2023 South Dakota Codified Laws › Title 58 - Insurance › Chapter 29E - Pharmacy Benefits Management › Section 58-29E-1 - Definitions.

58-29E-1. Definitions.
Terms used in this chapter mean:
(1)"Brand name," the same as set forth in §36-11-2;
(2)"Covered individual," a member, participant, enrollee, contract holder, policy holder, or beneficiary of a third-party payor who is provided health coverage by the third-party payor. The term includes a dependent or other individual provided health coverage through a policy, contract, or plan for a covered individual;
(3)"Generic drug," a chemically equivalent copy of a brand name drug with an expired patent;
(4)"Health benefit plan," the same as set forth in §58-17F-2;
(5)"Health carrier," the same as set forth in §58-17F-1;
(6)"Interchangeable biological product," the same as set forth in §36-11-2;
(7)"Maximum allowable cost," the maximum amount that a pharmacy may be reimbursed, as set by a pharmacy benefit manager or a third-party payor, for a brand name or a generic drug, an interchangeable biological product, or any other prescription drug and which may include:
(a)The average acquisition cost;
(b)The national average acquisition cost;
(c)The average manufacturer price;
(d)The average wholesale price;
(e)The brand effective rate;
(f)The generic effective rate;
(g)Discount indexing;
(h)Federal upper limits;
(i)The wholesale acquisition cost; and
(j)Any other term used by a pharmacy benefit manager or a health carrier to establish reimbursement rates for a pharmacy;
(8)"Maximum allowable cost list," a list of prescription drugs that:
(a)Includes the maximum allowable cost for each prescription drug; and
(b)Is used, directly or indirectly, by a pharmacy benefit manager;
(9)"Pharmaceutical manufacturer," any person engaged in the business of preparing, producing, converting, processing, packaging, labeling, or distributing a prescription drug, but not including a wholesale distributor or dispenser;
(10)"Pharmacist," the same as set forth in §36-11-2;
(11)"Pharmacy," the same as set forth in §36-11-2;
(12)"Pharmacy benefit management," 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 third-party payor for the benefit of covered individuals, or any of the following services provided with regard to the administration of pharmacy benefits:
(a)Mail service pharmacy;
(b)Claims processing, retail network management, and payment of claims to pharmacies for prescription drugs dispensed to covered individuals;
(c)Clinical formulary development and management services;
(d)Rebate contracting and administration;
(e)Certain patient compliance, therapeutic intervention, and generic substitution programs; and
(f)Disease management programs involving prescription drug utilization;
(13)"Pharmacy benefit management fee," a fee that covers the cost of providing pharmacy benefit management, but does not exceed the value of the service performed by the pharmacy benefit manager;
(14)"Pharmacy benefit manager," a person that performs pharmacy benefit management, pursuant to a contract or other relationship with a third-party payor and includes:
(a)A person acting in a contractual or employment relationship for a pharmacy benefit manager while providing pharmacy benefit management for a third party payor; and
(b)A mail service pharmacy;
(15)"Pharmacy benefit manager affiliate," a pharmacy that, or a pharmacist who, directly or indirectly, through one or more intermediaries, owns or controls, is owned and controlled by, or is under common ownership or control of, a pharmacy benefit manager;
(16)"Pharmacy network," pharmacies that have contracted with a pharmacy benefit manager to dispense or sell prescription drugs to covered individuals under a health benefit plan for which the prescription drug benefit is managed by a pharmacy benefit manager;
(17)"Prescription drug," a drug classified by the United States Food and Drug Administration as requiring a prescription by a health care practitioner, prior to being administered or dispensed to a patient, and including interchangeable biological products, brand names, and generic drugs;
(18)"Prescription drug benefit,” a health benefit plan providing third-party payment or prepayment for prescription drugs;
(19)"Prescription drug order,” the same as set forth in §36-11-2;
(20)"Proprietary information," information on pricing, costs, revenue, taxes, market share, negotiating strategies, customers, and personnel held by a private entity and used for that private entity's business purposes;
(21)"Rebate," a discount or other negotiated price concession that is paid directly or indirectly to a pharmacy benefit manager by a pharmaceutical manufacturer or by an entity in the prescription drug supply chain, other than a covered individual, and which is:
(a)Based on a pharmaceutical manufacturer's list price for a prescription drug;
(b)Based on utilization;
(c)Designed to maintain, for the pharmacy benefit manager, a net price for a prescription drug, during a specified period of time, in the event the pharmaceutical manufacturer's list price increases; or
(d)Based on estimates regarding the quantity of a prescribed drug that will be dispensed by a pharmacy to covered individuals;
(22)"Spread pricing," an amount charged or claimed by a pharmacy benefit manager that is in excess of the ingredient cost for a dispensed prescription drug, plus a dispensing fee paid directly or indirectly to a pharmacy, pharmacist, or other provider, on behalf of the third-party payor, less a pharmacy benefit management fee;
(23)"Third-party payor," any entity, other than a covered individual, a covered individual's representative, or a healthcare provider, which is responsible for any amount of reimbursement for a prescription drug benefit, provided the term includes a health carrier and a health benefit plan;
(24)"Trade secret," the same as set forth in §37-29-1;
(25)"Unaffiliated pharmacy," a dispensing pharmacy that is not:
(a)Owned, in whole or in part, by a pharmacy benefit manager;
(b)A subsidiary of a pharmacy benefit manager; or
(c)An affiliate of a pharmacy benefit manager; and
(26)"Wholesale distributor," the same as set forth in §36-11A-25.
Source: SL 2004, ch 311, §1; SL 2023, ch 166, §1.