72nd OREGON LEGISLATIVE ASSEMBLY--2003 Regular Session
NOTE: Matter within { + braces and plus signs + } in an
amended section is new. Matter within { - braces and minus
signs - } is existing law to be omitted. New sections are within
{ + braces and plus signs + } .
LC 2693
Senate Bill 629
Sponsored by Senator FISHER (at the request of Pharmacists
Association)
SUMMARY
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure as
introduced.
Establishes requirements for issuance of certificate of
authority and license for pharmacy benefit management company.
Authorizes fees for certificate and license. Establishes basis
for denial, suspension or revocation of certificate of authority
and license. Authorizes State Board of Pharmacy to adopt rules
for requirements for certificate of authority and for Insurance
Commissioner to adopt rules for license for pharmacy benefit
management company.
A BILL FOR AN ACT
Relating to regulation of pharmacy benefit management companies;
creating new provisions; and amending ORS 689.135.
Be It Enacted by the People of the State of Oregon:
SECTION 1. { + As used in sections 1 to 9 of this 2003 Act:
(1) 'Board ' means the State Board of Pharmacy.
(2) 'Commissioner' means the Insurance Commissioner.
(3) 'Enrollee' means an individual who is or has been enrolled
in a pharmacy benefit management plan.
(4) 'Insolvent' or 'insolvency' means a financial situation in
which, based upon the financial information required by sections
1 to 9 of this 2003 Act, the assets of a pharmacy benefit
management company are less than its liabilities and required
reserves.
(5) 'Pharmacist' means any individual licensed by this state to
engage in the practice of pharmacy.
(6) 'Pharmacists' services' includes drug therapy and other
patient care services provided by a pharmacist that are intended
to achieve outcomes related to the cure or prevention of a
disease, elimination or reduction of a patient's symptoms or
arresting or slowing of a disease process as defined by the rules
of the board.
(7) 'Pharmacy' has the meaning given that term in ORS 689.005.
(8) 'Pharmacy benefit management company' means a business that
administers the prescription drug and device portion of health
insurance plans on behalf of plan sponsors such as self-insured
employers, insurance companies, unions and health maintenance
organizations.
(9)(a) 'Pharmacy benefit management plan' means an arrangement
for the delivery of prescription services in which a pharmacy
benefit management company undertakes to provide, arrange for,
pay for or reimburse any of the costs of prescription services
for an enrollee on a prepaid or insured basis that:
(A) Contains one or more incentive arrangements intended to
influence the cost or level of prescription services between the
plan sponsor and one or more pharmacies with respect to the
delivery of prescription services; and
(B) Requires or creates benefit payment differential incentives
for enrollees to use under contract with the pharmacy benefit
management company.
(b) 'Pharmacy benefit management plan' does not mean an
employee welfare benefit plan as defined in the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1002(1)) that
is self-insured or self-funded. + }
SECTION 2. { + (1) A person or organization establishing or
operating a pharmacy benefit management company in this state to
provide pharmacy benefit management plans must obtain a
certificate of authority from the State Board of Pharmacy.
(2) The board shall adopt by rule the requirements for a
certificate of authority to establish and operate a pharmacy
benefit management company in compliance with this section and
section 3 of this 2003 Act. The requirements must include, but
are not limited to:
(a) Obtaining an annual license to do business in this state
from the Insurance Commissioner as provided in sections 4 and 5
of this 2003 Act;
(b) Completion of forms that are adopted by the board for
applying for a certificate authority; and
(c) Payment of application and annual renewal fees adopted by
the board by rule. + }
SECTION 3. { + (1) The State Board of Pharmacy may suspend or
revoke a certificate of authority or deny an application for a
certificate of authority if it finds that:
(a) The pharmacy benefit management company is operating in
contravention of its basic organizational document.
(b) The pharmacy benefit management company does not arrange
for pharmacists' services.
(c) The pharmacy benefit management company has failed to meet
the requirements for issuance of a certificate of authority as
required by section 2 of this 2003 Act or of rules adopted by the
board.
(d) The pharmacy benefit management company is unable to
fulfill its obligation to furnish pharmacists' services as
required under its pharmacy benefit management plan.
(e) The pharmacy benefit management company is not financially
responsible and may reasonably be expected to be unable to meet
its obligations to enrollees or prospective enrollees.
(f) The pharmacy benefit management company, or any person on
its behalf, has advertised or merchandised its services in an
untrue, misrepresentative, misleading, deceptive or unfair
manner.
(g) The continued operation of the pharmacy benefit management
company would be hazardous to its enrollees.
(h) The pharmacy benefit management company has otherwise
failed to substantially comply with the provisions of sections 1
to 9 of this 2003 Act.
(2) If the certificate of authority of a pharmacy benefit
management company has been revoked, the company must immediately
conduct only those activities that are essential to the orderly
conclusion of the affairs of the company. The board may permit
further operation of the company that the board finds in the best
interest of enrollees to the end that the enrollees will be
afforded the greatest practical opportunity to obtain
pharmacists' services. + }
SECTION 4. { + (1) The Insurance Commissioner may issue an
annual license to do business in this state to a pharmacy benefit
management company providing pharmacy benefit management plans
after the pharmacy benefit management company has:
(a) Paid all fees, taxes and charges required by law or rule;
(b) Made any deposit required by the commissioner by rule;
(c) Met the minimum capital and surplus requirements specified
by the commissioner by rule;
(d) Filed a financial statement or statements and any reports,
certificates or other documents the commissioner considers
necessary to secure a full and accurate knowledge of its
practices and financial condition;
(e) Established that it is solvent and that its financial
condition, method of operation and manner of doing business are
such as to satisfy the commissioner that it can meet its
obligations to its enrollees; and
(f) Complied with all other requirements of sections 4 to 9 of
this 2003 Act and rules adopted by the commissioner.
(2) The license shall be in addition to the certificate of
authority required by the State Board of Pharmacy under section 2
of this 2003 Act.
(3) An initial license issued under this section expires on
June 30 next following the date on which it becomes effective.
(4) A license issued under this section must be renewed
annually. + }
SECTION 5. { + The Insurance Commissioner may refuse to renew
the license of any pharmacy benefit management company or may
renew the license, subject to any restrictions considered
appropriate by the commissioner, if the commissioner finds an
impairment of required capital and surplus or that the pharmacy
benefit management company has not satisfied all the conditions
or has violated provisions or rules under sections 4 to 9 this
2003 Act. The commissioner may refuse to renew the license of
any pharmacy benefit management company only after giving the
licensee 10 days' notice and providing the licensee an
opportunity to be heard. The hearing may be informal, and the
commissioner and the licensee may waive the required notice. + }
SECTION 6. { + The Insurance Commissioner shall adopt rules
for the:
(1) Implementation and enforcement of sections 4 to 9 of this
2003 Act;
(2) Submission of financial and informational statements and
other documents that must be filed with the commissioner by a
pharmacy benefit management company;
(3) Financial examinations of the licensee or prospective
licensee;
(4) Approval of contracts between a licensee and pharmacies or
pharmacists to provide pharmacists' services through a pharmacy
benefit management plan to enrollees;
(5) Investigation and resolution of complaints filed with the
commissioner by enrollees, pharmacists or plan sponsors
concerning the failure of a licensee to meet the requirements of
sections 4 to 9 of this 2003 Act;
(6) Protection of the benefits of enrollees upon the insolvency
of a licensee, including an assessment of a fee on other
licensees to provide benefits to the enrollees of the insolvent
licensee; and
(7) Assessment of fees necessary to pay the expenses of
administration and enforcement of sections 4 to 9 of this 2003
Act. + }
SECTION 7. { + (1) A pharmacy benefit management company or
its representative may not cause or knowingly permit the use of:
(a) Advertising that is untrue or misleading;
(b) Solicitation that is untrue or misleading; or
(c) Any form of evidence of coverage that is deceptive.
(2) A pharmacy benefit management company, unless licensed as
an insurer, may not use in its name, contracts or literature:
(a) The words 'insurance,' 'casualty,' 'surety' or ' mutual';
(b) Any other words commonly associated with the insurance,
casualty or surety business; or
(c) Words deceptively similar to the name or description of any
insurance or fidelity and surety insurer doing business in this
state. + }
SECTION 8. { + The Prescription Benefit Management Account is
created in the General Fund. All moneys received by the
Department of Consumer and Business Services under section 6 of
this 2003 Act shall be paid into the State Treasury, deposited in
the General Fund to the credit of the Prescription Benefit
Management Account, and used exclusively for the purposes of
sections 4 to 9 of this 2003 Act. + }
SECTION 9. { + An enrollee in a pharmacy benefit management
plan has the right to privacy and confidentiality in pharmacists'
services. This right may be expressly waived in writing by the
enrollee or the enrollee's guardian. + }
SECTION 10. ORS 689.135 is amended to read:
689.135. (1) The State Board of Pharmacy shall have such other
duties, powers and authority as may be necessary to the
enforcement of this chapter and to the enforcement of board rules
made pursuant thereto, which shall include, but are not limited
to, the following:
(a) Cause to have printed and circulated annually copies of any
changes in the laws relating to pharmacy, controlled substances,
drugs and poisons and the rules adopted to enforce such laws, and
set reasonable charges therefor.
(b) Appoint advisory committees.
(2) The board may join such professional organizations and
associations organized exclusively to promote the improvement of
the standards of the practice of pharmacy for the protection of
the health and welfare of the public and whose activities assist
and facilitate the work of the board.
(3) In addition to any statutory requirements, the board may
require such surety bonds as it deems necessary to guarantee the
performance and discharge of the duties of any officer or
employee receiving and disbursing funds.
(4) The executive director of the board shall keep the seal of
the board and shall affix it only in such manner as may be
prescribed by the board.
(5) The board shall determine within 30 days prior to the
beginning of each state fiscal year the fees to be collected for:
(a) Examinations and reexaminations, which fee shall not exceed
$400.
(b) Pharmacist licenses, which fee shall not exceed $250.
(c) Pharmacist licensing by reciprocity, which fee shall not
exceed $300.
(d) Intern license, which fee shall not exceed $50.
(e) Duplicate pharmacist certificate, which fee shall not
exceed $50.
(f) Pharmacist license, delinquent renewal fee, which fee shall
not exceed $50.
(g) Certification of approved providers of continuing education
courses, which fee shall not exceed $300.
(h) Registration of drug outlets other than pharmacies and
renewal of registration, which fee shall not exceed $500.
(i) Initial pharmacy or institutional drug outlet, which fee
shall not exceed $300.
(j) Annual pharmacy or institutional drug outlet, which fee
shall not exceed $300.
(k) Pharmacy or institutional drug outlet delinquent renewal
fee, which fee shall not exceed $200.
(L) Nonprescription drug outlets, which fee shall not exceed
$50.
(m) Nonprescription drug outlet delinquent renewal fee, which
fee shall not exceed $50.
(n) Reinspection fee, which fee shall not exceed $100.
(o) Drug outlets, other than pharmacies or institutional drug
outlets, delinquent renewal fee, which fee shall not exceed $100.
{ + (p) Initial certificate of authority for a pharmacy
benefit management company.
(q) Annual renewal of a certificate of authority for a pharmacy
benefit management company. + }
(6) All moneys collected either as costs or fines under ORS
435.010 to 435.130, 453.175, 453.185 and 453.990 and this chapter
shall be paid by the magistrate or other officer receiving them
to the treasurer of the county where the prosecution is
conducted. These moneys shall be applied, first, to the payment
of the costs of such prosecution; the remainder shall be paid by
the county treasurer to the General Fund in the State Treasury
and, in the case of:
(a) All moneys except criminal fines, placed to the credit of
the Public Health Account and such moneys hereby are appropriated
continuously and shall be used only for the administration and
enforcement of ORS 435.010 to 435.130 and this chapter.
(b) Criminal fines, placed to the credit of the Criminal Fine
and Assessment Account.
(7) All moneys received by the Department of Human Services
under ORS 435.010 to 435.130, 453.185 and 453.990 and this
chapter shall be paid into the General Fund in the State Treasury
and placed to the credit of the Public Health Account and such
moneys hereby are appropriated continuously and shall be used
only for the administration and enforcement of ORS 435.010 to
435.130 and this chapter.
(8) The board may receive and expend funds, in addition to its
annual biennial appropriation, from parties other than the state,
provided:
(a) Such moneys are awarded for the pursuit of a specific
objective which the board is authorized to accomplish by this
chapter, or which the board is qualified to accomplish by reason
of its jurisdiction or professional expertise;
(b) Such moneys are expended for the pursuit of the objective
for which they are awarded;
(c) Activities connected with or occasioned by the expenditures
of such funds do not interfere with or impair the performance of
the board's duties and responsibilities and do not conflict with
the exercise of the board's powers as specified by this chapter;
(d) Such moneys are kept in a separate, special state account;
and
(e) Periodic reports are made to the Governor concerning the
board's receipt and expenditure of such moneys.
(9) The board may assign to each drug outlet under its
jurisdiction, a uniform state number, coordinated where possible
with all other states which adopt the same uniform numbering
system.
(10) The board or its authorized representatives shall also
have power to investigate and gather evidence concerning alleged
violations of the provisions of this chapter or of the rules of
the board.
(11) The president and vice president of the board may
administer oaths in connection with the duties of the board.
(12) The books, registers and records of the board as made and
kept by the executive director or under the supervision of the
executive director, subject to the direction of the board, shall
be prima facie evidence of the matter recorded therein, in any
court of law.
(13) The board may administer oaths, issue notices and
subpoenas in the name of the board, enforce subpoenas in the
manner authorized by ORS 183.440, hold hearings and perform such
other acts as are reasonably necessary to carry out its duties
under this chapter.
(14)(a) Notwithstanding anything in this chapter to the
contrary, whenever a duly authorized representative of the board
finds or has probable cause to believe that any drug or device is
adulterated, misbranded or a new drug, as defined in Section
201(p) of the Federal Food, Drug and Cosmetic Act, for which
there is no approval in effect pursuant to Section 505(b) of the
federal Act nor an approved notice of claimed investigational
exemption pursuant to Section 505(i) of the federal Act, or
otherwise rendered unsafe for use as a result of fire, flood or
other natural disaster, the representative shall affix to such
drug or device a tag or other appropriate marking giving notice
that such article is or is suspected of being adulterated,
misbranded, or otherwise rendered unsafe and has been detained or
embargoed and warning all persons not to remove or dispose of
such article by sale or otherwise until provision for removal or
disposal is given by the board, its agent or the court. No person
shall remove or dispose of such embargoed drug or device by sale
or otherwise without the permission of the board or its agent or,
after summary proceedings have been instituted, without
permission from the court.
(b) When a drug or device detained or embargoed under paragraph
(a) of this subsection has been declared by such representative
to be adulterated, misbranded or a new drug, or rendered unsafe,
the board shall, as soon as practical thereafter, petition the
judge of the circuit court in whose jurisdiction the article is
detained or embargoed for an order for condemnation of such
article. If the judge determines that the drug or device so
detained or embargoed is not adulterated or misbranded or
rendered unsafe, the board shall direct the immediate removal of
the tag or other marking.
(c) If the court finds the detained or embargoed drug or device
is adulterated or misbranded or rendered unsafe, such drug or
device, after entry of the decree, shall be destroyed at the
expense of the owner under the supervision of a board
representative and all court costs and fees, storage and other
proper expense shall be borne by the owner of such drug or
device. When the adulteration or misbranding can be corrected by
proper labeling or processing of the drug or device, the court,
after entry of the decree and after such costs, fees and expenses
have been paid and a good and sufficient bond has been posted,
may direct that such drug or device be delivered to the owner
thereof for such labeling or processing under the supervision of
a board representative. Expense of such supervision shall be paid
by the owner. Such bond shall be returned to the owner of the
drug or device on representation to the court by the board that
the drug or device is no longer in violation of the embargo and
the expense of supervision has been paid.
(d) It is the duty of the Attorney General to whom the board
reports any violation of this subsection to cause appropriate
proceedings to be instituted in the proper court without delay
and to be prosecuted in the manner required by law. Nothing in
this subsection shall be construed to require the board to report
violations whenever the board believes the public's interest will
be adequately served in the circumstances by a suitable written
notice or warning.
(15) Except as otherwise provided to the contrary, the board
shall exercise all of its duties, powers and authority in
accordance with ORS 183.310 to 183.550.
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