A. As used in Sections 357 through 360 of this title: 1. “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; 2. “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; 3. “Department” means the Insurance Department; 4. “Effective rate contracting” means any agreement or arrangement between a pharmacy or contracting agent acting on behalf of a pharmacy and a pharmacy benefits manager for pharmaceuticals based on the effective rate of payment rather than a predetermined fixed price or fixed discount percentage; 5. “Maximum allowable cost”, “MAC”, or “MAC list” means the list of drug products delineating the maximum per-unit reimbursement for multiple-source prescription drugs, medical product, or device; 6. “Multisource drug product reimbursement” (reimbursement) means the total amount paid to a pharmacy inclusive of any reduction in payment to the pharmacy, excluding prescription dispense fees and professional fees; 7. “Office” means the Office of the Attorney General; 8. “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: a. claims processing, retail network management and payment of claims to pharmacies for prescription drugs dispensed to covered individuals, b. clinical formulary development and management services, or c. rebate contracting and administration; 9. “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; 10. “Plan sponsor” means the employers, insurance companies, unions and health maintenance organizations or any other entity responsible for establishing, maintaining, or administering a health benefit plan on behalf of covered individuals; and 11. “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. B. Nothing in the definition of pharmacy benefits management or pharmacy benefits manager in the Patient’s Right to Pharmacy Choice Act, Pharmacy Audit Integrity Act, or Sections 357 through 360 of this title shall deem an employer a “pharmacy benefits manager” of its own self-funded health benefit plan, except, to the extent permitted by applicable law, where the employer, without the utilization of a third party and unrelated to the employer’s own pharmacy: a. negotiates directly with drug manufacturers, b. processes claims on behalf of its members, or c. manages its own retail network of pharmacies. Added by Laws 2014, c. 263, § 1, eff. July 1, 2014. Amended by Laws 2016, c. 285, § 7, eff. Nov. 1, 2016; Laws 2024, c. 332, § 4, emerg. eff. May 22, 2024; Laws 2025, c. 414, § 2, eff. Nov. 1, 2025.
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