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1 | AN ACT to create the Pharmacy Benefit Management and | ||||||||||||||||||||||||||
2 | Regulation Act.
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3 | Be it enacted by the People of the State of Illinois, | ||||||||||||||||||||||||||
4 | represented in the General Assembly:
| ||||||||||||||||||||||||||
5 | Section 1. Short title. This Act may be cited as the | ||||||||||||||||||||||||||
6 | Pharmacy Benefit
Management Regulation Act.
| ||||||||||||||||||||||||||
7 | Section 5. Purpose and intent. This Act establishes | ||||||||||||||||||||||||||
8 | standards and
criteria for the regulation and licensing of | ||||||||||||||||||||||||||
9 | pharmacy benefit management
companies. The purpose of this Act | ||||||||||||||||||||||||||
10 | is to promote, preserve, and protect the
public health, safety, | ||||||||||||||||||||||||||
11 | and welfare by and through effective regulation and
licensing | ||||||||||||||||||||||||||
12 | of pharmacy benefit management companies.
| ||||||||||||||||||||||||||
13 | Section 10. Definitions. For purposes of this Act:
| ||||||||||||||||||||||||||
14 | "Board of Pharmacy" or "Board" means the State Board of | ||||||||||||||||||||||||||
15 | Pharmacy.
| ||||||||||||||||||||||||||
16 | "Cease and desist" is an order of the Board prohibiting a | ||||||||||||||||||||||||||
17 | pharmacy
benefit manager or pharmacy benefit management | ||||||||||||||||||||||||||
18 | company or other person
or entity from continuing a particular | ||||||||||||||||||||||||||
19 | course of conduct that violates this Act
or its rules.
| ||||||||||||||||||||||||||
20 | "Director" means the Director of Insurance.
| ||||||||||||||||||||||||||
21 | "Enrollee" means an individual who has been enrolled in a | ||||||||||||||||||||||||||
22 | pharmacy
benefit management plan.
| ||||||||||||||||||||||||||
23 | "Insolvent" or "insolvency" means a financial situation in | ||||||||||||||||||||||||||
24 | which,
based upon the financial information required by this | ||||||||||||||||||||||||||
25 | Act for the preparation
of the pharmacy benefit management | ||||||||||||||||||||||||||
26 | company's annual statement, the assets
of the pharmacy benefit | ||||||||||||||||||||||||||
27 | management company are less than the sum of all of
its | ||||||||||||||||||||||||||
28 | liabilities and required reserves.
| ||||||||||||||||||||||||||
29 | "Pharmacists services" includes drug therapy and other | ||||||||||||||||||||||||||
30 | patient care
services provided by a licensed pharmacist | ||||||||||||||||||||||||||
31 | intended to achieve outcomes
related to the cure or prevention |
| |||||||
| |||||||
1 | of a disease, elimination or reduction of a
patient's symptoms, | ||||||
2 | or arresting or slowing of a disease process as defined
in the | ||||||
3 | rules of the Board.
| ||||||
4 | "Pharmacists" means any individual properly licensed as a | ||||||
5 | pharmacist
by the Department of Professional Regulation.
| ||||||
6 | "Pharmacy" means any appropriately licensed place within | ||||||
7 | this State
where drugs are dispensed and pharmacist services | ||||||
8 | are provided.
| ||||||
9 | "Pharmacy benefits management company" or "PBM" means a
| ||||||
10 | business that administers the prescription drug and device | ||||||
11 | portion of health
insurance plans on behalf of plan sponsors, | ||||||
12 | such as self-insured employers,
insurance companies, unions, | ||||||
13 | and health maintenance organizations.
| ||||||
14 | "Pharmacy benefit management plan" means an arrangement | ||||||
15 | for the
delivery of prescription services in which a pharmacy | ||||||
16 | benefit management
company undertakes to provide, arrange for, | ||||||
17 | pay for, or reimburse any of the
costs of prescription services | ||||||
18 | for an enrollee on a prepaid or insured basis
which (i) | ||||||
19 | contains one or more incentive arrangements intended to | ||||||
20 | influence
the cost or level of prescription services between | ||||||
21 | the plan sponsor and one or
more pharmacies with respect to the | ||||||
22 | delivery of prescription services and (ii)
requires or creates | ||||||
23 | benefit payment differential incentives for enrollees to
use | ||||||
24 | under contract with the pharmacy benefit management company. A
| ||||||
25 | pharmacy benefit plan does not mean an employee welfare benefit | ||||||
26 | plan (as
defined in Section 3(1) of the Employee Retirement | ||||||
27 | Income Security Act of
1974, 29 U.S.C. 1002(1)), which is | ||||||
28 | self-insured or self-funded.
| ||||||
29 | Section 15. Certificate of authority.
| ||||||
30 | (a) No person or organization may establish or operate a
| ||||||
31 | pharmacy benefit management company in this State to provide
| ||||||
32 | pharmacy benefit management plans without obtaining a | ||||||
33 | certificate
of authority from the Board. All PBMs providing | ||||||
34 | pharmacy benefit
management plans in this State shall obtain a | ||||||
35 | certificate of
authority from the Board of pharmacy every 4 |
| |||||||
| |||||||
1 | years.
| ||||||
2 | An organization or person may apply to the Board to obtain | ||||||
3 | a
certificate of authority to establish and operate a PBM in | ||||||
4 | compliance with
this Act if the organization obtains from the | ||||||
5 | Director an annual license to do
business in this State.
| ||||||
6 | (b) The Board may suspend or revoke any certificate of | ||||||
7 | authority
issued to a pharmacy benefit management company under | ||||||
8 | this Act or deny
an application for a certificate of authority | ||||||
9 | if it finds that:
| ||||||
10 | (1) the pharmacy benefit management company is | ||||||
11 | operating
significantly in contravention of its basic | ||||||
12 | organizational document;
| ||||||
13 | (2) the pharmacy benefit management company does not
| ||||||
14 | arrange for pharmacists services;
| ||||||
15 | (3) the pharmacy benefit management company has failed | ||||||
16 | to meet the
requirements for issuance of a certificate of | ||||||
17 | authority as set forth in this
Act;
| ||||||
18 | (4) the pharmacy benefit management company is unable | ||||||
19 | to
fulfill its obligation to furnish pharmacists services | ||||||
20 | as required under
its pharmacy benefit management plan;
| ||||||
21 | (5) the pharmacy benefit management company is no | ||||||
22 | longer
financially responsible and may reasonably be | ||||||
23 | expected to be unable
to meet its obligations to enrollees | ||||||
24 | or prospective enrollees;
| ||||||
25 | (6) the pharmacy benefit management company, or any
| ||||||
26 | person on its behalf, has advertised or merchandised its | ||||||
27 | services in an
untrue, misrepresentative, misleading, | ||||||
28 | deceptive, or unfair manner;
| ||||||
29 | (7) the continued operation of the pharmacy benefit
| ||||||
30 | management company would be hazardous to its enrollees;
| ||||||
31 | (8) the pharmacy benefit management company has failed | ||||||
32 | to
file an annual statement with the Director in a timely | ||||||
33 | manner; or
| ||||||
34 | (9) the pharmacy benefit management company has
| ||||||
35 | otherwise failed to substantially comply with this Act.
| ||||||
36 | (c) When the certificate of authority of a pharmacy benefit
|
| |||||||
| |||||||
1 | management company is revoked, the organization shall proceed,
| ||||||
2 | immediately following the effective date of the order of | ||||||
3 | revocation, to wind
up its affairs and shall conduct no further | ||||||
4 | business except as may be
essential to the orderly conclusion | ||||||
5 | of the affairs of the organization. The
Board may permit such | ||||||
6 | further operation of the organization as the Board
may find to | ||||||
7 | be in the best interest of enrollees to the end that the | ||||||
8 | enrollees
will be afforded the greatest practical opportunity | ||||||
9 | to obtain pharmacists
services.
| ||||||
10 | Section 20. License.
| ||||||
11 | (a) The Director shall not issue an annual license to do | ||||||
12 | business in this
State to any PBM providing pharmacy benefit | ||||||
13 | management plans until he is
satisfied that the pharmacy | ||||||
14 | benefit management company:
| ||||||
15 | (1) has paid all fees, taxes, and charges required by | ||||||
16 | law;
| ||||||
17 | (2) has made any deposit required by this Act;
| ||||||
18 | (3) has the minimum capital and surplus requirements | ||||||
19 | specified
by the Director;
| ||||||
20 | (4) has filed a financial statement or statements and | ||||||
21 | any reports,
certificates, or other documents the Director | ||||||
22 | considers necessary to
secure a full and accurate knowledge | ||||||
23 | of its affairs and financial
condition;
| ||||||
24 | (5) is solvent and its financial condition, method of | ||||||
25 | operation,
and manner of doing business are such as to | ||||||
26 | satisfy the Director that it can
meet its obligations to | ||||||
27 | all enrollees; and
| ||||||
28 | (6) has otherwise complied with all the requirements of | ||||||
29 | law.
| ||||||
30 | (b) This license shall be in addition to the certificate of | ||||||
31 | authority
required by the Board. A nonrefundable license | ||||||
32 | application fee of $500 shall
accompany each application for a | ||||||
33 | license to transact the business in this
State. The fee shall | ||||||
34 | be collected by the Director and paid directly into the
| ||||||
35 | Pharmacy Benefit Company Regulation Fund to provide expenses |
| |||||||
| |||||||
1 | for the
regulation, supervision, and examination of all | ||||||
2 | entities subject to regulation
under this Act.
| ||||||
3 | The license shall be signed by the Director or a duly | ||||||
4 | authorized agent
of the Director and shall expire on the next | ||||||
5 | June 30 after the date on which it
becomes effective.
| ||||||
6 | (c) All PBMs providing pharmacy benefit management plans | ||||||
7 | shall
obtain an annual renewal of its license from the | ||||||
8 | Director. The Director may
refuse to renew the license of any | ||||||
9 | pharmacy benefit management company
or may renew the license | ||||||
10 | subject to any restrictions considered appropriate
by the | ||||||
11 | Director, if he or she finds an impairment of required capital | ||||||
12 | and
surplus or if it finds that the pharmacy benefit management | ||||||
13 | company has not
satisfied all the conditions set forth in this | ||||||
14 | Act. The Director shall not fail
to
renew the license of any | ||||||
15 | pharmacy benefit management company to transact
business in | ||||||
16 | this State without giving the pharmacy benefit management
| ||||||
17 | company 10 days' notice and giving it an opportunity to be | ||||||
18 | heard. The
hearing may be informal, and the Director and the | ||||||
19 | pharmacy benefit
management company may waive the required | ||||||
20 | notice.
| ||||||
21 | Section 25. Annual statement.
| ||||||
22 | (a) A PBM providing pharmacy management benefit plans in | ||||||
23 | this
State shall file a statement with the Director annually by | ||||||
24 | March 1. The
statement shall be verified by at least 2 | ||||||
25 | principal officers and shall cover
the
preceding calendar year. | ||||||
26 | A pharmacy benefit management company shall
also send a copy of | ||||||
27 | the statement to the Board.
| ||||||
28 | (b) The statement shall be on forms prescribed by the | ||||||
29 | Director and
shall include:
| ||||||
30 | (1) a financial statement of the organization, | ||||||
31 | including its
balance sheet and income statement for the | ||||||
32 | preceding year;
| ||||||
33 | (2) the number of persons enrolled during the year, the | ||||||
34 | number
of enrollees as of the end of the year, and the | ||||||
35 | number of enrollments
terminated during the year; and
|
| |||||||
| |||||||
1 | (3) any other information relating to the operations of | ||||||
2 | the
pharmacy benefit management company required by the | ||||||
3 | Director pursuant
to this Act.
| ||||||
4 | (c) If the pharmacy benefit management company is audited | ||||||
5 | annually
by an independent certified public accountant, a copy | ||||||
6 | of the certified audit
report shall be filed annually with the | ||||||
7 | Director by June 30.
| ||||||
8 | (d) The Director may extend the time prescribed for any | ||||||
9 | pharmacy
benefit management company for filing annual | ||||||
10 | statements or other reports or
exhibits of any for good cause | ||||||
11 | shown. However, the Director shall not
extend the time for | ||||||
12 | filing annual statements beyond 60 days after the time
| ||||||
13 | prescribed by subsection (a) of this Section. A pharmacy | ||||||
14 | benefit
management company that fails to file its annual | ||||||
15 | statement within the time
prescribed by this Section may have | ||||||
16 | its licensed revoked by the Director or
its certificate of | ||||||
17 | authority revoked or suspended by the Board until the
annual | ||||||
18 | statement is filed.
| ||||||
19 | Section 30. Financial examination.
| ||||||
20 | (a) Instead of or in addition to making his or her own | ||||||
21 | financial
examination of a pharmacy benefit management | ||||||
22 | company, the Director may
accept the report of a financial | ||||||
23 | examination of other person responsible for
the pharmacy | ||||||
24 | benefit management companies under the laws of another state
| ||||||
25 | certified by the insurance supervisory official, similar | ||||||
26 | regulatory agency, or
the state health supervisory official of | ||||||
27 | another state.
| ||||||
28 | (b) The Director shall coordinate financial examinations | ||||||
29 | of a PBM
that provides pharmacy management benefit plans in | ||||||
30 | this State to ensure an
appropriate level of regulatory | ||||||
31 | oversight and to avoid any undue duplication
of effort or | ||||||
32 | regulation. The pharmacy benefit management company being
| ||||||
33 | examined shall pay the cost of the examination. The cost of the | ||||||
34 | examination
shall be deposited into the Pharmacy Benefit | ||||||
35 | Company Regulation Fund, a
special fund created in the State |
| |||||||
| |||||||
1 | treasury. Moneys in the Fund shall be used
to pay the expenses | ||||||
2 | of administering this Act.
| ||||||
3 | Section 35. Assessment.
| ||||||
4 | (a) The expense of administering this Act, including the | ||||||
5 | cost incurred
by the Director and the Board, shall be assessed | ||||||
6 | annually by the Board
against all pharmacy benefit management | ||||||
7 | companies operating in this State.
Before determining the | ||||||
8 | assessment, the Board shall request from the
Director an | ||||||
9 | estimate of all expenses for the regulation, supervision, and
| ||||||
10 | examination of all entities subject to regulation under this | ||||||
11 | Act. The
assessment shall be in proportion to the business done | ||||||
12 | in this State.
| ||||||
13 | (b) All fees assessed under this Act and paid to the Board | ||||||
14 | shall be
deposited into the Pharmacy Benefit Company Regulation | ||||||
15 | Fund.
| ||||||
16 | (c) The Board shall assess each pharmacy benefit management
| ||||||
17 | company annually for its just share of expenses. The assessment | ||||||
18 | shall be in
proportion to the business done in this State. The | ||||||
19 | Board shall provide the
Director an amount from the Pharmacy | ||||||
20 | Benefit Company Regulation Fund
to cover all expenses incurred | ||||||
21 | by the Director for the regulation under this
Act.
| ||||||
22 | (d) The Board shall give each pharmacy benefit management
| ||||||
23 | company notice of the assessment, which shall be paid to the | ||||||
24 | Board on or
before March 1 of each year. A pharmacy benefit | ||||||
25 | management company that
fails to pay the assessment on or | ||||||
26 | before the date prescribed shall be subject
to a penalty | ||||||
27 | imposed by the Board. The penalty shall be 10% of the
| ||||||
28 | assessment and interest for the period between the due date and | ||||||
29 | the date of
full payment. If a payment is made in an amount | ||||||
30 | later found to be in error,
the Board shall (i) if an | ||||||
31 | additional amount is due, notify the company of the
additional | ||||||
32 | amount and the company shall pay the additional amount within
| ||||||
33 | 14 days after the date of the notice or (ii) if an overpayment | ||||||
34 | is made, order a
refund.
| ||||||
35 | If an assessment made under this Act is not paid to the |
| |||||||
| |||||||
1 | Board by the
prescribed date, the amount of the assessment, | ||||||
2 | penalty, and interest may be
recovered from the defaulting | ||||||
3 | company in an action brought at the request of
the Board by the | ||||||
4 | Attorney General made in the name and for the use of the
State | ||||||
5 | in the appropriate circuit court after 10 days' notice to the | ||||||
6 | company.
The certificate of authority of any defaulting company | ||||||
7 | to transact business in
this State may be revoked or suspended | ||||||
8 | by the Board until it has paid the
assessment.
| ||||||
9 | Section 40. PBM contracts. A PBM that contracts with a | ||||||
10 | pharmacy
or pharmacist to provide pharmacists services through | ||||||
11 | a pharmacy
management plan for enrollees in this State shall | ||||||
12 | file the contract with the
Board 30 days before the execution | ||||||
13 | of the contract. The contract shall be
deemed approved unless | ||||||
14 | the Board disapproves the contract within 30 days
after filing | ||||||
15 | with the Board. Disapproval shall be in writing and set forth | ||||||
16 | the
reasons for disapproval. A copy the disapproval shall be | ||||||
17 | delivered to the
PBM. The Board, consistent with its | ||||||
18 | responsibility for protecting the public
interest, shall | ||||||
19 | develop formal criteria for the approval and disapproval of
PBM | ||||||
20 | contracts.
| ||||||
21 | Section 45. Enforcement.
| ||||||
22 | (a) The Board shall develop formal investigation and | ||||||
23 | compliance
procedures with respect to complaints by plan | ||||||
24 | sponsors, pharmacists, and
enrollees concerning the failure of | ||||||
25 | a pharmacy benefit management
company or the pharmacy benefit | ||||||
26 | manager to comply with the provisions of
this Act. If the Board | ||||||
27 | has reason to believe that there is a violation of this
Act, it | ||||||
28 | shall issue and serve upon the pharmacy benefit management
| ||||||
29 | company or the pharmacy benefit manager concerned a statement | ||||||
30 | of the
charges and a notice of a hearing to be held at a time | ||||||
31 | and place fixed in the
notice, which shall not be less than 30 | ||||||
32 | days after notice is served. The notice
shall require the | ||||||
33 | pharmacy benefit management company or the pharmacy
benefit | ||||||
34 | manager to show cause why an order should not be issued |
| |||||||
| |||||||
1 | directing
the alleged offender to cease and desist from the | ||||||
2 | violation. At the hearing,
the pharmacy benefit management | ||||||
3 | company or the pharmacy benefit
manager shall have an | ||||||
4 | opportunity to be heard and to show cause why an
order should | ||||||
5 | not be issued requiring the pharmacy benefit management
company | ||||||
6 | or the pharmacy benefit manager to cease and desist from the
| ||||||
7 | violation.
| ||||||
8 | (b) The Board may make an examination concerning the | ||||||
9 | quality of
services of any pharmacy benefit management company | ||||||
10 | and providers with
whom the pharmacy benefit management company | ||||||
11 | has contracts,
agreements, or other arrangements pursuant to | ||||||
12 | its pharmacy benefit
management plan as often as the Board | ||||||
13 | deems necessary for the protection
of the interests of the | ||||||
14 | people of this State. The pharmacy benefit
management company | ||||||
15 | being examined shall pay the cost of the examination.
| ||||||
16 | Section 50. Prohibited practices.
| ||||||
17 | (a) A pharmacy benefit management company or its | ||||||
18 | representative
may not cause or knowingly permit the use of (i) | ||||||
19 | advertising that is untrue or
misleading, (ii) solicitation | ||||||
20 | that is untrue or misleading, or (iii) any form
of
evidence of | ||||||
21 | coverage that is deceptive.
| ||||||
22 | (b) A pharmacy benefit management company, unless licensed | ||||||
23 | as an
insurer, may not use in its name, contracts, or | ||||||
24 | literature (i) any of the words
"insurance", "casualty", | ||||||
25 | "surety", or "mutual" or (ii) any other words
descriptive of | ||||||
26 | the insurance, casualty, or surety business or deceptively
| ||||||
27 | similar to the name or description of any insurance or fidelity | ||||||
28 | and surety
insurer doing business in this State.
| ||||||
29 | (c) A pharmacy benefit management company may not | ||||||
30 | discriminate
on the basis of race, creed, color, sex, or | ||||||
31 | religion in the selection of
pharmacies for participation in | ||||||
32 | the organization.
| ||||||
33 | (d) A pharmacy benefit management company may not | ||||||
34 | unreasonably
discriminate against pharmacists when contracting | ||||||
35 | for pharmacist services.
|
| |||||||
| |||||||
1 | Section 55. Disclosures. All of the following shall be | ||||||
2 | provided to the
pharmacy benefit company's enrollees of a | ||||||
3 | pharmacy benefit management
plan at the time of enrollment or | ||||||
4 | at the time the contract is issued and shall
be made available | ||||||
5 | upon request or at least annually:
| ||||||
6 | (1) A list of the names and locations of all affiliated | ||||||
7 | providers.
| ||||||
8 | (2) A description of the service area or areas within | ||||||
9 | which the
pharmacy benefit company provides prescription | ||||||
10 | services.
| ||||||
11 | (3) A description of the method of resolving complaints | ||||||
12 | of
covered persons, including a description of any | ||||||
13 | arbitration procedure if
complaints may be resolved | ||||||
14 | through a specified arbitration agreement.
| ||||||
15 | (4) Notice that the pharmacy benefit management | ||||||
16 | company is
subject to regulation in this State by both the | ||||||
17 | State Board of Pharmacy
and the Director of Insurance.
| ||||||
18 | (5) A prominent notice included within the evidence of
| ||||||
19 | coverage, providing substantially the following: "If you | ||||||
20 | have any
questions regarding an appeal or grievance | ||||||
21 | concerning the pharmacist
services that you have been | ||||||
22 | provided, which have not been satisfactorily
addressed by | ||||||
23 | your plan, you may contact the State Pharmacy Board.". The
| ||||||
24 | notice shall also provide the toll-free telephone number, | ||||||
25 | mailing address,
and electronic mail address of the State | ||||||
26 | Board of Pharmacy.
| ||||||
27 | Section 60. Privacy. An enrollee in a pharmacy benefit
| ||||||
28 | management plan has the right to privacy and confidentiality in
| ||||||
29 | pharmacist services. This right may be expressly waived in | ||||||
30 | writing
by the enrollee or the enrollee's guardian.
| ||||||
31 | Section 65. Insolvency.
| ||||||
32 | (a) If a pharmacy benefit management company becomes | ||||||
33 | insolvent or
ceases to be a company in this State in any |
| |||||||
| |||||||
1 | assessable or license year, the
company shall remain liable for | ||||||
2 | the payment of the assessment for the period
in which it | ||||||
3 | operated as a pharmacy benefit management company in this
| ||||||
4 | State.
| ||||||
5 | (b) In the event of an insolvency of a pharmacy benefit | ||||||
6 | management
company, the Director may, after notice and hearing, | ||||||
7 | levy an assessment on
pharmacy benefit management companies | ||||||
8 | licensed to do business in this
State. The assessments shall be | ||||||
9 | paid quarterly to the Director, and upon
receipt by the | ||||||
10 | Director shall be paid over into an escrow account in the
| ||||||
11 | Pharmacy Benefit Company Regulation Fund. This escrow account | ||||||
12 | shall be
solely for the benefit of enrollees of an insolvent | ||||||
13 | pharmacy benefit
management company.
| ||||||
14 | Section 95. Severability. The provisions of this Act are | ||||||
15 | severable under
Section 1.31 of the Statute on Statutes.
| ||||||
16 | Section 97. The State Finance Act is amended by adding | ||||||
17 | Section
5.625 as follows:
| ||||||
18 | (30 ILCS 105/5.625 new)
| ||||||
19 | Sec. 5.625. The Pharmacy Benefit Company Regulation Fund.
| ||||||
20 | Section 999. Effective date. This Act takes effect upon | ||||||
21 | becoming law. |