Illinois General Assembly - Full Text of SB2008
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Full Text of SB2008  102nd General Assembly




State of Illinois
2021 and 2022


Introduced 2/26/2021, by Sen. David Koehler


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    Amends the Illinois Insurance Code. Provides that if a generic equivalent for a brand name drug is approved by the federal Food and Drug Administration, plans that provide coverage for prescription drugs through the use of a drug formulary that are amended, delivered, issued, or renewed in the State on or after January 1, 2022 shall comply with specified requirements. Provides that the Department of Insurance may adopt rules to implement provisions concerning notice of change of drug formulary. In provisions concerning a contract between a health insurer and a pharmacy benefit manager, provides that a pharmacy benefit manager must update and publish maximum allowable cost pricing information according to specified requirements, must provide a reasonable administrative appeal procedure to allow pharmacies to challenge maximum allowable costs, and must comply with specified requirements if an appeal is denied. Sets forth provisions concerning pharmacy benefit manager contracts; specified requirements that a pharmacy benefit manager shall comply with; specified requirements that an auditing entity shall comply with when conducting a pharmacy audit; and specified requirements concerning pharmacy network access standards. Provides that a violation of specified provisions is an unfair method of competition and unfair and deceptive act or practice in the business of insurance. Sets forth provisions concerning applicability of the Pharmacy Benefit Managers Article of the Illinois Insurance Code, and provisions concerning fiduciary responsibility of a pharmacy benefit manager. Defines terms. Makes other changes. Amends the Illinois Public Aid Code. Sets forth provisions concerning reimbursement of professional dispensing fees and acquisition costs for pharmacy providers.

LRB102 17298 BMS 22782 b






SB2008LRB102 17298 BMS 22782 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, 424, and 513b1 and by adding
6Sections 513b1.1 and 513b1.3 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, including a
12biological product.
13    "Formulary" means a list of prescription drugs that is
14developed by clinical and pharmacy experts and represents the
15carrier's medically appropriate and cost-effective
16prescription drugs approved for use.
17    "Generic drug" means a prescription drug, whether
18identified by its chemical, proprietary, or nonproprietary
19name, that is not a brand name drug and is therapeutically
20equivalent to a brand name drug in dosage, safety, strength,
21method of consumption, quality, performance, and intended use.
22"Generic drug" includes a biosimilar product.
23    (b) Insurance companies that transact the kinds of



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1insurance authorized under Class 1(b) or Class 2(a) of Section
24 of this Code and provide coverage for prescription drugs
3through the use of a drug formulary must notify insureds of any
4change in the formulary. A company may comply with this
5Section by posting changes in the formulary on its website.
6    (c) If a generic equivalent for a brand name drug is
7approved by the federal Food and Drug Administration,
8insurance companies with plans that provide coverage for
9prescription drugs through the use of a drug formulary that
10are amended, delivered, issued, or renewed in this State on or
11after January 1, 2022 shall:
12        (1) immediately substitute the brand name drug with
13    the generic equivalent; or
14        (2) move the brand name drug to a formulary tier that
15    reduces an enrollee's cost.
16    (d) The Department of Insurance may adopt rules to
17implement this Section.
18(Source: P.A. 92-440, eff. 8-17-01; 92-651, eff. 7-11-02.)
19    (215 ILCS 5/424)  (from Ch. 73, par. 1031)
20    Sec. 424. Unfair methods of competition and unfair or
21deceptive acts or practices defined. The following are hereby
22defined as unfair methods of competition and unfair and
23deceptive acts or practices in the business of insurance:
24        (1) The commission by any person of any one or more of
25    the acts defined or prohibited by Sections 134, 143.24c,



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1    147, 148, 149, 151, 155.22, 155.22a, 155.42, 236, 237,
2    364, and 469, and 513b1 of this Code.
3        (2) Entering into any agreement to commit, or by any
4    concerted action committing, any act of boycott, coercion
5    or intimidation resulting in or tending to result in
6    unreasonable restraint of, or monopoly in, the business of
7    insurance.
8        (3) Making or permitting, in the case of insurance of
9    the types enumerated in Classes 1, 2, and 3 of Section 4,
10    any unfair discrimination between individuals or risks of
11    the same class or of essentially the same hazard and
12    expense element because of the race, color, religion, or
13    national origin of such insurance risks or applicants. The
14    application of this Article to the types of insurance
15    enumerated in Class 1 of Section 4 shall in no way limit,
16    reduce, or impair the protections and remedies already
17    provided for by Sections 236 and 364 of this Code or any
18    other provision of this Code.
19        (4) Engaging in any of the acts or practices defined
20    in or prohibited by Sections 154.5 through 154.8 of this
21    Code.
22        (5) Making or charging any rate for insurance against
23    losses arising from the use or ownership of a motor
24    vehicle which requires a higher premium of any person by
25    reason of his physical disability, race, color, religion,
26    or national origin.



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1        (6) Failing to meet any requirement of the Unclaimed
2    Life Insurance Benefits Act with such frequency as to
3    constitute a general business practice.
4(Source: P.A. 99-143, eff. 7-27-15; 99-893, eff. 1-1-17.)
5    (215 ILCS 5/513b1)
6    Sec. 513b1. Pharmacy benefit manager contracts.
7    (a) As used in this Section:
8    "Audit" means any physical on-site, remote electronic, or
9concurrent review of a pharmacist service submitted to the
10pharmacy benefit manager or pharmacy benefit manager affiliate
11by a pharmacist or pharmacy for payment.
12    "Auditing entity" means a person or company that performs
13a pharmacy audit.
14    "Biological product" has the meaning ascribed to that term
15in Section 19.5 of the Pharmacy Practice Act.
16    "Business day" means any day of the week excluding
17Saturday, Sunday, and any legal holiday, as specified in
18Section 17 of the Promissory Note and Bank Holiday Act.
19    "Claims processing services" means the administrative
20services performed in connection with the processing and
21adjudicating of claims relating to pharmacist services that
23        (1) receiving payments for pharmacist services; or
24        (2) making payments to a pharmacist or pharmacy for
25    pharmacist services.



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1    "Covered entity" has the meaning given to that term under
2the federal Health Insurance Portability and Accountability
3Act of 1996, as specified in 45 CFR 160.103.
4    "Covered person" means a member, policyholder, subscriber,
5enrollee, beneficiary, dependent, or other individual
6participating in a health benefit plan.
7    "Extrapolation" means the practice of inferring a
8frequency of dollar amount of overpayments, underpayments,
9nonvalid claims, or other errors on any portion of claims
10submitted, based on the frequency of dollar amount of
11overpayments, underpayments, nonvalid claims, or other errors
12actually measured in a sample of claims.
13    "Health benefit plan" means a policy, contract,
14certificate, or agreement entered into, offered, or issued by
15a health carrier to provide, deliver, arrange for, pay for, or
16reimburse any of the costs of physical, mental, or behavioral
17health care services.
18    "Health carrier" means an entity subject to the insurance
19laws and rules of this State or subject to the jurisdiction of
20the Director that contracts or offers to contract or enters
21into an agreement to provide, deliver, arrange for, pay for,
22or reimburse any of the costs of health care services,
23including a sickness and accident insurance company, a health
24insurance company, a health maintenance organization, a
25hospital and health service corporation, or any other entity
26providing a plan of health insurance, health benefits, or



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1health care services.
2    "Maximum allowable cost" means any listing of
3pharmaceutical products or method for calculating
4reimbursement amounts used by a pharmacy benefit manager,
5directly or indirectly, setting the maximum allowable cost on
6which reimbursement payment to a pharmacy or pharmacist may be
7based for dispensing a prescription pharmaceutical product and
8includes, without limitation: the maximum amount that a
9pharmacy benefit manager will reimburse a pharmacy for the
10cost of a drug.
11        (1) average acquisition cost, including national
12    average drug acquisition cost;
13        (2) average manufacturer price;
14        (3) average wholesale price;
15        (4) brand effective rate or generic effective rate;
16        (5) discount indexing;
17        (6) federal upper limits;
18        (7) wholesale acquisition cost; or
19        (8) any other term that a pharmacy benefit manager or
20    a third-party payer may use to establish reimbursement
21    rates to a pharmacist or pharmacy for pharmaceutical
22    products.
23    "Maximum allowable cost list" means a list of drugs for
24which a maximum allowable cost has been established by a
25pharmacy benefit manager.
26    "Misfill" means a prescription that was not dispensed; a



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1prescription that was dispensed but was an incorrect dose,
2amount, or type of medication; a prescription that was
3dispensed to the wrong person; a prescription in which the
4prescriber denied the authorization request; or a prescription
5in which an additional dispensing fee was charged.
6    "Other prescription drug or device services" means
7services other than claims processing services, provided
8directly or indirectly, whether in connection with or separate
9from claims processing services, including, but not limited
11        (1) negotiating rebates, discounts, or other financial
12    incentives and arrangements with drug companies;
13        (2) disbursing or distributing rebates;
14        (3) managing or participating in incentive programs or
15    arrangements for pharmacist services;
16        (4) negotiating or entering into contractual
17    arrangements with pharmacists or pharmacies;
18        (5) developing and maintaining formularies;
19        (6) designing prescription benefit programs; or
20        (7) advertising or promoting services.
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. "Pharmacy benefit
26manager" does not include:



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1        (1) a health care facility licensed in this State;
2        (2) a health care professional licensed in this State;
3    or
4        (3) a consultant who only provides advice as to the
5    selection or performance of a pharmacy benefit manager.
6    "Pharmacy benefit manager affiliate" means a pharmacy or
7pharmacist that directly or indirectly, through one or more
8intermediaries, owns or controls, is owned or controlled by,
9or is under common ownership or control with a pharmacy
10benefit manager.
11    "Pharmaceutical wholesaler" means a person or entity that
12sells and distributes, directly or indirectly, prescription
13pharmaceutical products, including, without limitation, brand
14name, generic, and over-the-counter pharmaceuticals, and that
15offers regular or private delivery to a pharmacy.
16    "Pharmaceutical product" means a generic drug, brand name
17drug, biologic, or other prescription drug, vaccine, or
19    "Pharmacist" has the meaning given to that term in the
20Pharmacy Practice Act.
21    "Pharmacist services" means products, goods, and services
22or any combination of products, goods, and services, provided
23as a part of the practice of pharmacy. "Pharmacist services"
24includes "pharmacist care" as defined in the Pharmacy Practice
26    "Pharmacy" has the meaning given to that term in the



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1Pharmacy Practice Act.
2    "Pharmacy acquisition cost" means the amount that a
3pharmaceutical wholesaler charges for a pharmaceutical product
4as listed on the pharmacy's billing invoice.
5    "Pharmacy audit" means an audit conducted of any records
6of a pharmacy for prescriptions dispensed or non-proprietary
7drugs or pharmacist services provided by a pharmacy or
8pharmacist to a covered person.
9    "Pharmacy record" means any record stored electronically
10or as a hard copy by a pharmacy that relates to the provision
11of a prescription or pharmacy services or other component of
12pharmacist care that is included in the practice of pharmacy.
13    "Pharmacy services administrative organization" means an
14entity operating within this State that contracts with
15independent pharmacies to conduct business on their behalf
16with third-party payers.
17    "Prescription" has the meaning given to the term in the
18Pharmacy Practice Act.
19    "Refer" means:
20        (1) ordering a covered person to a pharmacy either
21    orally or in writing, including online messaging;
22        (2) offering or implementing plan designs that require
23    covered persons to utilize a pharmacy benefit manager
24    affiliate or that increase plan or patient costs,
25    including requiring covered persons to pay the full cost
26    for a prescription when covered persons choose not to use



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1    a pharmacy benefit manager affiliate; or
2        (3) using person-specific advertising, marketing,
3    direct written, electronic, or verbal communication,
4    promotion, or other solicitation of a pharmacy by an
5    affiliate or pharmacy benefit manager as a result of an
6    arrangement or agreement with the pharmacy's affiliate.
7    "Retail price" means the price an individual without
8prescription drug coverage would pay at a retail pharmacy, not
9including a pharmacist dispensing fee.
10    "Third-party payer" means any entity involved in the
11financing of a pharmacy benefit plan or program other than the
12patient, health care provider, or sponsor of a plan subject to
13regulation under Medicare Part D, 42 U.S.C. 1395w–101, et al.
14    (b) A contract between a health insurer and a pharmacy
15benefit manager must require that the pharmacy benefit
17        (1) Update and publish maximum allowable cost pricing
18    information at least every 7 calendar days and at least 7
19    calendar days from an increase of 10% or more in the
20    pharmacy acquisition cost from 60% or more of the
21    pharmaceutical wholesalers doing business in the State or
22    a change in the methodology on which the maximum allowable
23    cost list is based or in the value of a variable involved
24    in the methodology.
25        (2) Maintain a process that will, in a timely manner,
26    eliminate drugs from maximum allowable cost lists or



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1    modify drug prices to remain consistent with changes in
2    pricing data used in formulating maximum allowable cost
3    prices and product availability.
4        (3) Provide access to its maximum allowable cost list
5    to each pharmacy or pharmacy services administrative
6    organization subject to the maximum allowable cost list.
7    Access may include a real-time pharmacy website portal to
8    be able to view the maximum allowable cost list. As used in
9    this Section, "pharmacy services administrative
10    organization" means an entity operating within the State
11    that contracts with independent pharmacies to conduct
12    business on their behalf with third-party payers.
13        (3.5) A pharmacy services administrative organization
14    may provide administrative services to pharmacies and
15    negotiate and enter into contracts with third-party payers
16    or pharmacy benefit managers on behalf of pharmacies.
17        (4) Provide a reasonable administrative appeal
18    procedure to allow contracted pharmacies to challenge
19    maximum allowable costs and reimbursements made under a
20    maximum allowable cost for a specific pharmaceutical
21    product or pharmaceutical products as: Provide a process
22    by which a contracted pharmacy can appeal the provider's
23    reimbursement for a drug subject to maximum allowable cost
24    pricing.
25            (i) not meeting the requirements of this Section;
26        or



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1            (ii) being below the pharmacy acquisition cost.
2        The appeals process must, at a minimum, include the
3    following:
4            (A) A requirement that a contracted pharmacy has
5        14 calendar days after the applicable fill date to
6        appeal a maximum allowable cost if the reimbursement
7        for the drug is less than the net amount that the
8        network provider paid to the supplier of the drug.
9            (B) A requirement that a pharmacy benefit manager
10        must respond to a challenge within 14 calendar days of
11        the contracted pharmacy making the claim for which the
12        appeal has been submitted.
13            (C) An up-to-date and active A telephone number,
14        and e-mail address, and or website to network
15        providers, at which the provider can contact the
16        pharmacy benefit manager to process and submit an
17        appeal.
18            (D) A requirement that, if an appeal is denied,
19        the pharmacy benefit manager must provide the reason
20        for the denial and the name and the national drug code
21        number from national or regional wholesalers operating
22        in Illinois that have the pharmaceutical product
23        currently in stock at a price below the maximum
24        allowable cost list. If the national drug code number
25        provided by the pharmacy benefit manager is not
26        available below the pharmacy acquisition cost from the



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1        pharmaceutical wholesaler from whom the pharmacy or
2        pharmacist purchases the majority of prescription
3        pharmaceutical products for resale, then the pharmacy
4        benefit manager shall adjust the maximum allowable
5        cost list above the challenging pharmacy's pharmacy
6        acquisition cost and permit the pharmacy to reverse
7        and rebill each claim affected by the inability to
8        procure the pharmaceutical product at a cost that is
9        equal to or less than the previously challenged
10        maximum allowable cost.
11            (E) A requirement that, if an appeal is sustained,
12        the pharmacy benefit manager must permit the
13        challenging pharmacy or pharmacist to reverse and
14        rebill the claim in question make an adjustment in the
15        drug price effective the date the challenge is
16        resolved and make the adjustment applicable to all
17        similarly situated network pharmacy providers, as
18        determined by the managed care organization or
19        pharmacy benefit manager.
20        (5) Allow a plan sponsor contracting with a pharmacy
21    benefit manager an annual right to audit compliance with
22    the terms of the contract by the pharmacy benefit manager,
23    including, but not limited to, full disclosure of any and
24    all rebate amounts secured, whether product specific or
25    generalized rebates, that were provided to the pharmacy
26    benefit manager by a pharmaceutical manufacturer.



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1        (6) Allow a plan sponsor contracting with a pharmacy
2    benefit manager to request that the pharmacy benefit
3    manager disclose the actual amounts paid by the pharmacy
4    benefit manager to the pharmacy.
5        (7) Provide notice to the party contracting with the
6    pharmacy benefit manager of any consideration that the
7    pharmacy benefit manager receives from the manufacturer
8    for dispense as written prescriptions once a generic or
9    biologically similar product becomes available.
10    (c) In order to place a particular prescription drug on a
11maximum allowable cost list, the pharmacy benefit manager
12must, at a minimum, ensure that:
13        (1) if the drug is a generically equivalent drug, it
14    is listed as therapeutically equivalent and
15    pharmaceutically equivalent "A" or "B" rated in the United
16    States Food and Drug Administration's most recent version
17    of the "Orange Book" or "Green Book" or have an NR or NA
18    rating by Medi-Span, Gold Standard, or a similar rating by
19    a nationally recognized reference;
20        (2) the drug is available for purchase by each
21    pharmacy in the State from national or regional
22    wholesalers operating in Illinois; and
23        (3) the drug is not obsolete.
24    (d) A pharmacy benefit manager is prohibited from limiting
25a pharmacist's ability to disclose whether the cost-sharing
26obligation exceeds the retail price for a covered prescription



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1drug, and the availability of a more affordable alternative
2drug, if one is available in accordance with Section 42 of the
3Pharmacy Practice Act.
4    (e) A health insurer or pharmacy benefit manager shall not
5require an insured to make a payment for a prescription drug at
6the point of sale in an amount that exceeds the lesser of:
7        (1) the applicable cost-sharing amount; or
8        (2) the retail price of the drug in the absence of
9    prescription drug coverage.
10    (f) In any participation contracts between a pharmacy
11benefit manager and pharmacists or pharmacies providing
12prescription drug coverage for health benefit plans, no
13pharmacy or pharmacist may be prohibited, restricted, or
14penalized in any way from disclosing to any covered person any
15health care information that the pharmacy or pharmacist deems
16appropriate regarding:
17        (1) the nature of treatment, risks, or alternatives
18    thereto;
19        (2) the availability of alternative therapies,
20    consultations, or tests;
21        (3) the decision of utilization reviewers or similar
22    persons to authorize or deny services;
23        (4) the process that is used to authorize or deny
24    health care services or benefits; or
25        (5) information on financial incentives and structures
26    used by the insurer.



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1    (g) A pharmacy benefit manager may not prohibit a pharmacy
2or pharmacist from discussing information regarding the total
3cost for pharmacist services for a prescription drug or from
4selling a more affordable alternative to the covered person if
5a more affordable alternative is available.
6    (h) A pharmacy benefit manager contract with a
7participating pharmacist or pharmacy may not prohibit,
8restrict, or limit disclosure of information to the Director,
9law enforcement, or State or federal governmental officials
11        (1) the recipient of the information represents that
12    it has the authority, to the extent provided by State or
13    federal law, to maintain proprietary information as
14    confidential; and
15        (2) before disclosure of information designated as
16    confidential the pharmacist or pharmacy:
17            (A) marks as confidential any document in which
18        the information appears; or
19            (B) requests confidential treatment for any oral
20        communication of the information.
21    (i) A pharmacy benefit manager may not terminate the
22contract of or penalize a pharmacist or pharmacy due to a
23pharmacist or pharmacy:
24        (1) disclosing information about pharmacy benefit
25    manager practices, except for information determined to be
26    a trade secret as determined by State law or the Director;



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1    or
2        (2) sharing any portion of the pharmacy benefit
3    manager contract with the Director pursuant to a complaint
4    or a query regarding whether the contract is in compliance
5    with this Article.
6    (j) A pharmacy benefit manager shall not prohibit a
7pharmacist or pharmacy from or indirectly punish a pharmacist
8or pharmacy for making any written or oral statement to any
9State, county, or municipal official or before any State,
10county, or municipal committee, body, or proceeding.
11    (k) A pharmacy benefit manager may not require a covered
12person purchasing a covered prescription drug to pay an amount
13greater than the lesser of the covered person's cost-sharing
14amount under the terms of the health benefit plan or the amount
15the covered person would pay for the drug if the covered person
16were paying the cash price. Any amount paid by a covered person
17under this subsection shall be attributable toward any
18deductible or, to the extent consistent with Section 2707 of
19the Public Health Service Act, the annual out-of-pocket
20maximums under the covered person's health benefit plan.
21    (l) A pharmacy benefit manager shall not reimburse a
22pharmacy or pharmacist in this State an amount less than the
23amount that the pharmacy benefit manager reimburses a pharmacy
24benefit manager affiliate for providing the same
25pharmaceutical product. The amount shall be calculated on a
26per unit basis based on the same generic product identifier or



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1generic code number. The amount shall not be less than the
2current national average drug acquisition cost listing for the
3same pharmaceutical product.
4    (m) A pharmacy or pharmacist may decline to provide a
5pharmaceutical product to a patient or pharmacy benefit
6manager if, as a result of a maximum allowable cost list, a
7pharmacy or pharmacist is to be paid less than the pharmacy
8acquisition cost of the pharmacy providing the pharmaceutical
9product. If the pharmacy or pharmacist is being paid less than
10the pharmacy acquisition cost for providing the pharmaceutical
11product, the pharmacist, using their professional and clinical
12judgment, may dispense the pharmaceutical product to the
13patient to ensure continuity of treatment and delivery of
14patient care. The pharmacy or pharmacist shall report the
15affected prescription claims to the Department. The Department
16shall create a website portal and email address for pharmacies
17and pharmacists to submit information about affected
18prescription claims. The Department shall contact the pharmacy
19benefit manager within 72 hours after notification to require
20compliance with this Section. A report of claims submitted to
21the Department shall be provided to the Office of the Attorney
22General for further investigation, if necessary.
23    (n) A pharmacy benefit manager shall pay a pharmacy a
24professional dispensing fee at a rate not less than the
25fee-for-service rate paid under the State's Medical Assistance
26Program established under Article V of the Illinois Public Aid



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1Code for each prescription pharmaceutical product that is
2dispensed (on a per unit basis based on the same generic
3product identifier or generic code number) to the patient by
4the pharmacy. This dispensing fee shall be in addition to the
5amount that the pharmacy benefit manager reimburses a
6pharmacy, consistent with the provisions of this Article, for
7the cost of the pharmaceutical product that the pharmacy
8dispenses to the patient.
9    (o) A pharmacy benefit manager shall not assess, charge,
10or collect any form of remuneration that passes from a
11pharmacy or pharmacist to the pharmacy benefit manager,
12including, but not limited to, claim-processing fees,
13performance-based fees, network-participation fees, or
14accreditation fees.
15    (p) A pharmacy benefit manager shall not directly or
16indirectly deny or reduce a claim after the claim has been
17adjudicated, unless one of the following applies:
18        (1) the original claim was submitted fraudulently; or
19        (2) the original claim payment was incorrect because
20    the pharmacy or pharmacist had already been paid for the
21    pharmaceutical product.
22    (q) A pharmacy benefit manager shall not condition
23payment, reimbursement, or network participation on any type
24of accreditation, certification, or credentialing standard
25beyond those required by the State Board of Pharmacy or
26applicable State or federal law.



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1    (r) A pharmacy benefit manager shall not prohibit or
2otherwise restrict a pharmacist or pharmacy from offering
3prescription delivery services to any covered person.
4    (s) A pharmacy benefit manager shall not require any
5additional requirement for a prescription claim that is more
6restrictive than the standards established under the Illinois
7Food, Drug and Cosmetic Act; the Pharmacy Practice Act; or the
8Illinois Controlled Substances Act.
9    (t) A pharmacy benefit manager shall allow participants
10and beneficiaries of the pharmacy benefit plans and programs
11that the pharmacy benefit manager serves to utilize any
12pharmacy within the State that is licensed to dispense the
13prescription pharmaceutical product that the participant or
14beneficiary seeks to fill, if the pharmacy is willing to
15accept the same terms and conditions that the pharmacy benefit
16manager has established for at least one of the networks of
17pharmacies that the pharmacy benefit manager has established
18to serve patients within the State.
19    (u) A pharmacy benefit manager shall not:
20        (1) prohibit or limit any person who is a participant
21    or beneficiary of the policy or plan from selecting a
22    pharmacy or pharmacist of his or her choice who has agreed
23    to participate in the plan according to the terms offered
24    by the insurer;
25        (2) deny a pharmacy or pharmacist the right to
26    participate as a contract provider under the policy or



SB2008- 21 -LRB102 17298 BMS 22782 b

1    plan if the pharmacy or pharmacist agrees to provide
2    pharmacy services, including, but not limited to,
3    prescription drugs, that meet the terms and requirements
4    set forth by the insurer under the policy or plan and
5    agrees to the terms of reimbursement set forth by the
6    insurer;
7        (3) impose upon a beneficiary of pharmacy services
8    under a health benefit plan any copayment, fee, or any
9    other condition that is not equally imposed upon all
10    beneficiaries in the same benefit category, class, or
11    copayment level under the health benefit plan when
12    receiving services from a contract provider;
13        (4) impose a monetary advantage, incentive, or penalty
14    under a health benefit plan that would affect or influence
15    a beneficiary's choice among those pharmacies or
16    pharmacists who have agreed to participate in the plan
17    according to the terms offered by the insurer;
18        (5) require a beneficiary, as a condition of payment
19    or reimbursement, to purchase pharmacy services, including
20    prescription drugs, exclusively through a mail-order
21    pharmacy or pharmacy benefit manager affiliate; or
22        (6) impose upon a beneficiary any copayment, amount of
23    reimbursement, number of days of a drug supply for which
24    reimbursement will be allowed, or any other payment,
25    restriction, limitation, or condition relating to
26    purchasing pharmacy services from any pharmacy, including



SB2008- 22 -LRB102 17298 BMS 22782 b

1    prescription drugs, that is more costly or more
2    restrictive than that which would be imposed upon the
3    beneficiary if such services were purchased from a
4    mail-order pharmacy, a pharmacy benefit manager affiliate,
5    or any other pharmacy that is willing to provide the same
6    services or products for the same cost and copayment as
7    any mail-order service.
8    (v) A pharmacy benefit manager or a pharmacy benefit
9manager affiliate shall not:
10        (1) refer a covered person to a mail-order pharmacy or
11    any other pharmacy benefit manager affiliate; or
12        (2) utilize a covered person's pharmacy service data
13    collected pursuant to the provision of claims processing
14    services for the purpose referring the covered person to a
15    mail-order pharmacy or any other pharmacy benefit manager
16    affiliate.
17    (w) A pharmacy benefit manager shall not prohibit a
18pharmacy from participating in any given network of pharmacies
19within the State if the pharmacy is licensed by the Department
20of Financial and Professional Regulation and willing to accept
21the same terms and conditions that the pharmacy benefit
22manager has established for other pharmacies participating
23within the network that the pharmacy wishes to join.
24    (x) A pharmacy benefit manager shall not require
25participation in additional networks for a pharmacy to enroll
26in an individual network.



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1    (y) A pharmacy benefit manager shall not charge a
2participant or beneficiary of a pharmacy benefits plan or
3program that the pharmacy benefit manager serves a different
4copayment obligation or additional fee for using any pharmacy
5within a given network of pharmacies established by the
6pharmacy benefit manager to serve patients within the State.
7    (z) Notwithstanding any other law, when conducting a
8pharmacy audit, an auditing entity shall:
9        (1) not conduct an on-site audit of a pharmacy at any
10    time during the first 3 business days of a month or the
11    first 2 weeks and final 2 weeks of the calendar year or
12    during a declared State or federal public health
13    emergency;
14        (2) notify the pharmacy or its contracting agent no
15    later than 30 days before the date of initial on-site
16    audit; the notification to the pharmacy or its contracting
17    agent shall be in writing and delivered either:
18            (A) by mail or common carrier, return receipt
19        requested; or
20            (B) electronically with electronic receipt
21        confirmation, addressed to the supervising pharmacist
22        of record and pharmacy corporate office, if
23        applicable, at least 30 days before the date of an
24        initial on-site audit;
25        (3) limit the audit period to 24 months after the date
26    a claim is submitted to or adjudicated by the pharmacy



SB2008- 24 -LRB102 17298 BMS 22782 b

1    benefit manager;
2        (4) include in the written advance notice of an
3    on-site audit the list of specific prescription numbers to
4    be included in the audit that may or may not include the
5    final 2 digits of the prescription numbers;
6        (5) use the written and verifiable records of a
7    hospital, physician, or other authorized practitioner that
8    are transmitted by any means of communication to validate
9    the pharmacy records in accordance with State and federal
10    law;
11        (6) limit the number of prescriptions audited to no
12    more than 100 randomly selected in a 12-month period and
13    no more than one on-site audit per quarter of the calendar
14    year, except in cases of fraud;
15        (7) provide the pharmacy or its contracting agent with
16    a copy of the preliminary audit report within 45 days
17    after the conclusion of the audit;
18        (8) be allowed to conduct a follow-up audit on site if
19    a remote or desk audit reveals the necessity for a review
20    of additional claims;
21        (9) accept invoice audits as validation invoices from
22    any wholesaler registered with the Department of Financial
23    and Professional Regulation from which the pharmacy has
24    purchased prescription drugs or, in the case of durable
25    medical equipment or sickroom supplies, invoices from an
26    authorized distributor other than a wholesaler;



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1        (10) provide the pharmacy or its contracting agent
2    with the ability to provide documentation to address a
3    discrepancy or audit finding if the documentation is
4    received by the pharmacy benefit manager no later than the
5    45th day after the preliminary audit report was provided
6    to the pharmacy or its contracting agent; the pharmacy
7    benefit manager shall consider a reasonable request from
8    the pharmacy for an extension of time to submit
9    documentation to address or correct any findings in the
10    report;
11        (11) be required to provide the pharmacy or its
12    contracting agent with the final audit report no later
13    than 60 days after the initial audit report was provided
14    to the pharmacy or its contracting agent;
15        (12) conduct the audit in consultation with a
16    pharmacist if the audit involves clinical or professional
17    judgment;
18        (13) not chargeback, recoup, or collect penalties from
19    a pharmacy until the time period to file an appeal of the
20    final pharmacy audit report has passed or the appeals
21    process has been exhausted, whichever is later, unless the
22    identified discrepancy is expected to exceed $25,000, in
23    which case the auditing entity may withhold future
24    payments in excess of that amount until the final
25    resolution of the audit;
26        (14) not compensate the employee or contractor



SB2008- 26 -LRB102 17298 BMS 22782 b

1    conducting the audit based on a percentage of the amount
2    claimed or recouped pursuant to the audit;
3        (15) not use extrapolation to calculate penalties or
4    amounts to be charged back or recouped unless otherwise
5    required by federal law or regulation; any amount to be
6    charged back or recouped due to overpayment may not exceed
7    the amount the pharmacy was overpaid;
8        (16) not include dispensing fees in the calculation of
9    overpayments unless a prescription is considered a
10    misfill; or
11        (17) conduct a pharmacy audit under the same standards
12    and parameters as conducted for other similarly situated
13    pharmacies audited by the auditing entity.
14    (aa) Except as otherwise provided by State or federal law,
15an auditing entity conducting a pharmacy audit may have access
16to a pharmacy's previous audit report only if the report was
17prepared by that auditing entity.
18    (bb) Information collected during a pharmacy audit shall
19be confidential by law, except that the auditing entity
20conducting the pharmacy audit may share the information with
21the covered entity for which a pharmacy audit is being
22conducted and with any regulatory agencies and law enforcement
23agencies as required by law.
24    (cc) A pharmacy may not be subject to a chargeback or
25recoupment for a clerical or recordkeeping error in a required
26document or record, including a typographical error or



SB2008- 27 -LRB102 17298 BMS 22782 b

1computer error, unless the error resulted in overpayment to
2the pharmacy.
3    (dd) A pharmacy shall have the right to file a written
4appeal of a preliminary and final pharmacy audit report in
5accordance with the procedures established by the entity
6conducting the pharmacy audit.
7    (ee) No interest shall accrue for any party during the
8audit period, beginning with the notice of the pharmacy audit
9and ending with the conclusion of the appeals process.
10    (ff) A contract between a pharmacy or pharmacist and a
11pharmacy benefit manager must contain a provision allowing,
12during the course of a pharmacy audit conducted by or on behalf
13of a pharmacy benefit manager, a pharmacy or pharmacist to
14withdraw and resubmit a claim within 30 days after:
15        (1) the preliminary written audit report is delivered
16    if the pharmacy or pharmacist does not request an internal
17    appeal; or
18        (2) the conclusion of the internal audit appeals
19    process if the pharmacy or pharmacist requests an internal
20    audit appeal.
21    (gg) To the extent that an audit results in the
22identification of any clerical or recordkeeping errors, such
23as typographical errors, scrivener's errors, or computer
24errors, in a required document or record, the pharmacy shall
25not be subject to recoupment of funds by the pharmacy benefit
26manager unless the pharmacy benefit manager can provide proof



SB2008- 28 -LRB102 17298 BMS 22782 b

1of intent to commit fraud or such error results in actual
2financial harm to the pharmacy benefit manager, a health plan
3managed by the pharmacy benefit manager, or a consumer.
4    (hh) Any claim that was retroactively denied for a
5clerical error, typographical error, scrivener's error, or
6computer error shall be paid if the prescription was properly
7and correctly dispensed, unless a pattern of such errors
8exists, fraudulent billing is alleged, or the error results in
9actual financial loss to the entity. As used in this
10subsection, "clerical error" means an error that does not
11result in actual financial harm to the covered entity or
12consumer and does not include the dispensing of an incorrect
13dose, amount, or type of medication or dispensing a
14prescription drug to the wrong person.
15    (ii) For any claim that meets the definition of a clean
16claim or is deemed to not have violated the terms of the
17contract or the practice of pharmacy as described under the
18Pharmacy Practice Act, the pharmacy benefit manager shall pay
19the pharmacy 5% of the total claim amount to cover audit
20preparation costs and time taken away from pharmacy staff in
21providing patient care.
22    (jj) This Section shall not apply to:
23        (1) audits in which suspected fraudulent activity or
24    other intentional or willful misrepresentation is
25    evidenced by a physical review, review of claims data or
26    statements, or other investigative methods;



SB2008- 29 -LRB102 17298 BMS 22782 b

1        (2) audits of claims paid for by federally funded
2    programs; or
3        (3) concurrent reviews or desk audits that occur
4    within 3 business days after transmission of a claim and
5    where no chargeback or recoupment is demanded.
6    (kk) A violation of this Section shall be an unfair and
7deceptive act or practice under Section 424 and under the
8Consumer Fraud and Deceptive Business Practices Act. The
9Department may issue monetary fines upon the pharmacy benefit
10manager for violations of this Section and may place a
11pharmacy benefit manager registration on probation,
12suspension, or revocation.
13    (ll) A pharmacy benefit manager shall provide:
14        (1) a reasonably adequate and accessible pharmacy
15    benefit manager network for the provision of prescription
16    drugs for a health benefit plan that shall provide for
17    convenient patient access to pharmacies within a
18    reasonable distance from a patient's residence; and
19        (2) a pharmacy benefit manager network adequacy report
20    describing the pharmacy benefit manager network and the
21    pharmacy benefit manager network's accessibility in this
22    State in the time and manner required by rule issued by the
23    Department.
24    A mail-order pharmacy shall not be included in the
25calculations determining pharmacy benefit manager network



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1    (mm) A pharmacy benefit manager shall report to the
2Director on a quarterly basis for each health care insurer the
3following information:
4        (1) the aggregate amount of rebates received by the
5    pharmacy benefit manager;
6        (2) the aggregate amount of rebates distributed to the
7    appropriate health care insurer;
8        (3) the aggregate amount of rebates passed on to the
9    enrollees of each health care insurer at the point of sale
10    that reduced the enrollees' applicable deductible,
11    copayment, coinsurance, or other cost-sharing amount;
12        (4) the individual and aggregate amount paid by the
13    health care insurer to the pharmacy benefit manager for
14    pharmacist services itemized by pharmacy, by product, and
15    by goods and services; and
16        (5) the individual and aggregate amount a pharmacy
17    benefit manager paid for pharmacist services itemized by
18    pharmacy, by product, and by goods and services.
19    The report made to the Department required under this
20subsection is confidential and not subject to disclosure under
21the Freedom of Information Act.
22    (nn) A pharmacy benefit manager is prohibited from
23conducting spread pricing in this State.
24    (oo) A pharmacy benefit manager shall comply with the
25following retail pharmacy network access standards:
26        (1) at least 90% of covered individuals residing in an



SB2008- 31 -LRB102 17298 BMS 22782 b

1    urban service area live within 2 miles of a retail
2    pharmacy participating in the pharmacy benefit manager's
3    retail pharmacy network;
4        (2) at least 90% of covered individuals residing in an
5    urban service area live within 5 miles of a retail
6    pharmacy designated as a preferred participating pharmacy
7    in the pharmacy benefit manager's retail pharmacy network;
8        (3) at least 90% of covered individuals residing in a
9    suburban service area live within 5 miles of a retail
10    pharmacy participating in the pharmacy benefit manager's
11    retail pharmacy network;
12        (4) at least 90% of covered individuals residing in a
13    suburban service area live within 7 miles of a retail
14    pharmacy designated as a preferred participating pharmacy
15    in the pharmacy benefit manager's retail pharmacy network;
16        (5) at least 70% of covered individuals residing in a
17    rural service area live within 15 miles of a retail
18    pharmacy participating in the pharmacy benefit manager's
19    retail pharmacy network; and
20        (6) at least 70% of covered individuals residing in a
21    rural service area live within 18 miles of a retail
22    pharmacy designated as a preferred participating pharmacy
23    in the pharmacy benefit manager's retail pharmacy network.
24    Mail-order pharmacies shall not be used to meet access
25standards for retail pharmacy networks.
26    (pp) Pharmacy benefit managers shall not require patients



SB2008- 32 -LRB102 17298 BMS 22782 b

1to use pharmacies that are directly or indirectly owned by the
2pharmacy benefit manager, including all regular prescriptions,
3refills, or specialty drugs regardless of day supply.
4    (qq) Pharmacy benefit managers shall not in any manner on
5any material, including, but not limited to, mail and
6identifications cards, include the name of any pharmacy,
7hospital, or other providers unless it specifically lists all
8pharmacies, hospitals, and providers participating in the
9preferred and nonpreferred pharmacy and health networks.
10    (rr) A pharmacy licensed in or holding a nonresident
11pharmacy permit in Illinois shall be prohibited from:
12        (1) transferring or sharing records relative to
13    prescription information containing patient identifiable
14    and prescriber identifiable data to or from an affiliate
15    for any commercial purpose; however, nothing shall be
16    construed to prohibit the exchange of prescription
17    information between a pharmacy and its affiliate for the
18    limited purposes of pharmacy reimbursement, formulary
19    compliance, pharmacy care, public health activities
20    otherwise authorized by law, or utilization review by a
21    health care provider; or
22        (2) presenting a claim for payment to any individual,
23    third-party payer, affiliate, or other entity for a
24    service furnished pursuant to a referral from an affiliate
25    or other person licensed under this Article.
26    (ss) If a pharmacy licensed or holding a nonresident



SB2008- 33 -LRB102 17298 BMS 22782 b

1pharmacy permit in this State has an affiliate, it shall
2annually file with the Department a disclosure statement
3identifying all such affiliates.
4    (tt) This Section shall not be construed to prohibit a
5pharmacy from entering into an agreement with an affiliate to
6provide pharmacy care to patients if the pharmacy does not
7receive referrals in violation of subsection (rr) and the
8pharmacy provides the disclosure statement required in
9subsection (ss).
10    (uu) In addition to any other remedy provided by law, a
11violation of this Section by a pharmacy shall be grounds for
12disciplinary action by the Department.
13    (vv) A pharmacist who fills a prescription that violates
14subsection (rr) shall not be liable under this Section.
15    (ww) This Section shall not apply to:
16        (1) any hospital or related institution; or
17        (2) any referrals by an affiliate for pharmacy
18    services and prescriptions to patients in skilled nursing
19    facilities, intermediate care facilities, continuing care
20    retirement communities, home health agencies, or hospices.
21    (xx) A pharmacy benefit manager or health benefit plans is
22prohibited from transferring and sharing patient information
23with pharmacy benefit manager affiliates for purposes of
24steering or referring a patient toward using a specific
26    (yy) (f) This Section applies to contracts entered into or



SB2008- 34 -LRB102 17298 BMS 22782 b

1renewed on or after July 1, 2020.
2    (zz) (g) This Section applies to any group or individual
3policy of accident and health insurance or managed care plan
4that provides coverage for prescription drugs and that is
5amended, delivered, issued, or renewed on or after July 1,
7(Source: P.A. 101-452, eff. 1-1-20.)
8    (215 ILCS 5/513b1.1 new)
9    Sec. 513b1.1. Applicability.
10    (a) This Article applies to a contract or health benefit
11plan issued, renewed, recredentialed, amended, or extended on
12or after the effective date of this amendatory Act of the 102nd
13General Assembly, including any health carrier that performs
14claims processing or other prescription drug or device
15services through a third party.
16    (b) As a condition of licensure, any contract in existence
17on the date the pharmacy benefit manager receives its license
18to do business in this State shall comply with the
19requirements of this Article.
20    (c) Nothing in this Article is intended or shall be
21construed to conflict with existing federal law.
22    (215 ILCS 5/513b1.3 new)
23    Sec. 513b1.3. Fiduciary responsibility. A pharmacy benefit
24manager is a fiduciary to a health carrier and shall:



SB2008- 35 -LRB102 17298 BMS 22782 b

1        (1) discharge that duty in accordance with federal and
2    State law;
3        (2) notify the covered entity in writing of any
4    activity, policy, or practice of the pharmacy benefit
5    manager that directly or indirectly presents any conflict
6    of interest and inability to comply with the duties
7    imposed by this Section, but in no event does this
8    notification exempt the pharmacy benefit manager from
9    compliance with all other Sections of this Code; and
10        (3) disclose all direct or indirect payments related
11    to the dispensation of prescription drugs or classes or
12    brands of drugs to the covered entity.
13    Section 10. The Illinois Public Aid Code is amended by
14changing Sections 5-5.12 and 5-36 as follows:
15    (305 ILCS 5/5-5.12)  (from Ch. 23, par. 5-5.12)
16    Sec. 5-5.12. Pharmacy payments.
17    (a) Every request submitted by a pharmacy for
18reimbursement under this Article for prescription drugs
19provided to a recipient of aid under this Article shall
20include the name of the prescriber or an acceptable
21identification number as established by the Department of
22Healthcare and Family Services.
23    (b) Pharmacies providing prescription drugs under this
24Article shall be reimbursed at a rate which shall include a



SB2008- 36 -LRB102 17298 BMS 22782 b

1professional dispensing fee as determined by the Illinois
2Department of Healthcare and Family Services, plus the current
3acquisition cost of the prescription drug dispensed. The
4Illinois Department of Healthcare and Family Services shall
5update its information on the acquisition costs of all
6prescription drugs no less frequently than every 30 days. The
7Department of Healthcare and Family Services shall not
8reimburse a pharmacy or pharmacist in this State an amount
9less than the current national average drug acquisition cost
10listing for the pharmaceutical product. However, the Illinois
11Department may set the rate of reimbursement for the
12acquisition cost, by rule, at a percentage of the current
13average wholesale acquisition cost.
14    (b-5) The Department of Healthcare and Family Services
15shall pay a pharmacy or pharmacist a professional dispensing
16fee at a rate not less than the amount determined by a pharmacy
17profession-recognized national or state survey of pharmacies
18for each prescription pharmaceutical product that is dispensed
19(on a per unit basis based on the same generic product
20identifier or generic code number) to the patient by the
21pharmacy. This dispensing fee shall be in addition to the
22amount that the Department of Healthcare and Family Services
23reimburses a pharmacy for the cost of the pharmaceutical
24product that the pharmacy dispenses to the patient. If a
25vendor is utilized for conducting the survey or data analysis,
26the vendor may not be a wholly or partially owned or controlled



SB2008- 37 -LRB102 17298 BMS 22782 b

1subsidiary of a pharmacy benefit manager or managed care
3    (b-10) All Medicaid managed care organizations must
4reimburse pharmacy provider professional dispensing fees and
5acquisition costs at no less than the amounts established
6under the fee-for-service program whether the Medicaid managed
7care organization directly reimburses pharmacy providers or
8contracts with a pharmacy benefit manager to reimburse
9pharmacy providers. The reimbursement requirement specified in
10this subsection applies to all pharmacy services for persons
11receiving benefits under this Code, including services
12reimbursed under Section 5-36.
13    (c) (Blank).
14    (d) The Department shall review utilization of narcotic
15medications in the medical assistance program and impose
16utilization controls that protect against abuse.
17    (e) When making determinations as to which drugs shall be
18on a prior approval list, the Department shall include as part
19of the analysis for this determination, the degree to which a
20drug may affect individuals in different ways based on factors
21including the gender of the person taking the medication.
22    (f) The Department shall cooperate with the Department of
23Public Health and the Department of Human Services Division of
24Mental Health in identifying psychotropic medications that,
25when given in a particular form, manner, duration, or
26frequency (including "as needed") in a dosage, or in



SB2008- 38 -LRB102 17298 BMS 22782 b

1conjunction with other psychotropic medications to a nursing
2home resident or to a resident of a facility licensed under the
3ID/DD Community Care Act or the MC/DD Act, may constitute a
4chemical restraint or an "unnecessary drug" as defined by the
5Nursing Home Care Act or Titles XVIII and XIX of the Social
6Security Act and the implementing rules and regulations. The
7Department shall require prior approval for any such
8medication prescribed for a nursing home resident or to a
9resident of a facility licensed under the ID/DD Community Care
10Act or the MC/DD Act, that appears to be a chemical restraint
11or an unnecessary drug. The Department shall consult with the
12Department of Human Services Division of Mental Health in
13developing a protocol and criteria for deciding whether to
14grant such prior approval.
15    (g) The Department may by rule provide for reimbursement
16of the dispensing of a 90-day supply of a generic or brand
17name, non-narcotic maintenance medication in circumstances
18where it is cost effective.
19    (g-5) On and after July 1, 2012, the Department may
20require the dispensing of drugs to nursing home residents be
21in a 7-day supply or other amount less than a 31-day supply.
22The Department shall pay only one dispensing fee per 31-day
24    (h) Effective July 1, 2011, the Department shall
25discontinue coverage of select over-the-counter drugs,
26including analgesics and cough and cold and allergy



SB2008- 39 -LRB102 17298 BMS 22782 b

2    (h-5) On and after July 1, 2012, the Department shall
3impose utilization controls, including, but not limited to,
4prior approval on specialty drugs, oncolytic drugs, drugs for
5the treatment of HIV or AIDS, immunosuppressant drugs, and
6biological products in order to maximize savings on these
7drugs. The Department may adjust payment methodologies for
8non-pharmacy billed drugs in order to incentivize the
9selection of lower-cost drugs. For drugs for the treatment of
10AIDS, the Department shall take into consideration the
11potential for non-adherence by certain populations, and shall
12develop protocols with organizations or providers primarily
13serving those with HIV/AIDS, as long as such measures intend
14to maintain cost neutrality with other utilization management
15controls such as prior approval. For hemophilia, the
16Department shall develop a program of utilization review and
17control which may include, in the discretion of the
18Department, prior approvals. The Department may impose special
19standards on providers that dispense blood factors which shall
20include, in the discretion of the Department, staff training
21and education; patient outreach and education; case
22management; in-home patient assessments; assay management;
23maintenance of stock; emergency dispensing timeframes; data
24collection and reporting; dispensing of supplies related to
25blood factor infusions; cold chain management and packaging
26practices; care coordination; product recalls; and emergency



SB2008- 40 -LRB102 17298 BMS 22782 b

1clinical consultation. The Department may require patients to
2receive a comprehensive examination annually at an appropriate
3provider in order to be eligible to continue to receive blood
5    (i) On and after July 1, 2012, the Department shall reduce
6any rate of reimbursement for services or other payments or
7alter any methodologies authorized by this Code to reduce any
8rate of reimbursement for services or other payments in
9accordance with Section 5-5e.
10    (j) On and after July 1, 2012, the Department shall impose
11limitations on prescription drugs such that the Department
12shall not provide reimbursement for more than 4 prescriptions,
13including 3 brand name prescriptions, for distinct drugs in a
1430-day period, unless prior approval is received for all
15prescriptions in excess of the 4-prescription limit. Drugs in
16the following therapeutic classes shall not be subject to
17prior approval as a result of the 4-prescription limit:
18immunosuppressant drugs, oncolytic drugs, anti-retroviral
19drugs, and, on or after July 1, 2014, antipsychotic drugs. On
20or after July 1, 2014, the Department may exempt children with
21complex medical needs enrolled in a care coordination entity
22contracted with the Department to solely coordinate care for
23such children, if the Department determines that the entity
24has a comprehensive drug reconciliation program.
25    (k) No medication therapy management program implemented
26by the Department shall be contrary to the provisions of the



SB2008- 41 -LRB102 17298 BMS 22782 b

1Pharmacy Practice Act.
2    (l) Any provider enrolled with the Department that bills
3the Department for outpatient drugs and is eligible to enroll
4in the federal Drug Pricing Program under Section 340B of the
5federal Public Health Service Services Act shall enroll in
6that program. No entity participating in the federal Drug
7Pricing Program under Section 340B of the federal Public
8Health Service Services Act may exclude Medicaid from their
9participation in that program, although the Department may
10exclude entities defined in Section 1905(l)(2)(B) of the
11Social Security Act from this requirement.
12(Source: P.A. 98-463, eff. 8-16-13; 98-651, eff. 6-16-14;
1399-180, eff. 7-29-15; revised 9-2-20.)
14    (305 ILCS 5/5-36)
15    Sec. 5-36. Pharmacy benefits.
16    (a)(1) The Department may enter into a contract with a
17third party on a fee-for-service reimbursement model for the
18purpose of administering pharmacy benefits as provided in this
19Section for members not enrolled in a Medicaid managed care
20organization; however, these services shall be approved by the
21Department. The Department shall ensure coordination of care
22between the third-party administrator and managed care
23organizations as a consideration in any contracts established
24in accordance with this Section. Any managed care techniques,
25principles, or administration of benefits utilized in



SB2008- 42 -LRB102 17298 BMS 22782 b

1accordance with this subsection shall comply with State law.
2    (2) The following shall apply to contracts between
3entities contracting relating to the Department's third-party
4administrators and pharmacies:
5        (A) the Department shall approve any contract between
6    a third-party administrator and a pharmacy;
7        (B) the Department's third-party administrator shall
8    not change the terms of a contract between a third-party
9    administrator and a pharmacy without written approval by
10    the Department; and
11        (C) the Department's third-party administrator shall
12    not create, modify, implement, or indirectly establish any
13    fee on a pharmacy, pharmacist, or a recipient of medical
14    assistance without written approval by the Department.
15    (b) The provisions of this Section shall not apply to
16outpatient pharmacy services provided by a health care
17facility registered as a covered entity pursuant to 42 U.S.C.
18256b or any pharmacy owned by or contracted with the covered
19entity. A Medicaid managed care organization shall, either
20directly or through a pharmacy benefit manager, administer and
21reimburse outpatient pharmacy claims submitted by a health
22care facility registered as a covered entity pursuant to 42
23U.S.C. 256b, its owned pharmacies, and contracted pharmacies
24in accordance with the contractual agreements the Medicaid
25managed care organization or its pharmacy benefit manager has
26with such facilities and pharmacies. Any pharmacy benefit



SB2008- 43 -LRB102 17298 BMS 22782 b

1manager that contracts with a Medicaid managed care
2organization to administer and reimburse pharmacy claims as
3provided in this Section must be registered with the Director
4of Insurance in accordance with Section 513b2 of the Illinois
5Insurance Code.
6    (c) On at least an annual basis, the Director of the
7Department of Healthcare and Family Services shall submit a
8report beginning no later than one year after January 1, 2020
9(the effective date of Public Act 101-452) this amendatory Act
10of the 101st General Assembly that provides an update on any
11contract, contract issues, formulary, dispensing fees, and
12maximum allowable cost concerns regarding a third-party
13administrator and managed care. The requirement for reporting
14to the General Assembly shall be satisfied by filing copies of
15the report with the Speaker, the Minority Leader, and the
16Clerk of the House of Representatives and with the President,
17the Minority Leader, and the Secretary of the Senate. The
18Department shall take care that no proprietary information is
19included in the report required under this Section.
20    (d) A pharmacy benefit manager shall notify the Department
21in writing of any activity, policy, or practice of the
22pharmacy benefit manager that directly or indirectly presents
23a conflict of interest that interferes with the discharge of
24the pharmacy benefit manager's duty to a managed care
25organization to exercise its contractual duties. "Conflict of
26interest" shall be defined by rule by the Department.



SB2008- 44 -LRB102 17298 BMS 22782 b

1    (e) A pharmacy benefit manager shall, upon request,
2disclose to the Department the following information:
3        (1) whether the pharmacy benefit manager has a
4    contract, agreement, or other arrangement with a
5    pharmaceutical manufacturer to exclusively dispense or
6    provide a drug to a managed care organization's enrollees,
7    and the aggregate amounts of consideration of economic
8    benefits collected or received pursuant to that
9    arrangement;
10        (2) the percentage of claims payments made by the
11    pharmacy benefit manager to pharmacies owned, managed, or
12    controlled by the pharmacy benefit manager or any of the
13    pharmacy benefit manager's management companies, parent
14    companies, subsidiary companies, or jointly held
15    companies;
16        (3) the aggregate amount of the fees or assessments
17    imposed on, or collected from, pharmacy providers; and
18        (4) the average annualized percentage of revenue
19    collected by the pharmacy benefit manager as a result of
20    each contract it has executed with a managed care
21    organization contracted by the Department to provide
22    medical assistance benefits which is not paid by the
23    pharmacy benefit manager to pharmacy providers and
24    pharmaceutical manufacturers or labelers or in order to
25    perform administrative functions pursuant to its contracts
26    with managed care organizations.



SB2008- 45 -LRB102 17298 BMS 22782 b

1    (f) The information disclosed under subsection (e) shall
2include all retail, mail order, specialty, and compounded
3prescription products. All information made available to the
4Department under subsection (e) is confidential and not
5subject to disclosure under the Freedom of Information Act.
6All information made available to the Department under
7subsection (e) shall not be reported or distributed in any way
8that compromises its competitive, proprietary, or financial
9value. The information shall only be used by the Department to
10assess the contract, agreement, or other arrangements made
11between a pharmacy benefit manager and a pharmacy provider,
12pharmaceutical manufacturer or labeler, managed care
13organization, or other entity, as applicable.
14    (g) A pharmacy benefit manager shall disclose directly in
15writing to a pharmacy provider or pharmacy services
16administrative organization contracting with the pharmacy
17benefit manager of any material change to a contract provision
18that affects the terms of the reimbursement, the process for
19verifying benefits and eligibility, dispute resolution,
20procedures for verifying drugs included on the formulary, and
21contract termination at least 30 days prior to the date of the
22change to the provision. The terms of this subsection shall be
23deemed met if the pharmacy benefit manager posts the
24information on a website, viewable by the public. A pharmacy
25service administration organization shall notify all contract
26pharmacies of any material change, as described in this



SB2008- 46 -LRB102 17298 BMS 22782 b

1subsection, within 2 days of notification. As used in this
2Section, "pharmacy services administrative organization" means
3an entity operating within the State that contracts with
4independent pharmacies to conduct business on their behalf
5with third-party payers. A pharmacy services administrative
6organization may provide administrative services to pharmacies
7and negotiate and enter into contracts with third-party payers
8or pharmacy benefit managers on behalf of pharmacies.
9    (h) A pharmacy benefit manager shall not include the
10following in a contract with a pharmacy provider:
11        (1) a provision prohibiting the provider from
12    informing a patient of a less costly alternative to a
13    prescribed medication; or
14        (2) a provision that prohibits the provider from
15    dispensing a particular amount of a prescribed medication,
16    if the pharmacy benefit manager allows that amount to be
17    dispensed through a pharmacy owned or controlled by the
18    pharmacy benefit manager, unless the prescription drug is
19    subject to restricted distribution by the United States
20    Food and Drug Administration or requires special handling,
21    provider coordination, or patient education that cannot be
22    provided by a retail pharmacy.
23    (i) Nothing in this Section shall be construed to prohibit
24a pharmacy benefit manager from requiring the same
25reimbursement and terms and conditions for a pharmacy provider
26as for a pharmacy owned, controlled, or otherwise associated



SB2008- 47 -LRB102 17298 BMS 22782 b

1with the pharmacy benefit manager. Reimbursement must not be
2less than the dispensing fees and acquisition costs under the
3fee-for-service program as required under subsection (b-10) of
4Section 5-5.12.
5    (j) A pharmacy benefit manager shall establish and
6implement a process for the resolution of disputes arising out
7of this Section, which shall be approved by the Department.
8    (k) The Department shall adopt rules establishing
9reasonable dispensing fees for fee-for-service payments in
10accordance with guidance or guidelines from the federal
11Centers for Medicare and Medicaid Services.
12(Source: P.A. 101-452, eff. 1-1-20; revised 10-22-19.)



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2 Statutes amended in order of appearance
3    215 ILCS 5/155.37
4    215 ILCS 5/424from Ch. 73, par. 1031
5    215 ILCS 5/513b1
6    215 ILCS 5/513b1.1 new
7    215 ILCS 5/513b1.3 new
8    305 ILCS 5/5-5.12from Ch. 23, par. 5-5.12
9    305 ILCS 5/5-36