SB209 - Revises provisions relating to pharmacy benefit managers. (BDR 57-534)

S.B. 209 - *SB209* SENATE BILL NO. 209–SENATORS STONE, NGUYEN, STEINBECK, ELLISON, KRASNER; AND BUCK FEBRUARY 18, 2025 ____________ Referred to Committee on Commerce and Labor SUMMARY—Revises provisions relating to pharmacy benefit managers. (BDR 57-534) FISCAL NOTE: Effect on Local Government: May Have Fiscal Impact. Effect on the State: Yes. CONTAINS UNFUNDED MANDATE (§ 36) (NOT REQUESTED BY AFFECTED LOCAL GOVERNMENT) ~ EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted. AN ACT relating to pharmacy benefit managers; expanding the scope of certain provisions; prohibiting pharmacy benefit managers from engaging in certain practices; requiring pharmacy benefit managers to make certain disclosures; requiring pharmacy benefit managers to pass rebates along to certain insurers and insureds; requiring pharmacy benefit managers and the Commissioner of Insurance to prepare certain reports; providing a cause of action for certain pharmacies; requiring certain insurers to use passed-along rebate funds for certain purposes; providing penalties; and providing other matters properly relating thereto. Legislative Counsel’s Digest: Existing law requires a pharmacy benefit manager to obtain a certificate of 1 registration as an insurance administrator from the Commissioner of Insurance and 2 comply with the requirements that apply to insurance administrators generally. 3 (NRS 683A.025, 683A.08522-683A.0893) Existing law additionally imposes 4 certain requirements specifically regulating the operation of pharmacy benefit 5 managers, which are entities that manage pharmacy benefits plans. (NRS 6 683A.171-683A.179) Existing law defines “pharmacy benefits plan” to refer to 7 insurance coverage of prescription drugs. (NRS 683A.175) Section 19 of this bill 8 expands the scope of that definition to also refer to insurance coverage of 9 pharmacist services. Section 19 thereby expands the scope of provisions governing 10 pharmacy benefit managers to also apply to entities that manage such coverage. 11 – 2 – - *SB209* Sections 2-13 of this bill define certain other terms relevant to pharmacy benefit 12 managers, and section 18 of this bill establishes the applicability of those 13 definitions. Section 14 of this bill prohibits a pharmacy benefit manager that 14 manages a plan which provides coverage through a network from requiring a 15 person to use a pharmacy affiliated with the pharmacy benefit manager if there are 16 other, nonaffiliated pharmacies in the network. Section 14 additionally prohibits a 17 pharmacy benefit manager from engaging in certain practices which are intended or 18 have the effect of steering a person towards an affiliated pharmacy instead of a 19 nonaffiliated pharmacy in the network. Section 14 also prohibits a pharmacy 20 benefit manager from discriminating against a nonaffiliated pharmacy. Section 15 21 of this bill requires a pharmacy benefit manager to disclose to a third party insurer 22 for which the pharmacy benefit manager manages a pharmacy benefits plan the 23 amount and types of fees that the pharmacy benefit manager charges the third party 24 for managing the plan or otherwise receives from other entities, including rebates, 25 in connection with managing the plan. 26 Existing law authorizes the Department of Health and Human Services to enter 27 into a contract with a pharmacy benefit manager to manage coverage of 28 prescription drugs under the State Plan for Medicaid and the Children’s Health 29 Insurance Program that requires the pharmacy benefit manager to provide to the 30 Department all rebates received for purchasing drugs in relation to those programs. 31 (NRS 422.4053) Section 15 imposes similar requirements for pharmacy benefit 32 managers that manage other pharmacy benefits plans. Specifically, section 15 33 requires a pharmacy benefit manager to provide the entire amount of any rebate the 34 pharmacy benefit manager receives in connection with providing pharmacy benefit 35 management services for a third party insurer that provides pharmacy coverage to: 36 (1) persons covered by the third party; or (2) the third party. Sections 22, 24-29, 32, 37 33, 36 and 37 of this bill require certain third parties that provide coverage for 38 prescription drugs to use any rebate money received from a pharmacy benefit 39 manager pursuant to section 15 for the sole purpose of reducing premiums and 40 eliminating or reducing cost-sharing obligations of covered persons. Section 23 of 41 this bill authorizes the Commissioner to require a domestic insurer that issues a 42 policy of individual health insurance to a person residing in another state to meet 43 the requirements of section 22 in certain circumstances. Sections 30 and 34 of this 44 bill indicate that the requirement governing the use of rebates received from a 45 pharmacy benefit manager is inapplicable to a managed care organization that is 46 providing coverage to recipients of Medicaid. Section 31 of this bill authorizes the 47 Commissioner to suspend or revoke the certificate of a health maintenance 48 organization that fails to comply with the requirements of section 29. The 49 Commissioner would also be authorized to take such action against other health 50 insurers who fail to comply with the requirements of sections 22, 24-28, 32 and 33. 51 (NRS 680A.200) 52 Section 16 of this bill prohibits a pharmacy benefit manager from: (1) using 53 spread pricing, which is a technique by which a pharmacy benefit manager charges 54 a third party an amount for a prescription drug that is different from the amount that 55 the pharmacy benefit manager reimburses a pharmacy for the same drug; (2) 56 agreeing to exclusively cover certain drugs; and (3) making or disseminating a false 57 or misleading statement or advertisement. Section 21 of this bill additionally 58 prohibits a pharmacy benefit manager from engaging in certain practices while 59 doing business with pharmacies. Section 21 also authorizes a pharmacy to bring an 60 action to recover certain damages against a pharmacy benefit manager that 61 retaliates against the pharmacy for reporting or attempting to remedy a potential or 62 actual violation of law applicable to insurance by the pharmacy benefit manager. 63 Section 17 of this bill requires a pharmacy benefit manager to submit to the 64 Commissioner an annual report detailing certain business practices of the pharmacy 65 benefit manager as well as certain information regarding pricing and rebates 66 – 3 – - *SB209* relating to the prescription drugs administered by the pharmacy benefit manager. 67 Sections 17 and 35 of this bill provide for the confidentiality of the information 68 contained in the report. Section 17 requires the Commissioner to compile, submit 69 to the Legislature and publish on the Internet a report once every 2 years on the 70 overall impact of pharmacy benefit managers on the cost of prescription drugs in 71 this State based on the reports submitted by the pharmacy benefit managers. 72 Existing law exempts certain federally regulated insurance coverage of 73 prescription drugs provided by employers for their employees from requirements 74 governing pharmacy benefit managers except where the pharmacy benefit manager 75 is required by contract to comply with those requirements. (NRS 683A.177) In 76 Rutledge v. Pharm. Care Mgmt. Ass’n, the United States Supreme Court held that 77 states are authorized to impose certain general requirements governing pharmacy 78 benefit managers on pharmacy benefit managers that manage such coverage. (592 79 U.S. 80, 89 (2020)) Section 20 of this bill removes the exemption for such 80 coverage from certain requirements governing pharmacy benefit managers, thereby 81 requiring a pharmacy benefit manager that manages such coverage to comply with 82 those requirements. Section 20 also subjects a pharmacy benefit manager that 83 manages such coverage to the requirements of this bill, to the extent authorized by 84 current precedent of the United States Supreme Court. 85 THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS: Section 1. Chapter 683A of NRS is hereby amended by 1 adding thereto the provisions set forth as sections 2 to 17, inclusive, 2 of this act. 3 Sec. 2. “Affiliated pharmacy” means a pharmacy that 4 directly, or indirectly through one or more intermediaries, 5 controls, is controlled by or is under common control with a 6 pharmacy benefit manager. 7 Sec. 3. “Claim” means a request for payment for: 8 1. Administering, filling or refilling a prescription drug; or 9 2. Providing a pharmacist service or a medical supply or 10 device to a covered person. 11 Sec. 4. “Control” has the meaning ascribed to it in 12 NRS 692C.050. 13 Sec. 5. “Cost-sharing obligation” includes, without 14 limitation, a copayment, coinsurance or deductible imposed upon 15 or collected from a covered person in connection with filling a 16 prescription or obtaining other pharmacist services. 17 Sec. 6. “Manufacturer” has the meaning ascribed to it in 42 18 U.S.C. § 1396r-8(k)(5). 19 Sec. 7. “Network plan” means a pharmacy benefits plan 20 offered by a third party under which the financing and delivery of 21 pharmacist services is provided, in whole or in part, through a 22 defined set of providers under contract with the third party. The 23 term does not include an arrangement for the financing of 24 premiums. 25 – 4 – - *SB209* Sec. 8. “Nonaffiliated pharmacy” means a pharmacy that: 1 1. Directly or indirectly through a pharmacy services 2 administrative organization contracts with a pharmacy benefit 3 manager; and 4 2. Does not control, is not controlled by and is not under 5 common control with the pharmacy benefit manager. 6 Sec. 9. “Pharmacist services” means the provision of 7 products, goods or services, or any combination thereof, provided 8 as a part of the practice of pharmacy, as defined in NRS 639.0124. 9 Sec. 10. “Pharmacy benefit management services” includes, 10 without limitation: 11 1. Negotiating the price of prescription drugs, including, 12 without limitation, negotiating or contracting for direct or indirect 13 rebates, discounts or price concessions on prescription drugs. 14 2. Managing any aspect of a pharmacy benefits plan, 15 including, without limitation: 16 (a) Developing or managing a formulary; 17 (b) Processing and paying claims for prescription drugs; 18 (c) Performing reviews of the utilization of prescription drugs; 19 (d) Processing requests for prior authorization for 20 prescriptions; 21 (e) Adjudicating appeals and grievances relating to a 22 pharmacy benefits plan; 23 (f) Contracting with pharmacies to provide pharmacist services 24 for covered persons; 25 (g) Managing the cost of covered prescription drugs on behalf 26 of a third party; and 27 (h) Managing or providing data relating to a pharmacy 28 benefits plan. 29 3. Performing any administrative, managerial, clinical, 30 pricing, financial, reimbursement, data administration, reporting 31 or billing service for a third party in relation to a pharmacy 32 benefits plan. 33 Sec. 11. “Pharmacy services administrative organization” 34 means an entity that provides contracting and other administrative 35 services relating to prescription drug benefits to pharmacies. 36 Sec. 12. “Rebate” means any discount, remuneration or 37 other payment paid by a manufacturer or wholesaler to a 38 pharmacy benefit manager after a claim has been adjudicated or 39 completed at a pharmacy. The term does not include a bona fide 40 service fee, as defined in 42 C.F.R. § 447.502. 41 Sec. 13. “Wholesaler” has the meaning ascribed to it in 42 NRS 639.016. 43 Sec. 14. 1. A pharmacy benefit manager that manages a 44 network plan shall not: 45 – 5 – - *SB209* (a) Require a covered person to use an affiliated pharmacy to 1 fill a prescription or obtain other pharmacist services if there is a 2 nonaffiliated pharmacy in the network; 3 (b) Except as authorized by subsection 2, induce, persuade or 4 attempt to induce or persuade a covered person to transfer a 5 prescription to or otherwise use an affiliated pharmacy instead of 6 a nonaffiliated pharmacy in the network; 7 (c) Unreasonably restrict a covered person from using a 8 particular pharmacy in the network for the purpose of filling a 9 prescription or receiving pharmacist services covered by the 10 pharmacy benefits plan of the covered person; 11 (d) Communicate to a covered person that the covered person 12 is required to have a prescription filled or receive other pharmacist 13 services at a particular pharmacy if there are other pharmacies in 14 the network that have the ability to dispense the prescription or 15 provide the pharmacist services required by the covered person; 16 (e) Unreasonably obstruct or interfere with the ability of a 17 covered person to timely access a prescription drug or device that 18 has been prescribed to the covered person at a pharmacy of the 19 person’s choice, including, without limitation, a nonaffiliated 20 pharmacy; 21 (f) Discriminate against a nonaffiliated pharmacy based on the 22 nonaffiliated status of the pharmacy, including, without limitation, 23 by: 24 (1) Offering materially different terms or conditions to a 25 nonaffiliated pharmacy based on the status as a nonaffiliated 26 pharmacy; 27 (2) Refusing to renew or terminating a contract with a 28 nonaffiliated pharmacy on the basis that the pharmacy is a 29 nonaffiliated pharmacy, or for reasons other than those that apply 30 equally to affiliated pharmacies; and 31 (3) Reimbursing a nonaffiliated pharmacy for a pharmacist 32 service in an amount that is less than the pharmacy benefit 33 manager would reimburse an affiliated pharmacy for the same 34 pharmacist service; or 35 (g) Deny a pharmacy the opportunity to participate in a 36 network or receive a preferred status if the pharmacy is willing to 37 accept the same terms and conditions that the pharmacy benefit 38 manager has established for affiliated pharmacies as a condition 39 for participating in the network or receiving preferred status, as 40 applicable. 41 2. A third party or pharmacy benefit manager may reduce the 42 amount of an applicable cost-sharing obligation of a covered 43 person who fills a prescription o [Text truncated for display. Full text available on LegiScan.]