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Pharmacy Benefit Managers Face New Licensing Requirements

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.

© Polsinelli PC, Polsinelli LLP in California

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About this Author

Steven L. Imber, Polsinelli PC, Insurance Regulatory Attorney, Enforcement Actions Lawyer,
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Steve Imber chairs Polsinelli's Insurance Business and Regulatory group.  As a former General Counsel at a state insurance department, Steve Imber has the knowledge and experience to provide quality counsel to insurers, third party administrators, insurance agencies, medical discount plans and other insurance regulated entities. His practice includes representing and assisting clients on multi-state and national licensing projects, research projects, enforcement actions, market conduct examinations, audits and compliance programs and various other regulatory and...

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Justin Liby has a talent for organizing and managing large national and multi-state licensure and research projects. This knack provides him with a solid foundation for crafting and implementing sound, efficient strategies that achieve success for his clients. Justin concentrates his efforts on helping the insurance industry navigate the formidable federal and state regulatory maze to achieve the industry’s business needs. He stays current in the insurance industry's evolution, as well as the legislation and regulatory activity impacting the industry.

Justin is a former regulator for the Kansas Insurance Department and in-house counsel for a national third-party administrator.

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Jennifer Osborn Nix works diligently for insurance companies, third-party administrators, and other regulated entities to further their goals and help them remain compliant within the 50-state regulatory scheme. She focuses on insurance regulatory and compliance issues, with a primary emphasis on life and health insurance matters.

Jennifer works with many regulated entities, including many in the health care sector, who rely on her for research, advice, strategic counsel, and licensing.

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