Bill Text: IL HB3631 | 2023-2024 | 103rd General Assembly | Chaptered

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Bill Title: Amends the Pharmacy Benefit Managers Article of the Illinois Insurance Code. Provides that a pharmacy benefit manager may not retaliate against a pharmacist or pharmacy for disclosing information in a court, in an administrative hearing, before a legislative commission or committee, in any other proceeding, or to a government or law enforcement agency, if the pharmacist or pharmacy has reasonable cause to believe that the disclosed information is evidence of a violation of a State or federal law, rule, or regulation. Provides that a pharmacist or pharmacy shall make commercially reasonable efforts to limit the disclosure of confidential and proprietary information. Provides that retaliatory actions against a pharmacy or pharmacist include specified actions.

Spectrum: Strong Partisan Bill (Democrat 32-2)

Status: (Passed) 2023-08-04 - Public Act . . . . . . . . . 103-0453 [HB3631 Detail]

Download: Illinois-2023-HB3631-Chaptered.html

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Public Act 103-0453
HB3631 Enrolled LRB103 30054 BMS 56477 b
AN ACT concerning regulation.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Insurance Code is amended by
changing Section 513b1 as follows:
(215 ILCS 5/513b1)
Sec. 513b1. Pharmacy benefit manager contracts.
(a) As used in this Section:
"340B drug discount program" means the program established
under Section 340B of the federal Public Health Service Act,
42 U.S.C. 256b.
"340B entity" means a covered entity as defined in 42
U.S.C. 256b(a)(4) authorized to participate in the 340B drug
discount program.
"340B pharmacy" means any pharmacy used to dispense 340B
drugs for a covered entity, whether entity-owned or external.
"Biological product" has the meaning ascribed to that term
in Section 19.5 of the Pharmacy Practice Act.
"Maximum allowable cost" means the maximum amount that a
pharmacy benefit manager will reimburse a pharmacy for the
cost of a drug.
"Maximum allowable cost list" means a list of drugs for
which a maximum allowable cost has been established by a

pharmacy benefit manager.
"Pharmacy benefit manager" means a person, business, or
entity, including a wholly or partially owned or controlled
subsidiary of a pharmacy benefit manager, that provides claims
processing services or other prescription drug or device
services, or both, for health benefit plans.
"Retail price" means the price an individual without
prescription drug coverage would pay at a retail pharmacy, not
including a pharmacist dispensing fee.
"Third-party payer" means any entity that pays for
prescription drugs on behalf of a patient other than a health
care provider or sponsor of a plan subject to regulation under
Medicare Part D, 42 U.S.C. 1395w-101, et seq.
(b) A contract between a health insurer and a pharmacy
benefit manager must require that the pharmacy benefit
manager:
(1) Update maximum allowable cost pricing information
at least every 7 calendar days.
(2) Maintain a process that will, in a timely manner,
eliminate drugs from maximum allowable cost lists or
modify drug prices to remain consistent with changes in
pricing data used in formulating maximum allowable cost
prices and product availability.
(3) Provide access to its maximum allowable cost list
to each pharmacy or pharmacy services administrative
organization subject to the maximum allowable cost list.

Access may include a real-time pharmacy website portal to
be able to view the maximum allowable cost list. As used in
this Section, "pharmacy services administrative
organization" means an entity operating within the State
that contracts with independent pharmacies to conduct
business on their behalf with third-party payers. A
pharmacy services administrative organization may provide
administrative services to pharmacies and negotiate and
enter into contracts with third-party payers or pharmacy
benefit managers on behalf of pharmacies.
(4) Provide a process by which a contracted pharmacy
can appeal the provider's reimbursement for a drug subject
to maximum allowable cost pricing. The appeals process
must, at a minimum, include the following:
(A) A requirement that a contracted pharmacy has
14 calendar days after the applicable fill date to
appeal a maximum allowable cost if the reimbursement
for the drug is less than the net amount that the
network provider paid to the supplier of the drug.
(B) A requirement that a pharmacy benefit manager
must respond to a challenge within 14 calendar days of
the contracted pharmacy making the claim for which the
appeal has been submitted.
(C) A telephone number and e-mail address or
website to network providers, at which the provider
can contact the pharmacy benefit manager to process

and submit an appeal.
(D) A requirement that, if an appeal is denied,
the pharmacy benefit manager must provide the reason
for the denial and the name and the national drug code
number from national or regional wholesalers.
(E) A requirement that, if an appeal is sustained,
the pharmacy benefit manager must make an adjustment
in the drug price effective the date the challenge is
resolved and make the adjustment applicable to all
similarly situated network pharmacy providers, as
determined by the managed care organization or
pharmacy benefit manager.
(5) Allow a plan sponsor contracting with a pharmacy
benefit manager an annual right to audit compliance with
the terms of the contract by the pharmacy benefit manager,
including, but not limited to, full disclosure of any and
all rebate amounts secured, whether product specific or
generalized rebates, that were provided to the pharmacy
benefit manager by a pharmaceutical manufacturer.
(6) Allow a plan sponsor contracting with a pharmacy
benefit manager to request that the pharmacy benefit
manager disclose the actual amounts paid by the pharmacy
benefit manager to the pharmacy.
(7) Provide notice to the party contracting with the
pharmacy benefit manager of any consideration that the
pharmacy benefit manager receives from the manufacturer

for dispense as written prescriptions once a generic or
biologically similar product becomes available.
(c) In order to place a particular prescription drug on a
maximum allowable cost list, the pharmacy benefit manager
must, at a minimum, ensure that:
(1) if the drug is a generically equivalent drug, it
is listed as therapeutically equivalent and
pharmaceutically equivalent "A" or "B" rated in the United
States Food and Drug Administration's most recent version
of the "Orange Book" or have an NR or NA rating by
Medi-Span, Gold Standard, or a similar rating by a
nationally recognized reference;
(2) the drug is available for purchase by each
pharmacy in the State from national or regional
wholesalers operating in Illinois; and
(3) the drug is not obsolete.
(d) A pharmacy benefit manager is prohibited from limiting
a pharmacist's ability to disclose whether the cost-sharing
obligation exceeds the retail price for a covered prescription
drug, and the availability of a more affordable alternative
drug, if one is available in accordance with Section 42 of the
Pharmacy Practice Act.
(e) A health insurer or pharmacy benefit manager shall not
require an insured to make a payment for a prescription drug at
the point of sale in an amount that exceeds the lesser of:
(1) the applicable cost-sharing amount; or

(2) the retail price of the drug in the absence of
prescription drug coverage.
(f) Unless required by law, a contract between a pharmacy
benefit manager or third-party payer and a 340B entity or 340B
pharmacy shall not contain any provision that:
(1) distinguishes between drugs purchased through the
340B drug discount program and other drugs when
determining reimbursement or reimbursement methodologies,
or contains otherwise less favorable payment terms or
reimbursement methodologies for 340B entities or 340B
pharmacies when compared to similarly situated non-340B
entities;
(2) imposes any fee, chargeback, or rate adjustment
that is not similarly imposed on similarly situated
pharmacies that are not 340B entities or 340B pharmacies;
(3) imposes any fee, chargeback, or rate adjustment
that exceeds the fee, chargeback, or rate adjustment that
is not similarly imposed on similarly situated pharmacies
that are not 340B entities or 340B pharmacies;
(4) prevents or interferes with an individual's choice
to receive a covered prescription drug from a 340B entity
or 340B pharmacy through any legally permissible means,
except that nothing in this paragraph shall prohibit the
establishment of differing copayments or other
cost-sharing amounts within the benefit plan for covered
persons who acquire covered prescription drugs from a

nonpreferred or nonparticipating provider;
(5) excludes a 340B entity or 340B pharmacy from a
pharmacy network on any basis that includes consideration
of whether the 340B entity or 340B pharmacy participates
in the 340B drug discount program;
(6) prevents a 340B entity or 340B pharmacy from using
a drug purchased under the 340B drug discount program; or
(7) any other provision that discriminates against a
340B entity or 340B pharmacy by treating the 340B entity
or 340B pharmacy differently than non-340B entities or
non-340B pharmacies for any reason relating to the
entity's participation in the 340B drug discount program.
As used in this subsection, "pharmacy benefit manager" and
"third-party payer" do not include pharmacy benefit managers
and third-party payers acting on behalf of a Medicaid program.
(g) A violation of this Section by a pharmacy benefit
manager constitutes an unfair or deceptive act or practice in
the business of insurance under Section 424.
(h) A provision that violates subsection (f) in a contract
between a pharmacy benefit manager or a third-party payer and
a 340B entity that is entered into, amended, or renewed after
July 1, 2022 shall be void and unenforceable.
(i)(1) A pharmacy benefit manager may not retaliate
against a pharmacist or pharmacy for disclosing information in
a court, in an administrative hearing, before a legislative
commission or committee, or in any other proceeding, if the

pharmacist or pharmacy has reasonable cause to believe that
the disclosed information is evidence of a violation of a
State or federal law, rule, or regulation.
(2) A pharmacy benefit manager may not retaliate against a
pharmacist or pharmacy for disclosing information to a
government or law enforcement agency, if the pharmacist or
pharmacy has reasonable cause to believe that the disclosed
information is evidence of a violation of a State or federal
law, rule, or regulation.
(3) A pharmacist or pharmacy shall make commercially
reasonable efforts to limit the disclosure of confidential and
proprietary information.
(4) Retaliatory actions against a pharmacy or pharmacist
include cancellation of, restriction of, or refusal to renew
or offer a contract to a pharmacy solely because the pharmacy
or pharmacist has:
(A) made disclosures of information that the
pharmacist or pharmacy has reasonable cause to believe is
evidence of a violation of a State or federal law, rule, or
regulation;
(B) filed complaints with the plan or pharmacy benefit
manager; or
(C) filed complaints against the plan or pharmacy
benefit manager with the Department.
(j) (i) This Section applies to contracts entered into or
renewed on or after July 1, 2022.

(k) (j) This Section applies to any group or individual
policy of accident and health insurance or managed care plan
that provides coverage for prescription drugs and that is
amended, delivered, issued, or renewed on or after July 1,
2020.
(Source: P.A. 101-452, eff. 1-1-20; 102-778, eff. 7-1-22;
revised 8-19-22.)