par. (a) if
8the prescription drug that is to be removed or reassigned is any of the following:
SB3,10,99 a. No longer approved by the federal food and drug administration.
SB3,10,1210 b. The subject of a notice, guidance, warning, announcement, or other
11statement from the federal food and drug administration relating to concerns about
12the safety of the prescription drug.
SB3,10,1413 c. Approved by the federal food and drug administration for use without a
14prescription.
SB3,10,2215 2. A disability insurance policy, self-insured health plan, or pharmacy benefit
16manager is not required to provide advanced written notice under par. (a) if, for the
17prescription drug that is being removed from the formulary or reassigned to a benefit
18tier that has a higher deductible, copayment, or coinsurance, the policy, plan, or
19pharmacy benefit manager adds to the formulary a generic prescription drug that
20is approved by the federal food and drug administration for use as an alternative to
21the prescription drug or a prescription drug in the same pharmacologic class or with
22the same mechanism of action at any of the following benefit tiers:
SB3,10,2423 a. The same benefit tier from which the prescription drug is being removed or
24reassigned.
SB3,11,2
1b. A benefit tier that has a lower deductible, copayment, or coinsurance than
2the benefit tier from which the prescription drug is being removed or reassigned.
SB3,11,103 (c) A pharmacist or pharmacy shall notify an enrollee in a disability insurance
4policy or self-insured health plan if a prescription drug for which an enrollee is filling
5or refilling a prescription is removed from the formulary and the policy or plan or a
6pharmacy benefit manager acting on behalf of a policy or plan adds to the formulary
7a generic prescription drug that is approved by the federal food and drug
8administration for use as an alternative to the prescription drug or a prescription
9drug in the same pharmacologic class or with the same mechanism of action at any
10of the following benefit tiers:
SB3,11,1211 1. The same benefit tier from which the prescription drug is being removed or
12reassigned.
SB3,11,1413 2. A benefit tier that has a lower deductible, copayment, or coinsurance than
14the benefit tier from which the prescription drug is being removed or reassigned.
SB3,11,2115 (d) If an enrollee has had an adverse reaction to the generic prescription drug
16or the prescription drug in the same pharmacologic class or with the same
17mechanism of action that is being substituted for an originally prescribed drug, the
18pharmacist or pharmacy may extend the prescription order for the originally
19prescribed drug to fill one 30-day supply of the originally prescribed drug for the
20cost-sharing amount that applies to the prescription drug at the time of the
21substitution.
SB3,16 22Section 16 . 632.865 (1) (a) of the statutes is renumbered 632.865 (1) (aw).
SB3,17 23Section 17 . 632.865 (1) (ae) and (ak) of the statutes are created to read:
SB3,11,2424 632.865 (1) (ae) “Health benefit plan” has the meaning given in s. 632.745 (11).
SB3,11,2525 (ak) “Health care provider” has the meaning given in s. 146.81 (1).
SB3,18
1Section 18. 632.865 (1) (c) of the statutes is renumbered 632.865 (1) (c) (intro.)
2and amended to read:
SB3,12,53 632.865 (1) (c) (intro.) “Pharmacy benefit manager" means an entity doing
4business in this state that contracts to administer or manage prescription drug
5benefits on behalf of any of the following:
SB3,12,6 61. An insurer or other.
SB3,12,8 73. Another entity that provides prescription drug benefits to residents of this
8state.
SB3,19 9Section 19 . 632.865 (1) (c) 2. of the statutes is created to read:
SB3,12,1010 632.865 (1) (c) 2. A cooperative, as defined in s. 185.01 (2).
SB3,20 11Section 20 . 632.865 (1) (dm) of the statutes is created to read:
SB3,12,1212 632.865 (1) (dm) “Prescription drug" has the meaning given in s. 450.01 (20).
SB3,21 13Section 21 . 632.865 (3) to (7) of the statutes are created to read:
SB3,12,1614 632.865 (3) License required. No person may perform any activities of a
15pharmacy benefit manager without being licensed by the commissioner as an
16administrator or pharmacy benefit manager under s. 633.14.
SB3,12,23 17(4) Accreditation for network participation. A pharmacy benefit manager or
18a representative of a pharmacy benefit manager shall provide to a pharmacy, within
1930 days of receipt of a written request from the pharmacy, a written notice of any
20certification or accreditation requirements used by the pharmacy benefit manager
21or its representative as a determinant of network participation. A pharmacy benefit
22manager or a representative of a pharmacy benefit manager may change its
23accreditation requirements no more frequently than once every 12 months.
SB3,13,3
1(5) Retroactive claim reduction. Unless required otherwise by federal law,
2a pharmacy benefit manager may not retroactively deny or reduce a pharmacist's or
3pharmacy's claim after adjudication of the claim unless any of the following is true:
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