Bulletin No. 2017-01 Pharmacy Benefit Managers Re: Surety Bond

GOVERNOR MARY FALLIN INSURANCE COMMISSIONER JOHN D. DOAK INSURANCE COMMISSIONER State of Oklahoma Page 1 of 2 Bulletin PBM 2017-01 Effective Immediately To: All Pharmacy Benefits Managers (“PBMs”) FROM: John D. Doak, Insurance Commissioner Re: Surety Bond DATE: September 7, 2017 The Department has received a significant number of questions and comments concerning the surety bonding requirement set forth in Oklahoma Administrative Code Sec. O.A.C. 365:25-29-6. The cited Regulation provides in relevant part as follows: 365:25-29-6. Surety bond (a) Prior to the issuance of a pharmacy benefits manager license, the PBM applicant shall file with the Commissioner and thereafter keep in effect, as long as the license remains in effect, a surety bond in an amount determined to be sufficient by the Commissioner. The bond shall be in a form acceptable to the Commissioner and for the purpose of securing conformity with the laws and regulations governing pharmacy benefits managers. The bond shall be for the benefit of parties protected by the provisions of 59 O.S. §§ 357-360. (b) The surety bond must provide that no party may cancel the bond without first giving thirty (30) days written notice to the principal and the Commissioner. (c) Absent a finding otherwise, a bond with limits of One Million Dollars ($1,000,000.00) per occurrence and Five Million Dollars ($5,000,000.00), annual aggregate, shall be deemed to be sufficient. Based upon the comments received from PBMs and surety insurers including the Surety & Fidelity Association of America (SFAA), the Commissioner makes a finding that the amount of surety bond as provided in section 365:25-29-6(c) is not readily available in the market and therefore amends said surety bond requirement as follows: Absent a finding otherwise, a bond with a minimum penal sum of limits pursuant to the following table of One Million Dollars ($1,000,000.00) per occurrence and Five Million Dollars ($5,000,000.00), annual aggregate, shall be deemed to be sufficient: Annual Oklahoma Covered Lives1 Minimum Penal Sum 0-5,000 $50,000 5,001-10,000 $100,000 10,001 - 25,000 $250,000 25,001 – 50,000 $500,000 50,001 -100,000 $750,000 100,001 - Up $1,000,000 Questions applicable to this bulletin should be directed to Lauren Lynch at lauren.lynch@oid.ok.gov or to Sara Worten of the Legal Division at sara.worten@oid.ok.gov. The Oklahoma Insurance Department encourages readers of this bulletin to periodically check the Department’s website at http://www.ok.gov/oid/ for news and updates to bulletins and other relevant material. 1 The number of total covered individuals or lives served under all of the PBMs contracts or agreements in Oklahoma.