§ 27-45A-3 — Definitions

For purposes of this chapter, the following words have the following meanings:
(1) AFFILIATE or PBM AFFILIATE. An entity, including, but not limited to, a pharmacy, health insurer, or group purchasing organization that directly or indirectly, through one or more intermediaries, has one of the following affiliations:
a. Owns, controls, or has an investment interest in a pharmacy benefits manager.
b. Is owned, controlled by, or has an investment interest holder who is a pharmacy benefits manager.
c. Is under common ownership or corporate control with a pharmacy benefits manager.
(2) CLAIMS PROCESSING SERVICES. The administrative services performed in connection with the processing and adjudicating of claims relating to pharmacist services that include any of the following:
a. Receiving payments for pharmacist services.
b. Making payments to pharmacists or pharmacies for pharmacist services.
c. Both paragraphs a. and b.
(3) COVERED INDIVIDUAL. A member, policyholder, subscriber, enrollee, beneficiary, dependent, or other individual participating in a health benefit plan.
(4) HEALTH BENEFIT PLAN. A policy, contract, certificate, or agreement entered into, offered, or issued by a health insurer to provide, deliver, arrange for, pay for, or reimburse any of the costs of physical, mental, or behavioral health care services, including pharmaceutical services.
(5) HEALTH INSURER. An entity subject to the insurance laws of this state and rules of the department, or subject to the jurisdiction of the department, that contracts or offers to contract to provide, deliver, arrange for, pay for, or reimburse any of the costs of health care services, including, but not limited to, a sickness and accident insurance company, a health maintenance organization operating pursuant to Chapter 21A, a nonprofit hospital or health service corporation, a health care service plan organized pursuant to Article 6, Chapter 20 of Title 10A, or any other entity providing a plan of health insurance, health benefits, or health services, including a nonprofit agricultural organization that provides a plan for health care services to its members.
(6) INDEPENDENT PHARMACY. A pharmacy as defined in Section 34-23-1 located in the state which holds an active permit from the Alabama State Board of Pharmacy and is classified by the Alabama State Board of Pharmacy as a community pharmacy.
(7) IN-NETWORK or NETWORK. A network of pharmacists or pharmacies that are paid for pharmacist services pursuant to an agreement with a health benefit plan or a pharmacy benefits manager.
(8) MEDICAID REIMBURSEMENT RATE. The total payment amount for an outpatient drug dispensed by a pharmacy as set by rule adopted by the Alabama Medicaid Agency which is in effect on April 15, 2025.
(9) OTHER PRESCRIPTION DRUG OR DEVICE SERVICES. Services, other than claims processing services, provided directly or indirectly, whether in connection with or separate from claims processing services, including, but not limited to, any of the following:
a. Negotiating rebates with drug companies.
b. Disbursing or distributing rebates.
c. Managing or participating in incentive programs or arrangements for pharmacist services.
d. Negotiating or entering into contractual arrangements with pharmacists or pharmacies, or both.
e. Developing formularies.
f. Designing prescription benefit programs.
g. Advertising or promoting services.
(10) PHARMACIST. As defined in Section 34-23-1.
(11) PHARMACIST SERVICES. Products, goods, and services, or any combination of products, goods, and services, provided as a part of the practice of pharmacy.
(12) PHARMACY. As defined in Section 34-23-1.
(13) PHARMACY BENEFITS MANAGER. a. A person, including a wholly or partially owned or controlled subsidiary of a pharmacy benefits manager, that provides claims processing services or other prescription drug or device services, or both, to covered individuals who are employed in or are residents of this state, for health benefit plans. The term includes any person that administers a prescription discount program directly for or on behalf of a pharmacy benefits manager or health benefit plan for drugs to covered individuals which are not reimbursed by a pharmacy benefits manager or are not covered by a health benefit plan.
b. Pharmacy benefits manager does not include any of the following:
1. A health care facility licensed in this state.
2. A health care professional licensed in this state.
3. A consultant who only provides advice as to the selection or performance of a pharmacy benefits manager.
(14) PRESCRIPTION DRUGS. Includes, but is not limited to, certain infusion, compounded, and long-term care prescription drugs. The term does not include specialty drugs.
(15) REBATE. Any payments or price concessions that accrue to a pharmacy benefits manager or its health benefit plan client, directly or indirectly, including through its PBM affiliate or its subsidiary, third party, or intermediary, including an off-shore purchasing organization, from a pharmaceutical manufacturer or its affiliate, subsidiary, third party, or intermediary. The term includes, but is not limited to, payments, discounts, administration fees, credits, incentives, or penalties associated, directly or indirectly, in any way with claims administered on behalf of a health benefit plan.
(16) SPECIALTY DRUGS. Prescription medications that require special handling, administration, or monitoring and are used for the treatment of patients with serious health conditions requiring complex therapies, and that are eligible for specialty tier placement by the Centers for Medicare and Medicaid Services pursuant to 42 C.F.R. § 423.560.
(17) SPREAD PRICING. A prescription drug pricing model used by a pharmacy benefits manager in which the pharmacy benefits manager charges a health benefit plan a contracted price for a prescription drug which is higher than the amount the pharmacy benefits manager pays the pharmacy for the prescription drug.
(18) STEERING. The term includes all of the following practices by a pharmacy benefits manager:
a. Directing, ordering, or requiring a covered individual to use a specific pharmacy, including a PBM affiliate pharmacy, for the purpose of filling a prescription or receiving pharmacist services.
b. Inducing a covered individual to use a designated pharmacy, including a PBM affiliate pharmacy, by increasing costs to the health benefit plan or charging the covered individual up to the full cost for a prescription drug if the covered individual fails to use the pharmacy designated by the pharmacy benefits manager.
c. Advertising, marketing, or promoting a pharmacy, including a PBM affiliate pharmacy, over another in-network pharmacy.
d. Engaging in any practice that results in excluding, restricting, or inhibiting an in-network pharmacy from providing prescription drugs to beneficiaries under a health benefit plan, which may involve, but not be limited to, the use of credentialing or accreditation standards, day supply limitations, or delivery method limitations.
e. Engaging in any practice aimed at directly or indirectly influencing a pharmaceutical manufacturer to limit its distribution of a prescription drug to certain pharmacies or to restrict distribution of the drug to non-PBM affiliate pharmacies.

Legislative History

(Act 2019-457, §3; Act 2021-341, §1; Act 2025-136, §2.)