House Bill 690
By: Representatives Newton of the 127th, Au of the 50th, Cooper of the 45th, Stephens of the
164th, and Hawkins of the 27th
A BILL TO BE ENTITLED
AN ACT
To amend Chapter 64 of Title 33 of the Official Code of Georgia Annotated, relating to
regulation and licensure of pharmacy benefits managers, so as to provide that such managers
have a duty of care to insureds, health plans, and providers; to provide for definitions; to
provide for rules and regulations; to provide for a priority of duties; to provide for a private
right of action; to provide for related matters; to repeal conflicting laws; and for other
purposes.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:
SECTION 1.
Chapter 64 of Title 33 of the Official Code of Georgia Annotated, relating to regulation and
licensure of pharmacy benefits managers, is amended by revising Code Section 33-64-1,
relating to definitions, as follows:
"33-64-1.
As used in this chapter, the term:
(1) 'Affiliate pharmacy' means a pharmacy which, either directly or indirectly through
one or more intermediaries:
(A) Has an investment or ownership interest in a pharmacy benefits manager licensed
under this chapter;
(B) Shares common ownership with a pharmacy benefits manager licensed under this
chapter; or
(C) Has an investor or ownership interest holder which is a pharmacy benefits manager
licensed under this chapter.
(2) 'Business entity' means a corporation, association, partnership, sole proprietorship,
limited liability company, limited liability partnership, or other legal entity.
<ins>(3) 'Controlled group of corporations' means any group of the following of which the
pharmacy benefits manager is a member:
(A) One or more chains of corporations connected through stock ownership with a
common parent corporation if stock possession constitutes at least 50 percent of the
total combined voting power of all classes of stock entitled to vote or at least 50 percent
of the total value of shares of all classes of stock of at least one of the other
corporations, excluding, in computing such voting power or value, stock owned directly
by such other corporations;
(B) Two or more corporations if five or fewer persons who are individuals, estates, or
trusts own stock possessing more than 50 percent of the total combined voting power
of all classes of stock of each corporation, taking into account the stock ownership of
each such person only to the extent such stock ownership is identical with respect to
each corporation;
(C) Three or more corporations each of which is a member of a group of corporations
described in subparagraph (A) or (B) of this paragraph, and one of which is a common
parent corporation included in a group of corporations described in subparagraph (A)
of this paragraph and also is included in a group of corporations described in
subparagraph (B) of this paragraph; and
</ins>
<ins>(D) Two or more life insurers subject to taxation under federal law which are members
of a controlled group of corporations described in subparagraph (A), (B), or (C) of this
paragraph. Such insurers shall be treated as a controlled group of corporations separate
from any other corporations which are members of the controlled group of corporations
described in subparagraph (A), (B), or (C) of this paragraph.
</ins> <del>(3)(4)</del> 'Dispenser' shall have the same meaning as in paragraph (10) of Code Section
16-13-21.
<del>(4)(5)</del> 'Health plan' means an individual or group plan or program which is established
by contract, certificate, law, plan, policy, subscriber agreement, or any other method and
which is entered into, issued, or offered for the purpose of arranging for, delivering,
paying for, providing, or reimbursing any of the costs of health care or medical care,
including pharmacy services, drugs, or devices. Such term includes any health care
coverage provided under the state health benefit plan pursuant to Article 1 of Chapter 18
of Title 45; the medical assistance program pursuant to Article 7 of Chapter 4 of Title 49;
the PeachCare for Kids Program pursuant to Article 13 of Chapter 5 of Title 49; and any
other health benefit plan or policy administered by or on behalf of this state.
<del>(5)(6)</del> 'Health system' means a hospital or any other facility or entity owned, operated,
or leased by a hospital and a long-term care home.
<del>(6)(7)</del> 'Insured' means a person who receives prescription drug benefits administered by
a pharmacy benefits manager.
<ins>(8) 'Insurer' means any entity subject to the insurance laws and regulations of this state,
or subject to the jurisdiction of the Commissioner, that contracts or offers to contract to
provide, deliver, arrange for, pay for, or reimburse any of the costs of health care
services, including through a health plan as defined in this subsection, and shall include
a sickness and accident insurance company, a health maintenance organization, a
preferred provider organization, or any similar entity, or any other entity providing a
health plan of health insurance or health benefits.
</ins>
<del>(7)(9)</del> 'Maximum allowable cost' means the per unit amount that a pharmacy benefits
manager reimburses a pharmacist for a prescription drug, excluding dispensing fees and
copayments, coinsurance, or other cost-sharing charges, if any.
<ins>(8)(10)</ins> 'National average drug acquisition cost' means the monthly survey of retail
pharmacies conducted by the federal Centers for Medicare and Medicaid Services to
determine average acquisition cost for Medicaid covered outpatient drugs.
<ins>(9)(11)</ins> 'Pharmacy' means a pharmacy or pharmacist licensed pursuant to Chapter 4 of
Title 26 or another dispensing provider.
<ins>(12) 'Pharmacy benefits management fee' means a fee charged for the cost of providing
one or more pharmacy benefits management services and which does not exceed the
value of the service or services performed by the pharmacy benefits manager.
</ins> <del>(10)(13)</del> 'Pharmacy benefits management <ins>services'</ins> means the <ins>following, except that such
term shall not include the practice of pharmacy as defined in Code Section 26-4-4:
(A) The</ins> administration of a plan or program that pays for, reimburses, and covers the
cost of drugs, devices, or pharmacy care to insureds on behalf of a health plan;
<ins>(B) The negotiation of the price of prescription drugs, including negotiating and
contracting for direct or indirect rebates, discounts, or other price concessions;
(C) The management of any aspect or aspects of a prescription drug benefit, including
the processing and payment of claims for prescription drugs, arranging alternative
access to or funding for prescription drugs, the performance of drug utilization review,
the processing of drug prior authorization requests, the adjudication of appeals or
grievances related to the prescription drug benefit, contracting with network
pharmacies, controlling the cost of covered prescription drugs, managing or providing
data relating to the prescription drug benefit, or the provision of services related thereto;
(D) The performance of any administrative, managerial, clinical, pricing, financial,
reimbursement, data administration or reporting, or billing service; or
</ins>
<ins>(E) Such other services as the Commissioner may define in regulation.</ins> <del>The term shall
not include the practice of pharmacy as defined in Code Section 26-4-4.
(11)(14)</del> 'Pharmacy benefits manager' means a person, business entity, or other entity that
<ins>directly or indirectly</ins> performs <ins>one or more</ins> pharmacy benefits management <ins>services.
Such</ins> <del>The</del> term includes a person or entity acting for a pharmacy benefits manager in a
contractual or employment relationship in the performance of pharmacy benefits
management <ins>services</ins> for a health plan, <ins>and any agent, contractor, intermediary, affiliate,
subsidiary, or related entity of such person who facilitates, provides, directs, or oversees
the provision of the pharmacy benefits management services. Such</ins> <del>The</del> term does not
include services provided by pharmacies operating under a hospital pharmacy license.
<ins>Such</ins> <del>The</del> term also does not include health systems while providing pharmacy services
for their patients, employees, or beneficiaries, for indigent care, or for the provision of
drugs for outpatient procedures. <ins>Such</ins> <del>The</del> term also does not include services provided
by pharmacies affiliated with a facility licensed under Code Section 31-44-4 or a licensed
group model health maintenance organization with an exclusive medical group contract
and which operates its own pharmacies which are licensed under Code Section 26-4-110.
<ins>(15) 'Pharmacy benefits manager duty' means a duty and obligation to perform pharmacy
benefits management services with care, skill, prudence, diligence, fairness, transparency,
and professionalism and, in the best interests of the insured, the health plan, and the
provider, to perform such services as consistent with the requirements of this chapter and
any regulation that may be adopted to implement this chapter.
</ins> <del>(12)(16)</del> 'Point-of-sale fee' means all or a portion of a drug reimbursement to a pharmacy
or other dispenser withheld at the time of adjudication of a claim for any reason.
<ins>(17) 'Provider' means an individual or entity that provides, dispenses, or administers one
or more units of a prescription drug.
</ins> <del>(13)(18)</del> 'Rebate' means any and all payments that accrue to a pharmacy benefits
manager or its health plan client, directly or indirectly, from a pharmaceutical
manufacturer, including but not limited to discounts, administration fees, credits,
incentives, or penalties associated directly or indirectly in any way with claims
administered on behalf of a health plan client <ins>and shall also include but not be limited to:
(A) Negotiated price concessions including but not limited to base price concessions
whether described as rebates or otherwise and reasonable estimates of any price
protection rebates and performance based price concessions that may accrue directly
or indirectly to the insurer or health plan, or other party on behalf of the insurer or
health plan, including a pharmacy benefits manager, during the coverage year from a
manufacturer, dispensing pharmacy, or other party in connection with the dispensing
or administration of a prescription drug; and
(B) Reasonable estimates of any negotiated price concessions, fees, and other
administrative costs that are passed through, or are reasonably anticipated to be passed
through, to the insurer or health plan, or other party on behalf of the insurer or health
plan, including a pharmacy benefits manager, and serve to reduce the insurer or health
plan's liabilities for a prescription drug.
(19) 'Related entity' means:
(A) Any entity, whether foreign or domestic, who is a member of any controlled group
of corporations; or
(B) Any person other than a corporation that is treated under rules promulgated under
this chapter as related to a pharmacy benefits manager.
</ins> <del>(14)(20)</del> 'Retroactive fee' means all or a portion of a drug reimbursement to a pharmacy
or other dispenser recouped or reduced following adjudication of a claim for any reason,
except as otherwise permissible as described in Code Section 26-4-118.
<ins>(21) 'Spread pricing' means any amount charged or claimed by a pharmacy benefits
manager for a prescription drug that exceeds the amount paid by the pharmacy benefits
manager to the pharmacy or pharmacist for the dispensing of the prescription drug.
</ins> <del>(15)(22)</del> 'Steering' means:
(A) Ordering an insured to use its affiliate pharmacy for the filling of a prescription or
the provision of pharmacy care;
(B) Ordering an insured to use an affiliate pharmacy of another pharmacy benefits
manager licensed under this chapter pursuant to an arrangement or agreement for the
filling of a prescription or the provision of pharmacy care;
(C) Offering or implementing plan designs that require an insured to utilize its affiliate
pharmacy or an affiliate pharmacy of another pharmacy benefits manager licensed
under this chapter or that increases plan or insured costs, including requiring an insured
to pay the full cost for a prescription when an insured chooses not to use any affiliate
pharmacy; or
(D) Advertising, marketing, or promoting its affiliate pharmacy or an affiliate
pharmacy of another pharmacy benefits manager licensed under this chapter to
insureds. Subject to the foregoing, a pharmacy benefits manager may include its
affiliated pharmacy or an affiliate pharmacy of another pharmacy benefits manager
licensed under this chapter in communications to patients, including patient and
prospective patient specific communications, regarding network pharmacies and prices,
provided that the pharmacy benefits manager includes information regarding eligible
nonaffiliated pharmacies in such communications and that the information provided is
accurate."
SECTION 2.
Said chapter is further amended by revising Code Section 33-64-13, relating to federal law
governs, as follows:
"33-64-13.
<ins>(a)</ins> To the extent that any provision of this chapter is inconsistent or conflicts with
applicable federal law, rule, or regulation, such applicable federal law, rule, or regulation
shall apply.
<ins>(b) In implementing the requirements of this chapter, the state shall only regulate a
pharmacy benefits manager or insurer to the extent permissible under applicable law."
</ins> SECTION 3.
Said chapter is further amended by adding a new Code section to read as follows:
<ins>"33-64-14.
(a) A pharmacy benefits manager shall owe the pharmacy benefits manager duty to any
insured, health plan, or provider that receives pharmacy benefits management services from
the pharmacy benefits manager or that furnishes, covers, receives, or is administered a unit
of a prescription drug for which the pharmacy benefits manager has provided pharmacy
benefits management services. Such duty includes:
(1) The pharmacy benefits manager duty owed to insureds shall include duties of care
and good faith and fair dealing. The Commissioner shall adopt regulations defining the
scope of the duties owed to insureds, including by obligating pharmacy benefits managers
to provide all pharmacy benefits management services related to formulary design,
utilization management, and grievances and appeals in a transparent manner to insureds
that is consistent with the best interest of insureds and to disclose all conflicts of interest
to insureds;
(2) The pharmacy benefits manager duty owed to health plans shall include duties of care
and good faith and fair dealing. The Commissioner shall adopt regulations defining the
scope of the duties owed to health plans, including by obligating pharmacy benefits
managers to provide transparency to health plans about amounts charged or claimed by
the pharmacy benefits manager in a manner that is adequate to identify all instances of
spread pricing and to disclose all conflicts of interest to health plans; and
(3) The pharmacy benefits manager duty owed to providers shall include duties of care
and good faith and fair dealing. The Commissioner shall adopt regulations defining the
scope of the duties owed to providers, including by obligating pharmacy benefits
</ins>
<ins>managers to provide transparency to providers about amounts charged or claimed by the
pharmacy benefits manager in a manner that is adequate to identify all instances of spread
pricing and to disclose all conflicts of interest to providers.
(b) Where there is a conflict between the pharmacy benefits manager duties owed pursuant
to this Code section, the pharmacy benefits manager duty owed to an insured shall be
primary over the duty owed to any other party, and the pharmacy benefits manager duty
owed to a provider shall be primary over the duty owed to a health plan.
(c) A person who is aggrieved by a violation of this Code section may bring a civil action
before a state court of competent jurisdiction against a pharmacy benefits manager."
</ins> SECTION 4.
All laws and parts of laws in conflict with this Act are repealed.