AB 7

This bill generally requires pharmacy benefit managers to be licensed with the

commissioner of insurance or to have an employee benefit plan administrator license

under current law. The bill also establishes certain requirements on pharmacy

benefit managers and certain health plans regarding their interactions with

pharmacies and pharmacists. Under the bill, a pharmacy benefit manager is an

entity that contracts to administer or manage prescription drug benefits on behalf

of an insurer, a cooperative, or another entity that provides prescription drug

benefits to Wisconsin residents.

Licensure of pharmacy benefit managers

The bill requires a pharmacy benefit manager to be licensed either as a

pharmacy benefit manager or as an employee benefit plan administrator, which is

an existing license under current law, in order to perform the activities of a pharmacy

benefit manager. The bill specifies that an entity that is both an employee benefit

plan administrator and a pharmacy benefit manager need only have a single license

as an administrator. To obtain a license, the pharmacy benefit manager must pay

the applicable fee; supply a bond; provide its federal employer identification number;

and show to the commissioner that the pharmacy benefit manager intends to act in

good faith in compliance with applicable laws, rules, and commissioner's orders

through certain competent and trustworthy individuals, to designate an individual

to directly administer the prescription drug benefits, and, if not organized in

Wisconsin, to agree to be subject to the jurisdiction of the commissioner and

Wisconsin courts. Under the bill, pharmacy benefit manager licenses may be

limited, suspended, or revoked for the same reasons as for employee benefit plan

administrator licenses, which include that the pharmacy benefit manager is

unqualified; repeatedly or knowingly violates laws, rules, or commissioner's orders;

endangers enrollees or the public; or has inadequate financial resources. After a

pharmacy benefit manager's license is ordered suspended or revoked, the

commissioner may allow the pharmacy benefit manager to continue to provide

services for the purpose of providing continuity of care to existing enrollees. In

addition to powers the commissioner has generally to implement and enforce

insurance-related laws, the bill allows the commissioner to examine, audit, or accept

an audit of a pharmacy benefit manager in the same manner as employee benefit

plan administrators and insurers and to promulgate any rules to implement

licensure of pharmacy benefit managers.

Pharmacy benefit manager regulation

Unless federal law requires otherwise, a pharmacy benefit manager is

prohibited in the bill from retroactively denying a pharmacist's or pharmacy's claim

unless the original claim was fraudulent, the payment of the original claim was

incorrect, the pharmacy services were not rendered by the pharmacist or pharmacy,

the pharmacist or pharmacy violated state or federal law, or the reduction is