A bill

 

TO AMEND THE SOUTH CAROLINA CODE OF LAWS BY AMENDING SECTION 38-71-2200, RELATING TO DEFINITIONS CONCERNING PHARMACY BENEFITS MANAGERS, SO AS TO DEFINE NECESSARY TERMS; AND BY AMENDING SECTION 38-71-2230, RELATING TO PROHIBITED ACTIONS OF PHARMACY BENEFITS MANAGERS, SO AS TO PROHIBIT PATIENT STEERING AND CERTAIN OTHER TRADE PRACTICES.

 

Be it enacted by the General Assembly of the State of South Carolina:

 

SECTION 1.  Section 38-71-2200 of the S.C. Code is amended by adding:

 

    (14) "Spread pricing" means a prescription drug pricing model utilized by a pharmacy benefits manager in which the PBM charges a health benefit plan a contracted price for prescription drugs that differs from the amount the PBM directly or indirectly pays the pharmacy or pharmacist for providing pharmacy services.

 

SECTION 2.  Section 38-71-2200(13) of the S.C. Code is amended to read:

 

    (13) "Specialized delivery drug" means a prescription drug that meets a majority of the following criteria, as set forth by the manufacturer, FDA, or other applicable law or regulatory body and:

       (a) requires special handling or storage;

       (b) requires complex and extended patient education or counseling;

       (c) requires intensive monitoring;

       (d) requires clinical oversight;  or

       (e) requires product support services; and the drug is used to treat chronic and complex, or rare medical conditions:

           (i) that can be progressive; or

           (ii) that can be debilitating or fatal if left untreated or undertreated.;

       (f) exceeds a cost threshold established by the South Carolina Department of Insurance; or

       (g) treats rare, chronic, or complex medical conditions including, but not limited to, cancer, rheumatoid arthritis, multiple sclerosis, or rare genetic disorders.

 

SECTION 3.  Section 38-71-2230 of the S.C. Code is amended by adding:

 

    (I)(1) A pharmacy benefits manager in South Carolina is prohibited from doing any of the following:

           (a) committing any unfair and deceptive trade practice prohibited by the South Carolina Unfair Trade Practices Act;

           (b) performing any act that violates the duties, obligations, and responsibilities imposed under this chapter on a pharmacy benefits manager;

           (c) buying, selling, transferring, or providing personal healthcare or contact information of any beneficiary to any other party for any purpose with one exception. A pharmacy benefits manager may provide such information regarding beneficiaries of a health plan to that health plan provider if requested by the health plan provider;

           (d) conducting or participating in spread pricing;

           (e) directly or indirectly engaging in patient steering to a pharmacy in which the pharmacy benefits manager maintains an ownership interest or control without making a written disclosure and receiving acknowledgment from the patient. The disclosure required by this subitem must provide notice that the pharmacy benefits manager has an ownership interest in or control of the pharmacy, and that the patient has the right under the law to use any alternate pharmacy that he chooses. The pharmacy benefits manager is prohibited from retaliation or further attempts to influence the patient, or treat the patient or the patient's claim any differently if the patient chooses to use the alternate pharmacy. The provisions of this subitem do not apply to employers, unions, associations, or other persons who employ, own, operate, control, or contract directly with a pharmacy or pharmacist for the purpose of managing or controlling prescription costs paid for the benefit of an employee or member or those covered by the employee or member's plan, or when the persons contract with a pharmacy benefits manager to steer employees or members to pharmacists or pharmacies which the person owns, operates, or controls;

           (f) penalizing a beneficiary or providing an inducement to the beneficiary for the purpose of getting the beneficiary to use specific retail, mail-order pharmacy, or another network pharmacy provider in which a pharmacy benefits manager has an ownership or controlling interest or that has an ownership or controlling interest in a pharmacy benefits manager. For purposes of this subitem, "inducement" means the providing of financial incentives, including variations in premiums, deductibles, copayments, or coinsurance. The provisions of this subitem do not apply to employers, unions, associations, or other persons who employ, own, operate, control, or contract directly with a pharmacy or pharmacist for the purpose of managing or controlling prescription costs paid for the benefit of an employee or member or those covered by the employee or member's plan, or when the persons contract with a pharmacy benefits manager to steer employees or members to pharmacists or pharmacies which the person owns, operates, or controls;

           (g) retroactively denying or reducing a claim of a pharmacist or pharmacy for payment or demand repayment of all or part of a claim after the claim has been paid, in part or in full, by the pharmacy benefits manager;

           (h) reimbursing a local pharmacist or local pharmacy less than the amount it reimburses chain pharmacies, mail-order pharmacies, specialty pharmacies, or affiliates of the pharmacy benefits manager for the same drug or device or for the same pharmacy service in this State;

           (i) failing to publicly update maximum allowable cost lists as required by Section 38-71-2240(B)(2);

           (j) failing to honor maximum allowable cost (MAC) prices as set forth in Section 38-71-2240; A pharmacy benefits manager may not require a pharmacist or pharmacy to purchase drugs from any particular wholesaler. However, if a pharmacy benefits manager recommends or provides a wholesaler, then that wholesaler must be willing and able to honor the pharmacy benefits manager's MAC price, ship the order, and have receipt of the order within two business days with no additional charge to the pharmacist. The wholesaler with the lowest price, which is listed as the MAC price, is not obligated to sell or ship to a nonmember pharmacist or pharmacy. If the wholesaler chooses not to sell the drug to the pharmacist or pharmacy, then the MAC price set by the pharmacy benefits manager must be adjusted to the price available to the pharmacist or pharmacy through another wholesaler;

           (k) failing to meet the payment standards established in this article;

           (l) failing to provide detailed remittance advice to pharmacists and pharmacies;

           (m) failing to pay any state or local sales tax imposed on any drug, device, or pharmacy services or to remit the sales tax to the appropriate pharmacist or pharmacy for the tax proceeds to be forwarded to the sales tax authority. A pharmacy benefits manager who does not pay the sales tax is liable to the taxing authority for the tax, interest, penalties, and any other fees or costs imposed by law for failure to pay sales taxes. No pharmacy benefits manager may deduct the taxes from any amount due to a pharmacist or pharmacy for a drug, device, or pharmacy service or charge or pay anyone a fee or surcharge for paying any sales tax or remitting any sales tax proceeds to a pharmacist or pharmacy if that fee or surcharge would be imposed directly or indirectly on the pharmacist or pharmacy. A pharmacy benefits manager who pays any out-of-state pharmacist or pharmacy for drugs or devices shipped to a beneficiary in this State or for pharmacy services rendered to a beneficiary that is taxable in this State shall remit the tax directly to the appropriate taxing authority. A pharmacist or pharmacy that does not receive sales tax proceeds from a pharmacy benefits manager for any drug, device, or pharmacy service subject to sales taxes has no responsibility for payment of the taxes if the pharmacist or pharmacy provides written notification to the appropriate taxing authority, the Department of Insurance, and the Board of Pharmacy of the pharmacy benefits manager's failure to remit the sales taxes at the time the next sales tax return is due to be filed. State or local sales taxes and other applicable state-imposed taxes or fees must be considered as part of the allowable cost and shall be included in the claim submitted by a pharmacist or pharmacy;

           (n) restricting early refills on maintenance drugs to an amount less than seven days for a prescription of at least a thirty-day supply. However, at the direction of the Department of Health and Human Services, for purposes of administering the Medicaid pharmacy benefits program, a pharmacy benefits manager may apply a more restrictive early refill policy without violating the provisions of this subsection;

           (o) requiring a beneficiary to follow a plan's step-therapy protocol if the prescribed drug is on the health plan's prescription drug formulary, the beneficiary has tried the step-therapy-required prescription drug while under his current or previous health plan, and the provider has submitted a justification and supporting clinical documentation that such prescription drug was discontinued due to lack of efficacy or effectiveness, diminished effect, or an adverse effect or event;

           (p) delaying a decision on a request for authorization to dispense a prescription drug for more than seventy-two hours, or twenty-four hours in exigent circumstances in which the patient, in the opinion of the prescribing provider, pharmacy, or pharmacist submitting the authorization request, is suffering from a health condition that may seriously jeopardize the patient's life, health, or ability to regain maximum function. A request for authorization must include relevant data or appropriate documentation to render a decision on a request for authorization;

           (q) exploiting prescription drug information obtained from beneficiaries for monetary gain or economic power over beneficiaries, pharmacists, or pharmacies;

           (r) selling, exchanging, or using in any manner prescription drug information regarding a beneficiary obtained through a beneficiary's use of a prescription for purposes of marketing, solicitation, consumer steering, referral, or any other practice or act, except as otherwise provided for in this subsection, that provides the pharmacy benefits manager or any of its affiliates or subsidiaries economic power or control over pharmacists or pharmacies or interferes in the free choice of a beneficiary;

           (s) engaging in drug repackaging and markups. A pharmacy benefits manager that owns or controls a mail-order pharmacy may not allow the mail-order pharmacy to repackage drugs and sell the repackaged items at higher prices than the original average wholesale price unless beneficiaries who may buy the repackaged drugs are informed in writing that the drugs have been repackaged and are being sold at the higher price;

           (t) conducting business or otherwise operating in this State without being:

               (i) registered with and in good standing with the South Carolina Secretary of State to do business in this State; and

               (ii) licensed by and in good standing with the Department of Insurance.

       (2)(a) An enrollee's defined cost sharing for a prescription drug must be calculated at the point-of-sale based on a price that is reduced by an amount equal to at least one hundred percent of all rebates received, or to be received, in connection with the dispensing or administration of the prescription drug.

           (b) This item may not be construed to preclude a healthcare insurer from decreasing an enrollee's defined cost sharing by an amount greater than that required under subitem (a).

           (c) In implementing the requirements of this item, the state may only regulate a healthcare insurer to the extent permissible under applicable law.

           (d)(i) In complying with this section, a healthcare insurer or its agents shall provide the enrollee with a transactional history of the applied rebate beginning with the pharmaceutical or pharmaceutical product's manufacturer and ending with the enrollee or final consumer.

               (ii) The actual amount of a rebate received or remitted by any party in the transactional history stated in sub-subitem (i) may not be considered a trade secret or proprietary information.

               (iii) A healthcare insurer shall impose the confidentiality protections of this section on any vendor or downstream third party that performs healthcare or administrative services on behalf of the healthcare insurer that may receive or have access to rebate information.

       (3)(a) The commission of any of the acts or any combination of acts prohibited by items (1) or (2) must be considered an unfair method of competition and unfair practice or act in accordance with the South Carolina Unfair Trade Practices Act if the violations are committed or performed with such frequency as to indicate a general business practice.

           (b) For purposes of this subsection, a violation must be considered to have occurred each time a prohibited act is committed.

           (c) Each day that a pharmacy benefits manager operates without being registered with and in good standing with the Secretary of State to do business in this State or without being licensed by and in good standing with the Department of Insurance must be considered a separate violation.

       (4) Nothing in this subsection may be construed to:

           (a) interfere with or violate a consumer's right to know where the consumer may have access to the lowest cost drugs, whether a consumer is using insurance or other third-party reimbursement or not; or

           (b) interfere with the requirement that consumers receive notice of changes to pharmacy networks, such as the inclusion of new pharmacies or removal of existing pharmacies from networks.

 

SECTION 4.  This act takes effect upon approval by the Governor.

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