Pharmacy Benefit Managers (PBM) License
Regulations: 59 OS §§ 357 – 360 and OAC 365: 25-29-8 thru 15
Disclaimer: The following is an overview of the laws pertaining to the licensure requirements for Pharmacy Benefit Managers. Refer to the OSCN or OAC webpage (links are on left side of this webpage) to research all the regulations.
Definitions
59 O.S. § 357
Covered entity means a nonprofit hospital or medical service organization, for-profit hospital or medical service organization, insurer, health benefit plan, health maintenance organization, health program administered by the state in the capacity of providing health coverage, or an employer, labor union, or other group of persons that provides health coverage to persons in this state. This term does not include a health benefit plan that provides coverage only for accidental injury, specified disease, hospital indemnity, disability income, or other limited benefit health insurance policies and contracts that do not include prescription drug coverage.
Covered individual means a member, participant, enrollee, contract holder or policy holder or beneficiary of a covered entity who is provided health coverage by the covered entity. A covered individual includes any dependent or other person provided health coverage through a policy, contract or plan for a covered individual.
Department means the Insurance Department.
Pharmacy benefits management means a service provided to covered entities to facilitate the provision of prescription drug benefits to covered individuals within the state, including negotiating pricing and other terms with drug manufacturers and providers. Pharmacy benefits management may include any or all of the following services:
- claims processing, retail network management and payment of claims to pharmacies for prescription drugs dispensed to covered individuals,
- clinical formulary development and management services, or
- rebate contracting and administration.
Pharmacy benefits manager or “PBM” means a person, business, or other entity that performs pharmacy benefits management. The term shall include a person or entity acting on behalf of a PBM in a contractual or employment relationship in the performance of pharmacy benefits management for a managed care company, nonprofit hospital, medical service organization, insurance company, third-party payor, or a health program administered by an agency or department of this state.
Provider means a pharmacy licensed by the State Board of Pharmacy, or an agent or representative of a pharmacy, including, but not limited to, the pharmacy’s contracting agent, which dispenses prescription drugs or devices to covered individuals.
OAC 365:25-29-11
“Doing pharmacy benefits management business in this state” defined-venue-exceptions
Any one of the following acts, in this state, effected by mail or otherwise, is defined to be doing pharmacy benefits management business:
- The making of or proposing to make, as a PBM, a contract with a covered entity for the provision of pharmacy benefits management services to covered individuals;
- The provision of pharmacy benefit management services to covered individuals;
- Directly or indirectly acting as an agent for, or otherwise representing or aiding on behalf of another, any person or PBM in:
- the solicitation, negotiation, procurement, or effectuation of pharmacy benefits management contracts or services;
- the transaction of matters subsequent to effectuation of a contract providing pharmacy benefits management services and arising out of it; or
- any other manner representing or assisting a person in the transaction of the business of pharmacy benefits management.
- The provisions of this section do not apply to transactions in this state involving a contract between a covered entity and a PBM not contracted to any provider in this state, that is lawfully solicited, written, and delivered outside of this state, covering only pharmacy benefits provided to individuals or entities not residing or located in this state.
59 O.S. § 358 (A), (B), (C) and (D). Powers of the Oklahoma Insurance Department
In order to provide pharmacy benefits management or any of the services included under the definition of pharmacy benefits management in this state, a pharmacy benefits manager or any entity acting as one in a contractual or employment relationship for a covered entity shall first obtain a license from the Insurance Department, and the Department may charge a fee for such licensure.
The Department shall establish, by regulation, licensure procedures, required disclosures for pharmacy benefits managers (PBMs) and other rules as may be necessary for carrying out and enforcing the provisions of this title. The licensure procedures shall, at a minimum, include the completion of an application form that shall include the name and address of an agent for service of process, the payment of a requisite fee, and evidence of the procurement of a surety bond.
The Department may suspend, revoke or refuse to issue or renew a license for noncompliance with any of the provisions hereby established or with the rules promulgated by the Department; for conduct likely to mislead, deceive or defraud the public or the Department; for unfair or deceptive business practices or for nonpayment of an application or renewal fee or fine. The Department may also levy administrative fines for each count of which a PBM has been convicted in a Department hearing. See also, 36 O.S. § 6966.1(A).
59 O.S. § 358 (C), (E), and (F). Powers of the Attorney General’s Office
Enforcement of the Patient’s Right to Pharmacy Choice Act is regulated by the Attorney General Office. Please refer all questions, comments, or complaints that do not pertain to the PBM license to their office.
The Department or the Office of the Attorney General may subpoena witnesses and information. Its compliance officers may take and copy records for investigative use and prosecutions. Nothing in this subsection shall limit the Office of the Attorney General from using its investigative demand authority to investigate and prosecute violations of the law.
The Office of the Attorney General, after notice and opportunity for hearing, may instruct the Insurance Commissioner that the PBM’s license be censured, suspended, or revoked for conduct likely to mislead, deceive, or defraud the public or the State of Oklahoma; or for unfair or deceptive business practices, or for any violation of the Patient’s Right to Pharmacy Choice Act, the Pharmacy Audit Integrity Act, or Sections 357 through 360 of this title. The Office of the Attorney General may also levy administrative fines for each count of which a PBM has been convicted following a hearing before the Attorney General. If the Attorney General makes such instruction, the Commissioner shall enforce the instructed action within thirty (30) calendar days.
In addition to or in lieu of any censure, suspension, or revocation of a license by the Commissioner, the Attorney General may levy a civil or administrative fine of not less than One Hundred Dollars ($100.00) and not greater than Ten Thousand Dollars ($10,000.00) for each violation of this subsection and/or assess any other penalty or remedy authorized by this section. For purposes of this section, each day a PBM fails to comply with an investigation or inquiry may be considered a separate violation.
The Attorney General may promulgate rules to implement the provisions of Sections 357 through 360 of this title.
36 O.S. § 109 General Provisions
No person shall transact a business of insurance in Oklahoma without complying with the applicable provisions of this Code.
Days to respond – Any person and organization subject to the jurisdiction of the Insurance Commissioner, upon receipt of any inquiry from the Commissioner shall, within twenty (20) calendar days from the date of receipt of the inquiry, furnish the Commissioner with an adequate response to the inquiry. Any inquiry or response subject to this subsection shall be delivered electronically.
Contact Change – All persons and organizations subject to the jurisdiction of the Commissioner shall keep any contact information deemed necessary by the Commissioner on file with the Insurance Department. Contact information shall be kept current and be submitted electronically in the manner and form prescribed by the Commissioner, along with any applicable fees. Any change in contact information shall be submitted within twenty (20) days of the change.
OAC 365: 25-29-5. PBM License Requirements
Initial and/or renewal application for a PBM License shall be on a form provided by the Commissioner and shall include:
- The identity of the PBM and any company or organization controlling the operation of the PBM, including the name, business address, and contact person for the PBM and the controlling entity. For purposes of this subsection, “control” or “controlling” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of the PBM, whether through the ownership of voting securities, by contract or otherwise, unless, for an individual, the power is the result of an official position with, or corporate office held by the person.
- The name and address of the corporate officers and directors, members, and managers (if an LLC), or names of all partners (if a partnership) of the applicant PBM. A completed NAIC UCAA Form 11 Biographical Affidavit is required to be on file for everyone listed.
- A “Certificate of Incorporation” or comparable organizational document from the domiciliary state of the PBM.
- In the case of a PBM domiciled outside the State of Oklahoma, a certificate that the PBM is in good standing in the state of domicile or organization.
- A report of the details of any suspension, sanction, penalty or other disciplinary action relating to the PBM and its officers and directors.
- The name and address of the agent of record for services of process in Oklahoma. A completed UCAA Form 12 Uniform Consent for Service of Process form is required to be on file with the OID. A $10.00 fee will accommodate the original filling and per update. This form only needs to be resubmitted in case of a change.
- The number of total covered individuals or lives served under all of the PBM’s contracts or agreements in Oklahoma.
- A certificate signed by an Executive Officer of the PBM attesting to the accuracy of the information contained in the filing.
- Initial Application – The most recently concluded fiscal year-end financial statements for the PBM and its controlling entity, which statements have been audited by an independent certified public accountant (CPA) under U.S. generally accepted accounting principles (GAAP).
OAC 365: 25-29-7. License Term, Renewal, Fees
- An application fee shall not be refundable if the application is denied, withdrawn, cancelled, or refused for any reason by either the applicant or the Commissioner.
- The PBM license shall continue in force no longer than twelve (12) months from the original month of issuance. Upon filing a PBM license renewal application on a form provided by the Commissioner, a renewal license may be issued by the Commissioner to a PBM licensee which is in compliance with the act, has continuously maintained such license, and has paid a renewal fee of Five Hundred Dollars ($500.00).
- If the PBM fails to timely apply for renewal of its license or fails to pay any applicable fees or outstanding fines by the last day of the month in which the license was originally issued, the license shall expire automatically. After expiration, the PBM license may be reinstated for up to one (1) year following the expiration date upon filing a PBM license renewal application on a form provided by the Commissioner and the payment of a reinstatement fee of One Thousand Dollars ($1,000.00). If after the one-year date the license has not been reinstated, the licensee shall be required to apply for a license as a new PBM licensee applicant.
- In the event that the Commissioner declines to issue or renew a PBM license, the Commissioner shall notify the applicant or licensee of such declination and advise the applicant or licensee, in writing, of the reason for the declination. The applicant or licensee may make written demand upon the Commissioner within thirty (30) days of the date of notification by the Commissioner, for a hearing before the Commissioner or an independent hearing examiner appointed by the Commissioner to determine the existence of the grounds for the Commissioner’s action. The hearing shall be held within a reasonable time period pursuant to the Oklahoma Administrative Procedures Act.
OAC 365:25-29-8. PBM to file certain financial statements – Annual Statement Form
Before May 1 of each year, every PBM providing pharmacy benefits management shall submit to the Insurance Commissioner a report, which includes the following:
- The most recently concluded fiscal year-end financial statements for the PBM and report of covered lives, signed by an Executive Officer of the PBM attesting to the accuracy of the information contained in the report form prescribed by the Commissioner.
- The report shall be prepared using generally accepted accounting principles (GAAP). The report may be supplemented by any additional information required by the Insurance Commissioner.
Extension Request – The Commissioner may extend the time prescribed for filing annual or other reports or exhibits of any kind for good cause shown. However, the Commissioner shall not extend the time for filing annual statements beyond ninety (90) days after the time prescribed by this Section.
- A written extension request must be received by email prior to May 1st. Include the licensee’s legal name and Oklahoma license number on the request.
OAC 365:25-29-6. Surety bond
Prior to the issuance of a pharmacy benefits manager license, the PBM applicant shall file with the Commissioner and thereafter keep in effect, as long as the license remains in effect, a surety bond in an amount determined to be sufficient by the Commissioner. The bond shall be in a form acceptable to the Commissioner and for the purpose of securing conformity with the laws and regulations governing pharmacy benefits managers. The bond shall be for the benefit of parties protected by the provisions of the Pharmacy Audit Integrity Act, 59 O.S. §§ 356 et seq., 59 O.S. §§ 357-360 and 36 O.S. §§ 6958-6968.
- The surety bond must provide that no party may cancel the bond without first giving thirty (30) days written notice to the principal and the Commissioner.
- Absent a finding otherwise, a bond, shall be deemed to be sufficient if it meets the following requirements:
- PBM with not more than five thousand (5,000) annual Oklahoma covered lives, the bond shall have a minimum penal sum of fifty thousand dollars ($50,000.00).
- PBM with more than five thousand (5,000) but not more than ten thousand (10,000) annual Oklahoma covered lives, the bond shall have a minimum penal sum of one hundred thousand dollars ($100,000.00),
- PBM with more than ten thousand (10,000) but not more than twenty-five thousand (25,000) annual Oklahoma covered lives, the bond shall have a minimum penal sum of two hundred fifty thousand dollars ($250,000.00)
- PBM with more than twenty-five thousand (25,000) but not more than fifty thousand (50,000) annual Oklahoma lives covered, the bond shall have a minimum penal sum of five hundred thousand dollars ($500,000.00).
- PBM with more than fifty thousand (50,000) but not more than one hundred thousand (100,000) annual Oklahoma lives covered, the bond shall have a minimum penal sum of seven hundred fifty thousand dollars ($750,000.00).
- PBM with more than one hundred thousand (100,000) annual Oklahoma covered lives, the bond shall have a minimum penal sum of one million dollars ($1,000,000.00).
OAC 365:25-29-10. Penalty for noncompliance
Each day that a pharmacy benefits manager conducts business in the State of Oklahoma without a license shall be deemed to be an instance of violation. See also, 36 O.S. §6966.1(D). The payment of the penalty may be enforced in the same manner as civil judgments may be enforced.
Every health insurer and PBM upon receipt of any inquiry from the Commissioner or the Commissioner’s representative shall, within twenty (20) days from the date of inquiry, furnish the Commissioner or the Commissioner’s representative with an adequate response to the inquiry.
OAC 365:25-29-15. Examinations and investigations of PBMs and health insurers
The Commissioner shall have power and authority to examine and investigate the affairs of every PBM engaged in pharmacy benefits management in the state in order to determine whether it is in compliance with all applicable provisions of Title 15, Title 36 and Title 59 of the Oklahoma Statutes that fall under the regulatory jurisdiction of the Insurance Commissioner and Title 365 of the Oklahoma Administrative Code and may take disciplinary action to enforce the same.