SB 555-FN - AS INTRODUCED
2024 SESSION
24-2870
05/08
SENATE BILL 555-FN
AN ACT relative to receipt of pharmaceutical rebates by insurers and pharmacy benefits managers.
SPONSORS: Sen. Avard, Dist 12; Sen. Watters, Dist 4; Sen. Innis, Dist 7; Sen. Birdsell, Dist 19; Sen. Soucy, Dist 18; Sen. Bradley, Dist 3; Sen. Gannon, Dist 23; Sen. Pearl, Dist 17; Sen. Gendreau, Dist 1; Sen. Carson, Dist 14; Sen. Fenton, Dist 10; Rep. Pauer, Hills. 36; Rep. Mooney, Hills. 12
COMMITTEE: Health and Human Services
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ANALYSIS
This bill revises the annual reporting requirement for pharmacy benefits managers regarding pharmaceutical rebates. The bill also revises the percentage of rebates insurers are required to make available to enrollees, increases the fine for noncompliance, and removes prospective repeal of RSA 415-A:7, relative to insurer cost sharing of rebates.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
24-2870
05/08
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Twenty Four
AN ACT relative to receipt of pharmaceutical rebates by insurers and pharmacy benefits managers.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Pharmacy Benefits Manager Reporting. Amend RSA 402-N:6, I to read as follows:
I. Each pharmacy benefits manager shall submit an annual or quarterly report to the commissioner containing a list of health benefit plans it administered[,] and the [aggregate amount of all] rebates it collected from pharmaceutical manufacturers that were attributable to patient utilization in the state of New Hampshire during the prior calendar year. The report submitted to the commissioner shall include the following information:
(a) The aggregate number of rebates and total value received by the pharmacy benefit manager;
(b) The aggregate number of rebates and total value distributed to the appropriate health care insurer;
(c) The aggregate number of rebates and total value passed on to an insured of each health care insurer at the point of sale that reduced the insured’s applicable deductible, copayment, coinsurance, or other cost-sharing amount;
(d) The individual and aggregate amount paid by the health care insurer to the pharmacy benefit manager for pharmacist services itemized by pharmacy, by product (at the unique NDC level), and by goods and services; and
(e) The individual and aggregate amount a pharmacy benefit manager paid for pharmacist services itemized by pharmacy, by product, and by goods and services.
2 Pharmaceutical Rebates. Amend RSA 415-A:7, II-IV to read as follows:
II. All rebates remitted by or on behalf of a pharmaceutical manufacturer, developer or labeler, directly or indirectly, to an insurer, or to a pharmacy benefits manager under contract with an insurer, related to its prescription drug benefits shall be remitted [in one or both of the following ways:
(a)] in the following manner. At least 50 percent of all rebates shall be remitted directly to the covered person at the point of sale to reduce the out-of-pocket cost to the covered person associated with a particular or specific prescription drug[;
(b) Remitted to, and retained by, the insurer. Rebates remitted to the insurer shall be applied by the insurer in its plan design and in future plan years to offset the premium for covered persons].
III. Beginning November 1, [2020] 2024 and annually thereafter, an insurer shall file with the commissioner a report in the manner and form determined by the commissioner demonstrating the manner in which the insurer and/or its contracted entity for pharmacy benefit services has complied with this section.
IV. Any insurer that violates any provision of this section may, at the discretion of the commissioner, be subject to subparagraph (a) or (b), or both:
(a) Its certificate of authority may be indefinitely suspended or revoked.
(b) A civil fine not to exceed [$2,500] $10,000 may be imposed for each violation. Repeated violations of the same provision shall constitute separate civil offenses.
3 Repeal. 2020; 15:2, relative to the prospective repeal of RSA 415-A:7, is repealed.
I. Section 3 of this act shall take effect June 30, 2024.
II. The remainder of this act shall take effect 60 days after its passage.
24-2870
Revised 2/6/24
SB 555-FN- FISCAL NOTE
AS INTRODUCED
AN ACT relative to receipt of pharmaceutical rebates by insurers and pharmacy benefits managers.
FISCAL IMPACT: [ X ] State [ X ] County [ X ] Local [ ] None
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Estimated State Impact - Increase / (Decrease) | ||||||
| FY 2024 | FY 2025 | FY 2026 | FY 2027 | ||
Revenue | $0 | Indeterminable (Net Decrease) | Indeterminable (Net Decrease) | Indeterminable (Net Decrease) | ||
Revenue Fund(s) | Pharmacy Rebates (Decrease) Insurance Premium Tax (Increase) NH Employee and Retiree Health Benefit Plan, Granite Advantage Health Care Fund | |||||
Expenditures | $0 | Indeterminable Increase | Indeterminable Increase | Indeterminable Increase | ||
Funding Source(s) | General Fund Various Government Funds | |||||
Appropriations | $0 | $0 | $0 | $0 | ||
Funding Source(s) | None
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• Does this bill provide sufficient funding to cover estimated expenditures? [X] No • Does this bill authorize new positions to implement this bill? [X] No | ||||||
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Estimated Political Subdivision Impact - Increase / (Decrease) | ||||||
| FY 2024 | FY 2025 | FY 2026 | FY 2027 | ||
County Revenue | $0 | $0 | $0 | $0 | ||
County Expenditures | $0 | Indeterminable | Indeterminable | Indeterminable | ||
Local Revenue | $0 | $0 | $0 | $0 | ||
Local Expenditures | $0 | Indeterminable | Indeterminable | Indeterminable | ||
METHODOLOGY:
This bill revises the annual reporting requirement for pharmacy benefits managers regarding pharmaceutical rebates. The bill also revises the percentage of rebates insurers are required to make available to enrollees, increases the fine for noncompliance, and removes prospective repeal of RSA 415-A:7, relative to insurer cost sharing of rebates.
The Department of Administrative Services indicates the State of NH Employee and Retiree Health Benefit Plan (HBP) is a self-funded prescription drug plan which pays the full cost of pharmacy claims less any member co payments. In 2022, gross prescription drug expenditures were approximately $125 million and the member cost share was $5.6 million. The HBP currently receives 100% of drug rebate revenue from its pharmacy benefit manager to offset drug costs. In 2022, the HBP received approximately $41.4m in rebates to help offset the drug costs.
Beginning in January 2024, Medicare retirees covered under the HBP will transition to a fully-insured Medicare Advantage Plan for pharmacy benefits and the State will no longer be responsible for the claims incurred by the Medicare retiree population, and it will not receive the rebates generated from those claims. The Department is not able to determine if this bill will result in these fully-insured premiums to increase in the future.
The Department states the amount of copayment charged to the members is determined by collective bargaining agreements for active employees and by the legislature for non-Medicare retirees. It is unclear if the amount of rebates paid up front at point of sale will be limited to the members' out-of-pocket cost. However, it does appear that the rebates paid to the HBP will be reduced by up to 50% and therefore decrease revenue to the plan which is currently used to off set drug claim expenses. The Department estimated the annual decrease in rebates to the HBP would be approximately $15 million and expects the fiscal impact would continue beyond FY 2027.
The Insurance Department indicates section 2 of the bill would require that insurers remit at least 50% of product specific rebates directly to the consumer at the point of sale. The bill would remove language providing that rebates be remitted directly to the insurer, to offset subsequent years’ premiums. The Department assumes this bill would result in increased upward pressure on premiums, and as such, increased premium tax revenues, however the extent of such increases is indeterminable at this time.
The Department of Health and Human Services (DHHS) indicated this bill would result in the following fiscal impacts:
- Section 1 of the bill relates to a report to be submitted by pharmacy benefit managers and would result in a minimal increase in the administrative costs the DHHS pays to Medicaid Managed Care Organizations (MCOs). The DHHS notes section 1927 of the Social Security Act contains confidentiality requirements relative to rebate agreements state Medicaid programs have with manufacturers and wholesalers and the requirements of this bill may conflict with those provisions of law.
- Section 2 of the bill would result in an increase of at least $30 million dollars in general fund expenditures. The DHHS currently receives pharmaceutical rebates of approximately $30 million which offset the costs of the Medicaid program. This amount is expected to grow in the future with the emergence of therapeutics such as gene therapies.
- The financial model as contemplated in the bill does not align with the fiscal structure of the Medicaid program or how the beneficiary experiences cost sharing. The DHHS recently reprocured the Medicaid MCO contracts. A feature of the new contracts is a single pharmacy benefit manager (PBM) for all three MCOs. This provision was implemented to increase pharmaceutical rebates which offset a portion of the costs of the MCO contracts. This bill would require additional general funds and funds from the Granite Advantage Health Care Fund to fund the Medicaid program. In addition, the bill may not permit the Department to maintain the single PBM model which would result in contract amendments and additional costs.
It is assumed that any fiscal impact would occur after FY 2024.
AGENCIES CONTACTED:
Departments of Administrative Services, Health and Human Services and Insurance