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November 2016


Pharmacy Benefit Managers Face New Licensing Requirements







Third Party Administrators Professionals:


Steven L. Imber


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Justin T. Liby


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Jennifer Osborn Nix


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Two states recently enacted new pharmacy benefit manager licensing requirements that affect pharmacy benefit managers in Kentucky and New Mexico. It is important for Pharmacy Benefit Managers to ensure they are in compliance with these new laws.

The details of the actions are summarized below.

Kentucky SB 117

Kentucky Senate Bill 117 revised the definition of a "pharmacy benefit manager" (PBM) and "maximum allowable cost." It also clarifies PBM obligations, including an appeal process for certain parties and the maximum allowable cost to determine the drug product reimbursement. Further, Senate Bill 117 creates a new requirement for PBMs to obtain a license from the Kentucky Insurance Department by January 1, 2017. Per the Kentucky Insurance Department, as of January 1, 2017, an entity may not do business in Kentucky as a PBM until its PBM license has been issued. The Kentucky Insurance Department just recently published the PBM licensure application on its website.

New Mexico

The New Mexico Superintendent of Insurance recently issued Bulletin 2016-021, which supersedes Bulletin No. 2014-014.

According to the Superintendent, Bulletin 2016-21 was issued to advise any unlicensed PBM doing business in New Mexico that a PBM application must be submitted to the New Mexico Office of the Superintendent of Insurance by November 1, 2016, and that failure to comply with provisions of the New Mexico Pharmacy Benefits Manager Regulation Act may result in a monetary penalty of up to $10,000 per violation and cessation of business operations in New Mexico.

For More Information

Polsinelli's Insurance and Health Care teams include attorneys who were former in-house counsel for TPAs and PBMs, as well as attorneys who were formerly insurance regulators.

By leveraging its extensive experience representing TPAs and PBMs, the Polsinelli team helps clients avoid the learning curve and related cost implications that can be experienced by working with companies or attorneys less familiar with the regulatory and compliance needs of TPAs and PBMs. For additional information regarding this article, please contact one of the authors, a member of Polsinelli’s Third Party Administrators practice, or your Polsinelli attorney.











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