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Growing Web of State Drug-Pricing Legislation Increases Challenges for Pharmaceutical Manufacturers and Other Industry Participants

With proposed federal legislation on pause, state legislatures continue to target the pricing of pharmaceuticals, passing a number of new laws in 2020. As complexity at the state level continues to increase, pharmaceutical manufacturers and others in the distribution and payment chain face an expanding set of challenges. For example, certain states have fined pharmaceutical manufacturers tens of millions of dollars in the last eight months for allegedly failing to comply with certain price-related reporting requirements.

Since our last update, state legislatures have continued to propose and pass various forms of drug-pricing laws. In 2020 alone, states have considered over 400 proposed drug-pricing bills, with more than 20 signed into law.1 As state oversight increases, and ramps up in complexity, companies at each level of the pharmaceutical distribution and payment chain face new and potentially significant risks when it comes to decisions regarding their pricing practices.

To be clear, these states are not overtly challenging or restricting prices set by pharmaceutical manufacturers. Rather, the state legislative approach generally reflects an effort to target the cost of drugs through other means, such as by increasing pricing transparency, requiring disclosures from pharmaceutical benefit managers ("PBMs") and insurers, and capping consumer cost sharing on certain drugs. For example, some states now require pharmaceutical manufacturers that raise the price of a drug above a certain threshold (e.g., 10-15% increase in a year or 50% over five years) to provide written justifications for their pricing decisions or face fines for failing to provide the required information. Some states have even authorized consumers to import drugs from Canada—a hotly contested issue at the federal level in the last few years.

PBMs have also landed in the crosshairs of state oversight. For example, PBMs operating in certain states may be precluded from implementing certain targeted pricing strategies altogether (e.g., so-called "spread pricing," where a PBM sets one payment rate to the pharmacy but charges a higher rate to its health plan client). Other laws may require PBMs to submit detailed reports outlining confidential information aboutmanufacturer rebates or disclose to health plan sponsors prices the PBMs paid for drugs. These laws targeting PBMs are generating considerable attention and significant legal challenges.2

Although these various state laws share some similarities, they are far from uniform, which means that each statute further complicates what is an already complex series of reporting obligations, pricing thresholds, and restrictions for pharmaceutical manufacturers and others in the drug distribution and payment chain. Some even carry penalties and fines for noncompliance or failure to timely disclose required pricing information. For example, in just the last six months, California fined more than a dozen pharmaceutical manufacturers $17.5 million for failing to properly report price increases.3 Similarly, Nevada issued approximately $17 million in fines to more than twenty pharmaceutical manufacturers last fall for failing to report pricing data.4

Ongoing developments at the state level are contrasted by the relative inactivity by Congress, which largely has shelved the issue of drug-pricing legislation in light of the COVID-19 pandemic. Indeed, the CARES Act does not mention drug pricing, although some are calling for Congress to fold drug-pricing measures into any future legislation regarding surprise medical billing and supply-chain issues following the pandemic.5 Similarly, the $3 trillion HEROES Act, recently passed by the House of Representatives, does not take head on the issue of drug pricing.6 Notably, however, on May 8, 2020, the U.S. Department of Health and Human Services finalized rules that allow commercial insurance plans to implement so-called "copay accumulators," which exclude manufacturer copay coupons (and similar programs) from counting towards the insured's cost-sharing obligation.7 These final rules permit states to make a different policy choice and prohibit or limit copay accumulator programs, which may prompt other states to follow prior action by Virginia and West Virginia to limit the practice.

White & Case's Pharmaceuticals & Healthcare Group is tracking and evaluating the impact of these growing complexities on the pharmaceutical industry. To help provide an overview of recent state legislation regarding drug pricing, the state-by-state chart below summarizes important statutory provisions and includes additional information regarding which states have passed certain types of laws, which entities those laws target, and where to look for the language of the statute if a closer review is required.8

 

State

Legislative Target(s)

Category

Act Title 

Summary of Law

Link to Law

 

e.g. Pharmacy Benefit Managers ("PBMs"), Pharmaceutical Company, Pharmaceutical Manufacturers, Pharmacists, Insurers, Canadian Drug Importation

e.g. Drug Price, Transparency, Drug Affordability Review, Study, Coupons, Licensing, Substitutions

 

   

Alabama

PBMs

Licensing, Drug Price, Transparency

SB 73: Alabama Pharmacy Benefit Manager Licensure and Regulation Act

Requires PBMs to register with the Department of Insurance and be licensed by January 1, 2020 to conduct business in the state. Prohibits PBMs from preventing pharmacies and pharmacists from disclosing the amount an individual would pay for a drug without insurance. PBMs may not require a plan member to pay more than either the contracted co-payment amount or the cash retail value, whichever is less. 

Link

Arizona

PBMs, Insurers

Coupons (restricts copay accumulators)

HB 2166: An Act Relating to Insurance Cost Sharing

Requires PBMs and Insurers to include in any cost sharing requirement, the amount paid by either the enrollee or another person on behalf of the enrollee (e.g., through a coupon) for drugs 1) without a generic equivalent or 2) where the enrollee has authorization to use drug instead of the generic equivalent. 

Link

Arizona

PBMs 

Transparency

HB 2285: An Act amending Section 20 3321, Arizona Revised Statutes

Requires PBMs, among other things, to update their maximum allowable cost (MAC) lists in a timely manner, to share with pharmacies the sources used to determine MAC pricing, and to establish an appeal process by which pharmacies can appeal MAC pricing reimbursement. 

It further bars PBMs from, among other things, prohibiting retail pharmacies from dispensing 90 prescription refills if certain conditions are met, or prohibiting retail pharmacies from offering mail delivery of drugs as an ancillary service.

Link

Arkansas

Pharmacists

Substitutions (biosimilars)

HB 1269: An Act to allow Pharmacists to Make Biological Product Substitutions; And for Other Purposes

Allows pharmacists to substitute an interchangeable biosimilar product under specified circumstances when the substitution would result in cost savings to the patient. Notice to the prescriber of the substitution within five business days is required if requested. 

Link

Arkansas

PBMs

Transparency, Drug Price, PBM Spread Pricing

Act 994: An Act to clarify the State Insurance Department's Regulatory and Enforcement Authority Concerning Pharmacy Benefit Managers; to Modify Arkansas Pharmacy Benefit Manager Licensure Act; and For Other Purposes
SB 17: An Act Relating to Health Care

Amends the required appeal process for pharmacies to challenge plan reimbursements. Directs PBMs to reimburse pharmacies at rates no less than specified benchmarks and limits retroactive and certain other adjustments to pharmacy claims. Prohibits spread pricing by PBMs. Requires PBMs to report certain rebate and other information to the Insurance Commissioner quarterly. 

Link

California

Pharmaceutical Manufacturers, Insurers

Drug Price, Transparency

SB 17: An Act relating to Health Care

Imposes several new disclosure requirements, including requiring Insurers to provide annual reports on the 25 most frequently prescribed drugs, the 25 most costly drugs, and the 25 drugs with the highest year-over-year increases in price.

It further requires drug manufacturers to provide notice if they intend to introduce a new prescription drug at a cost that exceeds the threshold set out in Medicare Part D to be designated a "specialty drug" under federal law.

Link

California

Pharmaceutical Manufacturers

Patent Settlement

AB 824: An Act to add Division 114.01 to the Health and Safety Code, relating to Business

On October 7, 2019, California became the first state to enact legislation—Assembly Bill 824—rendering certain pharmaceutical patent litigation settlement agreements presumptively anticompetitive.

Link; see also Link (White & Case's antitrust team outline of potential effects of this law).

Colorado

PBMs

Transparency

HB 1078: Pharmacy Benefit Management Firm Claims Payment

Prohibits PBMs from retroactively reducing payment on a clean claim submitted by a pharmacy. The measure also prohibits a PBM from reimbursing a pharmacy in an amount less than the amount the PBM reimburses any affiliate for the same pharmacy services. 

Link

Colorado

Canadian Drug Importation

Transparency

SB 19-005: Dr. Irene Aguilar Canadian Prescription Drug Importation Act

Creates a program to allow the importation of prescription drugs from Canada to Colorado, subject to regulatory oversight and approval from the federal government. 

Link

Colorado

Pharmaceutical Manufacturers

Drug Price, Transparency

HB 19-1131: An Act concerning a Requirement to Share the Wholesale Acquisition Cost of a Drug when sharing Information concerning the Drug with another Party 

Requires pharmaceutical manufacturers who market to prescribers to disclose a drug's wholesale acquisition cost as well as the names of up to three generic drugs in the therapeutic class, should they exist.

Link

Colorado

Insurers

Cost Regulation, Drug Price

HB 19-1216: An Act concerning Measures to reduce a Patient's Cost of Prescription Drugs, and in connection, therewith, making an Appropriation

Requires Insurers to cap the cost of insulin for covered plan members at no more than US$100 per 30-day supply, regardless of the amount of insulin a patient needs. The Act also requires the Department of Law to investigate insulin prices and present its findings in a report no later than November 1, 2020.

Link

Connecticut

PBMs

Drug Price, Transparency

SB 445: An Act concerning Contracts between a Pharmacy and a Pharmacy Benefit Manager, the Bidirectional Exchange of Electronic Health Records and the Charging of Facility Fees by a Hospital or Health System

Imposes new restrictions on available terms in contracts between PBMs and pharmacies, including 1) PBMs may not prevent pharmacists from disclosing the costs of alternative medication, and 2) PBMs cannot require an individual to pay an amount that would exceed the individual's copayment for the medication, the allowable claim amount for the medication, or the amount the individual would pay without insurance.

Link

Connecticut

PBMs, Health Carriers, Pharmaceutical Manufacturers

Transparency 

HB 5384: An Act concerning Prescription Drug Costs

Creates a number of new reporting requirements, including that (1) beginning March 1, 2021, PBMs must  file an annual standard-form report outlining, among other things, the dollar amounts of all rebates received from pharmaceutical manufacturers concerning drug formularies managed by the PBM, and (2) pharmaceutical manufacturers of pipeline drugs that, according to Office of Health Strategy's study and annual reports starting from March 1, 2020, may have a significant impact on state expenditures for outpatient prescription. The standard form must lay out, among other things, all factors that caused the increase in the wholesale acquisition cost of the relevant outpatient prescription drugs, and aggregate research and development costs as well as such other capital expenditures. 

The law also requires the Insurance Commissioner to publish an annual report including a statement disclosing whether, and describing the manner in which, health carriers made rebates available to individuals at the point of purchase.

Link

Delaware

PBMs, Insurers

Drug Price

HB 24: An Act to amend Title 18 of the Delaware Code relating to Copayment or Coinsurance for Prescription Drugs

Prohibits Insurers and PBMs from imposing a copayment or coinsurance requirement for a prescription drug that exceeds the price of that prescription drug, the contract price for the drug, or the copayment that would exist notwithstanding this law, whichever is less. 

Link

Delaware

PBMs 

Transparency, Drug Price 

HB 194: An Act to amend Title 18 of the Delaware Code Relating to Pharmacy Benefits Managers

Along with other reporting requirements, this Act requires that PBMs utilize an appeal process for pharmacies to challenge plan reimbursements.

Link

Florida

Pharmaceutical Manufacturers, Canadian Drug Importation

Importation

HB19: Canadian Prescription Drug Importation Program

Creates the program to allow the importation of prescription drugs from Canada to Florida, subject to regulatory oversight and approval from the federal government. 

Link

Georgia

Pharmacists

Other; Patient Data Privacy

HB 233: Pharmacy Anti-Steering and Transparency Act 

Prohibits pharmacies from sharing patient or prescriber identifying data for any commercial purpose outside the scope of serving patients. 

Link

Georgia

PBMs

Transparency

HB 323: An Act relating to Regulation and Licensure of Pharmacy Benefit Managers

Requires PBMs to report annually the total amount of rebates received from pharmaceutical manufacturers that the PBM did not pass on to its clients.

Link

Hawaii

No Recently Enacted Legislation Applicable 

       

Idaho

PBMs

Legislation, Drug Price

HB 386: An Act relating to Pharmacy Benefit Managers

Adds to existing law regulating PBM activities to: prohibit PBMs from limiting pharmacist's ability to provide cost sharing information or clinical efficacy of more affordable alternatives to consumers, provide certain requirements for MAC pricing and appeals, and prohibit the retroactive denial or reduction of a claim in certain instances.

Link

Illinois

PBMs

Drug Price, Transparency

HB 465: An Act concerning Regulation

Provides that a contract between a health insurer and a PBM must: (1) require the PBM to update maximum allowable cost pricing information and maintain a process that will eliminate drugs from maximum allowable cost lists or modify drug prices to remain consistent with changes in pricing data; (2) prohibit PBMs from limiting a pharmacist's ability to disclose the availability of a more affordable alternative drug; and (3) prohibit PBMs from requiring an insured to make a payment for a prescription drug in an amount that exceeds the lesser of the applicable cost-sharing amount or the retail price of the drug.

Link

Illinois

Insurers

Drug Price

SB 667: An Act concerning Regulation

Among other details, this measure provides that insurers must limit the total amount an enrollee is required to pay for insulin to $100 per 30-day supply, regardless of the type and amount needed. It also directs the Department of Insurance to issue a report by November 1, 2020 regarding insulin pricing practices and recommendations to control and prevent overpricing of insulin.

Link

Indiana

PBMs, Insurers

Drug Price

HB 1207: An Act to amend the Indiana Code Concerning Professions and Occupations

Provides that a state employee plan, a health maintenance organization, an insurer, or a PBM may not require a pharmacy or pharmacist to collect a higher copayment for a prescription drug from a covered individual than the health plan provider allows the pharmacy or pharmacist to retain.

Requires an insurer to provide 60 days' notice to specified insured consumers and opportunity for appeal, when removing a prescription drug from the insurer's formulary or changing the applicable cost sharing requirements.

Link

Indiana

PBMs, Insurers

Licensing, Other

SB 241: An Act to amend the Indiana Code Concerning Insurance

Prohibits PBMs from reducing pharmacy payments to an effective rate of reimbursement or from reimbursing PBM-affiliated pharmacies at a rate greater than other pharmacies in the PBM's network. Establishes guidelines for how PBMs can set MAC pricing and sets up an appeals process for pharmacies to dispute MAC rates. Requires PBMs to disclose upon request to their health plan customers that actual amounts paid by the PBM to any pharmacy. Creates licensing and reporting requirements for PBMs, including required reporting starting June 1, 2021 of certain rebate and administrative fee information.  

Link

Iowa

PBMs

Transparency 

SF 563: An Act relating to PBMs and Information Related to the Management of Prescription Drug Benefits, and including Applicability Provisions 

Requires each PBM to submit an annual report to the Insurance Commissioner that includes, among other things, aggregate rebate amounts and administrative fees received from prescription pharmaceutical manufacturers and the amount of those rebates and fees that were not passed through to the PBM's health plan clients.

Link

Kansas

No Recently Enacted Legislation Applicable 

       

Kentucky

PBMs

Other

SB 50: An Act relating to Pharmacy Benefits in the Medicaid Program and Declaring an Emergency

Requires the Department for Medicaid Services (the "Department")
to contract with a PBM to be the state's PBM and for each managed care organization contracted for Managed Medicaid to use the state's PBM. For Managed Medicaid, the state's PBM is 1) required to use pass-through pricing as well as specified preferred drug lists and reimbursement methodologies; and 2) prohibited from using spread pricing or from reducing pharmacy payments to an effective reimbursement rate or imposing certain other pharmacy limits/restrictions.

Link

Louisiana

Insurer, Pharmacists, PBMs

Drug Price, Transparency

HB 436: An Act relative to Coverage of Prescription Drugs

Prohibits entities that administer prescription drug benefit programs in Louisiana from prohibiting a pharmacist from informing a patient of "all relevant options" and their cost and efficacy. Also prohibits PBMs from reimbursing pharmacies less than the amount paid to the PBM's affiliates for the same service.

Link

Louisiana

PBMs

Licensing, Drug Price, Transparency

SB 41: An Act relative to Regulation of PBMs

Large-scale reform of PBM requirements in Louisiana, which, among other things, requires PBM registration and regulation by certain state agencies and prohibits "spread pricing" without providing the required notice.

Link

Louisiana

Pharmacists, PBMs

Other

HB 433: An Act relative to Business Practices of Pharmacists, Pharmacies, and PBMs

Provides new regulations governing the interactions between pharmacists and PBMs, including prohibiting PBMs from reimbursing its affiliates more than non-affiliated pharmacies and subjecting those who violate the law to actions and penalties provided for in the Unfair Trade Practices and Consumer Protection Law. 

Link

Louisiana

PBMs

Licensing, Coupons

SB 239: An Act relative to the Medicaid Prescription Drug Benefit Program

Among other things, this law authorizes the Louisiana Department of Health to remove pharmacy services from Medicaid managed care organization contracts and assume direct responsibility for such Medicaid pharmacy services. 

Link

Maine

Insurers, Pharmacists, PBMs

Drug Price, Transparency

LD 6: An Act to prohibit Insurance Carriers from Charging Enrollees for Prescription Drugs in Amounts that Exceed the Drugs' Costs

Prohibits Insurers or PBMs from requiring a copayment or other charge that exceeds the claim cost of a drug. It further prohibits Insurers or PBMs from penalizing pharmacists for disclosing costs or efficacy information to patients.

Link

Maine

Pharmaceutical Manufacturers

Drug Price, Transparency

LD 1162: An Act to further Expand Drug Price; Transparency

Manufacturers must provide annual drug price reports to the Maine Health Data Organization. The annual reports must notify the Organization if the manufacturer has 1) increased the wholesale acquisition cost of a brand-name or generic drug by more than 20%; or 2) introduced a new drug for distribution that has a cost greater than the threshold for being designated a "specialty drug" under Medicare Part D. If the Organization requests information relating to a specific prescription drug, the manufacturer must provide the Organization with the price per unit within 60 days. Failure to comply can result in monetary fines. Effective January 30, 2020.
Requires the Maine Health Data Organization to publish an annual report on the information from the Manufacturer reports, with various privacy protections. Effective November 1, 2020.

Link

Maine

Pharmaceutical Manufacturers

Importation

LD 1272: An Act to increase Access to Low-cost Prescription Drugs

Provides for the Department of Health and Human Services to adopt rules to work to establish a program to import Canadian drugs. By May 1, 2020, the Department will submit a request for approval of the drug importation program to the Federal Department of Health and Human Services. Effective January 1, 2020.

Link

Maine

N/A

Drug Affordability Review

LD 1499: An Act to establish the Maine Prescription Drug Affordability Board

Establishes the Maine Prescription Drug Affordability Review Board, which is authorized to determine spending targets on certain specific drugs that may cause affordability challenges to enrollees in a public payor health plan and provide a number or other broad powers including the ability to establish a common formulary for all public payers, enter into bulk purchasing agreements, and negotiate certain rebate amounts. 

Link

Maine

Pharmaceutical Manufacturers

Drug Price, Transparency

LD 1406: An Act to promote Prescription Drug Price; Transparency

Empowers the Maine Health Data Organization to develop a plan to collect data from manufacturers related to the pricing of drugs. 

Link

Maine

PBMs

Licensing, Other

LD 1504: An Act to protect Consumers from Unfair Practices Related to Pharmacy Benefits Management

Prohibits "spread pricing" by PBMs absent notice to the State. Requires PBMs to have a license to operate in the state and to apply a single maximum allowable cost list.  Effective January 1, 2020.

Link

Maine

Insurers

Other

LD 1928: An Act to prohibit Health Insurance Carriers from Retroactively Reducing Payment on Clean Claims Submitted by Pharmacies

Prohibits insurers (or their intermediaries) from charging a pharmacy or holding a pharmacy responsible for any fee related to a clean claim that is not apparent at the time the claim is processed, that is not reported on the remittance advice, or that is applied after the initial claim is adjudicated. 

Link

Maine

Insurers

Drug Price

LD 2096: An Act to save Lives by Capping the Out-of-pocket Cost of Certain Medications

Restricts insurers providing prescription insulin drug coverage from imposing any deductible or other cost-sharing requirement that results in out-of-pocket costs that exceed $35 per prescription for a 30-day supply, regardless of the amount of insulin needed to fill the enrollee's insulin prescriptions.

Link

Maryland

Pharmaceutical Manufacturers

Drug Price

HB 631: An Act concerning Public Health-Essential Off-Patent of Generic Drugs- Price Gouging- Prohibition

This price gouging law would have prevented manufacturers from implementing "unconscionable" price increases on certain drugs. In 2018, a Federal appellate court held the law is unconstitutional because it regulated commerce outside of Maryland's borders. Leave to appeal to the Supreme Court of the United States was denied in February 2019.

Link

Massachusetts

N/A

Drug Affordability Review, Transparency 

H 4000: An Act Making Appropriations for the Fiscal Year 2020 for the Maintenance of the Departments, Boards, Commissions, Institutions and Certain Activities of the Commonwealth, for Interest, Sinking Fund and Serial Bond Requirements And for Certain Permanent Improvements

Among other provisions, this law requires certain pharmaceutical manufacturers to disclose certain information regarding drug prices, price increases, and research and development spending to the Executive Office of Health and Human Services. Based on the submitted information, the Executive Office of Health of Human Services may identify and negotiate supplemental rebates for drugs with total annual costs exceeding certain thresholds. If a supplemental pricing rebate is not agreed on, the Manufacturer may be subject to further disclosure requirements. 

Link

Michigan

PBMs

Drug Price, Other

SB 139: Appropriations; health and human services; department of health and human services (provide for fiscal year 2019-2020)

Starting February 1, 2020 this law prohibits the Department of Health and Human Services from entering into contracts with Medicaid managed care organizations that use PBMs that fail to utilize certain reimbursement methodologies and fail to agree to move transparent pass-through pricing.

Link

Minnesota

PBMs

Licensing, Substitutions

SF 278: An Act relating to Health Care

Requires PBMs to be licensed to operate in the State; to report information regarding aggregate pharmaceutical manufacturer rebates, retained rebates, spread pricing, and other information to the Commissioner of Commerce; and to provide pharmacies certain information regarding the development of maximum allowable cost lists. This bill also permits pharmacists, with respect to a prescription not covered by the consumer's prescription drug plan, to dispense a therapeutically equivalent and interchangeable prescribed drug that is covered, pursuant to certain conditions and requirements.

Link

Minnesota

Insurers

Drug Price

SB 12: Omnibus Health and Human Services Appropriation Bill

Appropriations bill with a number of detailed limitations, such as limiting cost sharing on insulin and regulating the sale of medical cannabis. 

Link

Minnesota

Pharmaceutical Manufacturers

Drug Price

HF3100: Alec Smith Insulin Affordability Act

Obligates pharmaceutical manufacturers to make insulin available to eligible individuals, who urgently need insulin or require access to an affordable insulin supply.

Link

Mississippi

No Recently Enacted Legislation Applicable

 

 

 

 

Missouri

No Recently Enacted Legislation Applicable

       

Montana

PBMs, Insurers

Transparency, Drug Price 

SB 270: An Act revising Conditions for a Network Pharmacy or Pharmacist

Imposes a prospective requirement that regulated entities (e.g., PBMs) provide pharmacies with their maximum allowable price list at the time of contracting and prohibits regulated entities from penalizing pharmacies for sharing reimbursement information with patients. 

Link

Nebraska

PBMs, Insurers 

Drug Price, Transparency

LB 316: A Bill for an Act relating to Pharmacy; to adopt the Pharmacy Benefit Fairness Act

Prohibits regulated entities (e.g., Insurers) from requiring a point-of-sale payment in excess of either the non-insured cash cost or the patient's contractual payment, whichever is less. Further prohibits penalizing pharmacies for disclosing cost related information to patients. 

Link

Nevada

PBMs

Drug Price, Transparency

AB 141: An Act relating to Pharmacy Benefit Managers 

Prohibits a PBM from preventing a pharmacy from disclosing less expensive options to patients and from penalizing a pharmacy for selling a less expensive generic drug to patients. 

Link

Nevada

Pharmaceutical Manufacturers

Drug Price, Transparency

SB 262: An Act relating to Prescription Drugs

Extends certain reporting requirements for the sale of diabetes treating drugs to treatments for asthma. 

Link

Nevada

PBMs

Transparency, Drug Price 

SB 378: An Act relating to Prescription Drugs

This law alters a number of existing provisions related to PBMs, including altering the standard governing a PBM's contractual relationship from a fiduciary standard to a good-faith standard. It further alters how the state operates its Medicaid program by allowing the Department of Health and Human Services to contract with a PBM for the administration of the State Plan for Medicaid and the Children's Health Insurance Program. 

Link

Nevada

Pharmacists, PBMs, Pharmaceutical Manufacturers

Drug Price, Transparency

SB 539: An Act relating to Prescription Drugs

Creates a number of new reporting requirements related to the sale of drugs treating diabetes. 

Link

New Hampshire

PBMs 

Drug Price 

SB 226: An Act relative to Registration of PBMs, and reestablishing the Commission to study greater Transparency in Pharmaceutical Costs and Drug Rebate Programs

Creates a number of requirements for PBMs, including that PBMs must register to operate within the state and provide a process for pharmacies to appeal disputes regarding maximum allowable cost pricing.

Link

New Jersey

Pharmaceutical Manufacturers

Transparency

S 2389: An Act concerning the Disclosure of Prescription Drug Price Information

Requires the Board of Pharmacy to establish a prescription drug pricing disclosure website and requires pharmaceutical manufacturers in the state to provide the current wholesale acquisition price for drugs or biologics marketed in the state.

Link

New Jersey

PBMs, Insurers

Drug Price

SB 2690 An Act concerning Pharmacy Benefits Managers

Prohibits regulated entities (e.g., PBMs) from requiring a point-of-sale payment in excess of either the non-insured cash cost or the patient's contractual payment, whichever is less, and prohibits penalizing pharmacies for disclosing cost-related information to patients. 

Link

New Mexico

Canadian Drug Importation 

Drug Price 

SB1: An Act relating to Health; enacting the Wholesale Prescription Drug Importation Act; providing Power and Duties; creating a Program; creating a Committee; requiring Federal Certification; creating a Fund; declaring an Emergency

This measure requires the Department of Health to design a wholesale prescription drug importation program that complies with federal requirements. 

Link

New Mexico

Pharmaceutical Manufacturers, PBMs, Pharmacists 

Drug Price 

SB 131: An Act relating to Procurement

This law established the "Interagency Pharmaceuticals Purchasing Council" to study, review, and coordinate ways to manage drug costs through group purchasing and other means. 

Link

New Mexico

PBMs

Drug Price, Transparency, Volume Purchasing

SB 415; An Act relating to Health Care

Creates a number of requirements for PBMs, including that PBMs must be licensed to operate within the state and provide a process for pharmacies to appeal disputes regarding maximum allowable cost pricing. 

Link

New Mexico

Insurers

Drug Price

HB 292: Prescription Drug Cost Sharing

Requires insurers to cap the total amount an insured individual is required to pay for prescription insulin drugs at $25 per 30-day supply, regardless of the amount, or the number of prescription drugs or types of insulin prescribed. It also requires the superintendent of insurance to study the cost of prescription drugs for New Mexico consumers and make recommendations on increasing accessibility of prescription drugs in a report to be issued no later than October 1, 2020.

Link

New York

N/A

Transparency

SB 7506: A Budget Bill

Directs the Department of Health to remove Medicaid pharmacy benefits from the managed care benefit package and provide those pharmacy benefits under the fee for service program to ensure transparency and efficiency of services. 

It also empowers the Superintendent of Insurance to investigate certain prescription drug price increases of more than 50% over a 12-month period and provide such information to the newly created drug accountability board, which is authorized in certain instances to evaluate and report to the Superintendent on (among other things) a drug's impact on premium costs, affordability, and price compared to therapeutic benefit. It also caps cost sharing for prescription insulin at $100 for a 30-day supply regardless of the amount of insulin needed to fill the prescription. 

Link

New York

PBMs

Drug Price, Transparency

SB 1507: An Act to amend the Public Health Law, in relation to extending and enhancing the Medicaid Drug Cap and to reduce unnecessary Pharmacy Benefit Manager Costs to the Medicare Program

Prohibits PBMs in the Medicaid program from retaining any portion of spread pricing and requires the registration of PBMs.

Link

North Carolina

Pharmacists, PBMs

Drug Price, Transparency

HB 466: An Act relating to the Regulation of Pharmaceutical Benefit Managers

Imposes new requirements on the interactions between PBMs and pharmacists, including that 1) PBMs cannot prohibit pharmacists from providing cost share information to the patient or penalize a pharmacist for selling lower-priced drug to the patient if available, and 2) PBMs may not charge a co-payment greater than the total charge submitted by the pharmacy for the drug. 

Link

North Dakota

No Recently Enacted Legislation Applicable 

       

Oklahoma

PBMs 

Drug Cost, Transparency

HB 2632: Patient's Right to Pharmacy Choice Act

Prohibits restrictions on a patient's right to choose a pharmacy provider without paying a penalty and creates an advisory committee to review complaints and administer fines.

Link

Oregon

Pharmaceutical Manufacturers, Insurers 

Drug Price, Transparency

HB 4005: An Act relating to the Price of Prescription Drugs

Imposes a number of new reporting requirements on pharmaceutical manufacturers, including annual reports on certain factors regarding the manufacturer's price increases for drugs that cost US$100 or more for a one-month supply and that increase in price by more than 10%. The law further requires that Insurers report information regarding their 25 most costly drugs. 

Link

Oregon

Pharmacy Benefits Managers 

Drug Price, Transparency

HB 2185: An Act relating to PBMs; Creating New Provisions; and Amending ORS 735.530 and 735.534

Prohibits PBMs from requiring a prescription to be filled by a mail order pharmacy as a condition for reimbursing the cost of the drug. The law does, however, allow a PBM to require a prescription for a specialty drug to be filled at a specialty pharmacy as a condition for reimbursement of the cost of the drug. It further prohibits PBMs from restricting or penalizing network pharmacies for disclosing the difference between the out-of-pocket cost for the drug and the pharmacy's retail price for the drug.

Link

Pennsylvania

No Recently Enacted Legislation Applicable 

       

Rhode Island

No Recently Enacted Legislation Applicable 

       

South Carolina

PBMs 

Licensing, Transparency

S 359: An Act to amend the Code of Laws of South Carolina, 1976

Establishes a State licensing requirement for PBMs and imposes a number of limitations on PBM operations. The law prevents PBMs from limiting the health care information pharmacists can provide to patients (i.e., information the pharmacists deem appropriate and within the scope of practice); prohibiting pharmacist from discussing certain cost information regarding drugs; or collecting a copay that exceeds the total contracted price, or the amount an individual would pay if that individual was paying cash, for the drugs, among other things. 

Link

South Dakota

PBMs

Drug Price

HB 1137: An Act to revise certain Provisions regarding Pharmacy Benefit Managers

Limits a PBM's ability to contract for certain terms, such as to charge a patient an amount that exceeds the amount retained by the pharmacist.

Link

Tennessee

PBMs

Drug Price 

HB 786: An Act to amend Tennessee Code Annotated, Title 56, Chapter 7, Part 31, relative to pharmacy benefits managers

Limits a PBM's ability to contract for certain terms, such as terms that would require a pharmacist to dispense a product contrary to the pharmacist's professional judgment, and prohibits PBMs from reimbursing pharmacies less than the amount reimbursed to the PBM's affiliate entities. 

Link

Texas

Pharmaceutical Manufacturers, PBMs

Drug Price, Transparency

HB 2536: An Act relating to Transparency related to Drug Costs

Requires pharmaceutical manufacturers to provide reports of certain price increases for drugs which have a cost of at least US$100 for a 30-day supply: Where the increase in price is greater than 40% or more over the previous three years, or greater than 15% over the last year, the manufacturer must provide a report within 30 days of the price change.

Link

Utah

PBMs, Insurers, Pharmacists 

Transparency

HB 370: Pharmacy Benefit Manager Amendments 

Imposes a licensing and reporting requirement on PBMs and provides certain restrictions on claims reimbursements, as well as a prohibition on PBMs charging insured consumers costs sharing that exceeds the allowed claim amount, the total pharmacy reimbursement for the drug, or the retail price for the drug if not insured.

Link

Utah Insurers Coupons, Cost Sharing HB 207: Insulin Access Amendments

With some exceptions, requires health benefit plans to cap the total amount that an insured is required to pay for insulin at an amount not to exceed $30 per 30-day supply, regardless of the amount of insulin needed and whether the insured has met her deductible. 

Link

Utah

PBMs

Transparency, Cost Sharing

HB 272: Pharmacy Benefit Amendments 

Amendments to the Pharmacy Benefit Act prevent PBMs from retroactively denying or reducing a pharmacy's claim and contracting with a health insurer in certain instances unless the pharmacy benefit manager agrees to regularly report to the insurer detailed, claim-level information regarding pharmaceutical manufacturer rebates received by the PBM in connection with the contract.

The Prescription Drug Price Transparency Act, among other things, requires manufactures to report certain information if the wholesale acquisition cost for a drug increases by 10% in one calendar year or 16% across two calendar years, including information regarding the factors that lead to the increase, recent FDA approvals, recent patent expirations, and certain R&D cost information. It also direct insurers to report certain information their 25 highest spend drugs.

Link

Utah

PBMs

Drug Price

SB 138: Pharmacy Benefit Revisions 

Among other provisions, this measure prohibits PBMs from charging an enrollee, who uses an in-network retail pharmacy that offers delivery or mail order services, a fee or copayment that is higher than the fee or copayment the enrollee would pay if the enrollee used an in-network retail pharmacy that does not offer delivery or mail-order services.

Link

Vermont

Pharmaceutical Manufacturers

Drug Price, Transparency

SB 216: An act relating to Prescription Drugs

Authorizes the Vermont Attorney General to require manufacturers to provide justifications for price increases where the State spent "significant health care dollars" and where the wholesale acquisition cost of a drug has increased by a certain amount (by 50% over the last five years or by 15% over the last 12 months).

Link

Vermont

Pharmaceutical Manufacturers, Pharmacists, Insurers

Drug Price, Transparency, Substitutions

S 92: An Act relating to prescription Drug Price; Transparency and cost containment

Imposes a number of requirements on different entities within the healthcare sector, including requiring pharmacists to select the lowest priced interchangeable biological product unless otherwise instructed by the prescriber (or the purchaser, if they agree to pay the extra cost). It further requires insurers to provide a report on the costs associated with covering prescription drugs and the year-over-year increases in drug prices. The law places varying reporting requirements on Insurers based upon the number of individuals they insure. 

Link

Vermont

Pharmaceutical Manufacturers

Importation

S 175: An Act relating to the Wholesale Importation of Prescription Drugs

Directs the Agency of Human Services to design a program for wholesale importation of prescription drugs from Canada in compliance with all applicable federal standards. 

Link

Vermont 

Pharmaceutical Company (Wholesalers)

Drug Price

H 542 (Act 72): An Act relating to making Appropriations for the Support of Government.

Directs the Agency of Human Services to extend the deadline by which the Agency of Human Services must implement a wholesale drug importation program.

Link

Virginia 

Insurers (third-party administrators)

Drug Price, Transparency

HB 29: A Budget Bill

Requires the Department of Human Resource Management to include language in all contracts with third-party administrators to maintain policies and procedures for transparency in pharmacy benefit administration programs. 

Link

Virginia 

Insurers

Drug Price

HB 66: An Act relating to Health Insurance; Pharmacy Benefits; Cost-Sharing Payments for Prescription Insulin Drugs

Caps cost-sharing payments for prescription insulin drugs at $50 for 30-day supply of insulin.

Link

Virginia 

PBMs

Drug Price, Cost Sharing

SB 568: An Act relating to Medical Assistance Services; Managed Care Organization Contracts with Pharmacy Benefit Managers; Spread Pricing

Prohibits PBMs that contract with Medicaid managed care organizations from using spread pricing.

Link

Virginia

Insurers 

Coupons, Drug Price

S 1596: An Act to amend and reenact §§ 38.2-4214 and 38.2-4319 of the Code of Virginia

Requires any insurance carrier in Virginia to count any payments made by another person on the enrollee's behalf, including payments through prescription drug coupons, toward a patient's out-of-pocket maximum cost sharing requirement for plans created or extended after January 1, 2020. 

Link

Washington

Pharmaceutical Manufacturers, PBMs, Insurers 

Drug Price, Transparency

HB 1224: An Act relating to Prescription Drug Cost Transparency

Imposes a number of new reporting requirements on pharmaceutical manufacturers, PBMs, and Insurers related to price increases, prescription frequency, and reimbursement amounts.

Link

Washington

PBMs

Drug Price, Transparency

SB 5601: An Act relating to Pharmacy Benefit Managers 

Requires PBMs to obtain a license and prohibits PBMs from reimbursing a pharmacy or pharmacist in the state an amount less than the amount the PBM reimburses an affiliate for providing the same services.

Link

Washington Pharmaceutical Companies, 
Insurers 
 
Drug Price HB 2662: An Act reducing the Total Cost of Insulin

Creates the Total Cost of Insulin work group, which must submit a report to the governor and legislature detailing strategies to reduce the cost of and total expenditures on insulin for patients, carriers, and the state. This measure also requires health plans to cap cost-sharing for insulin at $100 per 30-day supply.

Link

Washington

Insurers

Drug Price 

HB 6087: An Act relating to Cost-Sharing Requirements for Coverage of Insulin Products 

Caps the total amount than an insured individual is required to pay for insulin at $100 per 30-day supply and allows health plans to raise the cost-sharing amount for a 30-day supply by $5 for every $100 increase in the cost of an insulin product to the health plan.

Link

West Virginia

PBMs, Insurers

Drug Price

HB 2770: A BILL to amend the Code of West Virginia, 1931

Effective January 1, 2020: When an insured's contributions to an applicable cost-sharing requirement is calculated (e.g., an out of pocket maximum), the Insurer and PBM must include the cost sharing amounts paid by the insured or on behalf of the insured by another person.

Link

West Virginia

Pharmaceutical Manufacturers, Insurers 

Transparency

SB 689: An Act relating to enacting the Requiring Accountable Pharmaceutical Transparency, Oversight, and Reporting Act

Requires drug manufacturers to submit an annual report to the auditor with regard to brand and specialty drugs with a wholesale acquisition cost of at least $100 and an increase of 40% or more over the preceding three years or 15% of more in the previous year, including information regarding the factors that lead to the increases, recent patent expirations and certain R&D cost information. It also directs insurers to report certain information for their 25 most frequently prescribed drugs.

Link

West Virginia 

PBMs, Insurers, Pharmaceutical Manufacturer

Transparency

SB 489: An act amending the Pharmacy Audit Integrity Act

Requires licensure of PBMs.

Link

West Virginia

Insurers 

Drug Price 

HB 4543: An Act relating to Insurance Coverage for Diabetics

Caps the total amount that a carrier can required a covered patient with diabetes to pay for a 30-day supply of insulin at $100, regardless of the quantity or type of insulin needed to fill the person's needs. Also prohibits a manufacturer, wholesaler, or PBM from passing through the costs of the prescribed insulin to the pharmacist or pharmacy.

Link

Wisconsin

No Recently Enacted Legislation Applicable 

       

Wyoming

PBMs 

Transparency

HB 63: An Act relating to Regulation of PBMs under the Insurance Code

Precludes PBMs from prohibiting or penalizing a pharmacy or pharmacist for informing a covered person about alternatives that may cost less than paying for a prescription drug using the person's prescription drug insurance. 

Link

 

Constantin Nuernberger (Law Clerk, New York, White & Case) contributed to the development of this publication.

 

1 Nicholas Florko, "State legislatures are lapping the federal government on drug pricing — even amid the coronavirus," STAT+ (Apr. 14, 2020), Link
2 Rutledge v. Pharmaceutical Care Management Association, No.18-540 (2020), which is currently pending before the Supreme Court, presents the question whether Arkansas's maximum allowable cost appeal law regulating PBM drug-reimbursement is preempted by ERISA.
3 See "Prescription Drug Wholesale Acquisition Cost (WAC) Increases," OSHPD (Apr. 2020), Link; see also Ed Silverman, "California fines more than a dozen drug makers for not providing drug pricing data," STAT+ (Apr. 28, 2020), Link
4 See, e.g., Zachary Brennan, "Nevada Fines Drugmakers $17M for Failing to Comply With Drug Pricing Law," Regulatory Focus (Oct. 4, 2019), Link
5 Brandon Lee, "HEALTH CARE BRIEFING: Drug Pricing Efforts on Post-Crisis Agenda," Bloomberg (May 4, 2020), Link
6 See Alex Ruoff, "Democrats Punt on Drug-Pricing Overhaul in Virus Relief Measure," Bloomberg (May 13, 2020), Link.
7 "Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2021; Notice Requirement for Non-Federal Governmental Plans," Department of Health and Human Services, Link (implementing 45 C.F.R. 156.130(h)).
8 The chart includes enacted state laws that place reporting requirements or regulations on pharmaceutical manufacturers or may have an effect on the cost of prescription drugs in the pharmaceutical distribution and payment chain. The chart is not a comprehensive list of all laws in the pharmaceutical industry. The laws surveyed are current through the first week of May 2020.

 

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