On May 3, 2023, Florida Governor Ron DeSantis signed the Florida Prescription Drug Reform Act (“the Act”) into law. The Act can potentially impact many group medical/prescription drug plans and the employers that sponsor them. This article identifies the key effects the Act could have on employers and their medical/prescription drug plans, discusses the issues plan sponsors should review/consider when determining the scope of the impact and suggests some next steps plan sponsors should consider taking.

While the Act will impact fully insured and self-insured plans, this article is primarily relevant to employers sponsoring self-insured plans.

Regulation of Contracts with PBMs

The Act directly impacts employers that sponsor self-insured group medical/prescription drug plans because one section of the Act regulates the content of the contract between the group medical/prescription drug plan and the plan’s pharmacy benefits manager (PBM).¹ This portion of the Act:

• Requires the contract between the plan and PBM to use pass-through pricing and prohibits the use of spread pricing.²
• Requires the contract between the plan and PBM to include provisions ensuring funds received in relation to providing services for a plan or a pharmacy are used or distributed only pursuant to the contract with the plan or pharmacy or as required by applicable law.
• Requires the contract between the plan and PBM to provide that the PBM will pass through 100% of manufacturer rebates (if the contract delegates the negotiation of rebates to the PBM) and that those rebates will be used for the sole purpose of offsetting defined cost sharing and reducing premiums of participants.
• Requires the contract between the plan and PBM to include network adequacy requirements that meet or exceed Medicare Part D program standards for convenient access to network pharmacies.
• Requires the contract between the plan and PBM to:
  • Extend the network beyond pharmacies affiliated with the PBM.
  • Include provisions that require the PBM to offer contracts to licensed pharmacies physically located at the site of certain specified providers for the administration or dispensing of drugs that are “administered through infusions, intravenously injected, or inhaled during a surgical procedure or are covered parenteral drugs, as part of onsite outpatient care.”
  • Permit participants to receive prescription drugs through retail pharmacies without requiring participants to use the PBM’s mail order service unless the drug cannot be acquired at any retail pharmacy in the plan’s network. However, the PBM may operate a mail-order program on an opt-in basis so long as the participant is not penalized for not using the mail-order program.
  • Not require a covered person to receive pharmacist services from an affiliated pharmacy or healthcare provider with respect to in-person administration of covered prescription drugs.
  • Prohibit (1) offering pharmacy networks that require or provide incentives (other than a reduced cost-sharing amount or enhanced quantity limits) for the use of affiliated pharmacies or healthcare providers for in-person administration of prescription drugs and (2) advertising, marketing or promoting an affiliated pharmacy (except that the PBM can include affiliated pharmacies in communications regarding all network pharmacies if treated equally).
• Requires the contract between the plan and PBM to prohibit the PBM from conditioning participation in a pharmacy network on participation in any other pharmacy network and from penalizing a pharmacy for not agreeing to participate in a specific network.
• Requires the contract between the plan and PBM to prohibit the PBM from instituting a network that requires a pharmacy to meet accreditation standards inconsistent with or more stringent than applicable federal and state licensing requirements. However, the PBM may specify specialty networks that require certain enhanced standards for participation if certain specified conditions are met.
• Requires the contract between the plan and PBM to require the PBM and the group medical/prescription plan to provide a 60-day continuity of care period following revision of the formulary (with limited exceptions).

The Act also requires pharmacy benefit plans to annually submit to the State an attestation that the plan is compliant with the Act. Fully insured plan sponsors with plans administered through Florida-licensed insurance carriers may request their insurer to complete the annual attestation on their behalf. Self-funded pharmacy benefit plan sponsors may be responsible for submitting the attestation directly with the Florida Office of Insurance Regulation (OIR), attesting that the pharmacy benefit plan is compliant with the law. The Act is unclear when the due date of the attestation is, but a best practice could be submitting the attestation to OIR by the end of each calendar year. The Florida OIR has made available a template attestation and provides some basic instructions for submitting the attestation on its website. Some third-party administrators (TPAs) and pharmacy benefit managers (PBMs) have suggested that a self-funded pharmacy benefit plan need only file an attestation if the self-funded plan is ERISA-exempt (e.g., church or non-federal governmental plans). We recommend that plan sponsors consult with their legal counsel to determine whether they are subject to the attestation requirement.

The Act includes a variety of other provisions outside this article’s scope. For example, the Act also regulates the content of contracts between PBMs and participating pharmacies and prohibits PBMs from engaging in certain practices.⁴

¹See FL Stat. § 626.8825(2). The term “pharmacy benefit manager” is defined as “a person or an entity doing business in this state which contracts to administer prescription drug benefits on behalf of a pharmacy benefits plan or program.”
² “Spread pricing” occurs when the health plan payment to the PBM exceeds actual amounts paid to the pharmacy by the PBM
³ FL Stat. § 626.8825(3).
⁴ FL Stat. § 626.8827

Regulatory and Legislative Strategy Group