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House Bill 215 — Pharmacy benefit managers, enforcement

House Bill 215 — Pharmacy benefit managers, enforcement

Parrish Miller
February 27, 2023

Bill Description: House Bill 215 would allow the Department of Insurance to use expanded enforcement measures against pharmacy benefit managers.

Rating: -1

Does it directly or indirectly create or increase penalties for victimless crimes or non-restorative penalties for nonviolent crimes? Conversely, does it eliminate or decrease penalties for victimless crimes or non-restorative penalties for non-violent crimes?

In 2020, the Legislature passed House Bill 386 (Freedom Index rating: -4) to impose a host of new regulations on pharmacy benefit managers, sometimes known as PBMs.

House Bill 215 would amend Section 41-349, Idaho Code, to add a new subsection saying, "If the director [of the Department of Insurance] finds a pharmacy benefit manager has violated this section or any provision of title 41, Idaho Code, then the director may subject the pharmacy benefit manager to any or all of the actions, penalties, and remedies referenced in sections 41-117, 41-1016, and 41-1026, Idaho Code."

To understand the scope of this addition, we must review the sections referenced above.

Section 41-117, Idaho Code, says, "Each violation of this code for which a greater penalty is not provided by another provision of this code or by other applicable laws of this state, shall in addition to any applicable prescribed denial, suspension, or revocation of certificate of authority or license be punishable by an administrative penalty of not more than one thousand dollars ($1,000) for any individual or natural person and not more than five thousand dollars ($5,000) for any other person, imposed by the director, and upon conviction by a fine of not more than one thousand dollars ($1,000) or by imprisonment in the county jail for a period not to exceed six (6) months, or by both such fine and imprisonment in the discretion of the court. Each instance of violation may be considered a separate offense."

This goes far beyond mere workplace discipline. It could mean thousands of dollars in fines and months of imprisonment. And given that "each instance of violation may be considered a separate offense," there is really no cap on how high these fines could go or how long someone could be incarcerated if some small offenses were committed on a regular basis. 

Section, 41-1016, Idaho Code, is quite lengthy, but it allows the director to impose administrative penalties of up to $1,000 and to suspend, revoke, or refuse a license for nearly any reason, including "violating any provision of title 41, Idaho Code, department rule, subpoena or order of the director or of another state’s insurance director" or "providing incorrect, misleading, incomplete or materially untrue information in the license application." Notably, there is no requirement that any offense be committed knowingly or willfully. 

Section, 41-1026, Idaho Code, allows the department to bar someone whose license has been revoked from reapplying for up to to five years.

The penalties allowed under this section are excessive, particularly because they allow for incarceration for violating administrative rules or failing to comply with an "order of the director."


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