Florida Passes the Florida Prescription Drug Reform Act

On May 3, 2023, Florida Governor DeSantis signed into law SB1550, the Prescription Drug Reform Act.

SB1550, aims to increase accountability and transparency in prescription drug pricing, with significant regulations on pharmacy benefit managers (PBMs) operating in Florida.

PBMs are an integral component of the pharmaceutical distribution chain, responsible for negotiation and financial transactions between health plans, pharmacies, and pharmaceutical manufacturers. PBM cost reduction services include management of claims, formularies, utilization, drug rebates, pharmacy networks, and negotiation of pharmacy fees and drug reimbursements.

Overview of SB1550

SB1550 takes effect on July 1, 2023, and imposes significant new requirements on PBMs.

Notable changes include:

1. Licensing and reporting requirements for PBMs
2. Required contractual terms for agreements between a PBM and a pharmacy benefits plan or program and agreements between a PBM and a participating pharmacy.
3. Annual attestation requirement.

Details of SB1550

Among other things, SB1550 will impact the following:

• Prohibits PBMs from limiting networks to affiliated pharmacies or directing patients to affiliated pharmacies for in-person administration of covered drugs.
• Restricts “step therapy” practices, which generally require the participant to first try less expensive options before “stepping up” to more costly alternatives.
• Prohibits mandatory mail order unless the drug is unavailable at retail pharmacy.
• Prohibits PBMs from restricting pharmacy disclosure to patients regarding treatment risks and alternatives or cost reduction services.
• Requires reporting of certain drug price increases if the price increased 15% or more during the preceding 12 months; or 30% or more over a three-year period
• Implements a 60-day continuity of care period for certain formulary changes made during the plan year.
• Prohibits financial clawbacks, reconciliation offsets, or offsets to adjudicated claims.
• Requires PBMs to obtain Certificate of Authority from the Office of Insurance Regulation by January 1, 2024, and report compliance with the law.
• Requires PBMs to report information regarding certain investment or ownership interests.

For contractual arrangements between a PBM and pharmacy benefits plan or program that are amended, adjusted, or renewed on or after July 1, 2023, which are applicable to pharmacy benefits covered on or after January 1, 2024, SB1550 provides numerous contractual terms that must be included, such as:

• Use of a Pass-through pricing model
• Exclusion of using a "spread pricing,” which is the practice in which a PBM charges the plan a different amount than the amount the PBM reimburses the pharmacy
• Ensuring that funds received are used or distributed only pursuant to contract
• Requiring that the PBM pass 100% of all prescription drug manufacturer rebates received to the pharmacy benefits plan or program under certain contractual conditions
• Including network adequacy requirements

Similarly, for contractual arrangements between a PBM and participating pharmacy that are amended, adjusted, or renewed on or after July 1, 2023, which are applicable to pharmacy benefits covered on or after January 1, 2024, SB1550 provides numerous contractual terms that must be included to ensure compliance with the new regulations.

Employers are encouraged to work with their consultant and PBM to review this new piece of legislation and how the PBM will ensure compliance with all the new requirements. OneDigital's compliance team will be monitoring any legal changes to SB1550.

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