SENATE BILL 498

56th legislature - STATE OF NEW MEXICO - first session, 2023

INTRODUCED BY

David M. Gallegos

 

 

 

 

 

AN ACT

RELATING TO PHARMACEUTICALS; AMENDING SECTIONS OF THE PHARMACY BENEFITS MANAGER REGULATION ACT; CREATING ADDITIONAL RESTRICTIONS FOR PHARMACY BENEFITS MANAGERS; EXPANDING THE APPEAL PROCEDURES RELATED TO MAXIMUM ALLOWABLE COST LISTS; UPDATING DEFINITIONS.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

     SECTION 1. Section 59A-61-2 NMSA 1978 (being Laws 2014, Chapter 14, Section 2, as amended) is amended to read:

     "59A-61-2. DEFINITIONS.--As used in the Pharmacy Benefits Manager Regulation Act:

          A. "in-network pharmacy" means a pharmacy that has contracted with a pharmacy benefits manager to provide pharmaceutical drugs and services;

          [A.] B. "maximum allowable cost" means the maximum amount that a pharmacy benefits manager will reimburse a pharmacy for the cost of a [generic] pharmaceutical drug;

          [B.] C. "maximum allowable cost list" means a searchable, electronic and internet-based listing of drugs used by a pharmacy benefits manager [setting the maximum allowable cost on which reimbursement to a pharmacy or pharmacist is made] that sets the maximum allowable payment to a pharmacy or pharmacist for a pharmaceutical drug. "Maximum allowable cost list" includes:

                (1) average acquisition cost, including national average drug acquisition cost;

                (2) average manufacturer price;

                (3) average wholesale price;

                (4) brand effective rate or generic effective rate;

                (5) discount indexing;

                (6) federal upper limits;

                (7) wholesale acquisition cost; and

                (8) any other term that a pharmacy benefits manager or a health care insurer may use to establish reimbursement rates to a pharmacist or pharmacy for pharmacist services;

          [C.] D. "obsolete" means a [product] pharmaceutical drug that is listed in national drug pricing compendia but is no longer available to be dispensed based on the expiration date of the last lot manufactured;

          [D.] E. "pharmacist" means an individual licensed as a pharmacist by the board of pharmacy;

          [E.] F. "pharmacy" means a licensed place of business where drugs are compounded or dispensed and pharmacist services are provided;

          G. "pharmacy acquisition cost" means the amount that a pharmaceutical wholesaler charges for a pharmaceutical drug as listed on the pharmacy's billing invoice;

          [F.] H. "pharmacy benefits management" means a service provided to or conducted by a health plan as defined in Section 59A-16-21.1 NMSA 1978 or health insurer that involves:

                (1) prescription drug claim administration;

                (2) pharmacy network management;

                (3) negotiation and administration of prescription drug discounts, rebates and other benefits;

                (4) design, administration or management of prescription drug benefits;

                (5) formulary management;

                (6) payment of claims to pharmacies for dispensing prescription drugs;

                (7) negotiation or administration of contracts relating to pharmacy operations or prescription benefits; or

                (8) any other service determined by the superintendent as specified by rule to be a pharmacy benefits management activity;       

          [G.] I. "pharmacy benefits manager" means an entity that provides pharmacy benefits management services;

          [H.] J. "pharmacy benefits manager affiliate" means a pharmacy or pharmacist that directly or indirectly, through one or more intermediaries, owns or controls, is owned or controlled by or is under common ownership or control with a pharmacy benefits manager;

          [I.] K. "pharmacy services administrative organization" means an entity that contracts with a pharmacy or pharmacist to act as the pharmacy or pharmacist's agent with respect to matters involving a pharmacy benefits manager or third-party payor, including negotiating, executing or administering contracts with the pharmacy benefits manager or third-party payor; [and]

          L. "preferred pharmacy network" means a group of in-network pharmacies that have contracted with a pharmacy benefits manager to provide pharmaceutical drugs and services at a lower price than the average in-network pharmacy in exchange for an increased volume of sales; and

          [J.] M. "superintendent" means the superintendent of insurance."

     SECTION 2. Section 59A-61-4 NMSA 1978 (being Laws 2014, Chapter 14, Section 4, as amended) is amended to read:

     "59A-61-4. PHARMACY REIMBURSEMENT PRACTICES FOR [GENERIC] PHARMACEUTICAL DRUGS--APPEALS PROCESS REQUIRED.--

          A. A pharmacy benefits manager shall determine a reimbursement amount for a [generic] pharmaceutical drug based on objective and verifiable sources.

          B. A pharmacy benefits manager shall reimburse a pharmacy an amount no less than the amount that the pharmacy benefits manager reimburses a pharmacy benefits manager affiliate in the same network for providing the same or equivalent service.

          C. A pharmacy benefits manager using maximum allowable cost pricing may place a pharmaceutical drug on a maximum allowable cost list if the drug:

                (1) is listed as "A" or "B" rated in the most recent version of the United States food and drug administration's approved drug products with therapeutic equivalence evaluations, also known as the "orange book", or has an "NR" or "NA" rating or a similar rating by a nationally recognized reference;

                (2) is available for purchase by pharmacies in the state at the time of claim submission from national or regional wholesalers and is not obsolete; and

                (3) is a drug with not fewer than two "A" or "B" rated therapeutically equivalent drugs in the most recent version of the United States food and drug administration's approved drug products with therapeutic equivalence evaluations, also known as the "orange book".

          D. A pharmacy benefits manager [using maximum allowable cost pricing] that uses a maximum allowable cost list shall:

                (1) upon a network pharmacy's request, provide that network pharmacy with the sources used to determine the maximum allowable cost pricing for the maximum allowable cost list specific to that provider;

                (2) review and update maximum allowable cost price information at least once every seven business days to reflect any modification of maximum allowable cost pricing;

                (3) establish and maintain a process for eliminating [products] pharmaceutical drugs from the maximum allowable cost list or modifying maximum allowable cost prices in at least seven business days to remain consistent with pricing changes and [product] drug availability in the marketplace;

                (4) provide a [procedure that] process for each network pharmacy to receive prompt notification of an update to the maximum allowable cost list;

                (5) provide a reasonable administrative appeal procedure that:

                     (a) allows pharmacies to challenge reimbursements made under a maximum allowable cost list for a specific drug or drugs as: 1) not meeting the requirements of this section; or 2) being below the pharmacy acquisition cost;

                     (b) allows a pharmacy to choose the entity to which it will appeal reimbursement for [generic] pharmaceutical drugs. A pharmacy may appeal: [(a)] 1) directly to the pharmacy benefits manager; or [(b)] 2) through a pharmacy services administrative organization; and

                [(5) provide an appeals process that]

                     (c) at a minimum, includes the following: [(a)] 1) a dedicated telephone number and electronic mail address or website for the purpose of submitting appeals; [(b)] 2) the ability to submit an appeal directly to the pharmacy benefits manager; and [(c)] 3) the allowance of at least twenty-one business days to file an appeal after the date a pharmacy receives notice of the reimbursement amount;

                (6) grant an appeal if the pharmacy benefits manager fails to respond to a complete submission as defined by rules promulgated by the superintendent of the appealing party in writing within fourteen business days after the pharmacy benefits manager receives the appeal;

                (7) if an appeal is granted:

                     (a) notify the challenging pharmacy and its pharmacy services administrative organization, if any, that the appeal is granted and make the change in the maximum allowable cost effective for the appealing pharmacy and for each other pharmacy in its network; [and]

                     (b) permit the appealing pharmacy to reverse and bill again the claim or claims that formed the basis of the appeal; and

                     (c) reimburse the appealing pharmacy for any reasonable costs that it incurred due to the appeal process;

                (8) when an appeal is denied:

                     (a) provide the challenging pharmacy and its pharmacy services administrative organization, if any, the national drug code number and supplier that has the [product] pharmaceutical drug available for purchase in New Mexico at or below the maximum allowable cost; and

                     (b) if the pharmaceutical drug identified by the national drug code provided by the pharmacy benefits manager is not available below the pharmacy acquisition cost from the pharmaceutical wholesaler from whom the pharmacy or pharmacist purchases the majority of prescription drugs for resale, adjust the maximum allowable cost as listed on the maximum allowable cost list above the challenging pharmacy's pharmacy acquisition cost and permit the pharmacy to reverse and rebill each claim affected by the inability to procure the drug at a cost that is equal to or less than the previously challenged maximum allowable cost;

                (9) within one business day of granting or denying a network pharmacy's appeal, notify all network pharmacies of the decision;

                (10) upon granting an appeal, allow other similarly situated network pharmacies to reverse and bill again for like claims that formed the basis of the granted appeal; and

                (11) provide for each of its network pharmacy providers and the superintendent a process and mechanism to readily access the maximum allowable cost list specific to that provider.

          E. A maximum allowable cost list specific to a provider and maintained by a managed care organization or pharmacy benefits manager is confidential.

          F. Pursuant to Section 59A-4-3 NMSA 1978, a pharmacy benefits manager shall provide information contained in a maximum allowable cost list to the superintendent upon request by the superintendent.

          G. A pharmacy or pharmacist may decline to provide services to a patient or pharmacy benefits manager if, as a result of a maximum allowable cost list, a pharmacy or pharmacist will be paid less than its pharmacy acquisition cost."

     SECTION 3. Section 59A-61-5 NMSA 1978 (being Laws 2014, Chapter 14, Section 5, as amended) is amended to read:

     "59A-61-5. PHARMACY BENEFITS MANAGER CONTRACTS--CERTAIN PRACTICES PROHIBITED--CERTAIN DISCLOSURES REQUIRED UPON REQUEST.--

          A. A pharmacy benefits manager shall not require that a pharmacy participate in one contract in order to participate in another contract.

          B. A pharmacy benefits manager shall provide to a pharmacy by electronic mail, facsimile or certified mail, at least thirty calendar days prior to its execution, a contract written in plain English.

          C. A contract between a pharmacy benefits manager and a pharmacy shall identify the industry standard reimbursement practice that the pharmacy benefits manager will use to determine a reimbursement amount, unless the contract is modified in writing to specify another industry standard practice.

          D. The provisions of the Pharmacy Benefits Manager Regulation Act shall not be waived, voided or nullified by contract.

          E. A pharmacy benefits manager shall not:

                (1) cause or knowingly permit the use of any advertisement, promotion, solicitation, representation, proposal or offer that is untrue, deceptive or misleading;

                (2) require pharmacy validation and revalidation standards inconsistent with, more stringent than or in addition to federal and state requirements for licensure and operation as a pharmacy in this state;

                (3) prohibit a pharmacy or pharmacist from:

                     (a) mailing or delivering drugs to a patient as an ancillary service;

                     (b) providing a patient information regarding the patient's total cost for pharmacist services for a prescription drug; or

                     (c) discussing information regarding the total cost for pharmacist services for a prescription drug or from selling a more affordable alternative to the insured if a more affordable alternative is available;

                (4) require or prefer a generic drug over its generic therapeutic equivalent;

                (5) prohibit, restrict or limit disclosure of information by a pharmacist or pharmacy to the superintendent; or

                (6) prohibit, restrict or limit pharmacies or pharmacists from providing to state or federal government officials general information for public policy purposes.

          F. A pharmacy benefits manager or health benefit plan shall not impose a fee on a pharmacy for scores or metrics or both scores and metrics. Nothing in this subsection prohibits a pharmacy benefits manager or health benefit plan from offering incentives to a pharmacy based on a score or metric; provided that the incentive is equally available to all in-network pharmacies.

          G. Within seven business days of a request by the superintendent or a contracted pharmacy or pharmacist, a pharmacy benefits manager or pharmacy services administrative organization shall provide as appropriate:

                (1) a contract;

                (2) an agreement;

                (3) a claim appeal document;

                (4) a disputed claim transaction document or price list; or

                (5) any other information specified by law.

          H. In a time and manner required by rules promulgated by the superintendent, a pharmacy benefits manager shall issue to the superintendent a network adequacy report describing the pharmacy benefits manager network and the pharmacy benefits manager network's accessibility to insureds statewide.

          I. Pursuant to the provisions of Section 59A-4-3 NMSA 1978, the superintendent, or the superintendent's designee, may examine the books, documents, policies, procedures and records of a pharmacy benefits manager to determine compliance with applicable law. The pharmacy benefits manager shall pay the costs of the examination. At the request of a person who provides information in response to a complaint, investigation or examination, the superintendent may deem the information confidential.

          J. A pharmacy benefits manager shall not deny an in-network pharmacy the opportunity to join a preferred pharmacy network if the pharmacy is willing to accept the terms and conditions that the pharmacy benefits manager has established for other pharmacies as a condition of joining the preferred pharmacy network.

          K. A pharmacy benefits manager shall not restrict an individual's choice of an in-network pharmacy."

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