1.1 	A bill for an act
1.2 	relating to health; requiring the disclosure of
1.3 	financial information and arrangements related to
1.4 	prescription drug purchasing; requiring rulemaking;
1.5 	providing civil penalties; amending Minnesota Statutes
1.6 	2004, section 151.061, subdivision 2; proposing coding
1.7 	for new law as Minnesota Statutes, chapter 151A.
1.8 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.9 	Section 1. Minnesota Statutes 2004, section 151.061,
1.10 	subdivision 2, is amended to read:
1.11 		Subd. 2.151A.01 Definitions.
 1.21 		Subdivision 1.Application. The definitions in this
1.22 	section apply to this chapter.
1.23 		Subd. 2.Commissioner. "Commissioner" means the
1.24 	commissioner of health.
1.25 		Subd. 3.Covered entity. "Covered entity" means a
1.26 	hospital; a health maintenance organization operating under
2.1 	chapter 62D; an insurance company licensed under chapter 60A; a
2.2 	nonprofit health service plan corporation operating under
2.3 	chapter 62C; a fraternal benefit society operating under chapter
2.4 	64B; a joint self-insurance employee health plan operating under
2.5 	chapter 62H; a health program administered by a department or
2.6 	the state in the capacity of provider of health coverage; or an
2.7 	employer, labor union, or other group of persons organized in
2.8 	the state that provides health coverage to covered individuals
2.9 	who are employed or reside in the state.  Covered entity does
2.10 	not include a self-funded plan that is exempt from state
2.11 	regulation pursuant to the Employee Retirement and Income
2.12 	Security Act; a plan issued for coverage for federal employees;
2.13 	or a health plan that provides coverage only for accidental
2.14 	injury, a specified disease, hospital indemnity, Medicare
2.15 	supplement, disability income, long-term care, or other limited
2.16 	benefit health insurance policies and contracts.
2.17 		Subd. 4.Covered individual. "Covered individual" means
2.18 	a member, participant, enrollee, contract holder, policyholder,
2.19 	or beneficiary of a covered entity who is provided health
2.20 	coverage by the covered entity.  Covered individual includes a
2.21 	dependent or other person provided health coverage through a
2.22 	policy, contract, or plan for a covered individual.
2.23 		Subd. 5.Generic drug. "Generic drug" means a chemically
2.24 	equivalent copy of a brand name drug with an expired patent.
2.25 		Subd. 6.Labeler. "Labeler" means an entity or person
2.26 	that receives prescription drugs from a manufacturer or
2.27 	wholesaler and repackages those drugs for later retail sale and
2.28 	that has a labeler code from the federal Food and Drug
2.29 	Administration under Code of Federal Regulations, title 21,
2.30 	section 207.20.
2.31 		Subd. 7.Pharmacy benefits management. "Pharmacy
2.32 	benefits management" means the procurement of prescription drugs
2.33 	at a negotiated rate for dispensation within the state to
2.34 	covered individuals, the administration or management of
2.35 	prescription drug benefits provided by a covered entity for the
2.36 	benefit of covered individuals, or any of the following services
3.1 	provided with regard to the administration of pharmacy benefits:
3.2 	(1) mail service pharmacy;
3.3 	(2) claims processing, retail network management, and
3.4 	payment of claims to pharmacies for prescription drugs dispensed
3.5 	to covered individuals;
3.6 	(3) clinical formulary development and management services;
3.7 	(4) rebate contracting and administration;
3.8 	(5) patient compliance, therapeutic intervention, and
3.9 	generic substitution programs; and 
3.10 	(6) disease management programs.
3.11 		Subd. 8.Pharmacy benefits manager. "Pharmacy benefits
3.12 	manager" means an entity that performs pharmacy benefits
3.13 	management.  Pharmacy benefits manager includes a person or
3.14 	entity acting for a pharmacy benefits manager in a contractual
3.15 	or employment relationship in the performance of pharmacy
3.16 	benefits management for a covered entity and includes mail
3.17 	service pharmacy.

3.18 	Sec. 3. [151A.03] CERTIFICATE OF AUTHORITY.
3.19 	No person or entity may perform or act as a pharmacy
3.20 	benefits manager in this state without a valid certificate of
3.21 	authority issued by the commissioner.  Each person or entity
3.22 	seeking a certificate of authority to act as a pharmacy benefits
3.23 	manager shall file with the commissioner an application for a
3.24 	certificate of authority upon a form to be furnished by the
3.25 	commissioner and a filing fee to be determined by the
3.26 	commissioner.  The commissioner may establish a filing fee
3.27 	notwithstanding section 16A.1283.

3.28 	Sec. 4. [151A.05] DISCLOSURE.
3.29 	(a) Each pharmacy benefits manager shall provide to a
3.30 	covered entity and any other person that it contracts with in
3.31 	the state:
3.32 	(1) all financial and utilization information requested by
3.33 	the covered entity relating to the provision of benefits to
3.34 	covered individuals through that covered entity and all
3.35 	financial and utilization information relating to services to
3.36 	that covered entity or person; and 
4.1 	(2) all financial terms and arrangements for remuneration
4.2 	of any kind that apply between the pharmacy benefits manager and
4.3 	any prescription drug manufacturer, labeler, or pharmacy,
4.4 	including formulary management and drug-switch programs,
4.5 	educational support, claims processing, pharmacy network fees
4.6 	that are charged from retail pharmacies, and data sales fees.
4.7 	(b) The pharmacy benefits manager shall provide all
4.8 	information identified in paragraph (a), clause (2), to the
4.9 	commissioner and the attorney general's office.  The information
4.10 	may be used for law enforcement purposes, including the
4.11 	enforcement of section 151.061.

4.12 	Sec. 5. [151A.07] DISPENSATION OF SUBSTITUTE PRESCRIPTION
4.13 	DRUG.
4.14 	(a) With regard to the dispensation of a substitute
4.15 	prescription drug for a prescribed drug to a covered individual,
4.16 	the following provisions apply:
4.17 	(1) the pharmacy benefits manager may request the
4.18 	substitution of a lower-priced generic and therapeutically
4.19 	equivalent drug for a higher-priced prescribed drug; and 
4.20 	(2) if the substitute drug costs more than the prescribed
4.21 	drug, the substitution must only be made for medical reasons
4.22 	that benefit the covered individual.
4.23 	(b) Before a substitution is made under this section, the
4.24 	pharmacy benefits manager shall obtain approval of the
4.25 	prescribing health professional and must disclose to the covered
4.26 	individual and the covered entity the cost of both drugs and any
4.27 	benefit or payment directly or indirectly accruing to the
4.28 	pharmacy benefits manager as a result of the substitution.

4.29 	Sec. 6. [151A.09] ENFORCEMENT.
4.30 	The commissioner shall enforce this chapter, including the
4.31 	suspension or revocation of the authority of a pharmacy benefits
4.32 	manager to provide pharmacy benefits management in this state
4.33 	for a violation of this chapter or the imposition of a monetary
4.34 	penalty not to exceed $25,000 for each violation.  The attorney
4.35 	general may pursue the penalties and remedies available to the
4.36 	attorney general under section 8.31 for any violation of this
5.1 	chapter.

5.2 	Sec. 7. [151A.11] RULES.
5.3 	The commissioner shall adopt rules to issue a certificate
5.4 	of authority and to enforce this chapter.

5.5 	Sec. 8. [151A.13] CIVIL ACTION.
5.6 	A covered entity may bring a civil action to enforce the
5.7 	provisions of this chapter or to seek civil damages for the
5.8 	violation of this chapter.