South Dakota § 58-29E-1 - Definitions.

§ 58-29E-1. Definitions.

Terms used in this chapter mean:

(1)    "Brand name," the same as set forth in § 36-11-2;

(2)    "Covered individual," a member, participant, enrollee, contract holder, policy holder, or beneficiary of a third-party payor who is provided health coverage by the third-party payor. The term includes a dependent or other individual provided health coverage through a policy, contract, or plan for a covered individual;

(3)    "Generic drug," a chemically equivalent copy of a brand name drug with an expired patent;

(4)    "Health benefit plan," the same as set forth in § 58-17F-2;

(5)    "Health carrier," the same as set forth in § 58-17F-1;

(6)    "Interchangeable biological product," the same as set forth in § 36-11-2;

(7)    "Maximum allowable cost," the maximum amount that a pharmacy may be reimbursed, as set by a pharmacy benefit manager or a third-party payor, for a brand name or a generic drug, an interchangeable biological product, or any other prescription drug and which may include:

(a)    The average acquisition cost;

(b)    The national average acquisition cost;

(c)    The average manufacturer price;

(d)    The average wholesale price;

(e)    The brand effective rate;

(f)    The generic effective rate;

(g)    Discount indexing;

(h)    Federal upper limits;

(i)    The wholesale acquisition cost; and

(j)    Any other term used by a pharmacy benefit manager or a health carrier to establish reimbursement rates for a pharmacy;

(8)    "Maximum allowable cost list," a list of prescription drugs that:

(a)    Includes the maximum allowable cost for each prescription drug; and

(b)    Is used, directly or indirectly, by a pharmacy benefit manager;

(9)    "Pharmaceutical manufacturer," any person engaged in the business of preparing, producing, converting, processing, packaging, labeling, or distributing a prescription drug, but not including a wholesale distributor or dispenser;

(10)    "Pharmacist," the same as set forth in § 36-11-2;

(11)    "Pharmacy," the same as set forth in § 36-11-2;

(12)    "Pharmacy benefit management," the procurement of prescription drugs at a negotiated rate for dispensation within this state to covered individuals, the administration or management of prescription drug benefits provided by a third-party payor for the benefit of covered individuals, or any of the following services provided with regard to the administration of pharmacy benefits:

(a)    Mail service pharmacy;

(b)    Claims processing, retail network management, and payment of claims to pharmacies for prescription drugs dispensed to covered individuals;

(c)    Clinical formulary development and management services;

(d)    Rebate contracting and administration;

(e)    Certain patient compliance, therapeutic intervention, and generic substitution programs; and

(f)    Disease management programs involving prescription drug utilization;

(13)    "Pharmacy benefit management fee," a fee that covers the cost of providing pharmacy benefit management, but does not exceed the value of the service performed by the pharmacy benefit manager;

(14)    "Pharmacy benefit manager," a person that performs pharmacy benefit management, pursuant to a contract or other relationship with a third-party payor and includes:

(a)    A person acting in a contractual or employment relationship for a pharmacy benefit manager while providing pharmacy benefit management for a third-party payor; and

(b)    A mail service pharmacy;

(15)    "Pharmacy benefit manager affiliate," a pharmacy that, or a pharmacist who, directly or indirectly, through one or more intermediaries, owns or controls, is owned and controlled by, or is under common ownership or control of, a pharmacy benefit manager;

(16)    "Pharmacy network," pharmacies that have contracted with a pharmacy benefit manager to dispense or sell prescription drugs to covered individuals under a health benefit plan for which the prescription drug benefit is managed by a pharmacy benefit manager;

(17)    "Prescription drug," a drug classified by the United States Food and Drug Administration as requiring a prescription by a health care practitioner, prior to being administered or dispensed to a patient, and including interchangeable biological products, brand names, and generic drugs;

(18)    "Prescription drug benefit,” a health benefit plan providing third-party payment or prepayment for prescription drugs;

(19)    "Prescription drug order,” the same as set forth in § 36-11-2;

(20)    "Proprietary information," information on pricing, costs, revenue, taxes, market share, negotiating strategies, customers, and personnel held by a private entity and used for that private entity's business purposes;

(21)    "Rebate," a discount or other negotiated price concession that is paid directly or indirectly to a pharmacy benefit manager by a pharmaceutical manufacturer or by an entity in the prescription drug supply chain, other than a covered individual, and which is:

(a)    Based on a pharmaceutical manufacturer's list price for a prescription drug;

(b)    Based on utilization;

(c)    Designed to maintain, for the pharmacy benefit manager, a net price for a prescription drug, during a specified period of time, in the event the pharmaceutical manufacturer's list price increases; or

(d)    Based on estimates regarding the quantity of a prescribed drug that will be dispensed by a pharmacy to covered individuals;

(22)    "Spread pricing," an amount charged or claimed by a pharmacy benefit manager that is in excess of the ingredient cost for a dispensed prescription drug, plus a dispensing fee paid directly or indirectly to a pharmacy, pharmacist, or other provider, on behalf of the third-party payor, less a pharmacy benefit management fee;

(23)    "Third-party payor," any entity, other than a covered individual, a covered individual's representative, or a healthcare provider, which is responsible for any amount of reimbursement for a prescription drug benefit, provided the term includes a health carrier and a health benefit plan;

(24)    "340B drug," a drug purchased through the 340B drug discount program by a 340B entity;

(25)    "340B drug discount program," a program that imposes limitations on the prices of drugs purchased by covered entities, in accordance with 42 U.S.C. § 256b (January 1, 2024);

(26)    "340B entity," a covered entity as defined in 42 U.S.C. § 256b(a)(4) (January 1, 2024);

(27)    "Trade secret," the same as set forth in § 37-29-1;

(28)    "Unaffiliated pharmacy," a dispensing pharmacy that is not:

(a)    Owned, in whole or in part, by a pharmacy benefit manager;

(b)    A subsidiary of a pharmacy benefit manager; or

(c)    An affiliate of a pharmacy benefit manager; and

(29)    "Wholesale distributor," the same as set forth in § 36-11A-25.

Source: SL 2004, ch 311, § 1; SL 2023, ch 166, § 1; SL 2024, ch 203, § 2, eff. Jan. 1, 2025.