103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
HB3761

 

Introduced 2/17/2023, by Rep. Will Guzzardi

 

SYNOPSIS AS INTRODUCED:
 
215 ILCS 5/155.37
215 ILCS 5/513b1
215 ILCS 5/513b1.1 new
215 ILCS 5/513b1.3 new
215 ILCS 5/513b1.5 new
215 ILCS 124/35 new

    Amends the Pharmacy Benefit Managers Article of the Illinois Insurance Code. Provides that a pharmacy benefit manager may not prohibit a pharmacy or pharmacist from selling a more affordable alternative to the covered person if a more affordable alternative is available. Provides that a pharmacy benefit manager shall not reimburse a pharmacy or pharmacist in this State an amount less than the amount that the pharmacy benefit manager reimburses a pharmacy benefit manager affiliate for providing the same pharmaceutical product. Provides that a pharmacy benefit manager is prohibited from conducting spread pricing in the State. Sets forth provisions concerning pharmacy network participation, fiduciary responsibility, and pharmacy benefit manager transparency. Provides that a pharmacy benefit manager shall report to the Director on a quarterly basis and that the report is confidential and not subject to disclosure under the Freedom of Information Act. Provides that the provisions apply to contracts entered into or renewed on or after July 1, 2023 (rather than July 1, 2022). Defines terms. Amends the Network Adequacy and Transparency Act. Sets forth provisions concerning pharmacy benefit manager network adequacy. Makes other changes.


LRB103 30051 BMS 56474 b

 

 

A BILL FOR

 

HB3761LRB103 30051 BMS 56474 b

1    AN ACT concerning regulation.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Insurance Code is amended by
5changing Sections 155.37 and 513b1 and by adding Sections
6513b1.1, 513b1.3, and 513b1.5 as follows:
 
7    (215 ILCS 5/155.37)
8    Sec. 155.37. Drug formulary; notice.
9    (a) As used in this Section:
10    "Brand name drug" means a prescription drug marketed under
11a proprietary name or registered trademark name.
12    "Formulary" means a list of prescription drugs that is
13developed by clinical and pharmacy experts and represents the
14carrier's medically appropriate and cost-effective
15prescription drugs approved for use.
16    "Generic drug" means a prescription drug, whether
17identified by its chemical, proprietary, or nonproprietary
18name, that is not a brand name drug and is therapeutically
19equivalent to a brand name drug in dosage, safety, strength,
20method of consumption, quality, performance, and intended use.
21    (b) Insurance companies that transact the kinds of
22insurance authorized under Class 1(b) or Class 2(a) of Section
234 of this Code and provide coverage for prescription drugs

 

 

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1through the use of a drug formulary must notify insureds of any
2change in the formulary. A company may comply with this
3Section by posting changes in the formulary on its website.
4    (c) If a generic equivalent for a brand name drug is
5approved by the U.S. Food and Drug Administration, then
6insurance companies with plans that provide coverage for
7prescription drugs through the use of a drug formulary that
8are amended, delivered, issued, or renewed in this State on or
9after January 1, 2024 shall:
10        (1) immediately make the generic equivalent available
11    on the formulary to the brand name drug; or
12        (2) move the brand name drug to a formulary tier that
13    reduces an enrollee's cost.
14    (d) Nothing in this Section shall interfere with a
15pharmacist complying with the Pharmacy Practice Act.
16    (e) The Department may adopt rules to implement this
17Section.
18(Source: P.A. 92-440, eff. 8-17-01; 92-651, eff. 7-11-02.)
 
19    (215 ILCS 5/513b1)
20    Sec. 513b1. Pharmacy benefit manager contracts.
21    (a) As used in this Section:
22    "340B drug discount program" means the program established
23under Section 340B of the federal Public Health Service Act,
2442 U.S.C. 256b.
25    "340B entity" means a covered entity as defined in 42

 

 

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1U.S.C. 256b(a)(4) authorized to participate in the 340B drug
2discount program.
3    "340B pharmacy" means any pharmacy used to dispense 340B
4drugs for a covered entity, whether entity-owned or external.
5    "Biological product" has the meaning ascribed to that term
6in Section 19.5 of the Pharmacy Practice Act.
7    "Covered person" means a member, policyholder, subscriber,
8enrollee, beneficiary, dependent, or other individual
9participating in a health benefit plan.
10    "Health benefit plan" means a policy, contract,
11certificate, or agreement entered into, offered, or issued by
12an insurer to provide, deliver, arrange for, pay for, or
13reimburse any of the costs of physical, mental, or behavioral
14health care services.
15    "Maximum allowable cost" means the maximum amount that a
16pharmacy benefit manager will reimburse a pharmacy for the
17cost of a drug.
18    "Maximum allowable cost list" means a list of drugs for
19which a maximum allowable cost has been established by a
20pharmacy benefit manager.
21    "Pharmacy benefit manager" means a person, business, or
22entity, including a wholly or partially owned or controlled
23subsidiary of a pharmacy benefit manager, that provides claims
24processing services or other prescription drug or device
25services, or both, for health benefit plans.
26    "Retail price" means the price an individual without

 

 

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1prescription drug coverage would pay at a retail pharmacy, not
2including a pharmacist dispensing fee.
3    "Spread pricing" means the model of prescription drug
4pricing in which the pharmacy benefits manager charges a
5health benefit plan a contracted price for prescription drugs,
6and the contracted price for the prescription drugs differs
7from the amount the pharmacy benefits manager directly or
8indirectly pays the pharmacist or pharmacy for pharmacist
9services.
10    "Third-party payer" means any entity that pays for
11prescription drugs on behalf of a patient other than a health
12care provider or sponsor of a plan subject to regulation under
13Medicare Part D, 42 U.S.C. 1395w-101, et seq.
14    (b) A contract between a health insurer and a pharmacy
15benefit manager must require that the pharmacy benefit
16manager:
17        (1) Update maximum allowable cost pricing information
18    at least every 7 calendar days.
19        (2) Maintain a process that will, in a timely manner,
20    eliminate drugs from maximum allowable cost lists or
21    modify drug prices to remain consistent with changes in
22    pricing data used in formulating maximum allowable cost
23    prices and product availability.
24        (3) Provide access to its maximum allowable cost list
25    to each pharmacy or pharmacy services administrative
26    organization subject to the maximum allowable cost list.

 

 

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1    Access may include a real-time pharmacy website portal to
2    be able to view the maximum allowable cost list. As used in
3    this Section, "pharmacy services administrative
4    organization" means an entity operating within the State
5    that contracts with independent pharmacies to conduct
6    business on their behalf with third-party payers. A
7    pharmacy services administrative organization may provide
8    administrative services to pharmacies and negotiate and
9    enter into contracts with third-party payers or pharmacy
10    benefit managers on behalf of pharmacies.
11        (4) Provide a process by which a contracted pharmacy
12    can appeal the provider's reimbursement for a drug subject
13    to maximum allowable cost pricing. The appeals process
14    must, at a minimum, include the following:
15            (A) A requirement that a contracted pharmacy has
16        14 calendar days after the applicable fill date to
17        appeal a maximum allowable cost if the reimbursement
18        for the drug is less than the net amount that the
19        network provider paid to the supplier of the drug.
20            (B) A requirement that a pharmacy benefit manager
21        must respond to a challenge within 14 calendar days of
22        the contracted pharmacy making the claim for which the
23        appeal has been submitted.
24            (C) A telephone number and e-mail address or
25        website to network providers, at which the provider
26        can contact the pharmacy benefit manager to process

 

 

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1        and submit an appeal.
2            (D) A requirement that, if an appeal is denied,
3        the pharmacy benefit manager must provide the reason
4        for the denial and the name and the national drug code
5        number from national or regional wholesalers.
6            (E) A requirement that, if an appeal is sustained,
7        the pharmacy benefit manager must make an adjustment
8        in the drug price effective the date the challenge is
9        resolved and make the adjustment applicable to all
10        similarly situated network pharmacy providers, as
11        determined by the managed care organization or
12        pharmacy benefit manager.
13        (5) Allow a plan sponsor contracting with a pharmacy
14    benefit manager an annual right to audit compliance with
15    the terms of the contract by the pharmacy benefit manager,
16    including, but not limited to, full disclosure of any and
17    all rebate amounts secured, whether product specific or
18    generalized rebates, that were provided to the pharmacy
19    benefit manager by a pharmaceutical manufacturer.
20        (6) Allow a plan sponsor contracting with a pharmacy
21    benefit manager to request that the pharmacy benefit
22    manager disclose the actual amounts paid by the pharmacy
23    benefit manager to the pharmacy.
24        (7) Provide notice to the party contracting with the
25    pharmacy benefit manager of any consideration that the
26    pharmacy benefit manager receives from the manufacturer

 

 

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1    for dispense as written prescriptions once a generic or
2    biologically similar product becomes available.
3    (c) In order to place a particular prescription drug on a
4maximum allowable cost list, the pharmacy benefit manager
5must, at a minimum, ensure that:
6        (1) if the drug is a generically equivalent drug, it
7    is listed as therapeutically equivalent and
8    pharmaceutically equivalent "A" or "B" rated in the United
9    States Food and Drug Administration's most recent version
10    of the "Orange Book" or have an NR or NA rating by
11    Medi-Span, Gold Standard, or a similar rating by a
12    nationally recognized reference;
13        (2) the drug is available for purchase by each
14    pharmacy in the State from national or regional
15    wholesalers operating in Illinois; and
16        (3) the drug is not obsolete.
17    (d) A pharmacy benefit manager is prohibited from limiting
18a pharmacist's ability to disclose to a covered person:
19        (1) whether the cost-sharing obligation exceeds the
20    retail price for a covered prescription drug, and the
21    availability of a more affordable alternative drug, if one
22    is available in accordance with Section 42 of the Pharmacy
23    Practice Act; or .
24        (2) any health care information that the pharmacy or
25    pharmacist deems appropriate regarding:
26            (i) the nature of treatment, risks, or

 

 

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1        alternatives thereto, if such disclosure is consistent
2        with the permissible practice of pharmacy under the
3        Pharmacy Practice Act;
4            (ii) the availability of alternative therapies,
5        consultations, or tests if such disclosure is
6        consistent with the permissible practice of pharmacy
7        under the Pharmacy Practice Act;
8            (iii) the decision of utilization reviewers or
9        similar persons to authorize or deny services;
10            (iv) the process that is used to authorize or deny
11        health care services or benefits; or
12            (v) information on financial incentives and
13        structures used by the insurer.
14    (e) A health insurer or pharmacy benefit manager shall not
15require an insured to make a payment for a prescription drug at
16the point of sale in an amount that exceeds the lesser of:
17        (1) the applicable cost-sharing amount; or
18        (2) the retail price of the drug in the absence of
19    prescription drug coverage.
20    (f) Unless required by law, a contract between a pharmacy
21benefit manager or third-party payer and a 340B entity or 340B
22pharmacy shall not contain any provision that:
23        (1) distinguishes between drugs purchased through the
24    340B drug discount program and other drugs when
25    determining reimbursement or reimbursement methodologies,
26    or contains otherwise less favorable payment terms or

 

 

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1    reimbursement methodologies for 340B entities or 340B
2    pharmacies when compared to similarly situated non-340B
3    entities;
4        (2) imposes any fee, chargeback, or rate adjustment
5    that is not similarly imposed on similarly situated
6    pharmacies that are not 340B entities or 340B pharmacies;
7        (3) imposes any fee, chargeback, or rate adjustment
8    that exceeds the fee, chargeback, or rate adjustment that
9    is not similarly imposed on similarly situated pharmacies
10    that are not 340B entities or 340B pharmacies;
11        (4) prevents or interferes with an individual's choice
12    to receive a covered prescription drug from a 340B entity
13    or 340B pharmacy through any legally permissible means,
14    except that nothing in this paragraph shall prohibit the
15    establishment of differing copayments or other
16    cost-sharing amounts within the benefit plan for covered
17    persons who acquire covered prescription drugs from a
18    nonpreferred or nonparticipating provider;
19        (5) excludes a 340B entity or 340B pharmacy from a
20    pharmacy network on any basis that includes consideration
21    of whether the 340B entity or 340B pharmacy participates
22    in the 340B drug discount program;
23        (6) prevents a 340B entity or 340B pharmacy from using
24    a drug purchased under the 340B drug discount program; or
25        (7) any other provision that discriminates against a
26    340B entity or 340B pharmacy by treating the 340B entity

 

 

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1    or 340B pharmacy differently than non-340B entities or
2    non-340B pharmacies for any reason relating to the
3    entity's participation in the 340B drug discount program.
4    As used in this subsection, "pharmacy benefit manager" and
5"third-party payer" do not include pharmacy benefit managers
6and third-party payers acting on behalf of a Medicaid program.
7    (g) A violation of this Section by a pharmacy benefit
8manager constitutes an unfair or deceptive act or practice in
9the business of insurance under Section 424.
10    (h) A provision that violates subsection (f) in a contract
11between a pharmacy benefit manager or a third-party payer and
12a 340B entity that is entered into, amended, or renewed after
13July 1, 2022 shall be void and unenforceable.
14    (i) A pharmacy benefit manager may not prohibit a pharmacy
15or pharmacist from selling a more affordable alternative to
16the covered person if a more affordable alternative is
17available.
18    (j) A pharmacy benefit manager shall not reimburse a
19pharmacy or pharmacist in this State an amount less than the
20amount that the pharmacy benefit manager reimburses a pharmacy
21benefit manager affiliate for providing the same
22pharmaceutical product.
23    (k) A pharmacy benefit manager shall not:
24        (1) condition payment, reimbursement, or network
25    participation on any type of accreditation, certification,
26    or credentialing standard beyond those required by the

 

 

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1    State Board of Pharmacy or applicable State or federal
2    law;
3        (2) prohibit or otherwise restrict a pharmacist or
4    pharmacy from offering prescription delivery services to
5    any covered person; or
6        (3) require any additional requirement for a
7    prescription claim that is more restrictive than the
8    standards established under the Illinois Food, Drug and
9    Cosmetic Act; the Pharmacy Practice Act; or the Illinois
10    Controlled Substances Act.
11    (l) A pharmacy benefit manager is prohibited from
12conducting spread pricing in this State.
13
14    (m) (i) This Section applies to contracts entered into or
15renewed on or after July 1, 2023 2022.
16    (n) (j) This Section applies to any group or individual
17policy of accident and health insurance or managed care plan
18that provides coverage for prescription drugs and that is
19amended, delivered, issued, or renewed on or after July 1,
202020.
21(Source: P.A. 101-452, eff. 1-1-20; 102-778, eff. 7-1-22;
22revised 8-19-22.)
 
23    (215 ILCS 5/513b1.1 new)
24    Sec. 513b1.1. Pharmacy network participation.
25    (a) As used in this Section:

 

 

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1    "Claims processing services" means the administrative
2services performed in connection with the processing and
3adjudicating of claims relating to pharmacist services that
4include:
5        (1) receiving payments for pharmacist services; or
6        (2) making payments to a pharmacist or pharmacy for
7    pharmacist services.
8    "Pharmacy benefit manager affiliate" means a pharmacy or
9pharmacist that directly or indirectly, through one or more
10intermediaries, owns or controls, is owned or controlled by,
11or is under common ownership or control with a pharmacy
12benefit manager. "Pharmacy benefit manager affiliate" includes
13any mail-order pharmacy that is directly or indirectly owned
14or controlled by a pharmacy benefit manager.
15    (b) A pharmacy benefit manager shall not:
16        (1) prohibit or limit a participant or beneficiary of
17    pharmacy services under a health benefit plan from
18    selecting a pharmacy or pharmacist of his or her choice if
19    the pharmacy or pharmacist is willing and agrees to accept
20    the same terms and conditions that the pharmacy benefit
21    manager has established for at least one of the networks
22    of pharmacies that the pharmacy benefit manager has
23    established to serve patients within this State;
24        (2) prohibit a pharmacy from participating in any
25    given network of pharmacies within the State if the
26    pharmacy is licensed by the Department of Financial and

 

 

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1    Professional Regulation and agrees to the same terms and
2    conditions, including the terms of reimbursement, that the
3    pharmacy benefit manager has established for other
4    pharmacies participating within the network that the
5    pharmacy wishes to join;
6        (3) charge a participant or beneficiary of a pharmacy
7    benefits plan or program that the pharmacy benefit manager
8    serves a different copayment obligation or additional fee
9    for using any pharmacy within a given network of
10    pharmacies established by the pharmacy benefit manager to
11    serve patients within this State;
12        (4) impose a monetary advantage, incentive, or penalty
13    under a health benefit plan that would affect or influence
14    a beneficiary's choice among those pharmacies or
15    pharmacists who have agreed to participate in the plan
16    according to the terms offered by the insurer;
17        (5) require a participant or beneficiary to use or
18    otherwise obtain services exclusively from a mail-order
19    pharmacy or one or more pharmacy benefit manager
20    affiliates;
21        (6) impose upon a beneficiary any copayment obligation
22    or other limitation, restriction, or condition, including
23    the number of days of a drug supply for which coverage will
24    be allowed, that is more costly or more restrictive than
25    that which would be imposed upon the beneficiary if such
26    services were purchased from a pharmacy benefit manager

 

 

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1    affiliate or any other pharmacy within a given network of
2    pharmacies established by the pharmacy benefit manager to
3    serve patients within this State;
4        (7) require participation in additional networks for a
5    pharmacy to enroll in an individual network;
6        (8) include in any manner on any material, including,
7    but not limited to, mail and identifications cards, the
8    name of any pharmacy, hospital, or other providers unless
9    it specifically lists all pharmacies, hospitals, and
10    providers participating in the given network of pharmacies
11    established by the pharmacy benefit manager to serve
12    patients within this State; or
13        (9) share, transfer, or otherwise utilize patient
14    information or pharmacy service data collected pursuant to
15    the provision of claims processing services for the
16    purpose of referring a participant or beneficiary to a
17    pharmacy benefit manager affiliate.
18    (c) A pharmacy licensed in or holding a nonresident
19pharmacy permit in Illinois shall be prohibited from:
20        (1) transferring or sharing records relative to
21    prescription information containing patient identifiable
22    and prescriber identifiable data to or from an affiliate
23    for any commercial purpose; however, nothing shall be
24    construed to prohibit the exchange of prescription
25    information between a pharmacy and its affiliate for the
26    limited purposes of pharmacy reimbursement, formulary

 

 

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1    compliance, pharmacy care, public health activities
2    otherwise authorized by law, or utilization review by a
3    health care provider; or
4        (2) presenting a claim for payment to any individual,
5    third-party payer, affiliate, or other entity for a
6    service furnished pursuant to a referral from an affiliate
7    or other person licensed under this Article.
8    (d) If a pharmacy licensed or holding a nonresident
9pharmacy permit in this State has an affiliate, it shall
10annually file with the Department a disclosure statement
11identifying all such affiliates.
12    (e) This Section shall not be construed to prohibit a
13pharmacy from entering into an agreement with an affiliate to
14provide pharmacy care to patients if the pharmacy does not
15receive referrals in violation of subsection (c) and the
16pharmacy provides the disclosure statement required in
17subsection (d).
18    (f) In addition to any other remedy provided by law, a
19violation of this Section by a pharmacy shall be grounds for
20disciplinary action by the Department.
21    (g) A pharmacist who fills a prescription that violates
22subsection (c) shall not be liable under this Section.
23    (h) This Section does not apply to:
24        (1) any hospital or related institution; or
25        (2) any referrals by an affiliate for pharmacy
26    services and prescriptions to patients in skilled nursing

 

 

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1    facilities, intermediate care facilities, continuing care
2    retirement communities, home health agencies, or hospices.
 
3    (215 ILCS 5/513b1.3 new)
4    Sec. 513b1.3. Fiduciary responsibility. A pharmacy benefit
5manager is a fiduciary to a contracted health insurer and
6shall:
7        (1) discharge that duty in accordance with federal and
8    State law;
9        (2) notify the covered entity in writing of any
10    activity, policy, or practice of the pharmacy benefit
11    manager that directly or indirectly presents any conflict
12    of interest and inability to comply with the duties
13    imposed by this Section, but in no event does this
14    notification exempt the pharmacy benefit manager from
15    compliance with all other Sections of this Code; and
16        (3) disclose all direct or indirect payments related
17    to the dispensation of prescription drugs or classes or
18    brands of drugs to the covered entity.
 
19    (215 ILCS 5/513b1.5 new)
20    Sec. 513b1.5. Pharmacy benefit manager transparency.
21    (a) A pharmacy benefit manager shall report to the
22Director on a quarterly basis for each health care insurer the
23following information:
24        (1) the aggregate amount of rebates received by the

 

 

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1    pharmacy benefit manager;
2        (2) the aggregate amount of rebates distributed to the
3    appropriate health care insurer;
4        (3) the aggregate amount of rebates passed on to the
5    enrollees of each health care insurer at the point of sale
6    that reduced the enrollees' applicable deductible,
7    copayment, coinsurance, or other cost-sharing amount;
8        (4) the individual and aggregate amount paid by the
9    health care insurer to the pharmacy benefit manager for
10    pharmacist services itemized by pharmacy, by product, and
11    by goods and services; and
12        (5) the individual and aggregate amount a pharmacy
13    benefit manager paid for pharmacist services itemized by
14    pharmacy, by product, and by goods and services.
15    (b) The report made to the Department required under this
16Section is confidential and not subject to disclosure under
17the Freedom of Information Act.
 
18    Section 10. The Network Adequacy and Transparency Act is
19amended by adding Section 35 as follows:
 
20    (215 ILCS 124/35 new)
21    Sec. 35. Pharmacy benefit manager network adequacy.
22    (a) As used in this Section:
23    "Pharmacy benefit manager" has the meaning ascribed to
24that term in Section 513b1 of the Illinois Insurance Code.

 

 

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1    "Pharmacy benefit manager network" means the group or
2groups of preferred providers of pharmacy services to a
3network plan.
4    "Pharmacy benefit manager network plan" means an
5individual or group policy of accident and health insurance
6that either requires a covered person to use or creates
7incentives, including financial incentives, for a covered
8person to use providers of pharmacy services managed, owned,
9under contract with, or employed by the insurer.
10    "Pharmacy services" means products, goods, and services or
11any combination of products, goods, and services, provided as
12a part of the practice of pharmacy. "Pharmacy services"
13includes pharmacist care as defined in the Pharmacy Practice
14Act.
15    (b) A pharmacy benefit manager shall provide a reasonably
16adequate and accessible pharmacy benefit manager network for
17the provision of prescription drugs for a health benefit plan
18that shall provide for convenient patient access to pharmacies
19within a reasonable distance from a patient's residence.
20    (c) Pharmacy benefit managers must file for review by the
21Director a pharmacy benefit manager network plan describing
22the pharmacy benefit manager network and the pharmacy benefit
23manager network's accessibility in this State in the time and
24manner required by rule issued by the Department.
25        (1) A mail-order pharmacy shall not be included in the
26    calculations determining pharmacy benefit manager network

 

 

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1    adequacy.
2        (2) A pharmacy benefit manager network plan shall
3    comply with the following retail pharmacy network access
4    standards:
5            (A) at least 90% of covered individuals residing
6        in an urban service area live within 2 miles of a
7        retail pharmacy participating in the pharmacy benefit
8        manager's retail pharmacy network;
9            (B) at least 90% of covered individuals residing
10        in an urban service area live within 5 miles of a
11        retail pharmacy designated as a preferred
12        participating pharmacy in the pharmacy benefit
13        manager's retail pharmacy network;
14            (C) at least 90% of covered individuals residing
15        in a suburban service area live within 5 miles of a
16        retail pharmacy participating in the pharmacy benefit
17        manager's retail pharmacy network;
18            (D) at least 90% of covered individuals residing
19        in a suburban service area live within 7 miles of a
20        retail pharmacy designated as a preferred
21        participating pharmacy in the pharmacy benefit
22        manager's retail pharmacy network;
23            (E) at least 70% of covered individuals residing
24        in a rural service area live within 15 miles of a
25        retail pharmacy participating in the pharmacy benefit
26        manager's retail pharmacy network; and

 

 

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1            (F) at least 70% of covered individuals residing
2        in a rural service area live within 18 miles of a
3        retail pharmacy designated as a preferred
4        participating pharmacy in the pharmacy benefit
5        manager's retail pharmacy network.
6    (d) The Director shall establish a process for the review
7of the adequacy of the standards required under this Section.