An Act To Protect Against Unfair Prescription Drug Practices
Maine Legislature, Session 121, LD 0554
Committee: Health and Human Services
Sponsors: TREAT, LEMOINE, HALL, HATCH, MA YO, STANLEY, KANE, O'NEIL

Legislative Document 
No. 554 
S.P. 194 
In Senate, February 6, 2003 
An Act To Protect Against Unfair Prescription Drug Practices 
Reference to the Committee on Health and Human Services suggested and ordered printed. 
Presented by Senator TREAT of Kennebec. 
Cosponsored by Representative LEMOINE of Old Orchard Beach and 
JOY J. O'BRIEN 
Secretary of the Senate 
Senators: HALL of Lincoln, HATCH of Somerset, LafOUNTAIN of York, MA YO of 
Sagadahoc, STANLEY of Penobscot, Representatives: CANA V AN of Waterville, KANE of 
Saco, O'NEIL of Saco. 
Printed on recycled paper 
Be it enacted by the People of the State of Maine as follows: 
Sec. I. 22 MRSA c. 603, sub-c. 4 is enacted to read: 
SUBCHAPTER 4 
PRESCRIPTION DRUG PRACTICES 
§2699. 
Prescription drug practices 
Pharmacy benefits managers shall and contracts for pharmaGY 
benefits management must comply with the requirements of this 
section. 
1. 
Definitions. 
As 
used 
in this 
chapter, 
unless 
the 
context 
otherwise 
indicates, 
the 
following 
terms 
have 
the 
following meanings. 
A. 
"Covered entity" means a nonprofit hospital or medical 
service 
organization, 
insurer, 
health 
coverage 
plan 
or 
health maintenance organization licensed pursuant to Title 
or 24-Ai a health program administered by the department 
or the State in the capacity of provider of health coverage; 
or 
an 
employer, 
labor 
union or other group 
of persons 
organized in the State that provides health coverage to 
covered 
individuals 
who 
are 
employed 
or 
reside 
in 
the 
State. 
"Covered entity" does not include a health plan that 
provides 
coverage 
only 
for 
accidental 
injury, 
specified 
disease, hospital indemnity, Medicare supplement, disability 
income or other long-term care. 
B. 
"Covered 
individual" 
means 
a 
member, 
participant, 
enrollee, contract holder or policy holder or beneficiary of 
a 
covered entity who is provided health coverage by the 
covered entity. 
"Covered individual" includes a dependent 
or other person provided health coverage through a policy, 
contract or plan for a covered individual. 
C. 
"ERISA" means the Employee Retirement Income Security 
Act of 1974 , 
United States Code, Sections 1001 to 1461 
(1988) • 
D. 
"Generic drug" means a chemically equivalent copy of a 
brand-name drug with an expired patent. 
E. 
"Labeler" 
means 
an 
entity or 
person that 
receives 
prescription drugs 
from 
a 
manufacturer or wholesaler and 
repackages those drugs for later retail sale and that has a 
labeler code from the federal Food and Drug Administration 
under 21 Code of Federal Regulations, 270.20 (1999). 
F. 
"Pharmacy benefits management" means the procurement of 
prescription drugs at a 
negotiated rate for dispensation 
within this State to covered individuals, the administration 
or management of prescription drug benefits provided by a 
covered entity for the benefit of covered individuals or any 
of 
the 
following 
services 
provided with 
regard 
to 
the 
administration of pharmacy benefits! 
(1) 
Mail service pharmacy; 
(2) 
Claims processing, retail network management and 
payment of claims to pharmacies for prescription drugs 
dispensed to covered individuals; 
(3) 
Clinical 
management 
formulary 
development 
and 
management services; 
(4) 
Rebate contracting and administration; 
(5) 
Certain 
patient 
compliance, 
therapeutic 
intervention and generic substitution programs; and 
(6) 
Disease management programs. 
G. 
"Pharmacy 
benefits 
manager" 
means 
an 
entity 
that 
performs pharmacy benefits management. 
"Pharmacy benefits 
manager" includes a person or entity acting for a pharmacy 
benefits manager in a contractual or employment relationship 
in the performance of pharmacy benefits management for 
a 
covered entity and includes mail service pharmacy. 
2. Required practices. 
A pharmacy benefits manager owes a 
fiduciary duty to a covered entity and covered individuals and 
shall discharge that duty in accordance with the provisions of 
ERISA, state and federal law and this section. 
A. 
A pharmacy benefits manager shall perform its duties 
wi th care, skill, prudence and diligence and in accordance 
with the standards of conduct applicable to a fiduciary in 
an enterprise of a like character and with like aims. 
B. 
A pharmacy benefits manager shall discharge its duties 
with respect to the covered entity and covered individuals 
solely in the interests of the covered individuals and for 
the 
primary 
purpose 
of 
providing 
benefits 
to 
covered 
individuals 
and 
defraying 
reasonable 
expenses 
of 
administering health plans. 
C. 
A pharmacy benefits manager shall notify the covered 
entity in writing of any activity, policy or practice of the 
pharmacy 
benefits 
manager 
that 
directly 
or 
indirectly 
presents any conflict of interest with the duties imposed by 
this subsection. 
D. 
A pharmacy benefits manager shall provide to a covered 
enti ty all financial and utilization information requested 
by the covered entity relating to the provision of benefits 
to covered individuals through that covered entity and all 
financial and utilization information relating to services 
to 
that 
covered 
entity. 
A 
pharmacy 
benefits 
manager 
providing information under 
this paragraph 
may 
designate 
that material 
as 
confidential. 
Information designated as 
confidential by a pharmacy benefits manager and provided to 
a covered entity under this paragraph may not be disclosed 
to any person without the consent of the pharmacy benefits 
manager, 
except that disclosure may 
be 
made 
in 
a 
court 
filing under the Maine Unfair Trade Practices Act or when 
authorized by that Act or ordered by a court of this State 
for good cause shown. 
E. 
With 
regard 
to 
the 
dispensation 
of 
a 
substitute 
prescription 
drug 
for 
a 
prescribed 
drug 
to 
a 
covered 
individual the following provisions apply. 
(1) 
The pharmacy benefits manager 
lower-priced 
generi~ __ drug 
for 
prescribed drug. 
may substitute a 
a 
higher-priced 
(2) 
The pharmacy benefits manager may not substitute a 
higher-priced 
generic 
drug 
for 
a 
lower-priced 
prescribed drug. 
(3) 
The pharmacy benefits manager shall consult with 
the prescribing health professional or that person's 
authorized representative and shall: 
i£L Disclose 
the 
costs 
of 
both 
drugs 
to 
the 
covered individual and the covered entity and any 
benefit or payment directly or indirectly accruing 
to the pharmacy benefits manager as a 
result of 
the substitution; and 
(b) Obtain the approval of the prescribing health 
professional 
or 
that 
person's 
authorized 
representative for the substitution. 
( 4 ) 
The pharmacy bene fits manager shall transfer ln 
full to the covered entity or covered individuals any 
benefit or payment received in any form by the pharmacy 
benefits manager as a result of the prescription drug 
substitution. 
F. 
A pharmacy benefits manager that derives any payment or 
benefit for the dispensation of prescription drugs within 
the State based on volume of sales for certain prescription 
drugs or classes or brands of drugs within the State shall 
pass that payment or benefit on in full to the covered 
entity or covered individuals. 
G. 
A 
pharmacy 
benefits 
manager 
shall 
disclose 
to 
the 
covered entity all financial 
terms 
and 
arrangements 
for 
remuneration of any kind that apply between the pharmacy 
benefits manager and any prescription drug manufacturer or 
labeler, including, without limitation, formulary management 
and 
drug-switch 
programs, 
educational 
support, 
claims 
processing and pharmacy network fees that are charged from 
retail pharmacies and data sales fees. 
3. 
Prohibition. 
A pharmacy benefits manager may not in a 
contract 
with 
a 
covered 
entity 
or 
a 
prescription 
drug 
manufacturer or labeler accept or agree to an obligation that is 
inconsistent with the fiduciary duties imposed by subsection 2, 
ERISA or other state or federal law. 
4. 
Waiver 
prohibited. 
Any 
agreement 
to 
'valve 
the 
provisions of this section is against public policy and void. 
5. 
Enforcement. 
A violation of this section is a violation 
of the Maine Unfair Trade Practices Act. 
Compliance with this 
section may be enforced through private action or action by the 
Attorney General. 
A. 
A covered 
entit~r, covered individual or other person 
injured as 
a 
result of 
a 
violation of this section is 
eligible to bring a private action as a person pursuant to 
the Unfair Trade Practices Act. 
B. 
An 
action by the Attorney General pursuant to this 
subsection is subject to the provisions of this paragraph 
and the Maine Unfair Trade Practices Act. 
Each violation of 
this section is a civil violation for which the Attorney 
General 
may 
obtain, 
in 
addition 
to 
other 
remedies, 
injunctive relief and a 
fine in an amount not to exceed 
$10,000 per violation, plus the costs of suit, including 
necessary 
and 
reasonable 
investigative 
costs, 
reasonable 
expert fees and reasonable attorney's fees. 
SUMMARY 
This 
bill 
specifies 
the 
fiduciary 
duties 
of 
pharmacy 
benefits 
managers 
and 
the 
obligation 
to 
serve 
the 
covered 
entities with whom 
they contract and the covered individuals 
provided health care benefits by the covered entities. 
The bill 
prohibits 
contractual 
terms 
that 
are 
inconsistent 
with 
the 
pharmacy benefits manager I s fiduciary duties. 
The bill requires 
payment to a pharmacy benefits manager based on volume of certain 
drugs or as a result of substitution of drugs to be passed on to 
the covered entity or covered individuals. 
The bill requires 
disclosure of financial 
terms that apply between 
a 
pharmacy 
benefits 
manager 
and 
a 
manufacturer 
or 
labeler. 
The 
bill 
requires 
consultation with 
and 
agreement 
of 
the 
prescribing 
health professional or 
a 
representative of that professional 
before a pharmacy benefits manager may switch a prescription drug 
to be dispensed to a 
covered individual. 
The bill prohibits 
agreements to waive provisions of the law. Violations of the law 
are violations of the Maine Unfair Trade Practices Act and are 
enforceable by private action or the Attorney General.