Section 1 Disclosure to Consumers

(A) Each pharmacy shall post in a prominent place at or near the place where prescriptions are dispensed a sign that clearly describes a pharmacist’s ability under this state’s law to substitute a less expensive drug product equivalent unless the consumer or the prescribing practitioner has indicated otherwise.

(B) The pharmacy examining board shall create a list of the 100 most commonly prescribed generic drug product equivalents, including the generic and brand names of the drugs, and provide, either directly or on the department’s Internet site, the list to each pharmacy on an annual basis. Each pharmacy shall make available to the public information on how to access the list.

(C) Each pharmacy shall have available for the public a listing of the retail price, updated no less frequently than monthly, of the 100 most commonly prescribed prescription drugs, which includes brand name and generic equivalent drugs and biological products and interchangeable biological products, that are available for purchase at the pharmacy.

Section 2 Publication

(A) Each pharmacy shall post in a prominent place at or near the place where prescriptions are dispensed a sign that clearly describes a pharmacist’s ability under this state’s law to substitute a less expensive interchangeable biological product unless the consumer or the prescribing practitioner has indicated otherwise.

Section 3 Links to be maintained by the Board

The board shall maintain links on the department’s Internet site to the federal food and drug administration’s lists of all currently approved interchangeable biological products. Each pharmacy shall make available for the public information on how to access the federal food and drug administration’s lists of all currently approved interchangeable biological products through the department’s Internet site.

Section 4 Required Disclosures

(A) A disability insurance policy or self-insured health plan that provides a prescription drug benefit shall make the formulary and all drug costs associated with the formulary available to plan sponsors and individuals prior to selection or enrollment.

(B) A disability insurance policy or self-insured health plan that provides a prescription drug benefit may not restrict, directly or indirectly, any pharmacy that dispenses a prescription drug to an enrollee in the policy or plan from informing, or penalize such pharmacy for informing, an enrollee of any differential between the out-of-pocket cost to the enrollee under the policy or plan with respect to acquisition of the drug and the amount an individual would pay for acquisition of the drug without using any health plan or health insurance coverage.

(C) A disability insurance policy or self-insured health plan that provides a prescription drug benefit shall ensure that any pharmacy benefit manager that provides services under a contract with the policy or plan does not, with respect to such policy or plan, restrict, directly or indirectly, any pharmacy that dispenses a prescription drug to an enrollee in the policy or plan from informing, or penalize such pharmacy for informing, an enrollee of any differential between the out-of-pocket cost to the enrollee under the policy or plan with respect to acquisition of the drug and the amount an individual would pay for acquisition of the drug without using any health plan or health insurance coverage.

(D) Cost-Sharing Limitation A disability insurance policy or self-insured health plan that provides a prescription drug benefit or a pharmacy benefit manager that provides services under a contract with a policy or plan may not require an enrollee to pay at the point of sale for a covered prescription drug an amount that is greater than the lowest of all of the following amounts:

(1) The cost-sharing amount for the prescription drug for the enrollee under the policy or plan.

(2) The amount a person would pay for the prescription drug if the enrollee purchased the prescription drug at the dispensing pharmacy without using any health plan or health insurance coverage.

Section 5 Choice of Provider; Penalty Prohibited

(A) No insurer, self-insured health plan, or pharmacy benefit manager may require, or penalize a person who is covered under a disability insurance policy or self-insured health plan for using or for not using, a specific retail, specific mail-order, or other specific pharmacy provider within the network of pharmacy providers under the policy or plan. A prohibited penalty under this subsection includes an increase in premium, deductible, copayment, or coinsurance.

Section 6 Pharmacy Networks

(A) If an enrollee utilizes a pharmacy or pharmacist in a preferred network of pharmacies or pharmacists, no disability insurance policy or self-insured health plan that provides a prescription drug benefit or pharmacy benefit manager that provides services under a contract with a policy or plan may require the enrollee to pay any amount or impose on the enrollee any condition that would not be required if the enrollee utilized a different pharmacy or pharmacist in the same preferred network.

(B) Any disability insurance policy or self-insured health plan that provides a prescription drug benefit, or any pharmacy benefit manager that provides services under a contract with a policy or plan, that has established a preferred network of pharmacies or pharmacists shall reimburse each pharmacy or pharmacist in the same network at the same rates.

Section 7 Drug Substitution

(A) Except as otherwise provided, a disability insurance policy that offers a prescription drug benefit, a self insured health plan that offers a prescription drug benefit, or a pharmacy benefit manager acting on behalf of a disability insurance policy or self-insured health plan shall provide to an enrollee advanced written notice of a formulary change that removes a prescription drug from the formulary of the policy or plan or that reassigns a prescription drug to a benefit tier for the policy or plan that has a higher deductible, copayment, or coinsurance. The advanced written notice of a formulary change under this paragraph shall be provided no fewer than 90 days before the expected date of the removal or reassignment and shall include information on the procedure for the enrollee to request an exception to the formulary change. The policy, plan, or pharmacy benefit manager is required to provide the advanced written notice under this paragraph only to those enrollees in the policy or plan who are using the drug at the time the notification must be sent according to available claims history.

(B) A disability insurance policy, self-insured health plan, or pharmacy benefit manager is not required to provide advanced written notice if the prescription drug that is to be removed or reassigned is any of the following:

(a) No longer approved by the federal food and drug administration.

(b) The subject of a notice, guidance, warning, announcement, or other statement from the federal food and drug administration relating to concerns about the safety of the prescription drug.

(c) Approved by the federal food and drug administration for use without a prescription.

(C) A disability insurance policy, self-insured health plan, or pharmacy benefit manager is not required to provide advanced written notice under par. (a) if, for the prescription drug that is being removed from the formulary or reassigned to a benefit tier that has a higher deductible, copayment, or coinsurance, the policy, plan, or pharmacy benefit manager adds to the formulary a generic prescription drug that is approved by the federal food and drug administration for use as an alternative to the prescription drug or a prescription drug in the same pharmacologic class or with the same mechanism of action at any of the following benefit tiers:

(1) The same benefit tier from which the prescription drug is being removed or

(2) A benefit tier that has a lower deductible, copayment, or coinsurance than the benefit tier from which the prescription drug is being removed or reassigned.

(3) A pharmacist or pharmacy shall notify an enrollee in a disability insurance policy or self-insured health plan if a prescription drug for which an enrollee is filling or refilling a prescription is removed from the formulary and the policy or plan or a pharmacy benefit manager acting on behalf of a policy or plan adds to the formulary a generic prescription drug that is approved by the federal food and drug administration for use as an alternative to the prescription drug or a prescription drug in the same pharmacologic class or with the same mechanism of action at any of the following benefit tiers:

(a) The same benefit tier from which the prescription drug is being removed or

(b) A benefit tier that has a lower deductible, copayment, or coinsurance than the benefit tier from which the prescription drug is being removed or reassigned.

(4) If an enrollee has had an adverse reaction to the generic prescription drug or the prescription drug in the same pharmacologic class or with the same mechanism of action that is being substituted for an originally prescribed drug, the pharmacist or pharmacy may extend the prescription order for the originally prescribed drug to fill one 30-day supply of the originally prescribed drug for the cost-sharing amount that applies to the prescription drug at the time of the

(5) No disability insurance policy, self-insured health plan, or pharmacy benefit manager acting on behalf of a disability insurance policy or self-insured health plan may remove a prescription drug from the formulary except at the time of coverage renewal.

Section 8 Application of Prescription Drug Payments

(A) Definitions in this section:

(1) “Brand name drug” means any of the following:

(a) A prescription drug that contains a brand name and that has no medically appropriate generic equivalent.

(b) A prescription drug that contains a brand name and that has a medically appropriate generic equivalent but to which the enrollee or other covered individual has obtained access through any of the following:

(1) Prior authorization

(2) A step therapy protocol

(3) The exceptions and appeals process of the disability insurance policy, self insured health plan, or pharmacy benefit manager.

(2) “Cost-sharing requirement” means a deductible, copayment or coinsurance.

(3) “Generic Equivalent” means a drug product equivalent that is nationally available.

(B) Application of Payments. Except as otherwise provided, a disability insurance policy that offers a prescription drug benefit, a self-insured health plan, or a pharmacy benefit manager acting on behalf of a disability insurance policy or self-insured health plan shall apply to any cost-sharing requirement or to any calculation of an out-of-pocket maximum amount of the disability insurance policy or self-insured health plan, including the annual limitations on cost sharing established under 42 USC 18022 (c) and 42 USC 300gg-6 (b), any amounts paid by an enrollee or other individual covered under the disability insurance policy or self insured health plan, or by any person on behalf of the enrollee or individual, for brand name drugs that are covered under the disability insurance policy or self insured health plan.

(C) Calculation of Cost-sharing Annual Limitations. For purposes of calculating an enrollee’s contribution to the annual limitation on cost-sharing under 42 USC 18022 (c) and 42 USC 300gg-6 (b), a disability insurance policy that offers a prescription drug benefit, a self-insured health plan, or a pharmacy benefit manager acting on behalf of a disability insurance policy or self-insured health plan shall include expenditures for any item or service covered under the disability insurance policy or self-insured health plan if the item or service is included within a category of essential health benefits, as described in 42 USC 18022 (b) (1), and regardless of whether the disability insurance policy, self-insured health plan, or pharmacy benefit manager classifies the item or service as an essential health benefit.

(D) Exception; High Deductible Health Plans. If applying the requirement under sub. (2) to payments made by or on behalf of an enrollee or other individual covered under a high deductible health plan, as defined under 26 USC 223 (c) (2), would result in the enrollee failing to meet the definition of an eligible individual under 26 USC 223 (c) (1), the disability insurance policy, self-insured health plan, or pharmacy benefit manager shall begin applying the requirement under sub. (2) to the disability insurance policy or self-insured health plan’s deductible after the enrollee has satisfied the minimum deductible requirement under 26 USC 223 (c)(2) (A) (i). This subsection does not apply to any amounts paid for items or services that are preventive care, as described in 26 USC 223 (c) (2) (C).

(Draft Note) Section 9 340B

(A) Definitions

(1) “340B covered entity” has the meaning given for “covered entity” under 42 USC 256b (a) (4).

(2) “340B drug” has the meaning given for “covered drug” under 42 USC 256b (b) (2).

(3) “Health Benefit Plan” means a health benefit plan as defined in [insert state code] that is not prescription drug coverage provided under Part D of Medicare under Title XVIII of the federal Social Security Act, 42 USC 1395 to 1395111.

(4) “Maximum allowable cost list” means a list of pharmaceutical products that sets forth the maximum amount a pharmacy benefit manager will pay to a pharmacy or pharmacist for dispensing a pharmaceutical product. The list may directly establish the maximum amounts or set forth a method for how the maximum amounts are calculated.

(5) “Pharmaceutical product” means a prescription generic drug, prescription brand-name drug, prescription biologic, or other prescription drug, vaccine, or device.

(6) “Pharmaceutical wholesaler” means a person that sells and distributes, directly or indirectly, a pharmaceutical product and that offers to deliver the pharmaceutical product to a pharmacy or pharmacist.

(B) [State code] will be amended to read “Pharmacy benefit manager” means an entity doing business in this state that contracts to administer or manage prescription drug benefits on behalf of any of the following:

(1) An insurer

(2) Another entity that provides prescription drug benefits to residents of this state.

(C) [State Code] will be amended to read “Pharmacy benefit manager affiliate” means a pharmacy or pharmacist that is an affiliate of a pharmacy benefit manager.

(D) “Pharmacy services administrative organization” means an entity that provides contracting and other administrative services to pharmacies or pharmacists to assist them in their interactions with 3rd-party payers, pharmacy benefit managers, pharmaceutical wholesalers, and other entities.

Section 10 Pharmaceutical Product Reimbursements

(A) Contents of maximum allowable cost lists. A pharmacy benefit manager that uses a maximum allowable cost list shall include all of the following information on the maximum allowable cost list:

(1) The average acquisition cost of each pharmaceutical product and the cost of the pharmaceutical product set forth in the national average drug acquisition cost data published by the federal centers for Medicare and Medicaid services.

(2) The average manufacturer price of each pharmaceutical product.

(3) The average wholesale price of each pharmaceutical product.

(4) The brand effective rate or generic effective rate for each pharmaceutical product.

(5) Any applicable discount indexing.

(6) The federal upper limit for each pharmaceutical product published by the federal centers for Medicare and Medicaid services.

(7) The wholesale acquisition cost of each pharmaceutical product.

(8) Any other terms that are used to establish the maximum allowable costs.

(B) Regulation of maximum allowable cost lists. A pharmacy benefit manager may place or continue a particular pharmaceutical product on a maximum allowable cost list only if all of the following apply to the pharmaceutical product:

(1) The pharmaceutical product is listed as a drug product equivalent, as defined in s. 450.13 (1e), or is rated by a nationally recognized reference, such as Medi-Span or Gold Standard Drug Database, as “not rated” or “not available.”

(2) The pharmaceutical product is available for purchase by all pharmacies and pharmacists in this state from national or regional pharmaceutical wholesalers operating in this state.

(3) The pharmaceutical product has not been determined by the drug manufacturer to be obsolete.

(C) Access and update obligations. A pharmacy benefit manager that uses a maximum allowable cost list shall do all of the following:

(1) Provide access to the maximum allowable cost list to each pharmacy or pharmacist subject to the maximum allowable cost list.

(2) Update the maximum allowable cost list on a timely basis.

(3) Update the maximum allowable cost list no later than 7 days after any of the following occurs:

(a) The pharmacy acquisition cost of a pharmaceutical product increases by 10 percent or more from at least 60 percent of the pharmaceutical wholesalers doing business in this state.

(b) There is a change in the methodology on which the maximum allowable cost list is based or in the value of a variable involved in the methodology.

(4) Provide a process for a pharmacy or pharmacist subject to the maximum allowable cost list to receive prompt notification of an update to the maximum allowable cost list.

(D) Appeal Process. A pharmacy benefit manager that uses a maximum allowable cost list shall provide a process for a pharmacy or pharmacist to appeal and resolve disputes regarding claims that the maximum payment amount for a pharmaceutical product is below the pharmacy acquisition cost.

A pharmacy benefit manager required to provide an appeal process under state law shall do all of the following:

(1) Provide a dedicated telephone number and email address or website that a pharmacy or pharmacist may use to submit an appeal.

(2) Allow a pharmacy or pharmacist to submit an appeal directly on the pharmacy’s or pharmacist’s own behalf.

(3) Allow a pharmacy services administrative organization to submit an appeal on behalf of a pharmacy or pharmacist.

(4) Provide at least 7 business days after a customer transaction for a pharmacy or pharmacist to submit an appeal under this paragraph concerning a pharmaceutical product involved in the transaction.

A pharmacy benefit manager that receives an appeal from or on behalf of a pharmacy or pharmacist under this paragraph shall resolve the appeal and notify the pharmacy or pharmacist of the pharmacy benefit manager’s determination no later than 7 business days after the appeal is received by doing any of the following:

(1) If the pharmacy benefit manager grants the relief requested in the appeal, the pharmacy benefit manager shall make the requested change in the maximum allowable cost; allow the pharmacy or pharmacist to reverse and rebill the relevant claim; provide to the pharmacy or pharmacist the national drug code number published in a directory by the federal food and drug administration on which the increase or change is based; and make the change effective for each similarly situated pharmacy or pharmacist subject to the maximum allowable cost list.

(2) If the pharmacy benefit manager denies the relief requested in the appeal, the pharmacy benefit manager shall provide to the pharmacy or pharmacist a reason for the denial, the national drug code number published in a directory by the federal food and drug administration for the pharmaceutical product to which the claim relates, and the name of a national or regional pharmaceutical wholesaler operating in this state that has the pharmaceutical product currently in stock at a price below the amount specified in the pharmacy benefit manager’s maximum allowable cost list.

Notwithstanding [state code], a pharmacy benefit manager may not deny a pharmacy’s or pharmacist’s appeal under this paragraph if the relief requested in the appeal relates to the maximum allowable cost for a pharmaceutical product that is not available for the pharmacy or pharmacist to purchase at a cost that is below the pharmacy acquisition cost from the pharmaceutical wholesaler from which the pharmacy or pharmacist purchases the majority of pharmaceutical products for resale. If this subdivision applies, the pharmacy benefit manager shall revise the maximum allowable cost list to increase the maximum allowable cost for the pharmaceutical product to an amount equal to or greater than the pharmacy’s or pharmacist’s pharmacy acquisition cost and allow the pharmacy or pharmacist to reverse and rebill each claim affected by the pharmacy’s or pharmacist’s inability to procure the pharmaceutical product at a cost that is equal to or less than the maximum allowable cost that was the subject of the pharmacy’s or pharmacist’s appeal.

(E) Affiliated reimbursements. A pharmacy benefit manager may not reimburse a pharmacy or pharmacist in this state an amount less than the amount that the pharmacy benefit manager reimburses a pharmacy benefit manager affiliate for providing the same pharmaceutical product. The reimbursement amount shall be calculated on a per unit basis based on the same generic product identifier or generic code number, if applicable.

(F) Declining to dispense. A pharmacy or pharmacist may decline to provide a pharmaceutical product to an individual or pharmacy benefit manager if, as a result of the applicable maximum allowable cost list, the pharmacy or pharmacist would be paid less than the pharmacy acquisition cost of the pharmacy or pharmacist providing the pharmaceutical product.

Section 11 Professional Dispensing Fees

A pharmacy benefit manager shall pay a pharmacy or pharmacist a professional dispensing fee at a rate not less than is paid by this state under the medical assistance program for each pharmaceutical product that the pharmacy or pharmacist dispenses to an individual. The fee shall be calculated on a per unit basis based on the same generic product identifier or generic code number, if applicable. The pharmacy benefit manager shall pay the professional dispensing fee in addition to the amount the pharmacy benefit manager reimburses the pharmacy or pharmacist for the cost of the pharmaceutical product that the pharmacy or pharmacist dispenses to the individual.

Section 12 Pharmacy Benefit Manager-Imposed Fees Prohibited

A pharmacy benefit manager may not assess, charge, or collect any form of remuneration that passes from a pharmacy or pharmacist to the pharmacy benefit manager, including claim-processing fees, performance-based fees, network participation fees, or accreditation fees.

Section 13 Fiduciary Duty and Disclosures to Health Benefit Plan Sponsors

(A) A pharmacy benefit manager owes a fiduciary duty to the health benefit plan sponsor to act according to the health benefit plan sponsor’s instructions and in the best interests of the health benefit plan sponsor.

(B) A pharmacy benefit manager shall annually provide, no later than the date and using the method prescribed by the commissioner by rule, the health benefit plan sponsor with all of the following information from the previous calendar year:

(1) The indirect profit received by the pharmacy benefit manager from owning any interest in a pharmacy or service provider.

(2) Any payment made by the pharmacy benefit manager to a consultant or broker who works on behalf of the health benefit plan sponsor.

(3) From the amounts received from all drug manufacturers, the amounts retained by the pharmacy benefit manager, and not passed through to the health benefit plan sponsor, that are related to the health benefit plan sponsor’s claims or bona fide service fees.

(4) The amounts, including pharmacy access and audit recovery fees, received from all pharmacies and pharmacists that are in the pharmacy benefit manager’s network or have a contract to be in the network and, from these amounts, the amount retained by the pharmacy benefit manager and not passed through to the health benefit plan sponsor.

Section 14 License Required

No person may perform any activities of a pharmacy benefit manager without being licensed by the commissioner as an administrator or pharmacy benefit manager

Section 15 Accreditation For Network Participation

(A) A pharmacy benefit manager or a representative of a pharmacy benefit manager shall provide to a pharmacy, within 30 days of receipt of a written request from the pharmacy, a written notice of any certification or accreditation requirements used by the pharmacy benefit manager or its representative as a determinant of network participation. A pharmacy benefit manager or a representative of a pharmacy benefit manager may change its accreditation requirements no more frequently than once every 12 months.

(B) A pharmacy benefit manager may not use any certification or accreditation requirement as a determinant of pharmacy network participation that is inconsistent with, more stringent than, or in addition to the federal requirements for licensure as a pharmacy and the requirements for licensure as a pharmacy.

Section 16 Retroactive Claim Reduction

Unless required otherwise by federal law, a pharmacy benefit manager may not retroactively deny or reduce a pharmacist’s or pharmacy’s claim after adjudication of the claim unless any of the following is true:

(a) The original claim was submitted fraudulently.

(b) The payment for the original claim was incorrect. Recovery for an incorrect payment under this paragraph is limited to the amount that exceeds the allowable claim.

(c) The pharmacy services were not rendered by the pharmacist or pharmacy.

(d) In making the claim or performing the service that is the basis for the claim, the pharmacist or pharmacy violated state or federal law.

Section 17 Discriminatory Reimbursement Prohibited

(A) In this subsection, “3rd-party payer” means an entity, other than a patient or health care provider, that reimburses for and manages health care expenses.

(B) A pharmacy benefit manager may not do any of the following:

(1) Refuse to reimburse a 340B covered entity or a pharmacy or pharmacist contracted with a 340B covered entity for dispensing 340B drugs.

(2) Impose requirements or restrictions on 340B covered entities or pharmacies or pharmacists contracted with 340B covered entities that are not imposed on other entities, pharmacies, or pharmacists.

(3) Reimburse a 340B covered entity or a pharmacy or pharmacist contracted with a 340B covered entity for a 340B drug at a rate lower than the amount paid for the same drug to pharmacies or pharmacists that are not 340B covered entities or pharmacies or pharmacists contracted with a 340B covered entity.

(4) Assess a fee, charge back, or other adjustment against a 340B covered entity or a pharmacy or pharmacist contracted with a 340B covered entity after a claim has been paid or adjudicated.

(5) Restrict the access of a 340B covered entity or a pharmacy or pharmacist contracted with a 340B covered entity to a 3rd-party payer’s pharmacy network solely because the 340B covered entity or the pharmacy or pharmacist contracted with a 340B covered entity participates in the 340B drug pricing program under 42 USC 256b.

(6) Require a 340B covered entity or a pharmacy or pharmacist contracted with a 340B covered entity to contract with a specific pharmacy or pharmacist or health benefit plan in order to access a 3rd-party payer’s pharmacy network.

(7) Impose a restriction or an additional charge on a patient who obtains a 340B drug from a 340B covered entity or a pharmacy or pharmacist contracted with a 340B covered entity.

(8) Restrict the methods by which a 340B covered entity or a pharmacy or pharmacist contracted with a 340B covered entity may dispense or deliver 340B drugs.

(9) Require a 340B covered entity or a pharmacy or pharmacist contracted with a 340B covered entity to share pharmacy bills or invoices with a pharmacy benefit manager, a 3rd-party payer, or a health benefit plan.

Section 18 Regulation of Pharmacy Networks and Individual Choice

All of the following apply to a pharmacy benefit manager that sells access to networks of pharmacies or pharmacists that operate in this state:

(a) The pharmacy benefit manager shall allow a participant or beneficiary of a pharmacy benefits plan or program that the pharmacy benefit manager serves to use any pharmacy or pharmacist in this state that is licensed to dispense the pharmaceutical product that the participant or beneficiary seeks to obtain, provided that the pharmacy or pharmacist accepts the same terms and conditions that the pharmacy benefit manager has established for at least one of the networks of pharmacies or pharmacists the pharmacy benefit manager has established to serve individuals in this state.

(b) The pharmacy benefit manager may establish a preferred network of pharmacies or pharmacists and a nonpreferred network of pharmacies or pharmacists, but the pharmacy benefit manager may not prohibit a pharmacy or pharmacist from participating in either type of network in this state, provided that the pharmacy or pharmacist is licensed by this state and the federal government and accepts the same terms and conditions that the pharmacy benefit manager has established for other pharmacies or pharmacists participating in the network that the pharmacy or pharmacist wants to join.

(c) The pharmacy benefit manager may not charge a participant or beneficiary of a pharmacy benefits plan or program that the pharmacy benefit manager serves a different copayment obligation or additional fee, or provide any inducement or financial incentive, for the participant or beneficiary to use a pharmacy or pharmacist in a particular network of pharmacies or pharmacists the pharmacy benefit manager has established to serve individuals in this state.

Section 19 Gag Clauses Prohibited

A pharmacy benefit manager may not prohibit a pharmacy or pharmacist that dispenses a pharmaceutical product from, nor may a pharmacy benefit manager penalize the pharmacy or pharmacist for, informing an individual about the cost of the pharmaceutical product, the amount in reimbursement that the pharmacy or pharmacist receives for dispensing the pharmaceutical product, the cost and clinical efficacy of a less expensive alternative to the pharmaceutical product, or any difference between the cost to the individual under the individual’s pharmacy benefits plan or program and the cost to the individual if the individual purchases the pharmaceutical product without making a claim for benefits under the individual’s pharmacy benefits plan or program.

Section 20 Exclusion of Pharmacies Prohibited

No pharmacy benefit manager, 3rd-party payer, or health benefit plan may exclude a pharmacy or pharmacist from its network because the pharmacy or pharmacist serves less than a certain portion of the population of the state or serves a population living with certain health conditions.

Section 21 Audits of Pharmacies and Pharmacists

(A) In this subsection:

(1) “Audit” means a review of the accounts and records of a pharmacy or pharmacist by or on behalf of an entity that finances or reimburses the cost of health care services or prescription drugs.

(2) “Entity” means a defined network plan, as defined in s. 609.01 (1b), insurer, self- insured health plan, or pharmacy benefit manager or a person acting on behalf of a defined network plan, insurer, self-insured health plan, or pharmacy benefit manager.

(3) “Self-insured health plan” has the meaning given in s. 632.85 (1) (c).

(B) Procedures. An entity conducting an on-site or desk audit of pharmacist or pharmacy records shall do all of the following:

(1) If the audit is an audit on the premises of the pharmacist or pharmacy, notify the pharmacist or pharmacy in writing of the audit at least 2 weeks before conducting the audit.

(2) Refrain from auditing a pharmacist or pharmacy within the first 5 business days of a month unless the pharmacist or pharmacy consents to an audit during that time.

(3) If the audit involves clinical or professional judgment, conduct the audit by or in consultation with a pharmacist licensed in any state.

(4) Limit the audit review to no more than 250 separate prescriptions. For purposes of this subdivision, a refill of a prescription is not a separate prescription.

(5) Limit the audit review to claims submitted no more than 2 years before the date of the audit, unless required otherwise by state or federal law.

(6) Allow the pharmacist or pharmacy to use authentic and verifiable records of a hospital, physician, or other health care provider to validate the pharmacist’s or pharmacy’s records relating to delivery of a prescription drug and use any valid prescription that complies with requirements of the pharmacy examining board to validate claims in connection with a prescription, refill of a prescription, or change in prescription.

(7) Allow the pharmacy or pharmacist to document the delivery of a prescription drug or pharmacist services to an enrollee under a health benefit plan using either paper or electronic signature logs.

(8) Before leaving the pharmacy after concluding the on-site portion of an audit, provide to the representative of the pharmacy or the pharmacist a complete list of the pharmacy records reviewed.

(C) Requirements of Audits. An entity that conducts audits of pharmacists of pharmacies shall ensure all of the following:

(1) Each pharmacist or pharmacy audited by the entity is audited under the same standards and parameters as other similarly situated pharmacists or pharmacies audited by the entity.

(2) The entity randomizes the prescriptions that the entity audits and the entity audits the same number of prescriptions in each prescription benefit tier.

(3) Each audit of a prescription reimbursed under Part D of Medicare under 42 USC 1395w-101 et seq. is conducted separately from audits of prescriptions reimbursed under other policies or plans.

(D) Results of Audit. An entity that has conducted an audit of a pharmacist or pharmacy shall do all of the following:

(1) Deliver to the pharmacist or pharmacy a preliminary report of the audit within 60 days after the date the auditor departs from an on-site audit or the pharmacy or pharmacist submits paperwork for a desk audit. A preliminary report under this subdivision shall include claim-level information for any discrepancy reported, the estimated total amount of claims subject to recovery, and contact information for the entity or person that completed the audit so the pharmacist or pharmacy subject to the audit may review audit results, procedures, and discrepancies.

(2) Allow a pharmacist or pharmacy that is the subject of an audit to provide documentation to address any discrepancy found in the audit within 30 days after the date the pharmacist or pharmacy receives the preliminary report.

(3) Deliver to the pharmacist or pharmacy a final audit report, which may be delivered electronically, within 90 days of the date the pharmacist or pharmacy receives the preliminary report or the date of the final appeal of the audit, whichever is later. The final audit report under this subdivision shall include specific documentation of any alleged errors and shall include any response provided to the auditor by the pharmacy or pharmacist and consider and address the pharmacy’s or pharmacist’s response.

(3a) If an entity delivers to the pharmacist or pharmacy a preliminary report of the audit or final audit report that references a billing code, drug code, or other code associated with audits, the entity shall provide an electronic link to a plain language explanation of the code.

(4) Refrain from assessing a recoupment or other penalty on a pharmacist or pharmacy until the appeal process is exhausted and the final report under subd. 3. is delivered to the pharmacist or pharmacy.

(5) Refrain from accruing or charging interest between the time the notice of the audit is given under par. (b) 1. and the final report under subd. 3. has been delivered.

(6) Exclude dispensing fees from calculations of overpayments.

(7) Establish and follow a written appeals process that allows a pharmacy or pharmacist to appeal the final report of an audit and allow the pharmacy or pharmacist as part of the appeal process to arrange for, at the cost of the pharmacy or pharmacist, an independent audit.

(8) Refrain from subjecting the pharmacy or pharmacist to a recoupment or recovery for a clerical or record-keeping error in a required document or record, including a typographical or computer error, unless the error resulted in an overpayment to the pharmacy or pharmacist.

(E) Confidentiality of Audit. Information obtained in an audit under this subsection is confidential and may not be shared unless the information is required to be shared under state or federal law and except that the audit may be shared with the entity on whose behalf the audit is performed. An entity conducting an audit may have access to the previous audit reports on a particular pharmacy only if the audit is conducted by the same entity.

(F) Cooperation with Audit. If an entity is conducting an audit that is complying with this subsection in auditing a pharmacy or pharmacist, the pharmacy or pharmacist that is the subject of the audit may not interfere with or refuse to participate in the audit.

(G) Payment of Auditors. A pharmacy benefit manager or entity conducting an audit may not pay an auditor employed by or contracted with the pharmacy benefit manager or entity based on a percentage of the amount recovered in an audit.

(H) Applicability.

(1) This subsection does not apply to an investigative audit that is initiated as a result of a credible allegation of fraud or willful misrepresentation or criminal wrongdoing.

(2) If an entity conducts an audit to which a federal law applies that is in conflict with all or part of this subsection, the entity shall comply with this subsection only to the extent that it does not conflict with federal law.

Section 22 Recoupment

(a) No pharmacy benefit manager may recoup reimbursement made to a pharmacist or pharmacy for errors that have no actual financial harm to an enrollee, policy, or plan unless the error is the result of the pharmacist or pharmacy failing to comply with a formal corrective action plan.

(b) No pharmacy benefit manager may use extrapolation in calculating reimbursements that it may recoup. The finding of errors for which reimbursement will be recouped shall be based on an actual error in reimbursement and not on a projection of the number of patients served having a similar diagnosis or on a projection of the number of similar orders or refills for similar prescription drugs.

(c) A pharmacy benefit manager that recoups any reimbursement made to a pharmacist or pharmacy for an error that was the cause of financial harm shall return the recouped reimbursement to the individual or the policy or plan sponsor who was harmed by the error.

Section 23 Quality Programs

No pharmacy benefit manager may base any criteria of a quality program in a contract between a pharmacy and a pharmacy benefit manager on a factor for which the pharmacy does not have complete and exclusive control.

Section 24 Transparency Reports

(A) Beginning on [effective date], and annually thereafter, every pharmacy benefit manager shall submit to the commissioner a report that contains, from the previous calendar year, the aggregate rebate amount that the pharmacy benefit manager received from all pharmaceutical manufacturers but retained and did not pass through to health benefit plan sponsors and the percentage of the aggregate rebate amount that is retained rebates. Information required under this paragraph is limited to contracts held with pharmacies located in this state.

(B) Reports under this subsection shall be considered a trade secret under the uniform trade secret act under s. 134.90.

(C) The commissioner may not expand upon the reporting requirement under this subsection, except that the commissioner may effectuate this subsection.

Section 25 Retaliation Prohibited

(A) In this subsection, “retaliate” includes any of the following actions taken by a pharmacy benefit manager:

(1) Terminating or refusing to renew a contract with a pharmacy or pharmacist.

(2) Subjecting a pharmacy or pharmacist to increased audits.

(3) Failing to promptly pay a pharmacy or pharmacist any money the pharmacy benefit manager owes to the pharmacy or pharmacist.

(B) A pharmacy benefit manager may not retaliate against a pharmacy or pharmacist for reporting an alleged violation of this section or for exercising a right or remedy under this section.

(C) In addition to any other remedies provided by law, a pharmacy or pharmacist may bring an action in court for injunctive relief based on a violation of par. (b). In addition to equitable relief, the court may, notwithstanding s. 814.04 (1), award a pharmacy or pharmacist that prevails in such an action reasonable attorney fees and costs in prosecuting the action.

Section 26 Employee Benefit Plan Administrators, Principals, and Pharmacy Benefit Managers

(A) Definitions

(1) “Administrator” means a person who directly or indirectly solicits or collects premiums or charges or otherwise effects coverage or adjusts or settles claims for an employee benefit plan, but does not include the following persons if they perform these acts under the circumstances specified for each:

(a) A creditor on behalf of its debtor, if to obtain payment, reimbursement or other method of satisfaction from an employee benefit plan for any part of a debt owed to the creditor by the debtor.

(2) “Employee benefit plan” means an insured or wholly or partially self-insured employee benefit plan which by means of direct payment, reimbursement or other arrangement provides to one or more employees who are residents of this state benefits or services that include, but are not limited to, benefits for medical, surgical or hospital care, benefits in the event of sickness, accident, disability or death, or benefits in the event of unemployment or retirement.

(3) “Insured employee” means an employee who is a resident of this state and who is covered under an employee benefit plan.

(4) “Principal” means a person, including an insurer, that uses the services of an administrator to provide an employee benefit plan.

(B) Written Agreement Required.  An administrator may not administer an employee benefit plan in the absence of a written agreement between the administrator and a principal. The administrator and principal shall each retain a copy of the written agreement for the duration of the agreement and for 5 years thereafter.

(C) Payment to Administrator.  If a principal is an insurer, payment to the administrator of a premium or charge by or on behalf of an insured employee is payment to the insurer, but payment of a return premium or claim by the insurer to the administrator is not payment to an insured employee until the payment is received by the insured employee. This section does not limit any right of the insurer against the administrator for failure to make payments to the insurer or an insured employee.

(D) Examination and Inspection of Books and Records.

(1) The commissioner may examine, audit or accept an audit of the books and records of an administrator or pharmacy benefit manager as provided for examination of licensees under [state code], to be conducted as provided in [state code], and with costs to be paid as provided in [state code].

(2) A principal that uses an administrator may inspect the books and records of the administrator, subject to any restrictions set forth in state law and in the written agreement required, for the purpose of enabling the principal to fulfill its contractual obligations to insureds insured employees.

(E) Approval of Advertising. An administrator may not use any advertising for a/an employee benefit plan underwritten by an insurer unless the insurer approves the advertising in advance.

(F) Claim Adjustment Compensation. If an administrator adjusts or settles claims under a/an employee benefit plan, the commission, fees or charges that the principal pays the administrator may not be based on the employee benefit plan’s loss experience. This section does not prohibit compensation based on the number or amount of premiums or charges collected, or the number or amount of claims paid or processed by the administrator.

(G) Written Notice. An administrator shall prepare sufficient copies of a written notice approved in advance by the principal for distribution to all insureds insured employees of the principal and either shall distribute the copies to the insured’s insured employees or shall provide the copies to the principal for distribution to the insureds insured employees. The written notice shall contain all of the following:

(1) General. Except as otherwise provided, a person may not perform, offer to perform or advertise any service as an administrator or a pharmacy benefit manager unless the person has obtained a license. A pharmacy benefit manager that also performs services as an administrator need only obtain an administrator license.

Section 27 Responsibilities of Principal

A principal may not use the services of an administrator unless the administrator furnishes proof of licensure or exemption. An insurer or a self-insured health plan may not use the services of a pharmacy benefit manager unless the pharmacy benefit manager furnishes proof of licensure.

Section 28 Licensure

(A) The commissioner shall issue a license to act as an administrator or pharmacy benefit manager to a corporation, limited liability company or partnership that does all of the following:

(1) That the corporation, limited liability company or partnership intends in good faith to act as an administrator or pharmacy benefit manager through individuals designated in compliance with applicable laws of this state and rules and orders of the commissioner.

(2) That for each employee benefit plan or prescription drug benefit to be administered, the corporation, limited liability company or partnership has designated or will designate an individual in the corporation, limited liability company or partnership to directly administer the employee benefit plan or prescription drug benefit.

(B) The commissioner shall promulgate rules establishing the specifications that a bond supplied by an administrator or pharmacy benefit manager must satisfy to guarantee faithful performance of the administrator or pharmacy benefit manager.

(C) Payment. An administrator or pharmacy benefit manager shall pay the annual renewal fee required under state law for each annual renewal of a license by the date specified by an established schedule.

(D) Social Security Number, Federal Employer Identification Number or Statement.  At an annual renewal, an administrator or pharmacy benefit manager shall provide his or her social security number, if the administrator is an individual unless he or she does not have a social security number, or its federal employer identification number, if the administrator or pharmacy benefit manager is a corporation, limited liability company or partnership, if the social security number or federal employer identification number was not previously provided on the application for the license or at a previous renewal of the license. If an administrator who is an individual does not have a social security number, the individual shall provide to the commissioner, at each annual renewal and on a form prescribed by the department of children and families, a statement made or subscribed under oath or affirmation that the administrator does not have a social security number.

(E) If an administrator or pharmacy benefit manager fails to pay the annual renewal fee as provided under sub. (1) or fails to provide a social security number, federal employer identification number or statement made or subscribed under oath or affirmation as required under sub. (1m), the commissioner shall suspend the administrator’s or pharmacy benefit manager’s license effective the day following the last day when the annual renewal fee may be paid, if the commissioner has given the administrator or pharmacy benefit manager reasonable notice of when the fee must be paid to avoid suspension.

(F) If, within 60 days from the effective date of suspension, an administrator or pharmacy benefit manager pays the annual renewal fee or provides the social security number, federal employer identification number or statement made or subscribed under oath or affirmation, or both if the suspension was based upon a failure to do both, the commissioner shall reinstate the administrator’s or pharmacy benefit manager’s license effective as of the date of suspension.

(G) If payment is not made or the social security number, federal employer identification number or statement made or subscribed under oath or affirmation is not provided within 60 days from the effective date of suspension, the commissioner shall revoke the administrator’s or pharmacy benefit manager’s license.

(H) Except as otherwise provided, the commissioner may revoke, suspend or limit the license of an administrator or pharmacy benefit manager after a hearing if the commissioner makes any of the following findings:

(1) That the administrator or pharmacy benefit manager is unqualified to perform the responsibilities of an administrator or pharmacy benefit manager.

(2) That the administrator or pharmacy benefit manager has repeatedly or knowingly violated an applicable law, rule or order of the commissioner.

(3) If the licensee is an administrator, that the administrator’s methods or practices in administering an employee benefit plan endanger the interests of insureds insured employees or the public, or that the financial resources of the administrator are inadequate to safeguard the interests of insureds insured employees or the public.

(I) If the licensee is a pharmacy benefit manager, that the pharmacy benefit manager’s methods or practices in administering a prescription drug benefit endanger the interests of enrollees or the public, or that the financial resources of the pharmacy benefit manager are inadequate to safeguard the interests of enrollees or the public.

(J) A person whose license has been revoked may apply for a new license only after the expiration of 5 years from the date of the order revoking the administrator’s or pharmacy benefit manager’s license, unless the order specifies a lesser period.

(K) The commissioner, after ordering a suspension or revocation under this subsection, may allow a pharmacy benefit manager to continue to provide services for the purpose of providing continuity of care in prescription drug benefits to existing enrollees.

(L) Regulation. Nothing in this chapter gives the commissioner the authority to impose requirements on a/an employee benefit plan that is exempt from state law under 29 USC 1144 (b).

Section 29 Application of Prescription Drug Payments

(A) For policies and plans containing provisions inconsistent with the treatment of state requirements, that treatment first applies to policy or plan years beginning on January 1 of the year following the year in which this paragraph takes effect, except as otherwise provided.

(B) For policies or plans that are affected by a collective bargaining agreement containing provisions inconsistent with the treatment required by state law, that treatment first applies to policy or plan years beginning on the effective date of this paragraph or on the day on which the collective bargaining agreement is newly established, extended, modified, or renewed, whichever is later.