HB23-1201: Prescription Drug Benefits Contract Term Requirements

• Requires carriers and pharmacy benefit managers (PBMs) to charge policyholders no more for prescription drugs than the amount paid to contracted pharmacies, effective for contracts issued or renewed on or after January 1, 2025.

• Mandates disclosure of prescription drug contract terms to group health plan policyholders beginning in 2025, including ingredient cost reimbursement rates, dispensing fees, prior authorization charges, rebates, and utilization management program costs, broken down by drug type and pharmacy category.

• Requires carriers and PBMs to communicate the value of cost differences between renewed contracts and prior year contracts, calculated as annual aggregate savings, savings per employee per year, and savings per covered person per year, with options for policyholders to repurpose savings through reduced out-of-pocket costs.

• Authorizes the Division of Insurance Commissioner to conduct annual audits and market conduct examinations of carriers and PBMs to ensure compliance, with audit information kept confidential and non-compliance treated as unfair or deceptive insurance practices.

• Appropriates $10,000 to the Division of Insurance for the 2023-24 fiscal year to implement the act, with an effective date subject to voter approval as a referred measure in November 2024.