AB 315: Pharmacy benefit management.

Existing law, the Pharmacy Law, provides for the licensure and regulation of pharmacists and pharmacies by the California State Board of Pharmacy. A violation of the Pharmacy Law is a crime.

This bill would require a pharmacy to inform a customer at the point of sale for a covered prescription drug whether the retail price is lower than the applicable cost-sharing amount for the prescription drug, unless the pharmacy automatically charges the customer the lower price. If the customer pays the retail price, the bill would require the pharmacy to submit the claim to the plan or insurer in the same manner as if the customer had purchased the prescription drug by paying the cost-sharing amount when submitted by the network pharmacy. The bill would provide that the payment rendered by an enrollee would constitute the applicable cost sharing, as specified. The bill would provide that a violation of those provisions would not be grounds for disciplinary or criminal action.

Existing law imposes specified requirements on an audit of pharmacy services provided to beneficiaries of a health benefit plan and defines a pharmacy benefit manager for those purposes as a person, business, or other entity that, pursuant to a contract or under an employment relationship with a carrier, health benefit plan sponsor, or other 3rd-party payer, either directly or through an intermediary, manages the prescription drug coverage provided by the carrier, plan sponsor, or other 3rd-party payer.

The bill would require pharmacy benefit managers to exercise good faith and fair dealing. Among other things, the bill would require a pharmacy benefit manager to notify a purchaser, as defined, in writing of any activity, policy, or practice of the pharmacy benefit manager that directly or indirectly presents a conflict of interest that interferes with the discharge of the pharmacy benefit managers duty to the purchaser to exercise good faith and fair dealing. The bill would require a pharmacy benefit manager to disclose, on a quarterly basis, and upon the request of the purchaser, certain information with respect to prescription product benefits specific to the purchaser, including, but not limited to, the aggregate wholesale acquisition costs from a pharmaceutical manufacturer or labeler for certain therapeutic drugs and any administrative fees received from a pharmaceutical manufacturer or labeler. The bill would exempt from those requirements proprietary information, as defined, if the purchaser fails to agree, in writing, to maintain that information as confidential. The bill would impose additional requirements on pharmacy benefit managers to disclose to pharmacy network providers or their contracting agents of any material change to a contract provision that affects, among other things, the terms of reimbursement. The bill would prohibit a pharmacy benefit manager from including in a contract with a pharmacy network provider or its contracting agent a provision that prohibits the provider from informing a patient of a less costly alternative to a prescribed medication. The bill would exempt from the above provisions a health care service plan or health insurer, or its affiliate, subsidiary, related entity, or contracted medical group, if it offers, provides, or administers pharmacy benefit management services only to enrollees, subscribers, policyholders, or insureds, as specified, and certain contracts under the Labor Code.

On and after January 1, 2020, and until January 1, 2023, the bill would also establish a pilot project in the Counties of Riverside and Sonoma to assess the impact of health care service plan and pharmacy benefit manager prohibitions on the dispensing of certain amounts of prescription drugs by network retail pharmacies. In those counties, the bill would prohibit a health care service plan from prohibiting, or permitting any delegated pharmacy benefit manager to prohibit, a pharmacy provider from dispensing a particular amount of a prescribed medication if the plan or pharmacy benefit manager allows that amount to be dispensed through a pharmacy owned or controlled by the plan or pharmacy benefit manager, except as specified. The bill would require plans in those counties to report annually to the Department of Managed Health Care information and data relating to the pilot project. The bill would require the department to provide a summary of that data to the Governor and health policy committees of the Legislature.

This bill would make legislative findings and declarations as to the necessity of a special statute for the Counties of Riverside and Sonoma.

Existing law provides for the regulation of health care service plans by the Department of Managed Health Care. A willful violation of those provisions is a crime. Existing law requires health care service plans that cover prescription drug benefits and that issue cards to enrollees to issue to each of its enrollees a uniform prescription drug information card that, at a minimum, contains specified information, including information required by the benefit administrator or health care service plan that is necessary to commence processing a pharmacy claim and a telephone number that pharmacy providers may call for assistance.

On and after January 1, 2020, the bill would impose additional requirements on health care service plans with regard to contracted pharmacy providers and pharmacy benefit managers. Among other things, the bill would prohibit a health care service plan from including in a contract with a pharmacy provider or its contracting agent a provision that prohibits the provider from informing a patient of a less costly alternative to a prescribed medication. The bill would require a health care service plan that contracts with a pharmacy benefit manager for management of any or all of its prescription drug coverage to require the pharmacy benefit manager to comply with specified provisions, register with the department pursuant to these provisions, and exercise good faith and fair dealing in the performance of its contractual duties to a health care service plan. The bill would require the registration of those pharmacy benefit managers with the department, as specified, and would authorize the department to set a fee for registration, as specified. The bill would establish enforcement provisions. The bill would also establish a Task Force on Pharmacy Benefit Management Reporting, until February 1, 2020, to determine what information related to pharmaceutical costs, if any, the department should require to be reported by health care service plans or their contracted pharmacy benefit managers. The bill would require the department to submit a report of the task force to specified persons and entities within the Legislature.

Because a willful violation of these provisions by health care service plans would be a crime, this bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.