AB 114

This bill generally allows the commissioner of insurance to regulate pharmacy

benefit managers by requiring them to register. The bill also establishes certain

price transparency requirements and requirements on contracts the pharmacy

benefit manager enters into with pharmacies, pharmacists, or health benefit plan

sponsors among other requirements.

Registration of pharmacy benefit managers

The bill prohibits a person, except an insurer already regulated by the

commissioner, from performing any activities of a pharmacy benefit manager in this

state without first registering with the commissioner. Certain pharmacy benefit

managers must be licensed by the Pharmacy Examining Board and registered as a

pharmacy benefit manager. If the Pharmacy Examining Board revokes the

pharmacy or distributor license for such a pharmacy benefit manager, the

commissioner must revoke the pharmacy benefit manager's registration. An

applicant for registration as a pharmacy benefit manager must file an appropriate

application and pay any registration fee set by the commissioner. A registration is

valid for one year. The commissioner may refuse to register a pharmacy benefit

manager for which a previous registration was suspended or revoked.

Under the bill, the commissioner, after a hearing, may suspend or revoke a

registration of a pharmacy benefit manager if the registered pharmacy benefit

manager, or an officer, director, or employee of a registered pharmacy benefit

manager, does any of the actions specified in the bill. The commissioner may

promulgate rules necessary to carry out the intent of pharmacy benefit manager

registration. The bill also allows the commissioner to use his or her authority that

is granted to regulate insurers to similarly regulate pharmacy benefit managers,

including the authority to require reports, conduct examinations, and issue orders.

The commissioner is required to promulgate certain rules, including rules regarding

formulary development, required disclosures, and a standardized medical

exceptions approval process, among others.

The bill requires pharmacy benefit managers to provide a reasonably adequate

and accessible network of pharmacies. Pharmacy benefit managers are not allowed

to include mail-order pharmacies in their calculation of network adequacy. The bill

requires pharmacy benefit managers to submit a network adequacy report to the

commissioner. The bill also imposes on pharmacy benefit managers a current law

requirement on health maintenance organizations, limited service health

organizations, and preferred provider plans that provide coverage of pharmaceutical

services when performed by one or more selected pharmacists to provide an annual

period of at least 30 days during which any pharmacist may elect to participate in

the organization or plan under its terms as a selected provider for at least one year.

Pharmacy benefit manager regulation

The bill requires pharmacy benefit managers to refrain from certain actions in