An Act To Assist Maine Pharmacies
Maine Legislature, Session 123, LD 1287
Committee: Business, Research and Economic Development
Sponsors: DIAMOND, ROBINSON

Legislative Document 
No. 1287 
S.P.450 
March 9, 2007 
An Act To Assist Maine Pharmacies 
Reference to the Committee on Business, Research and Economic Development suggested 
and ordered printed. 
Presented by Senator DIAMOND of Cumberland. 
Cosponsored by Representative ROBINSON of Raymond. 
Printed 011 recycled paper 
JOY J. O'BRIEN 
Secretary of the Senate 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 32 MRSA c. 117, sub-c. 13 is enacted to read: 
SUBCHAPTER 13 
PRESCRIPTION DRUG PRACTICES 
§13831. Short title 
This subchapter may be known and cited as "the Prescription Drug Practices Act." 
§13832. Definitions 
As used in this subchapter, unless the context otherwise indicates, the following 
terms have the following meanings. 
1. Bureau. "Bureau" means the Bureau of Insurance. 
2. Covered entity. "Covered entity" means a nonprofit hospital or medical service 
organization, insurer, health coverage plan or health maintenance organization licensed 
pursuant to Title 24 or 24-A; 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, long-term care or other limited 
benefit health insurance policies and contracts. 
3. 
Covered individual. 
"Covered individual" means a member, partiCipant, 
enrollee, contract holder or policyholder 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. 
4. Generic drug. "Generic drug" means a chemically equivalent copy of a brand-
name drug with an expired patent. 
5. Labeler. "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, Section 207.20 (2006). 
6. Pharmacist. "Pharmacist" means an individual licensed by this State to engage in 
the practice of pharmacy. 
7. Pharmacy. "Pharmacy" means a retail drug outlet registered with the board. 
8. Pharmacy benefits management. "Phannacy benefits management" means the 
arrangement for the procurement of prescription drugs at a negotiated rate for 
dispensation within the State to covered individuals, the administration or management of 
prescription drug benefits provided by a health insurance plan for the benefit of 
beneficiaries or any of the following services provided with regard to the administration 
of phannacy benefits: 
A. Mail-order phannacy services; 
B. Claims processing, retail network management as defined by the department by 
rule and payment of claims to phannacies for prescription drugs dispensed to 
beneficiaries; 
C. Clinical fonnulary development and management services; 
D. Rebate contracting and administration; 
E. 
Certain patient compliance, therapeutic intervention and generic substitution 
program services; and 
F. Disease management program services. 
9. Pharmacy benefits manager. "Phannacy benefits manager" means an entity that 
7 
perfonns phannacy benefits management. 
"Phannacy benefits manager" includes a 
person or entity acting for a phannacy benefits manager in a contractual or employment 
relationship in the perfonnance of phannacy benefits management for a covered entity 
and includes mail-order phannacy services. 
10. Superintendent. "Superintendent" means the Superintendent of Insurance. 
§13833. Certificate of authority 
1. Certificate required. A person or entity is prohibited from acting or operating as 
a phannacy benefits manager in this State without a valid certificate of authority issued 
by the bureau. The failure to obtain a certificate while acting or operating as a phannacy 
benefits manager is a civil violation for which a fine of not less than $5,000 and not more 
than $10,000 may be adjudged. 
2. Application. An application for a certificate of authority to act as a phannacy 
benefits manager may be obtained from the bureau. The application must include or 
attach the following: 
A. All basic organizational documents of the phannacy benefits manager, including, 
but not limited to, the articles of incomoration, articles of association, bylaws, 
partnership agreement, trade name certificate, trust agreement, shareholder agreement 
and other applicable documents and all amendments to those documents; 
B. The names, addresses, official positions and professional qualifications of the 
individuals who are responsible for the conduct of the affairs of the pharmacy 
benefits manager. including all members of the board of directors, board of trustees. 
executive committee. any other governing board or committee, the principal officers 
in the case of a corporation. the partners or members in the case of a partnership or 
association and any other person who exercises control or influence over the affairs 
of the phannacy benefits manager; 
C. 
A certificate of compliance issued by the board pursuant to section 13834 
indicating that the phannacy benefits manager's plan of operation is consistent with 
any rules adopted by the board; 
D. Annual statements or reports for the 3 most recent years or such other infonnation 
as the bureau may require in order to review the current financial condition of the 
applicant; 
E. 
If the applicant is not currently acting as a phannacy benefits manager, a 
statement of the amounts and sources of funds available for organization expenses 
and the proposed arrangements for reimbursement and compensation of incorporators 
or other principals; 
F. The name and address of the agent for service of process in this State; 
G. 
A detailed description of the claims processing services, phannacy services, 
insurance services, other prescription drug or device services, audit procedures for 
network phannacies or other administrative services to be provided; 
H. All incentive arrangements or programs, including, but not limited to, rebates, 
discounts, disbursements or any other similar financial program or arrangement 
relating to income or consideration received or negotiated, directly or indirectly, with 
any phannaceutical company that relates to prescription drug or device services, 
including at a minimum infonnation on the fonnula or other method for calculation 
and amount of the incentive arrangements, rebates or other disbursements, the 
identity of the associated drug or device and the dates and amounts of these 
disbursements; 
I. Other infonnation as the bureau may require; and 
J. A filing fee of $5,000. 
3. Inspection. The applicant shall make available for inspection by the bureau 
copies of all contracts with insurers, phannaceutical manufacturers or other persons using 
the services of the phannacy benefits manager for phannacy benefits management 
servIces. 
4. Denial of certificate. The bureau shall not issue a certificate of authority if it 
detennines that the phannacy benefits manager or any principal of the phannacy benefits 
manager is not competent, trustworthy, financially responsible or of good personal and 
business reputation or has had an insurance license or phannacy license denied for cause 
by any state. 
5. Fidelity bond. A phannacy benefits manager shall maintain a fidelity bond equal 
to at least 10% of the amount of the funds handled or managed annually by the phannacy 
benefits manager. The bureau may require an amount in excess of $500,000 but not more 
than 10% of the amount of the funds handled or managed annually by the phannacy 
benefits manager. A copy of the bond must be provided to the bureau. 
§13834. Certificate of compliance 
1. Plan of operation submitted to the board. Each pharmacy benefits manager 
seeking to become certified under section 13833 in this State shall submit its plan of 
operation for review in a format determined by the board. 
2. Rules. The board shall adopt rules, including, but not limited to, the review of the 
pharmacy benefits manager plan of operation, the format required, the filing fee for a 
certificate of compliance, the requirements for recertification under section 13833 and 
any other information that the board may require to complete its review. The fees 
collected must be used for the purpose of regulating pharmacy benefits managers. 
3. Approval by the board. If the plan of operation is approved by the board, the 
board shall issue the pharmacy benefits manager a certificate of compliance. 
Any 
subsequent material changes in the plan of operation must be filed with the board. 
§13835. Disclosure required 
1. 
Disclosures of ownership interests and affiliations required. A pharmacy 
benefits manager shall disclose to the bureau any ownership interest or affiliation of any 
kind with: 
A. Any insurance company responsible for providing benefits directly or through 
reinsurance to any plan for which the pharmacy benefits manager provides services; 
or 
B. Any parent company, subsidiary, other entity or business relating to the provision 
of pharmacy services or other prescription drug or device services, or a 
pharmaceutical manufacturer. 
2. Material changes in ownership. A pharmacy benefits manager shall notify the 
bureau in writing within 5 calendar days of any material change in its ownership. 
3. Disclosures of agreements. A pharmacy benefits manager shall disclose to the 
bureau the following agreements and practices: 
A. An agreement with a pharmaceutical manufacturer to favor the manufacturer's 
products over a competitor's products, to place the manufacturer's drug on the 
pharmacy benefits manager's preferred list or formulary or to switch the drug 
prescribed by a patient's health care provider with a drug agreed to by the pharmacy 
benefits manager and the manufacturer; 
B. An agreement with a pharmaceutical manufacturer to share manufacturer rebates 
and discounts with the pharmacy benefits manager or to pay money or other 
economic benefits to the pharmacy benefits manager; 
C. An agreement or practice to bill a health plan for prescription drugs at a cost 
higher than the pharmacy benefits manager pays the pharmacy; 
D. An agreement to share revenue with a mail order or Internet pharmacy company; 
and 
E. 
Any agreement to sell prescnptlon drug data, including data concerning the 
prescribing practices of health care providers in this State. 
§ 13836. Records 
1. Maintenance of records. A pharmacy benefits manager shall maintain for the 
duration of any written agreement and for 2 years thereafter books and records of all 
transactions between pharmacy benefits managers and insurers, covered persons, 
pharmacists and pharmacies. 
2. Access to records. The bureau has access to books and records maintained by a 
pharmacy benefits manager for the purposes of examination, audit and inspection. The 
information contained in the books and records is confidential and may not be disclosed, 
except that the bureau may use this information in any proceeding instituted against a 
pharmacy benefits manager or insurer. 
3. Financial examinations. The superintendent shall conduct periodic financial 
examinations of every pharmacy benefits manager in this State. The pharmacy benefits 
manager shall pay the cost of the examination. The examination fee must be used to 
offset expenses for the regulation, supervision and examination of all entities subj ect to 
regulation under this subchapter. 
§13837. Annual statement; fee 
1. Annual statement. A pharmacy benefits manager shall file with the bureau an 
annual statement and filing fee for renewing a certificate of authority under section 13833 
on or before March 1 st. The statement must be in the form and contain such information 
as the bureau prescribes, including the total number of persons subject to management by 
the pharmacy benefits manager during the year, the number of persons terminated during 
the year, the number of persons covered at the end of the year and the dollar value of 
claims processed. 
2. Disclosure of incentive arrangements. The annual statement under subsection 1 
must disclose all incentive arrangements or programs, including, but not limited to, 
rebates, discounts, disbursements or any other similar financial program or arrangement 
relating to income or consideration received or negotiated, directly or indirectly, with any 
pharmaceutical company that relates to prescription drug or device services, including at 
a minimum, information on the formula or other method for calculation and the amount 
of the incentive arrangements, rebates or other disbursements, the identity of the 
associated drug or device and the dates and amounts of these disbursements. 
§13838. Contracts; prohibited provisions 
1. Contract required. A person may not act as a pharmacy benefits manager 
without a written agreement between the person and the pharmacy benefits manager. 
2. Participation in contracts. A pharmacy benefits manager may not require a 
pharmacist or pharmacy to participate in one contract in order to participate in another 
contract. 
The pharmacy benefits manager may not exclude an otherwise qualified 
pharmacist or pharmacy from participation in a particular network solely because the 
pharmacist or pharmacy declined to participate in another plan or network managed by 
the pharmacy benefits manager. 
3. Filings with the bureau. The pharmacy benefits manager shall file a copy with 
the bureau of all contracts and agreements with pharmacies for approval not less than 30 
days before the execution of the contract or agreement. The bureau shall consult with the 
board on the criteria for contracts and agreements before the board's adopting rules 
concerning the criteria. The contract is deemed approved unless the bureau disapproves it 
within 30 days after it is filed. 
4. Prohibition. The written agreement between the covered entity and the pharmacy 
benefits manager may not provide that the pharmacist or pharmacy is responsible for the 
actions of the insurer or the pharmacy benefits manager. 
5. Fiduciary duties. All agreements must provide that when the pharmacy benefits 
manager receives payment for the services of the pharmacist or pharmacy the pharmacy 
benefits manager acts as a fiduciary of the pharmacy or pharmacist who provided the 
services. The pharmacy benefits manager shall distribute the funds in accordance with 
the time frames provided in this chapter. 
§13839. Prohibited practices 
1. Intervention prohibited. A pharmacy benefits manager may not intervene in the 
delivery or transmission of prescriptions from the prescriber to the pharmacist or 
pharmacy for the purpose of: 
A. Influencing the prescriber's choice of therapy; 
B. Influencing the patient's choice of pharmacist or pharmacy; or 
C. Altering the prescription information, including, but not limited to, switching the 
prescribed drug without the express authorization of the prescriber. 
2. Changes to prescriptions. An agreement between a pharmacy benefits manager 
and a pharmacy may not mandate that a pharmacist or pharmacy change a covered 
person's prescription unless the prescribing physician and the covered person authorize 
the pharmacist to make the change. 
3. Discrimination prohibited. The insurer and the pharmacy benefits manager may 
not discriminate with respect to participation in the network or reimbursement as to any 
pharmacist or pharmacy that is acting within the scope of licensure or certification. 
4. Health benefit plan. The pharmacy benefits manager may not transfer a health 
benefit plan to another payment network unless it receives written authorization from the 
covered entity. 
5. 
Copavments. 
A pharmacy benefits manager may not discriminate when 
contracting with pharmacies on the basis of copayments or days of supply. A contract 
must apply the same coinsurance, copayment and deductible to covered drug 
prescriptions filled by any pharmacy, including a mail-order pharmacy or pharmacist who 
participates in the network. 
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6. Participatinl! pharmacies. A pharmacy benefits manager may not discriminate 
when advertising which pharmacies are participating pharmacies. Any list of participating 
pharmacies must be complete and all-inclusive. 
7. Minimum record-keepinl! requirements. A pharmacy benefits manager may 
not mandate basic record keeping by any pharmacist or pharmacy that is more stringent 
than required by state or federal laws, rules or regulations. 
§13840. Termination of agreements 
1. Complaints, grievances and appeals. A pharmacy benefits manager may not 
terminate or penalize a pharmacist or pharmacy solely as a result of the pharmacist's or 
pharmacy's filing of a complaint, grievance or appeal as permitted under this subchapter. 
2. 
Denial or limitation of benefits. 
A pharmacist or pharmacy may not be 
terminated or penalized because it expresses disagreement with the pharmacy benefits 
manager's decision to deny or limit benefits to a covered person or because the 
pharmacist or pharmacy assists the covered person to seek reconsideration of the 
pharmacy benefits manager's decision or because the pharmacist or pharmacy discusses 
alternative medications. 
3. Written notice required. Before terminating a pharmacy or pharmacist from the 
network, the pharmacy benefits manager shall give the pharmacy or pharmacist a written 
explanation of the reason for the termination at least 30 days before the termination date 
unless the termination is based on the: 
A. 
Loss of the pharmacy's license to practice pharmacy or cancellation of 
professional liability insurance; or 
B. Conviction of fraud. 
4. Obligation to pay for services rendered. Termination of a contract between a 
pharmacy benefits manager and a phannacy or pharmacist, or termination of a pharmacy 
or pharmacist from a pharmacy benefits manager's provider network as defined by rule, 
does not release the pharmacy benefits manager from its obligation to make any payment 
due to the pharmacy or pharmacist for pharmacist services rendered. 
§13841. Medication reimbursement costs 
A pharmacy benefits manager shall use a current and nationally recognized 
benchmark to base the reimbursement paid to network pharmacies for medications and 
products. The reimbursement must be determined as follows: 
1. Average wholesale price. For brand-name or single-source products, the average 
wholesale price, as listed in standard industry references, such as First DataBank or Facts 
and Comparisons, or successor references, correct and current on the date of service 
provided, must be used; and 
2. Criteria for reimbursement. For generic drug or multi source products, the 
maximum allowable cost must be established by referencing the baseline price in 
standard industry references, such as First DataBank or Facts and Comparisons. Only 
products that are compliant with federal pharmacy laws as equivalent and generically 
interchangeable with a federal Food and Drug Administration Orange Book rating of "A-
B" may be reimbursed from a maximum allowable cost_ price methodology. 
If a 
multisource product has no baseline price, then it must be treated as a single-source 
brand-name drug for the purpose of determining reimbursement. 
§13842. Processing of clean claims; audits 
1. Payment of claims. A pharmacy benefits manager shall payor deny a clean 
claim, as defined by rule, submitted by a pharmacy within 15 days after receipt by the 
pharmacy benefits manager if the claim was submitted electronically or within 30 days 
after receipt if the claim was submitted by other means. 
A. 
A pharmacy benefits manager that fails to payor deny a clean claim in 
accordance with this subsection shall pay a penalty to the bureau for a period 
beginning on the 45th day after receipt of the clean claim and ending on the clean 
payment date, or delinquent payment period, calculated as follows: the amount of the 
clean claim payment times 10% per annum times the number of days in the 
delinquent payment period divided by 365. 
B. Beginning October 1, 2007, the bureau shall adopt rules that outline the collection 
procedures for the outstanding interest from claims under paragraph A. The bureau 
shall also adopt rules that transfer the remaining interests to the General Fund. 
2. Adjustment of payments. Within 24 hours of a price increase notification by a 
pharmaceutical manufacturer or supplier, a pharmacy benefits manager shall adjust its 
payments to pharmacists or pharmacies consistent with the price increase. 
3. Retroactive denial of claims prohibited. Claims paid by a pharmacy benefits 
manager may not be retroactively denied or adjusted after 7 days from adjudication of the 
claims except as provided in subsection 4. 
In no case mayan acknowledgement of 
eligibility be retroactively reversed. 
4. Retroactive denial or adjustment allowed. A pharmacy benefits manager may 
retroactively deny or adjust a claim if: 
A. The original claim was submitted fraudulently; 
B. The original claim payment was incorrect because the pharmacist or pharmacy 
was already paid for services rendered; or 
C. The services were not rendered by the pharmacist or pharmacy. 
5. Audits. The pharmacy benefits manager may not require extrapolation audits as a 
condition of participating in the contract or network. 
6. Recuperation of funds. The pharmacy benefits manager may not recoup any 
money that the pharmacy benefits manager believes is due as a result of an audit by setoff 
until the pharmacist or pharmacy has the opportunity to review the pharmacy benefits 
manager's findings and concurs with the results. If the parties cannot agree, then the audit 
is subject to review by the board. 
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§13843. Disclosures to covered persons; authorization for substitutions 
1. Written notice to covered persons. When the services of a pharmacy benefits 
manager are used, the pharmacy benefits manager shall provide a written notice approved 
by the insurer to a covered individual advising the individual of the identity of and 
relationship between the pharmacy benefits manager, the insured and the covered 
individual. 
2. Notice requirements. The notice under subsection 1 must contain a statement 
advising the covered individual that the pharmacy benefits manager is regulated by the 
bureau and that the individual has the right to file a complaint, appeal or grievance with 
the bureau concerning the pharmacy benefits manager. The notice must include the toll-
free telephone number, mailing address and electronic mail address of the bureau. The 
notice must be written in plain English, using terms that are generally understood by the 
prudent layperson, and a copy must be provided to the bureau and to each pharmacist and 
pharmacy participating in the network. 
3. 
Substitute prescription. 
When a pharmacy benefits manager requests a 
substitute prescription for a prescribed drug for a covered individual the following 
provisions apply. 
A. 
The pharmacy benefits manager may substitute a lower-priced genenc and 
therapeutically equivalent drug for a higher-priced prescribed drug. 
B. With regard to substitutions in which the substitute drug costs more than the 
prescribed drug, the substitution must be made for medical reasons that benefit the 
covered individual. 
If a substitution is being made under this paragraph, the 
pharmacy benefits manager shall obtain the approval of the prescribing health 
professional or that person's authorized representative after disclosing to the covered 
individual the cost of both drugs and any benefit or payment directly or indirectly 
accruing to the pharmacy benefits manager as a result of the substitution and any 
potential effects on a patient's health and safety, including side effects. 
C. The pharmacy benefits manager shall transfer in full to the covered entity any 
benefit or payment received in any form by the pharmacy benefits manager as a result 
of a prescription drug substitution under paragraph A or B. 
§13844. Complaints 
1. Adoption of procedures. The bureau and the board must adopt procedures for 
formal investigation of complaints concerning the failure of a pharmacy benefits manager 
to comply with this subchapter. 
2. Transfer of complaints. The bureau must refer a complaint received under this 
subchapter to the board if the complaint involves a professional or patient health or safety 
issue. 
3. Referrals. The board must refer a complaint received under this subchapter to the 
bureau if the complaint involves a business or financial issue. 
§13845. Settlement of claims 
Compensation to a pharmacy benefits manager for any claims that the phannacy 
benefits manager adjusts or settles on behalf of an insurer may not be contingent in any 
way on claims experience. 
This section does not prohibit the compensation of a 
pharmacy benefits manager based on the total number of claims paid or processed. 
§13846. Responsibilities to the covered entity 
1. 
Financial and utilization information. 
A pharmacy benefits manager shall 
provide to a covered entity 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 section 
may designate that information as confidential. Information designated as confidential by 
a pharmacy benefits manager and provided to a covered entity under this section may not 
be disclosed by the covered entity to any person without the consent of the pharmacy 
benefits manager, except that disclosure may be made when authorized by a court. 
2. Disclosure of arrangements. 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, but not limited to, rebates, formulary management and drug-switch, or 
substitution, programs, educational support, claims processing and pharmacy network 
fees that are charged from retail pharmacies and data sales fees. 
3. Price differentials. A pharmacy benefits manager shall disclose to the covered 
entity whether there is a difference between the price paid to the retail pharmacy and the 
amount billed to the covered entity for the purchase. 
4. Audits. The covered entity may audit the pharmacy benefits manager's books and 
records related to the rebates or other information provided in subsections 1, 2 and 3. 
5. Good faith. A pharmacy benefits manager shall perform its duties exercising 
good faith and fair dealing toward the covered entity. 
§13847. Rules 
The department shall adopt rules to implement this subchapter. 
Rules adopted 
12ursuant to this section are routine technical rules as defined in Title 5, chapter 375, 
subchapter 2-A. 
SUMMARY 
This bill establishes "the Prescription Drug Practices Act." It requires all pharmacy 
benefits managers operating in the State to acquire a valid certificate of authority to be 
issued by the Department of Professional and Financial Regulation, Bureau of Insurance. 
It establishes compliance and disclosure requirements for pharmacy benefits managers 
and prohibits certain practices by pharmacy benefits managers.