C.R.S. Section 10-16-163
Contracts

health benefit plans
pharmacy benefit managers
policyholders
transparency requirements
rules
definitions

(1)

For a contract between a carrier or pharmacy benefit manager and a certificate holder or policyholder that is issued or renewed on or after January 1, 2025, the amount charged by the carrier or PBM to the certificate holder or policyholder for a prescription drug dispensed to a covered person must be equal to or less than the amount paid by the carrier or PBM to a contracted pharmacy for such prescription drug dispensed to such covered person residing in Colorado.

(2)

Intentionally left blank —Ed.

(a)

For group health benefit plans in effect during calendar year 2025 and each calendar year thereafter, a carrier or pharmacy benefit manager shall disclose to each policyholder or the policyholder’s specifically designated broker or consultant the prescription drug contract terms required by this subsection (2). For group health benefit plans in effect during calendar year 2023 or 2024 or both, the disclosure must also include any changes in terms between each calendar year.

(b)

The disclosures required pursuant to this subsection (2) must include:

(I)

The ingredient cost average reimbursement rate for:

(A)

Generic drugs dispensed at retail pharmacies;

(B)

Brand-name drugs dispensed at retail pharmacies;

(C)

Specialty drugs dispensed at retail pharmacies;

(D)

Generic drugs dispensed at mail-order pharmacies;

(E)

Brand-name drugs dispensed at mail-order pharmacies;

(F)

Specialty drugs dispensed at mail-order pharmacies; and

(G)

Specialty drugs dispensed at any specialty pharmacy, including a pharmacy that is fully or partially owned by a contracting PBM, carrier, or the PBM’s or carrier’s holding companies or affiliates;

(II)

The average dispensing fee paid to each type of pharmacy, including each retail, mail-order, and specialty pharmacy;

(III)

The charge per prior authorization;

(IV)

Utilization management programs and associated fees;

(V)

Any other contracted services and associated fees;

(VI)

The average rebate across all paid prescriptions for the respective group health benefit plan and the average rebate across all paid prescriptions that pay a rebate for the respective group health benefit plan; and

(VII)

The rebate guarantee, where applicable.

(c)

For contracts between a carrier or pharmacy benefit manager and a certificate holder or policyholder that are renewed in calendar year 2025 and each calendar year thereafter, the carrier or PBM shall calculate and communicate to the certificate holder or policyholder the value of the difference between the contract terms in the renewed contracts and the contracts that were in effect the previous calendar year, annualizing the previous year’s actual data for each respective certificate holder or policyholder. The value communicated shall include annual aggregate savings, annual aggregate savings per employee per year, and annual aggregate savings per covered person per year.

(d)

A carrier or pharmacy benefit manager shall provide to each certificate holder or policyholder, for voluntary consideration, options to repurpose aggregate savings in the form of reductions to out-of-pocket costs such as deductibles, copayment amounts, coinsurance, or premium contributions. The carrier or PBM shall provide the information to certificate holders or policyholders no less than ninety days before the date of the contract renewal.

(e)

A carrier or PBM shall provide the information specified in subsections (2)(b), (2)(c), and (2)(d) of this section to all certificate holders and policyholders for contracts in effect during calendar year 2025, including certificate holders and policyholders that may not receive a renewal notice due to a multiyear contractual agreement or for any other reason except notice of termination.

(f)

The disclosures required in subsections (2)(b)(VI) and (2)(b)(VII) of this section must not disclose any proprietary rebate information between a drug manufacturer and the pharmacy benefit manager or its carrier affiliate. The disclosure of data required by these subsections must represent the aggregate value of rebates passing through from the pharmacy benefit manager or its carrier affiliate to the health benefit plan as defined by rule of the commissioner.

(g)

A carrier may exempt a segment of its business from this subsection (2). The carrier’s exempted business segment must provide the majority of covered medical professional services through a single, contracted medical group and operate its own pharmacies through which at least eighty-five percent of its aggregate prescription drug claims are filled. On and after August 7, 2023, a carrier that meets the exemption criteria in this subsection (2)(g) shall submit an attestation to the division of such compliance with each rate filing required pursuant to section 10-16-107. The carrier or PBM shall disclose all data requirements as outlined in this subsection (2) to the carrier’s group policyholders that are primarily accessing prescription drug benefits through a third-party PBM contracted with the carrier.

(3)

The commissioner shall promulgate rules to implement this section.

(4)

Intentionally left blank —Ed.

(a)

The commissioner may conduct an audit or market conduct examination of a carrier or pharmacy benefit manager to ensure compliance with this section. The commissioner, pursuant to any rules promulgated by the division, may audit a carrier or PBM annually to determine if there is a violation of this section.

(b)

The commissioner may determine a carrier’s or PBM’s compliance with this section based on a sampling of data or based on a full claims audit. The sampling of data and any extrapolation from the data used to determine penalties must be reasonably valid from a statistical standpoint and in accordance with generally accepted auditing standards. A carrier or PBM that does not comply with a division request for the data required to complete an audit violates this section and may be subject to penalties.

(c)

Information obtained through an audit conducted pursuant to this subsection (4) is proprietary and confidential information, available only to the commissioner and the commissioner’s auditing designee, and is not subject to disclosure unless specifically required by state or federal law.

(5)

The failure of a carrier or PBM to comply with this section is an unfair method of competition and an unfair or a deceptive act or practice in the business of insurance pursuant to section 10-3-1104 (1).

(6)

Intentionally left blank —Ed.

(a)

The requirements of subsections (1), (2), and (4) of this section apply to an employer-sponsored health benefit plan, an associated pharmacy benefit manager, and the health benefit plan members only if a person, Taft-Hartley trust, municipality, state, labor union, plan sponsor, or employer that provides the employer-sponsored health benefit plan elects to be subject to subsections (1), (2), and (4) of this section for its members that reside in Colorado.

(b)

As used in this subsection (6), “pharmacy benefit manager” means an entity doing business in this state that administers or manages prescription drug benefits, including claims processing services and other prescription drug or device services as defined in section 10-16-122.1, that is in a contractual relationship directly or indirectly through an affiliate with an employer-sponsored health benefit plan, which includes plans that are self-insured or regulated by the federal “Employee Retirement Income Security Act of 1974”, 29 U.S.C. sec. 1001 et seq., as amended, offered by:

(I)

A person;

(II)

A Taft-Hartley trust;

(III)

A municipality;

(IV)

The state;

(V)

A labor union;

(VI)

A plan sponsor;

(VII)

An employer; or

(VIII)

A coalition of employers or aggregation of employers working together to negotiate improved contract terms with a pharmacy benefit manager.

(7)

As used in this section, unless the context otherwise requires:

(a)

“Contracted pharmacy” means a pharmacy that has contracted with a carrier, a pharmacy benefit manager, or an affiliate of the carrier or PBM.

(b)

“Ingredient cost” means the actual amount paid to a pharmacy by a pharmacy benefit manager for a prescription drug, not including a dispensing fee or patient cost-sharing amount.

(c)

“Pharmacy” means an entity where medicinal drugs are dispensed and sold, including a retail pharmacy, mail-order pharmacy, specialty pharmacy, hospital outpatient setting, or other related pharmacy.

Source: Section 10-16-163 — Contracts - health benefit plans - pharmacy benefit managers - policyholders - transparency requirements - rules - definitions, https://leg.colorado.gov/sites/default/files/images/olls/crs2023-title-10.pdf (accessed Oct. 20, 2023).

California:	Codes
Colorado:	C.R.S.
Nevada:	NRS
New York:	Laws
Oregon:	OAR, ORS
Texas:	Statutes
World:	Rome Statute, International Dictionary

C.R.S. Section 10-16-163 Contracts

(1)

(2)

(a)

(b)

(I)

(A)

(B)

(C)

(D)

(E)

(F)

(G)

(II)

(III)

(IV)

(V)

(VI)

(VII)

(c)

(d)

(e)

(f)

(g)

(3)

(4)

(a)

(b)

(c)

(5)

(6)

(a)

(b)

(I)

(II)

(III)

(IV)

(V)

(VI)

(VII)

(VIII)

(7)

(a)

(b)

(c)

C.R.S. Section 10-16-163
Contracts