Pharmacy benefit management: Prescription Acquisition and Adjudication Agency.

Existing law provides for the regulation of health care service plans by the Department of Managed Health Care. A willful violation of those provisions is a crime. Existing law, on and after January 1, 2020, prohibits a health care service plan from including in a contract with a pharmacy provider or its contracting agent a provision that prohibits the provider from informing a patient of a less costly alternative to a prescribed medication. Existing law requires a health care service plan that contracts with a pharmacy benefit manager for management of any or all of its prescription drug coverage to require the pharmacy benefit manager to comply with specified provisions, register with the department pursuant to those provisions, and exercise good faith and fair dealing in the performance of its contractual duties to a health care service plan. Existing law provides for the regulation of health insurers by the Department of Insurance. This bill would, on and after July 1, 2021, prohibit a health care service plan or a health insurer from entering into, renewing, or extending a contract for pharmacy benefit manager services, as defined. Because a violation of this prohibition by a health care service plan would be a crime, this bill would impose a state-mandated local program. This bill would create the Prescription Acquisition and Adjudication Agency, and would create an advisory board for that agency, as specified. The bill would require a division of the agency to offer pharmacy benefit manager services to health care service plans and health insurers, including adjudicated claim processing, negotiations for pharmaceutical discounts, and the creation of formularies for each plan or insurer, as specified. This bill would additionally require a separate division of the agency to negotiate with pharmaceutical manufacturers for discounts and rebates for those plans or insurers, and would require the agency to develop a closed bidding process for those negotiations. The bill would require an agreement between the agency and a health care service plan or health insurer to include provisions granting 10% of any rebate or of the difference between the market value and the price negotiated by the agency, or 100% of the rebate or difference if the agreement is with a Medi-Cal managed care plan, to be paid to the agency, and deposited in to the Pharmaceutical Discount Fund, and would make those funds available, upon appropriation by the Legislature, to the agency to fund its costs or for other programs to lower health care costs in the state. Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest. This bill would make legislative findings to that effect. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason. By authorizing the agency, in its agreements with health care service plans or health insurers, to receive more than the reasonable costs of its services, this bill would include a change in state statute that would result in a taxpayer paying a higher tax within the meaning of Section 3 of Article XIIIA of the California Constitution, and thus would require for passage the approval of 23 of the membership of each house of the Legislature.