Sen. John J. Cullerton

Filed: 5/20/2008





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2     AMENDMENT NO. ______. Amend House Bill 1432 on page 1, by
3 replacing line 5 with the following:
4 "changing Sections 370c, 512-1, 512-2, 512-3, 512-4, 512-5,
5 512-6, 512-7, 512-8, 512-9, and 512-10, by adding Sections
6 512-7.5, 512-7.10, 512-11, and 512-12, and by changing the
7 heading of Article XXXI 1/2 as follows:"; and
8 on page 7, immediately below line 1, by inserting the
9 following:
10     "(215 ILCS 5/Art. XXXI.5 heading)

13     (215 ILCS 5/512-1)  (from Ch. 73, par. 1065.59-1)
14     Sec. 512-1. Short Title. This Article shall be known and
15 may be cited as the "Pharmacy Benefits Management Programs Law



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1 Third Party Prescription Program Act".
2 (Source: P.A. 82-1005.)
3     (215 ILCS 5/512-2)  (from Ch. 73, par. 1065.59-2)
4     Sec. 512-2. Purpose. It is hereby determined and declared
5 that the purpose of this Article is to regulate pharmacy
6 benefits management programs certain practices engaged in by
7 third-party prescription program administrators.
8 (Source: P.A. 82-1005.)
9     (215 ILCS 5/512-3)  (from Ch. 73, par. 1065.59-3)
10     Sec. 512-3. Definitions. For the purposes of this Article,
11 unless the context otherwise requires, the terms defined in
12 this Article have the meanings ascribed to them herein:
13     "Covered entity" means any entity that has entered into an
14 agreement, directly or indirectly, with a pharmacy benefits
15 manager to provide a pharmacy benefits management program.
16 "Covered entity" includes, but is not limited to, a person or
17 entity that has entered into a contract for prescription health
18 care services with an insurer, Health Maintenance
19 Organization, Limited Health Services Organization, or
20 Voluntary Health Services Plan under which the pharmacy
21 benefits manager is contractually obligated to provide a
22 pharmacy benefits management program.
23     "Covered individual" means a member, participant,
24 enrollee, contract holder, policy holder, or beneficiary of a



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1 covered entity who is provided prescription health coverage by
2 the covered entity. "Covered individual" includes, but is not
3 limited to, a dependent or other person who is provided health
4 coverage though a policy, contract, or plan for a covered
5 individual.
6     "Director" means the Director of the Division of Insurance
7 of the Department of Financial and Professional Regulation.
8     "Division" means the Division of Insurance of the
9 Department of Financial and Professional Regulation.
10     "Maximum allowable cost" or "MAC" means the maximum
11 allowable cost for a prescribed generic drug dispensed under
12 PBM Program Networks as determined by the program administrator
13 from time to time pursuant to a MAC list to be provided
14 electronically to pharmacy network participants at least
15 quarterly or more frequently upon a pharmacy request. The MAC
16 is based upon the average published wholesale price of at least
17 2 different manufacturers of the applicable generic drug (for
18 the same strength), or as published in 2 nationally recognized
19 drug databases and identified in the approved pharmacy network
20 contract.
21     "Pharmacy benefits management program" or "program" means
22 a system providing for the administration of or reimbursement
23 for pharmacy services and prescription drug products offered in
24 this State by a PBM for or on behalf of a covered entity.
25     "Pharmacy benefits manager" or "PBM" means any person,
26 partnership, or corporation that issues or causes to be issued



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1 any payment or reimbursement to a provider for services
2 rendered pursuant to a pharmacy benefits management program or
3 an entity that procures prescription drugs at a negotiated
4 rate. "Pharmacy benefits manager "or "PBM" does not include the
5 Director of Healthcare and Family Services or any agent
6 authorized by the Director of Healthcare and Family Services to
7 reimburse or procure prescription drugs at a negotiated rate
8 pursuant to a program of which the Department of Healthcare and
9 Family Services is the third party or covered entity, nor does
10 it include a pharmacy or pharmacy network provider.
11     "Pharmacy" has the meaning given to the term in the
12 Pharmacy Practice Act.
13     "Pharmacy network provider" means a pharmacist or pharmacy
14 that has a contractual relationship with a health benefit plan
15 or pharmacy benefit manager to provide pharmacist services or
16 medication therapy management services, as defined in the
17 Pharmacy Practice Act.
18     "Pharmacy reimbursement rate" means the amount a PBM pays
19 to a pharmacy or pharmacy network provider for prescription
20 drugs and services provided by the pharmacy or pharmacy network
21 provider to the PBM.
22     "Rebates" means any valuable consideration or inducement
23 to directly affect or influence the dispensing of pharmacy
24 drugs, supplies, or services.
25     (a) "Third party prescription program" or "program" means
26 any system of providing for the reimbursement of pharmaceutical



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1 services and prescription drug products offered or operated in
2 this State under a contractual arrangement or agreement between
3 a provider of such services and another party who is not the
4 consumer of those services and products. Such programs may
5 include, but need not be limited to, employee benefit plans
6 whereby a consumer receives prescription drugs or other
7 pharmaceutical services and those services are paid for by an
8 agent of the employer or others.
9     (b) "Third party program administrator" or "administrator"
10 means any person, partnership or corporation who issues or
11 causes to be issued any payment or reimbursement to a provider
12 for services rendered pursuant to a third party prescription
13 program, but does not include the Director of Healthcare and
14 Family Services or any agent authorized by the Director to
15 reimburse a provider of services rendered pursuant to a program
16 of which the Department of Healthcare and Family Services is
17 the third party.
18 (Source: P.A. 95-331, eff. 8-21-07.)
19     (215 ILCS 5/512-4)  (from Ch. 73, par. 1065.59-4)
20     Sec. 512-4. Licensure; application and fees Registration.
21     (a) No person, partnership, corporation, or other entity
22 may act as a PBM or provide a pharmacy benefits management
23 program in this State without being licensed by the Division.
24     (b) Each applicant for licensure must file with the
25 Director the following information and documents:



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1         (1) the name of the company and the state or country
2     under the laws of which the company is organized or
3     authorized;
4         (2) the title of the Act under or by which the company
5     was incorporated or organized, the date of its
6     incorporation or organization, and, if a corporation, the
7     period of its duration;
8         (3) an organizational chart;
9         (4) a list of the names, addresses, titles, and
10     biographical affidavits of the officers of the PBM;
11         (5) a sample copy of contracts utilized by the PBM
12     between the PBM and covered entities and between the PBM
13     and its pharmacy network providers; and
14         (6) such other information as the Director may
15     reasonably request.
16     (c) A licensee shall keep current the information required
17 under items (1) through (5) of subsection (b) of this Section
18 by reporting all material changes or additions to the Director
19 within 30 calendar days after the end of the month of each
20 change or addition. A material change or addition includes any
21 modification of the information that has a significant effect
22 on the operation of the PBM or pharmacy benefit management
23 program.
24     (d) Beginning on January 1, 2009, each PBM doing business
25 in this State must pay to the Director an initial licensure fee
26 of $1,000. Thereafter, annually on or before January 1 of each



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1 year, a PBM doing business in this State that seeks to renew a
2 PBM license must pay to the Director a renewal fee of $250. All
3 fees collected under this Section shall be deposited into the
4 Insurance Producer Administration Fund.
5     (e) This Section does not apply to licensed insurance
6 companies, Health Maintenance Organizations, Limited Health
7 Services Organizations, and Voluntary Health Services Plans.
8 All third party prescription programs and administrators doing
9 business in the State shall register with the Director of
10 Insurance. The Director shall promulgate regulations
11 establishing criteria for registration in accordance with the
12 terms of this Article. The Director may by rule establish an
13 annual registration fee for each third party administrator.
14 (Source: P.A. 82-1005.)
15     (215 ILCS 5/512-5)  (from Ch. 73, par. 1065.59-5)
16     Sec. 512-5. License denial, non-renewal, or revocation
17 Fiduciary and Bonding Requirements.
18     (a) The Director may place on probation, suspend, revoke,
19 or refuse to issue or renew a PBM license or may levy a civil
20 penalty in accordance with this Section or take any combination
21 of actions for any one or more of the following causes:
22         (1) Intentionally providing incorrect, misleading, or
23     materially untrue information in the license application.
24         (2) Intentionally violating any provision of this Law
25     or the insurance laws of this or another state or violating



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1     any rule, subpoena, or order of the Director or another
2     appropriate state regulator.
3         (3) Obtaining or attempting to obtain a license through
4     misrepresentation or fraud.
5         (4) Improperly withholding, misappropriating, or
6     converting any moneys or properties received in the course
7     of doing business.
8         (5) Intentionally misrepresenting the terms of any
9     contract or agreement between a PBM and a covered entity.
10         (6) Having admitted to or been found to have committed
11     any unfair trade practice or fraud.
12         (7) Using fraudulent, coercive, or dishonest practices
13     or demonstrating incompetence, untrustworthiness, or
14     financial irresponsibility in the conduct of business in
15     this State or elsewhere.
16         (8) Having a professional license or registration that
17     is comparable to a license issued under this Law denied,
18     suspended, or revoked in any other state, province,
19     district, or territory.
20         (9) Forging a name to an application.
21         (10) Failing to pay any tax or fee, as required by law.
22     (b) If the action by the Director is to deny renewal,
23 suspend, or revoke a license or to deny an application for
24 licensure, the Director shall notify the licensee or applicant
25 and advise, in writing, the licensee or applicant of the reason
26 for the suspension, revocation, or denial. The applicant or



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1 licensee may make written demand upon the Director within 30
2 calendar days after the date of mailing of notice for a hearing
3 before the Director to determine the reasonableness of the
4 Director's action. The hearing must be held within not fewer
5 than 20 calendar days nor more than 30 calendar days after the
6 mailing of the notice of hearing and shall be held pursuant to
7 the Illinois Administrative Code.
8     (c) In addition to or instead of any applicable denial,
9 suspension, or revocation of a license, an applicant or
10 licensee may, after hearing, be subject to a civil penalty.
11     (d) The Director has the authority to enforce and, by
12 order, require compliance with the provisions of this Article
13 against any person or PBM who is under investigation for or
14 charged with a violation of this Law or Code even if the
15 license has been surrendered or has lapsed by operation of law.
16     (e) Upon the suspension, denial, or revocation of a
17 license, the licensee having possession or custody of the
18 license shall promptly deliver it to the Director in person or
19 by mail. The Director shall publish all suspensions, denials,
20 or revocations after the suspension, denial, or revocation
21 becomes final.
22     (f) A licensee whose license is revoked or applicant whose
23 application is denied pursuant to this Section is ineligible to
24 apply for any pharmacy benefits management program or PBM
25 license under this Law for 3 years after the revocation or
26 denial. A PBM whose license as a pharmacy benefits management



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1 program has been revoked, suspended, or denied may not be
2 employed, contracted, or engaged in any related capacity during
3 the time the revocation, suspension, or denial is in effect.
4     (g) A PBM must inform the Director in a manner acceptable
5 to the Director of a change of address within 30 calendar days
6 after the change. A third party prescription program
7 administrator shall (1) establish and maintain a fiduciary
8 account, separate and apart from any and all other accounts,
9 for the receipt and disbursement of funds for reimbursement of
10 providers of services under the program, or (2) post, or cause
11 to be posted, a bond of indemnity in an amount equal to not
12 less than 10% of the total estimated annual reimbursements
13 under the program.
14     The establishment of such fiduciary accounts and bonds
15 shall be consistent with applicable State law. If a bond of
16 indemnity is posted, it shall be held by the Director of
17 Insurance for the benefit and indemnification of the providers
18 of services under the third party prescription program.
19     (h) Any PBM An administrator who operates more than one
20 pharmacy benefits management third party prescription program
21 may establish and maintain a separate fiduciary account or bond
22 of indemnity for each such program, or may operate and maintain
23 a consolidated fiduciary account or bond of indemnity for all
24 such programs.
25     The requirements of this subsection (h) Section do not
26 apply to any pharmacy benefits management third party



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1 prescription program administered by or on behalf of any
2 insurance company, Health Maintenance Organization, Limited
3 Health Service Organization, or Voluntary Health Services Plan
4 Care Service Plan Corporation or Pharmaceutical Service Plan
5 Corporation authorized to do business in the State of Illinois.
6 (Source: P.A. 82-1005.)
7     (215 ILCS 5/512-6)  (from Ch. 73, par. 1065.59-6)
8     Sec. 512-6. Notice.     Notice of any change in the terms
9 of a pharmacy benefits management third party prescription
10 program, including but not limited to drugs covered,
11 reimbursement rates, co-payments, and dosage quantity, shall
12 be given to each enrolled pharmacy as soon as possible at least
13 30 days prior to the time it becomes effective.
14 (Source: P.A. 82-1005.)
15     (215 ILCS 5/512-7)  (from Ch. 73, par. 1065.59-7)
16     Sec. 512-7. Required program and contractual Contractual
17 provisions.
18     (a) Any agreement or contract entered into in this State
19 between a PBM the administrator of a program and a pharmacy
20 under a pharmacy benefits management program shall include a
21 statement of the method of calculating and amount of
22 reimbursement to be paid to to the pharmacy for services
23 rendered to persons enrolled in the program, the frequency of
24 payment by the PBM program administrator to the pharmacy for



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1 those services, and a method for the adjudication of complaints
2 and the settlement of disputes between the contracting parties.
3     (b) Every pharmacy benefit management program shall do each
4 of the following:
5          (1) Provide A program shall provide an annual period
6     of at least 30 days during which any pharmacy licensed
7     under the Pharmacy Practice Act may elect to participate in
8     the program under the program terms for at least one year.
9     Beginning January 1, 2009, all agreements between a
10     pharmacy benefits management program and any other person
11     shall comply with the requirements of this Law. To the
12     extent that any such agreement renewed or extended after
13     December 31, 2008 fails to comply with the requirements of
14     this Law, such requirements shall be deemed to be
15     incorporated into those agreements by operation of law as
16     of the date of the renewal of execution.
17         (2) Keep current the information required to be
18     disclosed in its application for licensure by reporting all
19     material changes or additions to the Director within 30
20     days after each change or addition. If compliance with the
21     requirements of this subsection (b) would impair any
22     provision of a contract between a program and any other
23     person, and if the contract provision was in existence
24     before January 1, 1990, then immediately after the
25     expiration of those contract provisions the program shall
26     comply with the requirements of this subsection (b).



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1          (3) Cause to be issued an identification card to
2     covered individuals. The identification card shall comply
3     with the Uniform Prescription Drug Information Card Act.
4     This subsection (b) does not apply if:
5             (A) the program administrator is a licensed health
6         maintenance organization that owns or controls a
7         pharmacy and that enters into an agreement or contract
8         with that pharmacy in accordance with subsection (a);
9         or
10             (B) the program administrator is a licensed health
11         maintenance organization that is owned or controlled
12         by another entity that also owns or controls a
13         pharmacy, and the administrator enters into an
14         agreement or contract with that pharmacy in accordance
15         with subsection (a).
16         (4) Make changes to a formulary or a prescription drug
17     list (PDL) only on the anniversary date of the contract or
18     through mutual consent of the PBM and the covered entity.
19     The PBM shall establish a grievance process and an appeals
20     procedure for covered individuals effected by a formulary
21     or PDL change. This subsection (b) shall be inoperative
22     after October 31, 1992.
23     (c) (Blank). The program administrator shall cause to be
24 issued an identification card to each person enrolled in the
25 program. The identification card shall include:
26         (1) the name of the individual enrolled in the program;



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1     and
2         (2) an expiration date if required under the
3     contractual arrangement or agreement between a provider of
4     pharmaceutical services and prescription drug products and
5     the third party prescription program administrator.
6 (Source: P.A. 95-689, eff. 10-29-07.)
7     (215 ILCS 5/512-7.5 new)
8     Sec. 512-7.5. Disclosures.
9     (a) A PBM shall disclose to the covered entity the
10 aggregate total amount of any rebates received by the PBM from
11 a pharmaceutical product manufacturer or labeler as a result of
12 providing services to the covered entity and its covered
13 individuals. A PBM providing information under this subsection
14 (a) shall designate that information as confidential.
15 Information designated as confidential by a PBM and provided to
16 a covered entity under this subsection (a) may not be disclosed
17 by the covered entity to any person without the consent of the
18 PBM, except that disclosure may be made in a court filing or
19 when authorized by law or ordered by a court of this State for
20 good cause.
21     (b) A PBM shall disclose to a covered entity the source and
22 amount of any claims processing and pharmacy network fees that
23 are collected from retail pharmacies to the extent that such
24 amounts relate directly to the services provided by the PBM to
25 the covered entity and its covered individuals. Any and all



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1 information disclosed under this subsection (b) may be
2 designated as confidential. Information designated as
3 confidential by a PBM and provided to a covered entity under
4 this subsection (b) may not be disclosed by the covered entity
5 to any person without the consent of the PBM, except as may be
6 required in a court of law with proper jurisdiction or as
7 authorized by law.
8     (c) Except in the case of non-rebate sharing contracts, a
9 PBM shall disclose to a covered entity the reimbursement rates,
10 including, where applicable, MAC levels, paid to pharmacy
11 network providers for services provided to the covered entity
12 and its covered individuals. Any and all information disclosed
13 under this subsection (c) may be designated as confidential and
14 such information may not be disclosed by a covered entity
15 without the consent of the PBM except as may be required by a
16 court of law with proper jurisdiction or as authorized by law,
17 and further provided that nothing contained herein shall (i)
18 prevent a covered entity from verifying with pharmacy network
19 providers the actual amount of reimbursement that they are
20 receiving from the PBM for services provided to the covered
21 entity and its covered individuals and (ii) prevent a pharmacy
22 network provider from disclosing to the covered entity the
23 amount of reimbursement that it has actually received from the
24 PBM for services provided to the covered entity and its covered
25 individuals. Any provision contained in any contract,
26 agreement or understanding of any type between a PBM and a



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1 covered entity or between a PBM and a pharmacy network provider
2 contrary to this subsection (c) shall be null, void, and
3 unenforceable.
4     (d) Nothing in this Section shall prohibit a pharmacy
5 network provider from advising a covered individual of (i)
6 generic prescription drugs that might be available to the
7 covered individual at a lower out-of-pocket level and (ii) that
8 the covered individual may contact his or her prescribing
9 provider to determine whether there is an acceptable generic
10 prescription drug that can be used to treat the covered
11 individual's disease or medical condition that is available at
12 a lower out-of-pocket level.
13     (215 ILCS 5/512-7.10 new)
14     Sec. 512-7.10. Recoupment; audits.
15     (a) A PBM shall provide the pharmacy or pharmacy network
16 provider a remittance advice which must include an explanation
17 of a recoupment or offset taken by a PBM, if any. All pharmacy
18 audits and recoupments must be conducted in person or, in the
19 alternative, an official notice of audit must be sent by
20 certified mail to the pharmacy with specific requests for
21 information, and a minimum of 30 days must be granted for a
22 pharmacy response from date of receipt of official request. The
23 recoupment explanation shall, at a minimum, include the name of
24 the patient, the date of dispersing, the prescription drug or
25 drugs dispensed, the recoupment amount, and the reason for the



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1 recoupment or offset. In addition, a PBM shall provide with the
2 remittance advice a telephone number or mailing address to
3 initiate an appeal of the recoupment or offset. The
4 requirements of this Section shall be deemed fulfilled by a PBM
5 if the information required in the recoupment explanation is
6 provided to a pharmacy or pharmacy network provider in a notice
7 prior to the actual recoupment.
8     Written notice must be given to the pharmacy network
9 provider or pharmacist at least 2 weeks before the performance
10 of the initial on-site audit for each audit cycle. Any audit
11 performed that involves clinical or professional judgment must
12 be conducted in consultation with a pharmacist who has
13 knowledge of the provisions of this Article.
14     (b) Any clerical or record keeping error, including
15 typographical errors, scrivener's errors, or computer errors,
16 regarding a required document or record may not, in and of
17 itself, constitute fraud; however, such claims may be subject
18 to recoupment. Notwithstanding any other provision of law to
19 the contrary, no such claim shall be subject to criminal
20 penalties without proof of intent to commit fraud.
21     (c) A pharmacy network provider or pharmacist may use the
22 records of a hospital, physician, or other authorized
23 practitioner of the healing arts for drugs or medical supplies
24 written or transmitted by any means of communication for
25 purposes of validating pharmacy records with respect to orders
26 or refills of a legend or narcotic drug.



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1     (d) Extrapolation audits may not be conducted for the
2 purpose of pharmacy audits. A finding of overpayment or
3 underpayment may be a projection based on the number of
4 patients served having a similar diagnosis or on the number of
5 similar orders or refills for similar drugs; however,
6 recoupment of claims must be based on the actual overpayment or
7 underpayment unless the projection for overpayment or
8 underpayment is part of a settlement as agreed to by the
9 pharmacy network provider.
10     (e) Each pharmacy network provider or pharmacist shall be
11 audited under the standards and parameters as other similarly
12 situated pharmacies or pharmacists audited by a covered entity,
13 a PBM, or a representative of a covered entity or a PBM.
14     (f) The period covered by an audit may not exceed 2 years
15 from the date the claim was submitted to or adjudicated by a
16 covered entity, a PBM, or a representative of a covered entity
17 or PBM, except that this subsection (f) does not apply where a
18 longer period is required by a federal law.
19     (g) An audit shall not be initiated or scheduled during the
20 first 7 calendar days of any month due to the high volume of
21 prescriptions filled during that time, unless otherwise
22 consented to by the pharmacy network provider or pharmacist.
23     (h) Each PBM conducting an audit must establish an appeals
24 process under which a pharmacy network provider or pharmacist
25 may appeal an unfavorable preliminary audit report to the PBM
26 on whose behalf the audit was conducted. The PBM conducting an



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1 audit shall provide to the pharmacy network provider or its
2 representative, before or at the time of delivery of the
3 preliminary audit report, a written explanation of the appeals
4 process, including the name, address, and telephone number of
5 the person to whom an appeal should be addressed. If, following
6 the appeal, it is determined that an unfavorable audit report
7 or any portion thereof is unsubstantiated, the audit report or
8 such portion shall be dismissed without the necessity of
9 further proceedings.
10     (i) Reimbursement by a PBM under a contract to a pharmacy
11 network provider for prescription drugs and other products and
12 supplies that is calculated according to a formula that uses a
13 nationally recognized reference in the pricing calculation
14 shall use the most current nationally recognized reference
15 prices or amount in the actual or constructive possession of
16 the pharmacy benefits manager or its agent.
17     (215 ILCS 5/512-8)  (from Ch. 73, par. 1065.59-8)
18     Sec. 512-8. Cancellation procedures.
19     (a) The administrator of a program shall notify all
20 pharmacies enrolled in the program of any cancellation of the
21 coverage of benefits of any group enrolled in the program at
22 least 30 days prior to the effective date of such cancellation.
23 However, if the administrator of a program is not notified at
24 least 45 days prior to the effective date of such cancellation,
25 the administrator shall notify all pharmacies enrolled in the



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1 program of the cancellation as soon as practicable after having
2 received notice.
3     (a) (b) When a program is terminated, all persons enrolled
4 therein shall be so notified by the covered entity , and the
5 employer shall make every reasonable effort to gain possession
6 of any plan identification cards in such persons' possession.
7     (b) (c) Any covered individual person who intentionally
8 uses a program identification card to obtain services from a
9 pharmacy after having received notice of the cancellation of
10 his or her benefits shall be guilty of a Class C misdemeanor.
11 Persons shall be liable to the PBM program administrator for
12 all monies paid by the PBM program administrator for any
13 services received pursuant to any improper use of the
14 identification card.
15 (Source: P.A. 82-1005.)
16     (215 ILCS 5/512-9)  (from Ch. 73, par. 1065.59-9)
17     Sec. 512-9. Denial of Payment.
18     (a) No PBM administrator shall deny payment to any pharmacy
19 for covered pharmaceutical services or prescription drug
20 products that were in real-time approved to be dispensed
21 pursuant to an on-line adjudication program. rendered as a
22 result of the misuse, fraudulent or illegal use of an
23 identification card unless such identification card had
24 expired, been noticeably altered, or the pharmacy was notified
25 of the cancellation of such card. In lieu of notifying



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1 pharmacies which have a common ownership, the administrator may
2 notify a party designated by the pharmacy to receive such
3 notice, in which case, notification shall not become effective
4 until 5 calendar days after the designee receives notification.
5     (b) No PBM program administrator may withhold any payment
6 to any pharmacy for covered pharmaceutical services or
7 prescription drug products beyond the time period specified in
8 the payment schedule provisions of the agreement, except for
9 individual claims for payment which have been returned to the
10 pharmacy as incomplete or illegible. Such returned claims shall
11 be paid if resubmitted by the pharmacy to the PBM program
12 administrator with the appropriate corrections made.
13     (c) When a PBM utilizes a method of pharmacy reimbursement
14 that utilizes a MAC calculation, it shall attempt to reimburse
15 the dispensing network pharmacy at an amount not less than the
16 pharmacy acquisition cost plus an acceptable dispensing fee, as
17 set out in the pharmacy network agreement. In the event the MAC
18 rate is less that the network pharmacy acquisition cost, the
19 PBM shall have an appeal procedure in place to respond to
20 pharmacy requests for rate review. This process must provide
21 for a written response explaining the outcome of the review to
22 the requesting pharmacy within 30 days. If the rate is
23 adjusted, the adjustment will be made retroactive to the date
24 of the appeal request. In the event the appeal is not upheld or
25 acknowledged in a timely manner, a third party independent
26 review panel may review the claims as submitted by the



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1 pharmacies and submit periodic reports to the Director for
2 further determination.
3 (Source: P.A. 82-1005.)
4     (215 ILCS 5/512-10)  (from Ch. 73, par. 1065.59-10)
5     Sec. 512-10. Failure to obtain licensure Register. Any PBM
6 that fails to obtain a license from the Director and pay the
7 fee set forth in this Law third party prescription program or
8 administrator which operates without a certificate of
9 registration or fails to register with the Director and pay the
10 fee prescribed by this Article shall be construed to be an
11 unauthorized insurer as defined in Article VII of this Code and
12 shall be subject to all penalties contained therein.
13     The provisions of the Article shall apply to all pharmacy
14 benefits management programs and PBMs existing and established
15 as of the effective date of this amendatory Act of the 95th
16 General Assembly. new programs established on or after January
17 1, 1983. Existing programs shall comply with the provisions of
18 this Article on the anniversary date of the programs that
19 occurs on or after January 1, 1983.
20 (Source: P.A. 82-1005.)
21     (215 ILCS 5/512-11 new)
22     Sec. 512-11. Examination of business and affairs.
23     (a) The Director may, when and as often as the Director
24 deems it reasonably necessary to protect the interests of the



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1 public, examine the business and affairs of any licensed PBM.
2     (b) Licensees shall maintain for a period of 5 years copies
3 of all documents, books, records, accounts, papers, and any or
4 all computer or other recordings relating to the licensee's
5 business and affairs of operating a pharmacy benefit management
6 program.
7     (c) Every licensee or person from whom information is
8 sought, including all officers, directors, employees and
9 agents of any licensee or person from whom information is
10 sought, shall provide to the examiners timely, convenient, and
11 free access at all reasonable hours at the licensee's or
12 person's offices to all books, records, accounts, papers,
13 documents, assets, and computer or other recordings relating to
14 the property, assets, business, and affairs of the licensee
15 being examined. The officers, directors, employees, and agents
16 of the licensee or person shall facilitate the examination and
17 aid in the examination so far as it is in their power to do so.
18 The refusal of a licensee, by its officers, directors,
19 employees, or agents, to submit to examination or to comply
20 with any reasonable written request of the Director shall be
21 grounds for suspension, revocation, or denial of issuance or
22 renewal of any license or authority held by the licensee
23 pursuant to this Law.
24     (d) The Director or his or her designee shall have the
25 power to issue subpoenas, administer oaths, and examine under
26 oath any person as to any matter pertinent to the examination.



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1 Upon the failure or refusal of a person to obey a subpoena, the
2 Director may petition a court of competent jurisdiction, and,
3 upon proper showing, the court may enter an order compelling
4 the witness to appear and testify or produce documentary
5 evidence.
6     (e) When making an examination under this Law, the Director
7 may retain attorneys, appraisers, independent actuaries,
8 independent certified public accountants, or other
9 professionals and specialists as examiners. The costs of
10 retaining the examiners, including their work, travel, and
11 living expenses shall be borne by the licensee that is the
12 subject of the examination.
13     (215 ILCS 5/512-12 new)
14     Sec. 512-12. Fines and penalties. In addition to or instead
15 of any applicable denial, suspension, or revocation of a
16 license issued under this Law, a licensee may, after a hearing,
17 be subject to a civil penalty of up to $50,000 for each cause
18 of denial, suspension, or revocation.
19     Any licensee or other person who willfully or repeatedly
20 fails to observe or who otherwise violates any of the
21 provisions of this Law or this Code or any rule adopted or
22 final order entered thereunder shall, by civil penalty, forfeit
23 to the Division a sum not to exceed $5,000. Each day during
24 which a violation occurs constitutes a separate offense.".