An Act To Address Transparency, Accountability and Oversight of Pharmacy Benefit Managers
Maine Legislature, Session 129, LD 1389
Committee: Health Coverage, Insurance and Financial Services
Sponsors: POULIOT, BLIER, FOLEY, MORRIS
Amends: 22 MRSA §1711-E, 22 MRSA §8702, 22 MRSA §8706, 24-A MRSA §601, 24-A MRSA §1913, 24-A MRSA §1914, 24-A MRSA §4317

Legislative Document
No. 1389
S.P. 433
In Senate, March 26, 2019
An Act To Address Transparency, Accountability and Oversight of 
Pharmacy Benefit Managers
Reference to the Committee on Health Coverage, Insurance and Financial Services 
suggested and ordered printed.
DAREK M. GRANT
Secretary of the Senate
Presented by Senator POULIOT of Kennebec.
Cosponsored by Representative BLIER of Buxton and
Senator: FOLEY of York, Representative: MORRIS of Turner.
Be it enacted by the People of the State of Maine as follows:
Sec. 1.  22 MRSA §1711-E, sub-§1, ¶G, as amended by PL 2011, c. 443, §1, is 
further amended to read:
G.  "Pharmacy benefits benefit manager" has the same meaning as in Title 24-A, 
section 1913 1914, subsection 1, paragraph A G.
Sec. 2.  22 MRSA §1711-E, sub-§1, ¶I, as amended by PL 2007, c. 460, §1, is 
further amended to read:
I.  "Prescription drug information intermediary" means a person or entity that 
communicates, facilitates or participates in the exchange of prescription drug 
information regarding an individual or a prescriber.  "Prescription drug information 
intermediary" includes, but is not limited to, a pharmacy benefits benefit manager, a 
health plan, an administrator and an electronic transmission intermediary and any 
person or entity employed by or contracted to provide services to that entity.
Sec. 3.  22 MRSA §8702, sub-§8, as amended by PL 2009, c. 71, §5, is further 
amended to read:
8.  Payor.  "Payor" means a 3rd-party payor, 3rd-party administrator, Medicare 
health plan sponsor, pharmacy benefits benefit manager or nonlicensed carrier.
Sec. 4.  22 MRSA §8702, sub-§8-B, as amended by PL 2011, c. 443, §3, is 
further amended to read:
8-B.  Pharmacy benefit manager.  "Pharmacy benefits benefit manager" has the 
same meaning as in Title 24-A, section 1913 1914, subsection 1, paragraph A G.
Sec. 5.  22 MRSA §8706, sub-§2, ¶C, as amended by PL 2007, c. 136, §5, is 
further amended to read:
C.  The operations of the organization must be supported from 3 sources as provided 
in this paragraph:
(1)  Fees collected pursuant to paragraphs A and B;
(2)  Annual assessments of not less than $100 assessed against the following 
entities licensed under Titles 24 and 24-A: nonprofit hospital and medical service 
organizations, health insurance carriers and health maintenance organizations on 
the basis of the total annual health care premium; and 3rd-party administrators, 
carriers that provide only administrative services for a plan sponsor and 
pharmacy benefits benefit managers that process and pay claims on the basis of 
claims processed or paid for each plan sponsor.  The assessments are to be 
determined on an annual basis by the board.  Health care policies issued for 
specified disease, accident, injury, hospital indemnity, disability, long-term care 
or other limited benefit health insurance policies are not subject to assessment 
under this subparagraph.  For purposes of this subparagraph, policies issued for 
dental services are not considered to be limited benefit health insurance policies.  
The total dollar amount of assessments under this subparagraph must equal the 
assessments under subparagraph (3); and
(3)  Annual assessments of not less than $100 assessed by the organization 
against providers.  The assessments are to be determined on an annual basis by 
the board.  The total dollar amount of assessments under this subparagraph must 
equal the assessments under subparagraph (2).
The aggregate level of annual assessments under subparagraphs (2) and (3) must be 
an amount sufficient to meet the organization's expenditures authorized in the state 
budget established under Title 5, chapter 149.  The annual assessment may not 
exceed $1,346,904 in fiscal year 2002-03.  In subsequent fiscal years, the annual 
assessment may increase above $1,346,904 by an amount not to exceed 5% per fiscal 
year.  The board may waive assessments otherwise due under subparagraphs (2) and 
(3) when a waiver is determined to be in the interests of the organization and the 
parties to be assessed.
Sec. 6.  24-A MRSA §601, sub-§28, as enacted by PL 2009, c. 581, §3, is 
amended to read:
28.  Pharmacy benefit manager.  Pharmacy benefits benefit manager registration 
fees may not exceed:
A.  Original issuance fee, $100; and
B.  Annual renewal fee, $100.
Sec. 7.  24-A MRSA §1913, as repealed and replaced by PL 2011, c. 443, §4, is 
repealed.
Sec. 8.  24-A MRSA §1914 is enacted to read:
§1914.  Pharmacy benefit managers
1.  Definitions.  As used in this section, unless the context otherwise indicates, the 
following terms have the following meanings.
A.  "Aggregate retained rebate percentage" means the percentage of all rebates 
received from a pharmaceutical manufacturer or other entity by a pharmacy benefit 
manager for use of a prescription drug of the manufacturer or other entity that is not 
passed on to an insurer for whom the pharmacy benefit manager provides services.  
The percentage is calculated for each insurer for rebates in the prior calendar year as 
the total dollar amount of rebates received by the pharmacy benefit manager from all 
pharmaceutical manufacturers or other entities for the use of the manufacturers' or 
other entities' prescription drugs by covered persons of the insurer that was not passed 
through to the insurer divided by the total dollar amount of all rebates received by the 
pharmacy benefit manager from all pharmaceutical manufacturers or other entities for 
the use of the manufacturers' or other entities' prescription drugs by covered persons 
of the insurer.
B.  "Covered person" means a policyholder, subscriber, enrollee or other individual 
who is participating in a health benefit plan or who otherwise receives health care 
services or reimbursement for health care services from an insurer.
C.  "Department" means the Department of Health and Human Services.
D.  "Health benefit plan" means a policy, contract, certificate or agreement offered or 
issued by an insurer to provide, deliver, arrange for, pay for or reimburse costs for 
health care services.
E.  "Insurer" means an insurer under section 4, a self-insurance plan or other 3rd-
party payor that contracts, offers to contract or enters into an agreement to provide, 
deliver, arrange for, pay for or reimburse costs of health care services, including a 
health insurance company, a health maintenance organization, a hospital, a health 
services corporation or any other entity providing, paying for or reimbursing costs for 
a health insurance plan, health benefits or health care services.
F.  "Pharmacy" has the same meaning as in Title 32, section 13702-A, subsection 24.
G.  "Pharmacy benefit manager" means a person that, pursuant to a contract or under 
an employment relationship with an insurer, either directly or through an 
intermediary, manages the prescription drug coverage provided by the insurer, 
including the processing and payment of claims for prescription drugs, the 
performance of drug use review, the processing of prior authorization requests, the 
adjudication of appeals and grievances related to prescription drug coverage, 
contracting with network pharmacies and controlling the cost of prescription drugs.
2.  Registration required.  A pharmacy benefit manager conducting business in the 
State must be annually registered under this section.  The department may issue a 
nontransferable registration to a pharmacy benefit manager if the department determines 
the pharmacy benefit manager possesses the necessary organization, expertise and 
financial integrity to manage an insurer's prescription drug coverage and may limit or 
restrict the registration, including the type of services that a pharmacy benefit manager 
may provide or the activities in which the pharmacy benefit manager may engage.  A 
pharmacy benefit manager registered under this subsection shall maintain a registered 
agent and registered address in the State for purposes of accepting service of process.  A 
pharmacy benefit manager who conducts business in the State without a valid registration 
under this subsection commits a civil violation for which a penalty of $5,000 per day of 
violation must be assessed.
3.  Registration application.  An application for registration under subsection 2 must 
require the following information:
A.  The name of the pharmacy benefit manager;
B.  The address, telephone number and other contact information of the pharmacy 
benefit manager;
C.  The name and address of the pharmacy benefit manager's registered agent in the 
State;
D.  The name and address of each person beneficially interested in the activities of 
the pharmacy benefit manager; and
E.  The name and address of each person with management or control over the 
pharmacy benefit manager.
An applicant under this section shall pay the registration fee under section 601, 
subsection 28 upon submission of the application.
4.  Registration term; suspension, revocation and probation.  A registration issued 
under subsection 2 is valid for 3 years.  The department may suspend, revoke or place on 
probation a registration issued under subsection 2 if:
A.  The pharmacy benefit manager engages in fraudulent activity that constitutes a 
violation of state or federal law;
B.  The department receives a consumer complaint that justifies action under this 
subsection to protect the safety and interests of a consumer;
C.  The pharmacy benefit manager fails to pay the registration fee or violates any 
other rule of the department; or
D.  The pharmacy benefit manager fails to comply with or violates a provision of this 
section.
5.  Pharmacy benefit manager business practices.  In addition to the provisions in 
section 4317, a pharmacy benefit manager shall comply with the following business 
practices.
A.  A pharmacy benefit manager has a fiduciary duty to the insurer for which the 
pharmacy benefit manager performs services and shall discharge the duty in 
accordance with state and federal law.
B.  A pharmacy benefit manager shall perform services with care, prudence, diligence 
and professionalism.
C.  A pharmacy benefit manager shall notify in writing an insurer for which the 
pharmacy benefit manager performs services of any activity, policy or practice of the 
pharmacy benefit manager that directly or indirectly presents a conflict of interest 
with the provisions of this chapter.
D.  A pharmacy benefit manager may not enter into a contract with a pharmacy or 
pharmacist that prohibits or penalizes a pharmacy or pharmacist for disclosure of 
information to a covered person regarding:
(1)  The cost of a prescription medication to the covered person; or
(2)  The availability of a therapeutically equivalent alternative medication or an 
alternative method of purchasing the prescription medication, including paying a 
cash price that is less than the cost of the prescription under the covered person's 
health benefit plan.
E.  A pharmacy benefit manager may not require a pharmacy or other provider 
accreditation or certification that is inconsistent with, more stringent than or in 
addition to the requirements of the Maine Board of Pharmacy or other state or federal 
authority.
F.  A pharmacy benefit manager or an insurer for which the pharmacy benefit 
manager performs services may not require a covered person to make a payment at 
the point of sale for a covered prescription medication in any amount greater than the 
lesser of:
(1)  The applicable copayment for the prescription medication;
(2)  The allowable claim amount for the prescription medication;
(3)  The amount a covered person would pay for the prescription medication 
without using a health benefit plan or any other source of prescription medication 
benefits or discounts; and
(4)  The amount the pharmacy would be reimbursed for the prescription drug 
from the pharmacy benefit manager or the insurer for which the pharmacy benefit 
manager performs services.
G.  A pharmacy benefit manager or an insurer for which the pharmacy benefit 
manager performs services may not penalize, require or provide a financial incentive, 
including a variation in premium, deductible, copayment or coinsurance, to a covered 
person as an incentive to use a specific retail, mail order or other pharmacy provider 
in which the pharmacy benefit manager or covered person's insurer has an ownership 
interest or that has an ownership interest in the pharmacy benefit manager or the 
covered person's insurer.
6.  Report.  On or before June 1st of each year, a registered pharmacy benefit 
manager shall submit a report containing data from the prior calendar year to the 
department that contains the following:
A.  The aggregate amount of all rebates that the pharmacy benefit manager received 
from all pharmaceutical manufacturers for all insurers for which the pharmacy benefit 
manager provided services and the amount of rebates received from each insurer;
B.  The aggregate administrative fees that the pharmacy benefit manager received 
from all insurers for which the pharmacy benefit manager provided services and the 
amount of administrative fees received from each insurer;
C.  The aggregate retained rebates that the pharmacy benefit manager received from 
all pharmaceutical manufacturers and that did not pass through to an insurer;
D.  The aggregate retained rebate percentage; and
E.  The highest, lowest and mean aggregate retained rebate percentage for each 
insurer and for all insurers for which the pharmacy benefit manager provided 
services.
A pharmacy benefit manager may designate information required under this subsection as 
a trade secret as defined in Title 10, section 1542, subsection 4 that may be disclosed only 
by court order upon a determination of good cause shown.  Within 60 days of receipt, the 
department shall publish a report under this subsection on the department's publicly 
accessible website in a manner that does not violate Title 10, chapter 302.  A pharmacy 
benefit manager that violates this subsection commits a civil violation for which a penalty 
of not more than $1,000 per day of violation may be assessed.
7.  Rules.  The department shall adopt rules to carry out the provisions of this section.  
Rules adopted pursuant to this subsection are routine technical rules as defined in Title 5, 
chapter 375, subchapter 2-A.
Sec. 9.  24-A MRSA §4317, sub-§§4 and 5, as enacted by PL 2011, c. 443, §6, 
are amended to read:
4.  Participation in contracts.  A pharmacy benefits benefit manager may not 
require a pharmacist or pharmacy to participate in one network in order to participate in 
another network. The pharmacy benefits benefit manager may not exclude an otherwise 
qualified pharmacist or pharmacy from participation in one network solely because the 
pharmacist or pharmacy declined to participate in another network managed by the 
pharmacy benefits benefit manager.
5.  Prohibition.  The written contract between a carrier and a pharmacy benefits 
benefit manager may not provide that the pharmacist or pharmacy is responsible for the 
actions of the insurer or a pharmacy benefits benefit manager.
Sec. 10.  24-A MRSA §4317, sub-§6, as amended by PL 2011, c. 691, Pt. A, §23, 
is further amended to read:
6.  Pharmacy benefit manager duties. All contracts must provide that, when the 
pharmacy benefits benefit manager receives payment for the services of a pharmacist or 
pharmacy, the pharmacy benefits benefit manager shall distribute the funds in accordance 
with the time frames provided in this subchapter.
Sec. 11.  24-A MRSA §4317, sub-§§7 to 9, as enacted by PL 2011, c. 443, §6, 
are amended to read:
7.  Complaints, grievances and appeals.  A pharmacy benefits benefit manager may 
not terminate the contract of or penalize a pharmacist or pharmacy solely as a result of the 
pharmacist's or pharmacy's filing of a complaint, grievance or appeal. This subsection is 
not intended to restrict the pharmacy's and pharmacy benefits benefit manager's ability to 
enter into agreements that allow for mutual termination without cause.
8.  Denial or limitation of benefits.  A pharmacy's benefits pharmacy benefit 
manager may not terminate the contract of or penalize a pharmacist or pharmacy for 
expressing disagreement with a carrier's decision to deny or limit benefits to an enrollee 
or because the pharmacist or pharmacy assists the enrollee to seek reconsideration of the 
carrier's decision or because the pharmacist or pharmacy discusses alternative 
medications.
9.  Written notice required.  At least 60 days before a pharmacy's benefits 
pharmacy benefit manager terminates a pharmacy's or pharmacist's participation in the 
pharmacy benefits benefit manager's plan or network, the pharmacy benefits benefit 
manager shall give the pharmacy or pharmacist a written explanation of the reason for the 
termination, unless the termination is based on:
A.  The loss of the pharmacy's license or the pharmacist's license to practice 
pharmacy or cancellation of professional liability insurance; or
B.  A finding of fraud.
At least 60 days before a pharmacy or pharmacist terminates its participation in a 
pharmacy benefits benefit manager's plan or network, the pharmacy or pharmacist shall 
give the pharmacy benefits benefit manager a written explanation of the reason for the 
termination.
Sec. 12.  24-A MRSA §4317, sub-§10, as amended by PL 2013, c. 71, §1, is 
further amended to read:
10.  Audits.  Notwithstanding any other provision of law, when an on-site audit of 
the records of a pharmacy is conducted by a pharmacy benefits benefit manager, the audit 
must be conducted in accordance with the following criteria.
A.  A finding of overpayment or underpayment must be based on the actual 
overpayment or underpayment and not a projection based on the number of patients 
served having a similar diagnosis or on the number of similar orders or refills for 
similar drugs, unless the projected overpayment or denial is a part of a settlement 
agreed to by the pharmacy or pharmacist.
B.  The auditor may not use extrapolation in calculating recoupments or penalties.
C.  Any audit that involves clinical or professional judgment must be conducted by or 
in consultation with a pharmacist.
D.  Each entity conducting an audit shall establish an appeals process under which a 
pharmacy may appeal an unfavorable preliminary audit report to the entity.
E.  This subsection does not apply to any audit, review or investigation that is 
initiated based on or involves suspected or alleged fraud, willful misrepresentation or 
abuse.
F.  Prior to an audit, the entity conducting an audit shall give the pharmacy 10 days' 
advance written notice of the audit and the range of prescription numbers and the 
range of dates included in the audit.
G.  A pharmacy has the right to request mediation by a private mediator, agreed upon 
by the pharmacy and the pharmacy benefits benefit manager, to resolve any 
disagreements.  A request for mediation does not waive any existing rights of appeal 
available to a pharmacy under this subsection or subsection 11.
H.  The requirements of section 4303, subsection 10 apply to claims audited under 
this subsection.
Sec. 13.  24-A MRSA §4317, sub-§11, as enacted by PL 2011, c. 443, §6, is 
amended to read:
11.  Audit information and reports.  A preliminary audit report must be delivered 
to the pharmacy within 60 days after the conclusion of the audit under subsection 10.  A 
pharmacy must be allowed at least 30 days following receipt of the preliminary audit to 
provide documentation to address any discrepancy found in the audit.  A final audit report 
must be delivered to the pharmacy within 90 days after receipt of the preliminary audit 
report or final appeal, whichever is later.  A charge-back, recoupment or other penalty 
may not be assessed until the appeal process provided by the pharmacy benefits benefit 
manager has been exhausted and the final report issued.  Except as provided by state or 
federal law, audit information may not be shared.  Auditors may have access only to 
previous audit reports on a particular pharmacy conducted by that same entity.
Sec. 14.  24-A MRSA §4317, sub-§12, as enacted by PL 2015, c. 450, §1, is 
amended to read:
12.  Maximum allowable cost.  This subsection governs the maximum allowable 
cost for a prescription drug as determined by a pharmacy benefits benefit manager.
A.  As used in this subsection, "maximum allowable cost" means the maximum 
amount that a pharmacy benefits benefit manager pays toward the cost of a 
prescription drug.
B.  A pharmacy benefits benefit manager may set a maximum allowable cost for a 
prescription drug, or allow a prescription drug to continue on a maximum allowable 
cost list, only if that prescription drug:
(1)  Is rated as "A" or "B" in the most recent version of the United States Food 
and Drug Administration's "Approved Drug Products with Therapeutic 
Equivalence Evaluations," also known as "the Orange Book," or an equivalent 
rating from a successor publication, or is rated as "NR" or "NA" or a similar 
rating by a nationally recognized pricing reference; and
(2)  Is not obsolete and is generally available for purchase in this State from a 
national or regional wholesale distributor by pharmacies having a contract with 
the pharmacy benefits benefit manager.
C.  A pharmacy benefits benefit manager shall establish a process for removing a 
prescription drug from a maximum allowable cost list or modifying a maximum 
allowable cost for a prescription drug in a timely manner to remain consistent with 
changes to such costs and the availability of the drug in the national marketplace.
D.  With regard to a pharmacy with which the pharmacy benefits benefit manager has 
entered into a contract, a pharmacy benefits benefit manager shall:
(1)  Upon request, disclose the sources used to establish the maximum allowable 
costs used by the pharmacy benefits benefit manager;
(2)  Provide a process for a pharmacy to readily obtain the maximum allowable 
reimbursement available to that pharmacy under a maximum allowable cost list; 
and
(3) At least once every 7 business days, review and update maximum allowable 
cost list information to reflect any modification of the maximum allowable 
reimbursement available to a pharmacy under a maximum allowable cost list 
used by the pharmacy benefits benefit manager.
E.  A pharmacy benefits benefit manager shall provide a reasonable administrative 
appeal procedure, including a right to appeal that is limited to 14 days following the 
initial claim, to allow pharmacies with which the pharmacy benefits benefit manager 
has a contract to challenge maximum allowable costs for a specified drug.
F.  The pharmacy benefits benefit manager shall respond to, investigate and resolve 
an appeal under paragraph E within 14 days after the receipt of the appeal. The 
pharmacy benefits benefit manager shall respond to an appeal as follows:
(1)  If the appeal is upheld, the pharmacy benefits benefit manager shall make the 
appropriate adjustment in the maximum allowable cost and permit the 
challenging pharmacy or pharmacist to reverse and rebill the claim in question; or
(2)  If the appeal is denied, the pharmacy benefits benefit manager shall provide 
the challenging pharmacy or pharmacist the national drug code from national or 
regional wholesalers of a comparable prescription drug that may be purchased at 
or below the maximum allowable cost.
G.  The requirements of this subsection apply to contracts between a pharmacy and a 
pharmacy benefits benefit manager executed or renewed on or after September 1, 
2016.
Sec. 15.  24-A MRSA §4317, sub-§13, as enacted by PL 2017, c. 44, §1, is 
amended to read:
13.  Prohibition on excessive copayments or charges; disclosure not penalized.  A 
carrier or pharmacy benefits benefit manager may not impose on an enrollee a copayment 
or other charge that exceeds the claim cost of a prescription drug.  If information related 
to an enrollee's out-of-pocket cost or the clinical efficacy of a prescription drug or 
alternative medication is available to a pharmacy provider, a carrier or pharmacy benefits 
benefit manager may not penalize a pharmacy provider for providing that information to 
an enrollee.
SUMMARY
This bill requires that pharmacy benefit managers, which are entities that manage an 
insurer's prescription drug coverage, be registered by the Department of Health and 
Human Services.  It sets standards for registration including:
1.  Allowing the department to revoke, suspend or place on probation a pharmacy 
benefit manager's registration for fraudulent activities, to protect the safety and interest of 
a consumer or if the pharmacy benefit manager violates state law;
2.  Setting out required pharmacy benefit manager business practices, including:
A.  Placing a fiduciary duty on the managers with respect to the insurers who are the 
managers' clients;
B.  Prohibiting the manager from entering into a contract that prohibits a pharmacy or 
pharmacist from recommending a lower cost or alternative prescription medication 
than the medication under a covered person's prescription drug plan;
C.  Prohibiting the manager from requiring accreditation or certification for a 
pharmacy inconsistent with, more stringent than or in addition to those required by 
the Maine Board of Pharmacy and other state and federal authorities;
D.  Limiting the amount of payment required by a covered person for a prescription 
drug at the point of sale; and
E.  Prohibiting conflicts of interest; and
3.  Requiring an annual report from a pharmacy benefit manager that details the 
rebates received by the pharmacy benefit manager from pharmaceutical manufacturers for 
use of the manufacturers' prescription drugs and the disposition of those rebates.