SB389 - Revises provisions relating to the administration of pharmacy benefits under Medicaid and certain other health plans. (BDR 38-240)

- 83rd Session (2025) Senate Bill No. 389–Senators Scheible, Stone; and Daly CHAPTER.......... AN ACT relating to prescription drugs; requiring the Department of Health and Human Services to select and contract with a state pharmacy benefit manager to manage pharmacy benefits for Medicaid and certain other health benefit plans; requiring the Department to establish certain methodologies for the payment of and rates of reimbursement for prescription drugs under Medicaid; requiring the Department to establish a benchmark to measure certain data relating to the cost of prescription drugs; prescribing certain duties of the state pharmacy benefit manager; requiring that the Department approve certain contracts entered into by the state pharmacy benefit manager; prohibiting the state pharmacy benefit manager from engaging in certain activities; requiring a Medicaid managed care organization to contract with and utilize the state pharmacy benefit manager to manage pharmacy benefits; requiring a Medicaid managed care organization to provide certain information to the Department upon request; and providing other matters properly relating thereto. Legislative Counsel’s Digest: Existing law authorizes the Department of Health and Human Services to enter into a contract with a pharmacy benefit manager or a health maintenance organization to manage coverage of prescription drugs under the State Plan for Medicaid, the Children’s Health Insurance Program and certain other health benefit plans that elect to use the list of preferred prescription drugs established for Medicaid as their formulary. (NRS 422.4025, 422.4053) Sections 12 and 15 of this bill instead require the Department to, not later than January 1, 2030, select and enter into a contract with one pharmacy benefit manager, known as the state pharmacy benefit manager, to manage all such coverage of prescription drugs. Sections 12 and 13 of this bill prescribe certain required terms of such a contract. Section 4 of this bill prescribes the required contents of an application to serve as the state pharmacy benefit manager. Section 5 of this bill requires the Department to adopt regulations establishing: (1) the criteria that a pharmacy benefit manager must meet in order to serve as the state pharmacy benefit manager; and (2) certain methodologies and requirements relating to the reimbursement and payment of pharmacies for services rendered under the contract between the Department and the state pharmacy benefit manager. Section 5 requires the methodology established for the reimbursement of certain pharmacies to: (1) be developed in a manner which would provide the greatest amount of savings to the State; and (2) base the rate of reimbursement for a drug on the actual cost of acquiring the drug. For that purpose, section 5 also requires the Department to, if certain conditions are met, establish a benchmark to measure the price of drugs purchased in this State directly from manufacturers and wholesalers, which is to be known as the Nevada Average Acquisition Cost. Section 5 requires the Department to biennially submit a report to the Legislature concerning the savings – 2 – - 83rd Session (2025) realized by the State from the establishment and use of the Nevada Average Acquisition Cost benchmark. Section 8 of this bill requires each Medicaid managed care organization to contract with and utilize the state pharmacy benefit manager to administer all pharmacy benefits for recipients of Medicaid who receive such benefits through the Medicaid managed care organization. Section 8 also requires each Medicaid managed care organization to, upon request of the Department, disclose the expenditures of the Medicaid managed care organization associated with providing pharmacy benefits to recipients of Medicaid. Section 6 of this bill requires that the Department approve any contract between the state pharmacy benefit manager and a pharmacy or an entity that contracts on behalf of a pharmacy if the contract is for the provision of benefits under the contract between the state pharmacy benefit manager and the Department, or any revision, suspension or termination of such a contract between the state pharmacy benefit manager and a pharmacy, in order for the contract, revision, suspension or termination to become effective. Section 6 also authorizes the Department to change certain payment arrangements as necessary to comply with federal requirements. Finally, section 6 prohibits the state pharmacy benefit manager from entering into, renewing or amending a contract that conflicts with the obligations of the state pharmacy benefit manager under the provisions of this bill. Sections 2 and 3 of this bill define certain terms, and section 7 of this bill establishes the applicability of those definitions. Section 9 of this bill applies certain other definitions in existing law to sections 4-6. Sections 10, 11, 13 and 14 of this bill make conforming changes to transfer certain duties to the state pharmacy benefit manager and revise certain references in accordance with the provisions of this bill. EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted. THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS: Section 1. Chapter 422 of NRS is hereby amended by adding thereto the provisions set forth as sections 2 to 6, inclusive, of this act. Sec. 2. “Medicaid managed care organization” means a health maintenance organization with which the Department enters into a contract pursuant to NRS 422.273 to provide health care services through managed care to recipients of Medicaid. Sec. 3. “State pharmacy benefit manager” means the pharmacy benefit manager that enters into a contract with the Department pursuant to NRS 422.4053. Sec. 4. 1. A pharmacy benefit manager that meets the eligibility requirements established pursuant to section 5 of this act may apply to become the state pharmacy benefit manager by submitting an application to the Department on a form prescribed by the Department. The application must include, without limitation, disclosures of: – 3 – - 83rd Session (2025) (a) Any activity, policy, practice, contract or agreement of the applicant that may directly or indirectly present a conflict of interest in the relationship between the applicant and the Department or a Medicaid managed care organization, including, without limitation, any such activity, policy, practice, contract or agreement that operates solely or partially outside this State; (b) Any direct or indirect fees, charges or assessments that the applicant imposes on any pharmacy in this State: (1) With which the applicant shares common ownership, management or control; (2) Which is owned, managed or controlled by any management, parent or subsidiary of the applicant, any company jointly held by the applicant or any company otherwise affiliated with the applicant by a common owner, manager or holding company; (3) For which the board of directors of the pharmacy shares any members in common with the board of directors of the applicant; or (4) Which shares any manager in common with the applicant; (c) All common ownership, common management, common members of a board of directors, shared managers or shared control between: (1) The applicant, or any management, parent, subsidiary or jointly held company of the applicant or any company otherwise affiliated by a common owner, manager or holding company with the applicant; and (2) Any of the following entities: (I) A Medicaid managed care organization or a company affiliated with a Medicaid managed care organization; (II) A pharmacy services administrative organization, any other entity that contracts on behalf of a pharmacy or any company affiliated with a pharmacy services administrative organization or such an entity; (III) A wholesaler, as defined in NRS 639.016, or any company affiliated with a wholesaler; (IV) A third party, other than a Medicaid managed care organization, or any company affiliated with such a third party; and (V) A pharmacy or any company affiliated with a pharmacy; and (d) All financial arrangements, including the terms of each such arrangement, currently in effect between the applicant and a – 4 – - 83rd Session (2025) manufacturer or labeler of prescription drugs, including without limitation, an arrangement for: (1) The management of a formulary; (2) Fees relating to data sales; and (3) Education and support for claims processing. 2. As used in this section, “third party” means any insurer or organization providing health coverage or benefits in accordance with state or federal law. Sec. 5. 1. The Department shall adopt regulations establishing: (a) The criteria that a pharmacy benefit manager must meet in order to be eligible to enter into a contract with the Department pursuant to NRS 422.4053 to serve as the state pharmacy benefit manager. (b) The methodology for reimbursement to pharmacies, other than those pharmacies described in paragraph (c), for providing benefits under a contract entered into pursuant to subsection 1 of NRS 422.4053 or paragraph (a) of subsection 2 of NRS 422.4053. (c) The methodology for reimbursement to pharmacies owned by a health care facility that is registered as a covered entity pursuant to 42 U.S.C. § 256b under a contract entered into pursuant to subsection 1 of NRS 422.4053 or paragraph (a) of subsection 2 of NRS 422.4053. (d) Dispensing fees paid to pharmacies and pharmacists for providing benefits under a contract entered into pursuant to subsection 1 of NRS 422.4053 or paragraph (a) of subsection 2 of NRS 422.4053. In establishing those dispensing fees, the Department may consider applicable guidance promulgated by the Centers for Medicare and Medicaid Services of the United States Department of Health and Human Services. (e) A requirement that providers must submit to the Department or state pharmacy benefit manager data from claims, as prescribed by the Department, relating to the actual acquisition costs of drugs purchased by the providers from pharmacies owned by health care facilities that are registered as covered entities pursuant to 42 U.S.C. § 256b. 2. To the extent authorized by federal law, the dispensing fees established pursuant to paragraph (d) of subsection 1 may vary by pharmacy type, including, without limitation, rural and independently owned pharmacies, pharmacies owned by a corporation operating in multiple states and pharmacies owned by a health care facility that is registered as a covered entity pursuant to 42 U.S.C. § 256b. – 5 – - 83rd Session (2025) 3. To the extent practicable, the methodology for reimbursement established pursuant to paragraph (b) of subsection 1 must: (a) Generate the maximum amount of savings for the State with respect to the cost of prescription drugs; (b) Provide rates of reimbursement for drugs which are based on the actual cost of acquiring a drug, to the extent that doing so would result in a reduction of expenditures on prescription drugs by the Department; and (c) Utilize the Nevada Average Acquisition Cost price benchmark for the purposes set forth in paragraph (b), if established pursuant to subsection 4. 4. Except as otherwise provided in this subsection, the Department shall establish a pricing benchmark to be known as Nevada Average Acquisition Cost to measure the average, actual cost of prescription drugs purchased by pharmacies and other providers in this State directly from manufacturers and wholesalers of prescription drugs or from any other sources. The Department shall establish the Nevada Average Acquisition Cost only if, in the determination of the Department, the development of the benchmark would result in a reduction of spending on prescription drugs by the Department or otherwise result in a net reduction of expenditures by the State. To facilitate the establishment of the Nevada Average Acquisition Cost price benchmark, the Department may: (a) Establish a survey that must be completed periodically by pharmacies and other providers who purchase prescription drugs; (b) Utilize any data provided to the Department by the state pharmacy benefit manager or a health management organization with which the Department has contracted pursuant to NRS 422.4053; (c) Utilize any other data which is accessible to the Department, including, without limitation, data furnished to the Department by providers; (d) Utilize methodologies similar to those established by the Centers for Medicare and Medicaid Services of the United States Department of Health and Human Services with respect to the National Average Acquisition Cost pricing benchmark; and (e) Adopt such regulations as may otherwise be necessary to carry out the purposes of this section. 5. On or before February 1 of each odd-numbered year occurring after the establishment of the Nevada Average – 6 – - 83rd Session (2025) Acquisition Cost price benchmark, if established, the Department shall: (a) Compile a report concerning the actual or estimated savings generated for the State during the immediately preceding two calendar years from the establishment and utilization of the Nevada Average Acquisition Cost price benchmark; and (b) Submit the report compiled pursuant to paragraph (a) to the Director of the Legislative Counsel Bureau for transmittal to the next regular session of the Legislature. 6. As used in this section: (a) “Actual acquisition cost” has the meaning ascribed to it in 42 C.F.R. § 447.502. (b) “Provider” means a person or entity who participates in Medicaid as a provider of goods or services. Sec. 6. 1. The state pharmacy benefit manager shall submit to the Department for review: (a) Each contract for the provision of benefits under the contract entered into pursuant to NRS 422.4053 between the state pharmacy benefit manager and a pharmacy or an entity that contracts on behalf of such a pharmacy; (b) Each revision to the terms and conditions of a contract described in paragraph (a); and (c) Each suspension or termination of a contract described in paragraph (a). 2. The Department shall review each submission received pursuant to subsection 1 and approve or deny the contract, revision, suspension or termination, as applicable. A contract, revision, suspension or termination is not effective until the contract, revision, suspension or termination, as applicable, is approved by the Department. 3. [Text truncated for display. Full text available on LegiScan.]