HB 229: Establish licensing process, contract requirements for PBMs
the proposed legislation aims to establish a standalone licensing process and new contractual requirements for pharmacy benefit managers. this process will oversee the administration of prescription drug and device services, including claims processing, pharmacy benefit management, and other services. the legislation also requires pharmacy benefit managers to comply with certain requirements, such as providing accurate and timely information to pharmacies and patients, and ensuring that maximum allowable costs for drugs are reasonable and transparent. furthermore, the legislation includes provisions related to confidentiality and data protection, ensuring that sensitive information is handled and shared in accordance with applicable laws and regulations. the proposed legislation is intended to promote fair competition, protect the interests of pharmacies and patients, and improve the ov…
| Jun. 30, 2026 | Effective |
| Mar. 31, 2026 | Signed By The Governor |
| Mar. 26, 2026 | Sent To The Governor |
| Mar. 18, 2026 | Concurred in Senate amendments |
| Mar. 04, 2026 | Passed |
ANACT
To amend sections 1751.92, 3905.24, 3923.87, 3959.01, 3959.111, 3959.12, and 3959.20; to amend, for the purpose of adopting new section numbers as indicated in parentheses, sections 3959.111 (3957.25), 3959.20 (3957.26), and 3959.22 (3957.27); and to enact sections 3957.01, 3957.02, 3957.03, 3957.04, 3957.05, 3957.06, 3957.07, 3957.08, 3957.09, 3957.10, 3957.11, 3957.12, 3957.13, 3957.14, 3957.15, 3957.16, and 3957.99 of the Revised Code to establish a standalone licensing process and new contractual requirements for pharmacy benefit managers.
Be it enacted by the General Assembly of the State of Ohio:
Section 1. That sections 1751.92, 3905.24, 3923.87, 3959.01, 3959.111, 3959.12, and 3959.20 be amended; sections 3959.111 (3957.25), 3959.20 (3957.26), and 3959.22 (3957.27) be amended for the purpose of adopting new section numbers as indicated in parentheses; and sections 3957.01, 3957.02, 3957.03, 3957.04, 3957.05, 3957.06, 3957.07, 3957.08, 3957.09, 3957.10, 3957.11, 3957.12, 3957.13, 3957.14, 3957.15, 3957.16, and 3957.99 of the Revised Code be enacted to read as follows:
Each health insuring corporation shall comply with the requirements of section 3959.20-3957.26 of the Revised Code as they pertain to health plan issuers.
As used in this section, "health plan issuer" has the same meaning as in section 3922.01 of the Revised Code.
All records and other information obtained by the superintendent of insurance or the superintendent's deputies, examiners, assistants, or other employees, or agents relating to an investigation of an applicant for licensure under this chapter, or of an agent, solicitor, broker, or other person licensed or appointed under this chapter or Chapter 3951., 3957., or 3959. of the Revised Code, are confidential and are not public records as defined in section 149.43 of the Revised Code until the applicant, licensee, or appointee is provided notice and opportunity for hearing pursuant to Chapter 119. of the Revised Code with respect to such records or information. If no administrative action is initiated with respect to a particular matter about which the superintendent obtained records or other information as part of an investigation, all such records and information relating to that matter shall remain confidential for three years after the file on the matter is closed.
Division (A)(1) of this section applies only to investigations that could result in administrative action under Title XVII or XXXIX or Chapter 119. of the Revised Code.
The records and other information described in division (A) of this section shall remain confidential for all purposes except when it is appropriate for the superintendent and the superintendent's deputies, examiners, assistants, or other employees, or agents to take official action regarding the affairs of the applicant, licensee, or appointee or in connection with actual or potential criminal proceedings.
Notwithstanding divisions (A) and (B) of this section, the superintendent may do either of the following:
Share records and other information that are the subject of this section with the chief deputy rehabilitator, the chief deputy liquidator, other deputy rehabilitators and liquidators, and any other person employed by, or acting on behalf of, the superintendent pursuant to Chapter 3901. or 3903. of the Revised Code, with other local, state, federal, and international regulatory and law enforcement agencies, with local, state, and federal prosecutors, and with the national association of insurance commissioners and its affiliates and subsidiaries, provided that the recipient agrees to maintain the confidential status of the confidential record or other information and has authority to do so;
Disclose records and other information that are the subject of this section in the furtherance of any regulatory or legal action brought by or on behalf of the superintendent or the state, resulting from the exercise of the superintendent's official duties.
Notwithstanding divisions (A), (B), and (C) of this section, the superintendent may authorize the national association of insurance commissioners and its affiliates and subsidiaries by agreement to share confidential records and other information received pursuant to division (C)(1) of this section with local, state, federal, and international regulatory and law enforcement agencies and with local, state, and federal prosecutors, provided that the recipient agrees to maintain the confidential status of the confidential record or other information and has authority to do so.
Notwithstanding divisions (A), (B), and (C) of this section, the chief deputy rehabilitator, the chief deputy liquidator, and other deputy rehabilitators and liquidators may disclose records and other information that are the subject of this section in the furtherance of any regulatory or legal action brought by or on behalf of the superintendent, the rehabilitator, the liquidator, or the state resulting from the exercise of the superintendent's official duties in any capacity.
Nothing in this section shall prohibit the superintendent from receiving records and other information in accordance with section 3901.045 of the Revised Code.
No waiver of any applicable privilege or claim of confidentiality in the records and other information that are the subject of this section shall occur as a result of sharing or receiving records or other information as authorized in divisions (C)(1), (D), and (F) of this section.
The disclosure of records or other information in connection with a regulatory or legal action pursuant to divisions (C)(2) and (E) of this section does not prohibit an insurer or any other person from taking steps to limit the dissemination of the record or other information to persons not involved in or the subject of the regulatory or legal action on the basis of any recognized privilege arising under any other section of the Revised Code or the common law.
Employees or agents of the department of insurance shall not be required by any court in this state to testify in a civil action, if the testimony concerns any matter related to records or other information considered confidential under this section of which they have knowledge.
Each sickness and accident insurer or public employee benefit plan shall comply with the requirements of section 3959.20-3957.26 of the Revised Code as they pertain to health plan issuers.
As used in this section, "health plan issuer" has the same meaning as in section 3922.01 of the Revised Code.
As used in this chapter:
"Claims processing services" means administrative services performed in connection with processing and adjudicating claims relating to pharmacist services, including both of the following:
Receiving payments for pharmacist services;
Making payments to pharmacists or pharmacies for pharmacist services.
"Contracted pharmacy" or "pharmacy" means a pharmacy, as defined in section 4729.01 of the Revised Code, located in this state and participating in either the network of a pharmacy benefit manager or in a health care or pharmacy benefit plan through a direct contract or through a contract with a pharmacy services administration organization, group purchasing organization, or another contracting agent.
"Drug product reimbursement" means the amount paid by a pharmacy benefit manager to a contracted pharmacy for the cost of the drug dispensed to a patient and does not include a dispensing or professional fee.
"Fiscal year," "plan," "plan sponsor," and "self-insurance program" have the same meanings as in section 3959.01 of the Revised Code.
"Health benefit plan" and "health plan issuer" have the same meanings as in section 3922.01 of the Revised Code.
"Insurance" has the same meaning as in section 3905.01 of the Revised Code.
"Insurer" has the same meaning as in section 3901.32 of the Revised Code.
"Licensee" means a person licensed as a pharmacy benefit manager under this chapter.
"Maximum allowable cost" means a maximum drug product reimbursement for an individual drug or for a group of therapeutically and pharmaceutically equivalent multiple source drugs that are listed in the United States food and drug administration's approved drug products with therapeutic equivalence evaluations, commonly referred to as the orange book.
"Maximum allowable cost list" means a list of the drugs for which a pharmacy benefit manager imposes a maximum allowable cost.
"Other prescription drug or device services" means services other than claims processing services, provided directly or indirectly, whether in connection with or separate from claims processing services, including all of the following:
Negotiating rebates, discounts, or other financial incentives and arrangements with drug companies;
Disbursing or distributing rebates;
Managing or participating in incentive programs or arrangements for pharmacist services;
Negotiating or entering into contractual arrangements with pharmacists or pharmacies, or both;
Developing formularies;
Designing prescription benefit programs;
Advertising or promoting services.
"Pharmacist" means an individual licensed to engage in the practice of pharmacy, as defined in section 4729.01 of the Revised Code.
"Pharmacy benefit manager" means an entity that contracts with pharmacies on behalf of an employer, a multiple employer welfare arrangement, public employee benefit plan, state agency, insurer, managed care organization, or other third-party payer to provide claims processing services, pharmacy benefit management services or administration, or other prescription drug or device services. "Pharmacy benefit manager" includes the state pharmacy benefit manager selected under section 5167.24 of the Revised Code.
"Pharmacy benefit manager affiliate" means a pharmacy or pharmacist that directly or indirectly, through one or more intermediaries, owns or controls, is owned or controlled by, or is under common ownership or control with a pharmacy benefit manager.
"Pharmacy benefit management services" means services provided by a pharmacy benefit manager on behalf of an employer, a multiple employer welfare arrangement, public employee benefit plan, state agency, insurer, managed care organization, or other third-party payer to provide claims processing services, administrative support or efficiencies, contracting, or other prescription drug or device services.
"Pharmacy services administrative organization" means an organization that helps community pharmacies and pharmacy benefit managers or third-party payers achieve administrative efficiencies, including contracting and payment efficiencies.
"Rebate" means a discount or other price concession, or a payment attributable to the utilization of prescription drugs in this state, that is paid by a drug manufacturer directly to a pharmacy benefit manager after a claim has been processed and paid at a pharmacy.
"Subject to this chapter" means, in the context of an agreement involving a pharmacy benefit manager, that the agreement is entered into, amended, or renewed on or after July 1, 2027.
"Third-party payer" has the same meaning as in section 3901.38 of the Revised Code, except that the term does not include a pharmacy benefit manager subject to this chapter.
The superintendent of insurance shall establish by rule, adopted in accordance with Chapter 119. of the Revised Code, and administer a process for licensing pharmacy benefit managers in this state. The superintendent may adopt any other rules the superintendent deems necessary for the administration, implementation, and enforcement of this chapter. When adopting rules pursuant to this section, the superintendent shall consider standards and procedures that have been found to be the best practices relative to the use and regulation of pharmacy benefit managers.
On and after July 1, 2027, no person shall solicit a plan or plan sponsor that is domiciled in this state or has its principal headquarters or principal administrative office in this state to act as a pharmacy benefit manager for the plan or plan sponsor unless licensed under this chapter.
No person shall provide pharmacy benefit management services pursuant to an agreement subject to this chapter unless licensed under this chapter.
No person shall solicit a plan, act as a pharmacy benefit manager, or otherwise provide pharmacy benefit management services while the person's pharmacy benefit manager license is expired pursuant to division (C) of section 3957.08 of the Revised Code.
A person that seeks to be licensed as a pharmacy benefit manager shall file an application with the superintendent of insurance in the form and manner prescribed by the superintendent. The application shall include all the information the superintendent considers necessary to process the application, including evidence satisfactory to the superintendent that the applicant meets the requirements specified in division (C) of this section.
All applications for a pharmacy benefit manager license shall be accompanied by a nonrefundable filing fee of two thousand dollars per application. All fees collected under this section and section 3957.08 of the Revised Code shall be paid into the state treasury to the credit of the department of insurance operating fund created under section 3901.021 of the Revised Code.
To be eligible to receive a pharmacy benefit manager license, an applicant shall demonstrate to the superintendent that the applicant meets the requirements of this division.
For an applicant seeking a pharmacy benefit manager license as an individual, the applicant shall meet all of the following requirements:
The applicant must be at least eighteen years of age.
The applicant must not have been previously convicted of a financially related felony.
The applicant must not have committed any act that is grounds for the denial, suspension, or revocation of a license under this chapter.
The applicant must consent to a criminal records check, and the results of the check must be determined to be satisfactory by the superintendent pursuant to section 9.79 of the Revised Code.
The applicant must provide proof of United States citizenship or proof of legal authorization to work in the United States.
The applicant must provide any additional information or documents required by the superintendent.
For an applicant seeking a pharmacy benefit manager license as a business entity, the applicant shall meet all of the following requirements:
The applicant must be domiciled or maintain its principal place of business in this state, as evidenced by a certificate of good standing issued by the secretary of state.
The applicant must identify all officers, directors, partners, or members of the business entity and must identify any owners or members that hold five per cent or more ownership in the entity.