Title 806 | Chapter 009 | Regulation 360


806 KAR 9:360.Pharmacy Benefit Manager License.

Section 1.

Definitions.

(1)

"Admitted insurer" is defined by KRS 304.10-030(1).

(2)

"Commissioner" is defined by KRS 304.1-050(1).

(3)

"Department" is defined by KRS 304.1-050(2).

(4)

"Nonadmitted insurer" is defined by KRS 304.10-030(8).

(5)

"Pharmacy benefit manager" is defined by KRS 304.9-020(15).

Section 2.

Initial License and Renewal.

(1)

An applicant for a pharmacy benefit manager license or renewal license from the commissioner shall submit the following to the department in the format as outlined in the instructions on the Pharmacy Benefit Manager License Application:

(a)

Form PBM, The Pharmacy Benefit Manager License Application;

(b)

The fee set forth in KRS 304.9-053(3) and the penalty fee, if applicable, set forth in KRS 304.9-053(5);

(c)

The following evidence of financial responsibility:

1.

A certificate of insurance from either an admitted insurer or a nonadmitted insurer, in accordance with KRS 304.10-040, stating that the insurer has and will keep in effect on behalf of the pharmacy benefit manager a policy of insurance covering the legal liability of the licensed pharmacy benefit manager's erroneous acts or failure to act in its capacity as a pharmacy benefit manager, and payable to the benefit of any aggrieved party in the sum of not less than $1,000,000; or

2.

A cash surety bond issued by a corporate surety authorized to issue surety bonds in this commonwealth, in the sum of $1,000,000, which shall be subject to lawful levy of execution by any party to whom the licensee has been found to be legally liable;

(d)

The name of at least one (1) responsible individual who shall be responsible for the pharmacy benefit manager's compliance with KRS Chapter 304 and KAR Title 806 and who is:

1.

Licensed as an administrator in Kentucky; and

2.

Designated in accordance with KRS 304.9-133;

(e)

If performing utilization review in accordance with KRS 304.17A-607, the pharmacy benefit manager's utilization review registration number;

(f)

The following written policies and procedures to be used by the pharmacy benefit manager:

1.

An appeals process for any pricing system used to determine the cost of a generic drug required by KRS 304.17A-162;

2.

Exceptions policy required by 45 C.F.R. 156.122(c) and KRS 304.17A-535(4); and

3.

Pharmacy and Therapeutics committee membership standards and duties required by 45 C.F.R. 156.122(a);

(g)

Proof of a registered agent and office with the Kentucky Secretary of State in accordance with KRS 14A.4-010;

(h)

Provide a listing of all clients PBM provides services to including any non-ERISA self-funded or governmental plans; and

(i)

Provide a listing of any delegated or contracted companies that perform part of the PBM services.

(2)

(a)

Upon receipt of a complete application as required by subsection (1) of this section, the commissioner shall review the application and:

1.

a.

Approve the application; and

b.

Issue the applicant the pharmacy benefit manager license;

2.

Notify the applicant that additional information is needed in accordance with paragraph (b) of this subsection; or

3.

Deny the application in accordance with paragraph (c) of this subsection.

(b)

1.

If supplemental or additional information is necessary to complete the application, the applicant shall submit that information within thirty (30) days from the date of the notification from the commissioner.

2.

If the missing or necessary information is not received within thirty (30) days from the date of the notification, the commissioner shall deny the application unless good cause is shown. To determine if the applicant has demonstrated good cause, the commissioner shall weigh the justification provided against any other issues, including if the applicant had submitted any prior good cause excuses for the same request. Some examples of good cause include:

a.

Personnel-related issues, including the individual responsible for responding was transferred, terminated, or became incapacitated due to illness;

b.

A need to obtain information that was not immediately available and had to be requested from other sources;

c.

A lack of sufficient resources to respond to large requests; and

d.

Information technology, operational, or equipment malfunctions causing unexpected delays.

(c)

If the commissioner determines that the applicant does not meet the requirements for licensure, or if the application is denied pursuant to paragraph (b)2. of this subsection, the commissioner shall:

1.

Provide written notice to the applicant that the application has been denied; and

2.

Advise the applicant that a request for a hearing may be filed in accordance with KRS 304.2-310.

(3)

(a)

Except as provided in paragraph (b) of this subsection, a pharmacy benefit manager license shall:

1.

Be renewed annually as required by subsection (4) of this section; or

2.

Expire on March 31.

(b)

If the license was issued on or before January 1, 2017, the license shall expire on March 31, 2018, if not renewed as required by subsection (4) of this section.

(4)

(a)

A renewal application shall include the items required by subsection (1) of this section.

(b)

If the renewal application is submitted between April 1 and May 31, the application required by subsection (1) of this section shall be accompanied by a penalty fee of $500 in accordance with KRS 304.9-053(5).

Section 3.

Notice of Changes. Within thirty (30) days of any change, a licensee shall notify the commissioner of all changes among its members, directors, officers, and other individuals designated or registered to the license, any changes to the listing of clients and delegated contractors provided in the most recent application filed by the licensee, and any changes to its written policies and procedures submitted pursuant to Section 2(1)(f) of this administrative regulation.

Section 4.

Incorporation by Reference.

(1)

"Pharmacy Benefit Manager License Application", Form PBM, 10/2021, is incorporated by reference.

(2)

This material may be inspected, copied, or obtained, subject to applicable copyright law, at the Kentucky Department of Insurance, Mayo-Underwood Building, 500 Mero Street, Frankfort, Kentucky 40601, Monday through Friday, 8 a.m. to 4:30 p.m.

HISTORY: (43 Ky.R. 1123, 1590, 1735; eff. 5-5-2017; TAm eff. 6-7-2017; 45 Ky. R. 159, 656; eff. 10-5-2018; 47 Ky.R. 813, 1963; eff. 7-6-2021; TAm eff. 10-6-2021.)

7-Year Expiration: 7/6/2028

Last Action: 12/15/2021


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