A.R.S. tit. 20 ch. 25 — Arizona Revised Statutes Title 20 Chapter 25 — Pharmacy Benefits

20-3321. Definitions In this chapter, unless the context otherwise requires: 1. "Auditing entity" means any person, company, group or plan working on behalf of or pursuant to a contract with an insurer or pharmacy benefits manager for the purposes of auditing pharmacy drug claims adjudicated by pharmacies. 2. "Clerical errors" means a minor recordkeeping or transcribing error, including typographical errors, scrivner's errors or computer errors, in a required electronic or hard copy document, record or prescription order if both of the following criteria are met: (a) The error did not result in actual financial harm to an entity. (b) The error did not involve dispensing an incorrect dose or type of medication or dispensing a prescription drug to the wrong person. 3. "Desktop audit" means an audit that is conducted by an auditing entity at a location other than the location of the pharmacist or pharmacy. Desktop audit includes an audit that is performed at the offices of the auditing entity during which the pharmacist or pharmacy provides requested documents for review by hard copy or by microfiche, disk or other electronic media. 4. "In-pharmacy audit" means an audit that is conducted by an auditing entity at the physical business address of the pharmacy where the claim was adjudicated. 5. "Insurer" means a disability insurer, group disability insurer, blanket disability insurer, health care services organization, hospital service corporation, medical service corporation or hospital and medical service corporation. 6. "List" means the list of drugs for which a pharmacy benefit manager has established a maximum allowable cost. 7. "Maximum allowable cost": (a) Means the maximum amount that a pharmacy benefit manager will reimburse a pharmacy for the cost of a multisource drug. (b) Does not include the dispensing fee for the drug. 8. "Pharmacist" has the same meaning prescribed in section 32-1901. 9. "Pharmacy" has the same meaning prescribed in section 32-1901. 10. "Pharmacy benefit manager" means a person, business or other entity that, pursuant to a contract or under an employment relationship with an insurer or other third-party payor, either directly or through an intermediary manages the prescription drug coverage provided by the insurer or other third-party payor, including the processing and payment of claims for prescription drugs, the performance of drug utilization review, the processing of drug prior authorization requests, the adjudication of appeals or grievances related to prescription drug coverage, contracting with network pharmacies and controlling the cost of covered prescription drugs. 20-3322. Audit procedures; interest prohibition; claim payment reduction A. The following procedures apply to an audit conducted by an auditing entity: 1. When conducting an in-pharmacy audit an auditing entity shall: (a) Give a pharmacy at least fourteen days' written notice. (b) Not conduct an audit during the first five days of the month unless the pharmacy otherwise consents. (c) Provide the pharmacy a list of items to be audited that provides for identification of prescription number or numbers or date range that the auditing entity is seeking to audit. (d) When conducting an in-pharmacy audit or desktop audit, limit the audit to claims that do not exceed two years from the date that the claim was adjudicated by the pharmacy benefits manager. 2. An in-pharmacy audit or desktop audit that involves clinical or professional judgment shall be conducted by or in consultation with a pharmacist. 3. The pharmacy may use the records of a hospital, physician or other authorized practitioner to validate the pharmacy records. The validated records may be obtained via electronic methods, fax, telephone or written prescription orders and do not have to be the original hard copy prescription order. 4. Each pharmacy shall be audited under the same standards and parameters as other similarly situated pharmacies in this state. 5. When conducting a wholesale invoice audit, an auditing entity shall: (a) Not audit the pharmacy claims of another auditing entity. (b) Reverse a finding of discrepancy if the pharmacist or pharmacy dispensed the correct quantity of the drug according to the prescription and either of the following applies: (i) The national drug code published by the United States food and drug administration is in a quantity that is a subunit or multiple of the drug purchased by the pharmacist or pharmacy according to the supplier invoice. (ii) The drug dispensed by the pharmacist or pharmacy shares all but the last two digits of the United States food and drug administration's national drug code of the drug reflected on the supplier invoice. (c) As a presumption of validity of a purchase of a dispensed drug, accept any of the following to support the pharmacy's claim related to a dispensed drug: (i) Copies of the supplier invoices in the pharmacist's or pharmacy's possession, subject to validation that includes validating the pharmacy purchase order and the payment of the supplier invoice, and including any supplier invoices that were issued before the date the drug was dispensed but not earlier than ninety days before the first day of the audit period and any other invoices and supporting documentation from a supplier that is authorized by federal or state law to transfer ownership of the drug to the pharmacist or pharmacy. The validation may also require information that is required under the drug supply chain security act (P.L. 113-54; 127 Stat. 599; 21 United States Code sections 360eee through 360eee-4). (ii) Any reports required by a state board or agency. (d) Not later than the tenth business day after receiving the pharmacy's request, provide any supporting documentation that the pharmacy supplier provided to the auditing entity. B. When conducting an in-pharmacy audit or desktop audit, an auditing entity shall comply with the following requirements: 1. The auditing entity shall base a finding of overpayment or underpayment on the actual overpayment or underpayment and not on a projection based on the number of patients served who have similar diagnoses or on the number of similar orders or refills for similar drugs, unless required by federal or state law. 2. The auditing entity may not recoup monies from the pharmacy for any clerical errors identified in an audit. 3. Any finding of an overpayment may not include the dispensing fee amount unless any of the following criteria is met: (a) A prescription was not received by the patient or the patient's designee. (b) The prescriber denied authorization. (c) The prescription dispensed was a medication error by the pharmacy. (d) The identified overpayment is based solely on an extra dispensing fee. C. Interest may not accrue during the audit period. D. An auditing entity may not, directly or indirectly, retroactively reduce the amount of a claim payment to a pharmacist or a pharmacy after adjudication of the claim for a prescription drug unless any of the following applies: 1. The original claim was found to have been fraudulently submitted through an audit conducted in accordance with this article. 2. The claim submitted was a duplicate for which the pharmacy had already received payment. 3. The original reimbursement was incorrect due to an error that resulted in an overpayment by an insurer or a pharmacy benefit manager. E. Subsection D of this section does not prohibit an auditing entity, insurer or pharmacy benefit manager from increasing the amount of a claim payment after adjudication of the claim. 20-3323. Audit reports A. The auditing entity must deliver a preliminary audit report to the pharmacy within sixty days after the conclusion of the audit. B. A pharmacy is allowed at least thirty days after receipt of the preliminary audit to provide documentation to address any discrepancy found in the audit. C. Each auditing entity shall establish and make available to network pharmacies a written appeals process that shall include a process to appeal, investigate and resolve disputes regarding final audit findings. A pharmacy shall have at least thirty days from the delivery of the final audit findings to appeal an unfavorable audit finding to the auditing entity. This written appeals process shall be included in all contracts between a pharmacy benefits manager and a network pharmacy or a pharmacy benefits manager and a pharmacy's contracting representative. D. Each auditing entity shall provide a telephone number at which a network pharmacy may contact the pharmacy benefits manager and speak to someone who is responsible for processing appeals. E. The auditing entity must deliver a final audit report to the pharmacy within ninety days after receipt of the preliminary audit report or final appeal, whichever is later. F. Chargebacks, recoupment or other penalties may not be assessed until the appeals process has been exhausted and the final audit report has been issued. G. Unless otherwise required by state or federal law, audit information may not be shared with any entity other than the insurer on whose behalf the audit was conducted. Auditors may have access only to previous audit reports on a particular pharmacy conducted by that same auditing entity. 20-3324. Applicability A. Notwithstanding any other law, this article applies only to audits conducted of pharmacies located in this state. B. This article does not apply to claims reviews that are initiated within three business days after transmission of a claim in which no chargeback or recoupment is demanded. C. This article does not apply to an audit conducted in which a suspicion of fraudulent activity or other intentional and wilful misrepresentation is evidenced by physical review, review of claims data, statements or other investigative methods. The reason for an audit specified in this subsection shall be documented and available on request. 20-3331. Pharmacy benefit managers; requirements; applicability A. A pharmacy benefit manager shall do all of the following: 1. Update the price and drug information for each list that the pharmacy benefit manager maintains every seven business days. 2. At the beginning of the term of a contract, on renewal of a contract and at least once annually during the term of a contract, make available to each network pharmacy the sources used to determine maximum allowable cost pricing. 3. Establish a process by which a network pharmacy may appeal its reimbursement for a drug subject to maximum allowable cost pricing. 4. Allow a pharmacy services administrative organization that is contracted with the pharmacy benefit manager to file an appeal of a drug on behalf of the organization's contracted pharmacies. B. Beginning on January 1, 2020, this section applies to all new and existing contracts between a pharmacy benefit manager and a licensed pharmacy. 20-3332. Prohibition against claim adjudication process fees; civil remedies A. A pharmacy benefit manager may not directly or indirectly, on behalf of itself, a plan sponsor or an insurer, charge or hold a pharmacist or pharmacy responsible for a fee for any step of or component or mechanism related to the claims adjudication process, including: 1. Adjudicating a pharmacy benefit claim. 2. Processing or transmitting a pharmacy benefit claim. 3. Developing or managing a claims processing or adjudication network. 4. Participating in a claims processing or adjudication network. B. A pharmacy may submit a complaint of a violation of this chapter to the director. The pharmacy must include supporting documentation at the time the pharmacy files the complaint. The director shall investigate the complaint and may examine and audit the books and records of a pharmacy benefit manager to determine if the pharmacy benefit manager has committed a violation of this chapter. If the director finds that a pharmacy benefit manager has committed a violation of this chapter, the director may: 1. Seek an injunction in a court of competent jurisdiction and may apply for temporary and permanent orders that the director determines are necessary to restrain the pharmacy benefit manager from continuing to commit the violation. 2. Issue a cease and desist order pursuant to section 20-456 on the pharmacy benefit manager. C. A pharmacy benefit manager that commits a violation of this chapter is subject to the penalties prescribed in section 20-456. D. In addition to the actions and penalties prescribed in subsections B and C of this section, any person who is damaged by the acts of a pharmacy benefit manager committed in violation of this chapter may bring a civil action for damages against the pharmacy benefit manager committing the violation in a court of competent jurisdiction. 20-3333. Certificates of authority; issuance; revocation; renewal; civil penalties; rules A. A pharmacy benefit manager shall apply for, obtain and maintain a valid certificate of authority to operate as a pharmacy benefit manager in this state. A certificate of authority is renewable biennially and is nontransferable. B. A pharmacy benefit manager that applies for a certificate of authority shall submit to the director both of the following: 1. An application in a form and manner prescribed by the director. An officer or individual who is responsible for the conduct of the activities of the pharmacy benefit manager shall sign the application and verify that the contents of the application and any attachments are correct. The application form shall include the following: (a) The name, address and telephone number of the pharmacy benefit manager. (b) A copy of all basic organizational documents of the pharmacy benefit manager, including the articles of incorporation, bylaws, articles of association and trade name certificate, any other similar documents and all amendments to the documents. (c) The name and address of the pharmacy benefit manager's agent in this state for service of process. (d) The names, addresses, official positions and professional qualifications of each individual who is responsible for the conduct of the activities of the pharmacy benefit manager. (e) The name, address, telephone number, email address and official position of the employee who will serve as the primary contact for the department. (f) A signed certificate of good standing. (g) A description of the pharmacy benefit manager and its services, facilities and personnel. (h) A document in which the pharmacy benefit manager confirms that its business practices and each ongoing Arizona contract comply with this article and all laws of this state. 2. An application fee prescribed by the director. C. Within ninety days after receipt of a completed application and application fee, the director shall review the application and issue a certificate of authority if the applicant is deemed qualified under this section. If the director determines that the applicant is not qualified, the director shall notify the applicant, shall specify the reason for the denial and shall allow the applicant sixty days to remedy the stated reasons for the denial. D. Within thirty days after any material modification of the information submitted with the application for a certificate of authority, the pharmacy benefit manager shall file a notice of modification with the director. E. The director may refuse to issue a certificate of authority if the director determines that the pharmacy benefit manager had a pharmacy benefit manager certificate of authority or license revoked for cause in another state. F. The director may issue a cease and desist order if the pharmacy benefit manager does not hold a valid certificate of authority. The director may deny, suspend or revoke a pharmacy benefit manager's certificate of authority if the director finds, after notice and opportunity for hearing, that any of the following applies: 1. The pharmacy benefit manager violated any rule or order of the director or any law of this state applicable to a pharmacy benefit manager. 2. The pharmacy benefit manager refused to be examined or to produce its accounts, records and files for examination or that any individual responsible for the conduct of the activities in this state of the pharmacy benefit manager refused to provide information with respect to its activities or refused to perform any other legal obligation required by the director. 3. The pharmacy benefit manager is required under this section to have a certificate of authority and fails at any time to meet any qualification for which issuance of a certificate of authority could have been refused had the failure existed at the time of issuance and been known to the director, unless the director issued a certificate of authority with knowledge of the ground for disqualification and had the authority to waive it. 4. Any individual who is responsible for the management of the pharmacy benefit manager is convicted of or enters a plea of guilty or no contest to a felony related to the individual's activities on behalf of the pharmacy benefit manager. 5. The pharmacy benefit manager's certificate of authority or license has been revoked in another state. G. If a pharmacy benefit manager's certificate of authority is suspended or restricted, the director may allow the operation of the pharmacy benefit manager for a limited time not to exceed one hundred twenty days. The director may allow a pharmacy benefit manager whose certificate of authority has been suspended or restricted to operate for a period that exceeds one hundred twenty days if the director determines that the continued operation of the pharmacy benefit manager is in the beneficial interests of the covered persons by ensuring minimal disruptions to the continuity of care. A pharmacy benefit manager whose certificate of authority has been suspended or restricted is subject to the following civil penalties each month, as determined by the director, until the pharmacy benefit manager remedies the violation: 1. For an unintentional violation, not more than $1,000 for each violation and not more than an aggregate of $10,000 in any six month period. 2. For an intentional violation, not more than $5,000 for each violation and not more than an aggregate of $50,000 in any six month period. H. The director may revoke the certificate of authority if the pharmacy benefit manager has been operating under a suspended certificate of authority for a period of more than one hundred twenty days. I. For the purposes of this section, a pharmacy benefit manager has the same rights to notice and a hearing prescribed in title 41, chapter 6, article 10. J. The director may investigate officers, directors and owners of a pharmacy benefit manager to comply with this section. K. To renew a certificate of authority, a pharmacy benefit manager shall submit to the director all of the following: 1. A renewal application in a form and manner prescribed by the director. An officer or authorized representative of the pharmacy benefit manager shall sign the application and verify that the contents of the renewal form are correct. 2. A renewal schedule and a fee prescribed by the director. L. A pharmacy benefit manager's certificate of authority expires by operation of law if a complete renewal application and fee is not received by the due date as established in rule. M. If a pharmacy benefit manager and an insurer enter into a contractual agreement, the pharmacy benefit manager shall comply with the laws and rules that govern the contractual agreement as of the date of issuance of the certificate of authority. N. A pharmacy benefit manager shall comply with the records retention schedules as prescribed in rule and section 20-3334. O. A pharmacy benefit manager shall comply with the duties and appeals processes of a utilization review agent as prescribed by rule and chapter 15 of this title. P. The director may examine or review the relevant books and records of a pharmacy benefit manager to determine if the pharmacy benefit manager is in compliance with this article. All of the following apply to the information or data that is obtained during an examination or review: 1. The information is considered and treated as proprietary and confidential. 2. The information is not a public record and is exempt from title 39, chapter 1. 3. The information is to be used only for the purpose of ensuring a pharmacy benefit manager's compliance with this article. Q. The director may adopt rules to implement this section. R. This section shall apply only to a pharmacy benefit manager performing services for a health plan subject to the jurisdiction of this state. S. This section does not apply to a workers' compensation insurer performing services under title 23. 20-3334. Records retention; schedule A. The director shall establish a retention schedule for all records, books, documentation and other data on file with the department related to the enforcement of this article. B. The director shall not order the destruction or other disposal of any record, book, document or other data that is: 1. Required by law to be maintained. 2. Kept on file with the department until ten years have passed. 3. Filed during the director's administration or administrations. C. All of the following apply to the records, books, documentation and other data obtained by the department: 1. The information is considered and treated as proprietary and confidential. 2. The information is not a public record and is exempt from title 39, chapter 1. 3. The information is to be used only for the purpose of ensuring the pharmacy benefit manager's compliance with this article. 20-3335. Pharmacy benefit managers; prescribing; formulary change; notice; exemption; enforcement; applicability; definitions A. A pharmacy benefit manager that enters into an agreement with a health care insurer to provide pharmacy benefit management services to covered individuals on behalf of the pharmacy benefit manager or a health care insurer may not limit or exclude coverage of a prescription drug for any covered individual who is on a specific prescription drug if both of the following apply: 1. The prescription drug was previously approved by the pharmacy benefit manager or health care insurer for coverage for the covered individual. 2. The covered individual continues to be an insured, enrollee or subscriber of the health care insurer that the pharmacy benefit manager has contracted with to provide pharmacy benefit management services. B. If subsection A of this section applies, the drug coverage shall continue for a covered individual's specific prescription drug through the last day of the covered individual's health care plan year. C. A pharmacy benefit manager or health care insurer may not change a covered individual from the previously covered prescription drug if the covered individual's prescribing health care provider provides electronic or written notice to the pharmacy benefit manager or health care insurer notifying the pharmacy benefit manager or health care insurer that the covered individual will continue on the current prescription drug. D. If a pharmacy benefit manager or health care insurer makes any formulary change that limits or excludes coverage of a prescription drug, the pharmacy benefit manager or health care insurer shall provide electronic or written notice of the removal of or change for any prescription drug on the drug formulary to each impacted covered individual and the impacted covered individual's prescribing health care provider at least sixty days before the formulary change. The notice shall do both of the following: 1. Set forth the process by which the covered individual's health care provider may notify the pharmacy benefit manager or health care insurer for the continued use of the nonformulary prescription drugs. 2. Include notification to the prescribing health care provider that if the health care provider notifies the pharmacy benefit manager or health care insurer that the insured, enrollee or subscriber will continue on the nonformulary prescription drug for the remainder of the health care plan year, the health care provider will need to apply for a formulary exception pursuant to section 20-3336 for the continued use of the nonformulary prescription drug on renewal of the health care plan. E. This section does not: 1. Prevent a health care provider from prescribing another prescription drug that is covered by the health care insurer of the pharmacy benefit manager if the health care provider deems the prescription drug medically necessary for the covered individual. 2. Prevent a health care insurer or pharmacy benefit manager that is contracted to provide pharmacy benefit management services from: (a) Adding a prescription drug to its formulary. (b) Removing a prescription drug from its formulary if the drug manufacturer has removed the prescription drug for sale in the United States. (c) Making any formulary changes for patients who are not on a previously approved prescription drug. F. If a health care insurer, pharmacy benefit manager or utilization review agent violates this section, the director may enforce this section pursuant to section 20-3333 or chapter 15, article 1 of this title, as applicable. G. This section applies only to pharmacy benefit managers that are subject to section 20-3333. H. For the purposes of this section: 1. "Health care insurer" has the same meaning prescribed in section 20-2501. 2. "Health care plan" means a policy, contract or evidence of coverage that a health care insurer issues to an insured, enrollee or subscriber. 3. "Limit or exclude coverage" means to: (a) Limit or reduce the maximum coverage of prescription drug benefits. (b) Increase cost sharing for a covered prescription drug. (c) Require an additional prior authorization for a patient who is currently approved for a prescription drug based solely on the movement of the prescription drug to a more restrictive formulary tier. (d) Remove a prescription drug from a formulary unless either of the following applies: (i) The United States food and drug administration revokes approval for or removes a prescription drug from the prescription drug market. (ii) The prescription drug manufacturer notifies the United States food and drug administration of a manufacturing discontinuation or a potential discontinuation as required by section 506c of the federal food, drug, and cosmetic act (21 United States Code section 356c). 4. "Utilization review agent" means a utilization review agent as defined in section 20-2530 that is contracted to provide pharmacy benefit management services for a health care insurer. 20-3336. Pharmacy benefit managers; prescribing; formulary exception process requirements; exception; enforcement; definitions A. On renewal of a health care plan, a health care insurer, pharmacy benefit manager or utilization review agent shall provide a covered individual and prescribing health care provider with access to a clear and convenient process to request a formulary exception process. The health care insurer, pharmacy benefit manager or utilization review agent may use its existing formulary exception process to satisfy this requirement if the medical exceptions process is consistent with the requirements prescribed in this section. B. A health care insurer, pharmacy benefit manager or utilization review agent shall respond to a formulary exception determination request within seventy-two hours after receiving the formulary exception request and relevant clinical documentation. The covered individual or the covered individual's prescribing health care provider may request an expedited review in cases where exigent circumstances exist, and the health care insurer, pharmacy benefit manager or utilization review agent shall respond within twenty-four hours after receiving the formulary exception request and relevant clinical documentation. C. For a covered individual who renews the same health care plan, a health care insurer, pharmacy benefit manager or utilization review agent shall approve a formulary exception for the covered individual if the covered individual has been previously approved to receive the nonformulary prescription drug under the same health care plan and the prescribing health care provider uses the formulary exception process and provides relevant clinical documentation to certify all of the following: 1. The covered individual has tried a formulary equivalent prescription drug that was a part of the covered individual's prescription drug benefit at the time of the trial, the formulary equivalent prescription drug was not effective in the treatment of the covered individual's medical condition and the health care provider specifies the contraindication or adverse or harmful reaction in the covered individual. 2. The covered individual has experienced a positive therapeutic outcome on the requested drug for more than ninety days. 3. Formulary equivalent prescription drugs are contraindicated or will likely cause a serious adverse reaction. D. If a covered individual does not qualify for a formulary exception pursuant to subsection C of this section, the covered individual may still apply for a formulary exception using the health care insurer's, pharmacy benefit manager's or utilization review agent's formulary exception process. When evaluating whether the covered individual should qualify for a formulary exception to continue on a nonformulary prescription drug, the health care insurer, pharmacy benefit manager or utilization review agent shall consider the following factors: 1. Whether the covered individual has experienced a positive therapeutic outcome on the previously approved drug. 2. Whether the formulary prescription drug is not in the best interest of the covered individual based on medical necessity because the covered individual's use of the formulary prescription drug is expected to cause either of the following: (a) A negative impact on the covered individual's comorbid condition. (b) A clinically predictable negative drug interaction. 3. Whether the formulary prescription drug is contraindicated or will likely cause a serious adverse reaction. E. A health care insurer's or pharmacy benefit manager's denial of coverage for a nonformulary prescription drug shall be made in writing to the covered individual by a licensed pharmacist or medical director who made the decision to deny coverage. The written denial shall contain an explanation of the denial that includes the medical or pharmacological reasons why the authorization was denied. The health care insurer, pharmacy benefit manager or utilization review agent shall send a copy of the written denial to the covered individual's treating health care provider who requested the formulary exception. The health care insurer, pharmacy benefit manager or utilization review agent shall maintain copies of all written denials and shall make the copies available to the department for inspection. A covered individual or the covered individual's authorized representative may appeal any determination to deny a formulary exception under chapter 15, article 2 of this title. The written notification shall include the process by which a covered individual may appeal the determination. F. A formulary exception for a covered individual that is authorized by a health care insurer, pharmacy benefit manager or utilization review agent shall be in effect until the end of the covered individual's plan year. The approval of a formulary exception shall be in writing and delivered to the covered individual and the covered individual's treating health care provider. G. This section does not: 1. Prevent a health care provider from prescribing another prescription drug that is covered by the health care insurer or the pharmacy benefit manager if the health care provider deems the prescription drug medically necessary for the covered individual. 2. Prevent a health care insurer or pharmacy benefit manager that is contracted to provide pharmacy benefit management services from managing its formulary in compliance with this section, including: (a) Adding a prescription drug to its formulary. (b) Removing a prescription drug from its formulary if the drug manufacturer has removed the prescription drug for sale in the United States. (c) Setting the cost sharing for nonformulary prescription drugs. H. If a health care insurer, pharmacy benefit manager or utilization review agent violates this section, the director may enforce this section pursuant to section 20-3333 or chapter 15, article 1 of this title, as applicable. I. A policy that is issued or renewed by a disability insurer does not include a policy that provides limited benefit coverage as defined in section 20-1137. J. This section applies only to pharmacy benefit managers that are subject to section 20-3333. K. For the purposes of this section: 1. "Exigent circumstances" means a covered individual is suffering from a health condition that may seriously jeopardize the covered individual's life, health or ability to regain maximum function or when a covered individual is undergoing a current course of treatment using a nonformulary prescription drug. 2. "Formulary exception" means that health plan coverage of a health care provider's selected prescription drug is granted. 3. "Health care insurer" has the same meaning prescribed in section 20-2501. 4. "Health care plan" means a policy, contract or evidence of coverage that a health care insurer issues to an insured, enrollee or subscriber. 5. "Utilization review agent" means a utilization review agent as defined in section 20-2530 that is contracted to provide pharmacy benefit management services for a health care insurer. 20-3341. Definitions In this article, unless the context otherwise requires: 1. "Drug coverage": (a) Means any form of compensation paid to a pharmacy that dispenses prescription drugs for a patient under a contractual or other legal obligation with a health insurer or pharmacy benefit manager. (b) Does not include either of the following: (i) Coverage provided pursuant to title 36, chapter 29, article 1. (ii) Any amounts paid by an individual on his or her own behalf or on behalf of another individual without a contractual or legal obligation to do so. 2. "Health care plan" has the same meaning prescribed in section 20-3151. 3. "Health insurer" has the same meaning prescribed in section 20-242. 4. "Third party" means a health insurer or pharmacy benefit manager that provides or manages drug coverage under a health care plan. 5. "340B covered entity" means an entity that participates in the 340B drug discount program authorized by 42 United States Code section 256b. 6. "340B drug" means a drug that is purchased by a 340B covered entity through the 340B drug discount program authorized by 42 United States Code section 256b and that is dispensed by a pharmacy. 20-3342. Applicability A. This article applies to third parties that provide or manage drug coverage under a health care plan in this state. B. This article does not apply to any of the following: 1. The Arizona health care cost containment system administration and its contractors as defined in section 36-2901 to the extent the services are provided pursuant to title 36, chapter 29 or 34 or equivalent medicaid programs from other states. 2. The department of health services to the extent the services are provided under the AIDS drug assistance program. 3. Any individual or entity identified in section 36-2930.05. 20-3343. 340B drug program; 340B covered entities; pharmacies; drug coverage All contracts that are issued, delivered or renewed on or after January 1, 2024 for a third party that reimburses for 340B drugs shall not do any of the following: 1. Discriminate in reimbursement on the basis that the pharmacy dispenses a 340B drug. 2. Assess any fee, chargeback, clawback or adjustment on the basis that a pharmacy dispenses a 340B drug. 3. Exclude a pharmacy from a third party's pharmacy network on the basis that the pharmacy dispenses a 340B drug. 4. Restrict the methods or pharmacies within a third-party network by which a 340B covered entity may dispense or deliver 340B drugs.