{"data":{"id":"us-sd/sdcl-58-29e-1","jurisdiction":"us-sd","citation":"SDCL § 58-29E-1","heading":"Definitions.","body":"Terms used in this chapter mean:\n(1) \"Brand name,\" the same as set forth in § 36-11-2;\n(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;\n(3) \"Generic drug,\" a chemically equivalent copy of a brand name drug with an expired patent;\n(4) \"Health benefit plan,\" the same as set forth in § 58-17F-2;\n(5) \"Health carrier,\" the same as set forth in § 58-17F-1;\n(6) \"Interchangeable biological product,\" the same as set forth in § 36-11-2;\n(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:\n(a) The average acquisition cost;\n(b) The national average acquisition cost;\n(c) The average manufacturer price;\n(d) The average wholesale price;\n(e) The brand effective rate;\n(f) The generic effective rate;\n(g) Discount indexing;\n(h) Federal upper limits;\n(i) The wholesale acquisition cost; and\n(j) Any other term used by a pharmacy benefit manager or a health carrier to establish reimbursement rates for a pharmacy;\n(8) \"Maximum allowable cost list,\" a list of prescription drugs that:\n(a) Includes the maximum allowable cost for each prescription drug; and\n(b) Is used, directly or indirectly, by a pharmacy benefit manager;\n(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;\n(10) \"Pharmacist,\" the same as set forth in § 36-11-2;\n(11) \"Pharmacy,\" the same as set forth in § 36-11-2;\n(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:\n(a) Mail service pharmacy;\n(b) Claims processing, retail network management, and payment of claims to pharmacies for prescription drugs dispensed to covered individuals;\n(c) Clinical formulary development and management services;\n(d) Rebate contracting and administration;\n(e) Certain patient compliance, therapeutic intervention, and generic substitution programs; and\n(f) Disease management programs involving prescription drug utilization;\n(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;\n(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:\n(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\n(b) A mail service pharmacy;\n(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;\n(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;\n(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;\n(18) \"Prescription drug benefit,” a health benefit plan providing third-party payment or prepayment for prescription drugs;\n(19) \"Prescription drug order,” the same as set forth in § 36-11-2;\n(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;\n(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:\n(a) Based on a pharmaceutical manufacturer's list price for a prescription drug;\n(b) Based on utilization;\n(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\n(d) Based on estimates regarding the quantity of a prescribed drug that will be dispensed by a pharmacy to covered individuals;\n(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;\n(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;\n(24) \"340B drug,\" a drug purchased through the 340B drug discount program by a 340B entity;\n(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);\n(26) \"340B entity,\" a covered entity as defined in 42 U.S.C. § 256b(a)(4) (January 1, 2024);\n(27) \"Trade secret,\" the same as set forth in § 37-29-1;\n(28) \"Unaffiliated pharmacy,\" a dispensing pharmacy that is not:\n(a) Owned, in whole or in part, by a pharmacy benefit manager;\n(b) A subsidiary of a pharmacy benefit manager; or\n(c) An affiliate of a pharmacy benefit manager; and\n(29) \"Wholesale distributor,\" the same as set forth in § 36-11A-25.","path":["TITLE 58. INSURANCE","CHAPTER 58-29E. PHARMACY BENEFITS MANAGEMENT"],"source_url":"https://sdlegislature.gov/Statutes/58-29E-1","current_through":"2026-08-31","vintage":"","retrieved_at":"2026-09-03T15:18:57Z","sha256":"2279771539b5f6bd5998a63c5aecae2bc10934f7366498681c4ea8b5b95a33ae","source_id":"us-sd","stale":true,"prev":"us-sd/sdcl-58-29d-34","next":"us-sd/sdcl-58-29e-2"},"notice":"GroundRules: Original legal text. Not legal advice."}