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.

isions 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.