2009 California Civil Code - Section 2527-2528 :: Title 11. Pharmaceutical Services

SECTION 2527-2528

2527.  (a) On or after January 1, 1984, no prescription drug claims
processor, as defined in subdivision (b), shall enter into or perform
any provision of any new contract, or perform any provision of any
existing contract, with a licensed California pharmacy, or process or
assist in the processing of any prescription drug claim submitted by
or otherwise involving a service of a licensed California pharmacy
unless the processor is in compliance with subdivisions (c) and (d).
   (b) A "prescription drug claims processor," as used in this part,
means any nongovernmental entity which has a contractual relationship
with purchasers of prepaid or insured prescription drug benefits,
and which processes, consults, advises on, or otherwise assists in
the processing of prepaid or insured prescription drug benefit claims
submitted by a licensed California pharmacy or patron thereof. A
"prescription drug claims processor" shall not include insurers (as
defined in Section 23 of the Insurance Code), health care service
plans (as defined in subdivision (f) of Section 1345 of the Health
and Safety Code), nonprofit hospital service plans (pursuant to
Chapter 11A, (commencing with Section 11491) of Part 2 of Division 2
of the Insurance Code), pharmacy permitholders (pursuant to Section
4080 of the Business and Professions Code), employers, trusts, and
other entities which assume the risks of pharmaceutical services for
designated beneficiaries. Also, a "prescription drug claims processor"
shall not include insurers, health care service plans, and nonprofit
hospital service plans which process claims on a nonrisk basis for
self-insured clients.
   (c) On or before January 1, 1984, every prescription drug claims
processor shall have conducted or obtained the results of a study or
studies which identifies the fees, separate from ingredient costs, of
all, or of a statistically significant sample, of California
pharmacies, for pharmaceutical dispensing services to private
consumers. The study or studies shall meet reasonable professional
standards of the statistical profession. The determination of the
pharmacy's fee made for purposes of the study or studies shall be
computed by reviewing a sample of the pharmacy's usual charges for a
random or other representative sample of commonly prescribed drug
products, subtracting the average wholesale price of drug
ingredients, and averaging the resulting fees by dividing the
aggregate of the fees by the number of prescriptions reviewed. A
study report shall include a preface, an explanatory summary of the
results and findings including a comparison of the fees of California
pharmacies by setting forth the mean fee and standard deviation, the
range of fees and fee percentiles (10th, 20th, 30th, 40th, 50th,
60th, 70th, 80th, 90th). This study or these studies shall be
conducted or obtained no less often than every 24 months.
   (d) The study report or reports obtained pursuant to subdivision
(c) shall be transmitted by certified mail by each prescription drug
claims processor to the chief executive officer or designee, of each
client for whom it performs claims processing services. Consistent
with subdivision (c), the processor shall transmit the study or
studies to clients no less often than every 24 months.
   Nothing in this section shall be construed to require a
prescription drug claims processor to transmit to its clients more
than two studies meeting the requirements of subdivision (c) during
any such 24-month period.
   Effective January 1, 1986, a claims processor may comply with
subdivision (c) and this subdivision, in the event that no new study
or studies meeting the criteria of subdivision (c) have been
conducted or obtained subsequent to January 1, 1984, by transmitting
the same study or studies previously transmitted, with notice of
cost-of-living changes as measured by the Consumer Price Index (CPI)
of the United States Department of Labor.

2528.  A violation of Section 2527 may result only in imposition of
a civil remedy, which includes, but is not limited to, imposition of
statutory damages of not less than one thousand dollars ($1,000) or
more than ten thousand dollars ($10,000) depending on the severity or
gravity of the violation, plus reasonable attorney's fees and costs,
declaratory and injunctive relief, and any other relief which the
court deems proper. Any owner of a licensed California pharmacy shall
have standing to bring an action seeking a civil remedy pursuant to
this section so long as his or her pharmacy has a contractual
relationship with, or renders pharmaceutical services to, a
beneficiary of a client of the prescription drug claims processor,
against whom the action is brought provided that no such action may
be commenced by the owner unless he or she has notified the processor
in writing as to the nature of the alleged violation and the
processor fails to remedy the violation within 30 days from the
receipt of the notice or fails to undertake steps to remedy the
violation within that period and complete the steps promptly

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