BILL NUMBER: AB 1960	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Members Pavley and Frommer
   (Coauthors:  Assembly Members Chu, and Ridley-Thomas)

                        FEBRUARY 12, 2004

   An act to add Article 8 (commencing with Section 4130) to Chapter
9 of Division 2 of the Business and Professions Code, relating to
pharmacy benefits management.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1960, as introduced, Pavley.  Pharmacy benefits management.
   Existing law, the Pharmacy Law, creates the California State Board
of Pharmacy and makes it responsible for the regulation and
licensure of persons engaged in pharmacy practices relating to the
furnishing of dangerous drugs, as defined.  Under existing law, a
violation of the provisions of the Pharmacy Law is a crime.
   This bill would define the term "pharmacy benefits management" as
negotiating the purchase of dangerous drugs on behalf of specified
entities and administering or managing the prescription drug benefit
programs of those entities.  The bill would also define the term
"pharmacy benefits manager" as an entity that performs pharmacy
benefits management.  The bill would impose on that entity a
fiduciary duty to the person employing or contracting with the
entity.
   Because the bill would specify an additional requirement under the
Pharmacy Law, a violation of which would be a crime, it would impose
a state-mandated local program.
  The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.
   Vote:  majority.  Appropriation:  no.  Fiscal committee:  yes.
State-mandated local program:  yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Article 8 (commencing with Section 4130) is added to
Chapter 9 of Division 2 of the Business and Professions Code, to
read:

      Article 8.  Pharmacy Benefits Management

   4130.  "Pharmacy benefits management" means negotiating the
purchase of dangerous drugs on behalf of an entity that provides
health care services, including a health care service plan or a
health insurer, or an entity that purchases those services and
administering or managing the prescription drug benefit program
provided or purchased by those entities.  The administration or
management of a prescription drug benefit program includes all of the
following:
   (a) Providing mail pharmacy services.
   (b) Claims processing, managing a retail network, and paying
claims to a pharmacy for dangerous drugs dispensed to an enrollee or
insured.
   (c) Rebate contracting and administering the rebates.
   (d) Therapeutic intervention and generic substitution programs.
   (e) Disease management programs.
   4131.  A "pharmacy benefits manager" means an entity that performs
pharmacy benefits management and includes a person or entity acting
for a pharmacy benefits manager in a contractual or employment
relationship in the performance of pharmacy benefits management.
   4132.  A pharmacy benefits manager owes a fiduciary duty to the
person who contracts with, or employs, the pharmacy benefits manager.

  SEC. 2.  No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.                                 ____ CORRECTIONS
Heading -- Authors.                               ____