Licensure and regulation of pharmacy benefit managers (PBMs)
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State legislation establishing a new PBM chapter that creates licensure, prohibits certain PBM practices (including spread pricing), sets attribution rules for patient payments toward deductibles/out-of-pocket limits, and grants regulatory authority to Vermont's Department of Financial Regulation; affects PBMs, health insurers, pharmacies, pharmacists, and patients in Vermont.
No material clinical or coverage changes in this revision.
Statutory Coverage & Operational Requirements
Statutory requirements and prohibitions
Operational constraints and consumer protections established by the act include:
ALL of the following
- PBMs must be licensed and pay fees as established by the act.
- The Department of Financial Regulation is authorized to regulate PBMs.
- PBMs are prohibited from using spread pricing (charging a payer more than reimbursing a pharmacy and retaining the difference).
Enforced as a statutory prohibition on PBM billing practice.
- PBMs and health insurers must attribute all amounts paid by or on behalf of a patient for a prescription drug, including coupons and discounts, toward the patient’s deductible and out-of-pocket limits.
ALL of the following
- Exception: Third-party payments need not be counted toward deductible/OOP when a generic version of the drug is available and there is not a specific reason why the patient needs the brand-name version.
ALL of the following
- Insurers and PBMs may not attempt to regulate prescription drugs, pharmacies, or pharmacists in a manner more restrictive than or inconsistent with State or federal law or Vermont Board of Pharmacy rules.
ALL of the following
- PBMs and pharmacies are prohibited from directly contacting a patient for marketing without the patient’s consent, except as otherwise permitted by statute.
ALL of the following
- An insurer or PBM may not change a patient’s prescription drug order or choice of pharmacy without the patient’s consent; this prohibition does not affect Vermont’s generic substitution law that generally requires pharmacists to dispense a lower-cost generic when prescribed.
Coding and Attribution Notes
Licensure, Billing Rules, and Provider/Insurer Obligations
PBM licensure and spread pricing prohibition
The act requires PBMs to obtain licensure from the Department of Financial Regulation, establishes fees for PBM licensure, and prohibits PBMs from engaging in spread pricing (charging a payer more for a prescription drug than the PBM reimburses the dispensing pharmacy and retaining the difference).
- PBMs must be licensed and pay fees established by the act.
- Spread pricing is prohibited: PBMs may not charge an insurer or other payer more for a prescription drug than the PBM reimburses the pharmacy and keep the difference.
- The Department of Financial Regulation is authorized to regulate PBMs under the new PBM chapter.
Attribution of patient payments toward cost-sharing
PBMs and health insurers must attribute all amounts paid by or on behalf of a patient for a prescription drug—including coupons and discounts—toward the patient's deductible and out-of-pocket limits, with a limited exception for third-party payments when a generic is available and there is no specific medical reason for brand use.
- All patient payments, including coupons and discounts, count toward deductible and out-of-pocket maximums.
- Exception: third-party payments need not be counted if a generic version exists and there is not a specific reason why the patient needs the brand-name drug.
Protections for patient choice and prescription orders
Insurers and PBMs are prohibited from changing a patient's prescription drug order or choice of pharmacy without the patient's consent; this protection does not modify Vermont's generic substitution law requiring pharmacists to substitute lower-cost generics in most instances.
- Insurers and PBMs may not alter a patient's prescription or choice of pharmacy without patient consent.
- This prohibition does not affect Vermont’s generic substitution law (pharmacists must generally substitute a lower-cost generic when prescribed).
- The act also bars insurers and PBMs from regulating drugs, pharmacies, or pharmacists more restrictively than State or federal law or Vermont Board of Pharmacy rules, and limits direct patient marketing contact by PBMs and pharmacies without patient consent.
Key Definitions
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