BILL NUMBER: AB 339 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 7, 2015
INTRODUCED BY Assembly Member Gordon
( Coauthor: Assembly Member
Atkins )
FEBRUARY 13, 2015
An act to add Section 1342.71 to the Health and Safety Code, and
to add Section 10123.193 to the Insurance Code, relating to health
care coverage.
LEGISLATIVE COUNSEL'S DIGEST
AB 339, as amended, Gordon. Health care coverage: outpatient
prescription drugs.
Existing law, the Knox-Keene Health Care Service Plan Act of 1975,
provides for the licensure and regulation of health care service
plans by the Department of Managed Health Care and makes a willful
violation of the act a crime. Existing law also provides for the
regulation of health insurers by the Department of Insurance.
Existing law requires a health care service plan or insurer that
provides prescription drug benefits and maintains one or more drug
formularies to make specified information regarding the formularies
available to the public and other specified entities. Existing law
also specifies requirements for those plans and insurers regarding
coverage and cost sharing of specified prescription drugs.
This bill would require a health care service plan
contracts and policies of health insurance that are
contract or a health insurance policy that is
offered, renewed, or amended on or after January 1, 2016,
and that provide provides coverage for
outpatient prescription drugs, to provide coverage for medically
necessary prescription drugs that do not have
drugs, including th ose for which there is not
a therapeutic equivalent. This The
bill would require copayments, coinsurance, and other cost
sharing for these drugs to be reasonable.
reasonable, and would require that the copayment, coinsurance, or any
other form of cost sharing for a covered outpatient prescription
drug for an individual prescription not exceed 1/24
of the annual out-of-pocket limit applicable to individual
coverage for a supply of up to 30 days. The This
bill would require those contracts and policies
a plan contract or policy to cover single-tablet
and extended release prescription drug regimens, unless the plan or
insurer can demonstrate that multitablet and nonextended release drug
regimens, respectively, are more or equally
effective, as specified. This The bill
would prevent those plans and policies
prohibit, except as specified, a plan contract or policy from
placing prescription medications that treat a specific condition on
the highest cost tier tiers of a drug
formulary. This The bill would require
the Department of Managed Health Care and the Department of
Insurance to create a definition of "specialty prescription drugs,"
subject to specified limitations, no later than January 1, 2017.
a plan contract or policy to use specified definitions
for each tier of a drug formulary .
Because a willful violation of the bill's requirements relative to
health care service plans would be a crime, this bill would impose a
state-mandated local program.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1342.71 is added to the Health and Safety Code,
to read:
1342.71. (a) A health care service plan contract that is offered,
amended, or renewed on or after January 1, 2016, shall comply with
this section. This section shall not apply to Medi-Cal managed care
contracts.
(b) (1) A health care service plan that provides coverage for
outpatient prescription drugs shall cover medically necessary
prescription drugs.
(2) A health care service plan that provides coverage for
outpatient prescription drugs shall cover a medically necessary
prescription drug for which there is not a therapeutic equivalent.
(c) Copayments, coinsurance, and other cost sharing for outpatient
prescription drugs shall be reasonable so as to allow access to
medically necessary outpatient prescription drugs. The health care
service plan shall demonstrate to the director that proposed cost
sharing for a medically necessary prescription drug will not
discourage medication adherence.
(d) Consistent with federal law and guidance, and notwithstanding
Section 1342.7 and any regulations adopted pursuant to that section,
a health care service plan that provides coverage for outpatient
prescription drugs shall demonstrate to the satisfaction of the
director that the formulary or formular ies maintained by
the health care service plan do not discourage the
enrollment of individuals with health conditions.
conditions and do not reduce the generosity of the benefit for
enrollees with a particular condition.
(1) A health care service plan contract shall cover a
single-tablet drug regimen that is as effective as a multitablet
regimen unless the health care service plan is able to demonstrate to
the director that consistent with clinical guidelines and
peer-reviewed scientific and medical literature that the multitablet
regimen is clinically more effective and equally or
more likely to result in adherence to a drug regimen. A
health care service plan contract shall cover an extended release
prescription drug that is clinically as effective as a nonextended
release product unless the health care service plan is able to
demonstrate to the director that consistent with clinical guidelines
and peer-reviewed scientific and medical literature that the
nonextended release product is clinically equally or
more effective. The cost sharing for the enrollee
shall be the same for a single-tablet regimen as for the drugs
included in a multitablet regimen. The same cost sharing shall apply
for an extended release product as for a nonextended release product.
(2) A health care service plan contract shall not place most or
all of the prescription medications that treat a specific condition
on the highest cost tier tiers of a
formulary. formulary unless the health care
service plan can demonstrate to the satisfaction of the director that
such placement does not reduce the generosity of the benefits for
enrollees with a particular condition. In no instance in which there
is more than one treatment that is the standard of care for a
condition shall most or all prescription medications to treat that
condition be placed on the highest cost tiers. This shall not
apply to any medication for which there is a therapeutic equivalent
available on a lower cost tier.
(3) For coverage offered in the individual market, the health care
service plan shall demonstrate to the satisfaction of the director
that the formulary or formularies maintained for coverage in the
individual market are the same or comparable to those maintained for
coverage in the group market.
(3)
( 4) A health care service plan shall
demonstrate to the director that any limitation or utilization
management is consistent with and based on clinical guidelines and
peer-reviewed scientific and medical literature.
(e) (1) No later than January 1, 2017, the department shall
develop a definition of specialty prescription drugs that is based on
clinical guidelines and peer-reviewed scientific and medical
literature, including the need for special handling, storage,
administration, clinical monitoring, or reporting clinical outcomes
to the federal Food and Drug Administration of such prescription
drugs.
(2) The definition of specialty prescription drugs shall not be
based on the cost of the prescription drug to the health care service
plan but shall be based on medical management.
(3) A health care service plan contract shall use the definition
of specialty drug developed by the department in its outpatient
prescription drug benefit plan. The highest cost tier of a formulary
shall be based on clinical guidelines and medical evidence and shall
not be based on the cost of the prescription drug.
(e) With respect to an individual or group health care service
plan contract subject to Section 1367.006, the copayment,
coinsurance, or any other form of cost sharing for a covered
outpatient prescription drug for an individual prescription shall not
exceed 1/24 of the annual out-of-pocket limit applicable to
individual coverage under Section 1367.006 for a supply of up to 30
days.
(f) (1) If a health care service plan contract maintains a drug
formulary grouped into tiers, including a fourth tier or specialty
tier, a health care service plan contract shall use the following
definitions for each tier of the drug formulary:
(A) Tier one shall consist of preferred generic drugs and
preferred brand name drugs if the cost to the health care service
plan for a preferred brand name drug is comparable to those for
generic drugs.
(B) Tier two shall consist of nonpreferred generic drugs,
preferred brand name drugs, and any other drugs recommended by the
health care service plan's pharmaceutical and therapeutics committee
based on safety and efficacy and not solely based on the cost of the
prescription drug.
(C) Tier three shall consist of nonpreferred brand name drugs that
are recommended by the health care service plan's pharmaceutical and
therapeutics committee based on safety and efficacy and not solely
based on the cost of the prescription drug.
(D) Tier four shall consist of specialty drugs that are biologics,
which, according to the federal Food and Drug Administration or the
manufacturer, require distribution through a specialty pharmacy or
the enrollee to have special training for self-administration or
special monitoring. Specialty drugs may include prescription drugs
that cost more than the Medicare Part D threshold if those drugs are
recommended for Tier four by the health care service plan's
pharmaceutical and therapeutics committee based on safety and
efficacy, but placement shall not be solely based on the cost of the
prescription drug.
(2) Nothing in this section shall be construed to require a health
care service plan contract to include a fourth tier, but if a health
care service plan contract includes a fourth tier, the health care
service plan contract shall comply with this section.
(g) A health care service plan contract shall ensure that the
placement of prescription drugs on formulary tiers is not based
solely on the cost of the prescription drug to the health care
service plan, but is based on clinically indicated, reasonable
medical management practices.
(f)
( h) Nothing in this section shall be
construed to require or authorize a health care service plan that
contracts with the State Department of Health Care Services to
provide services to Medi-Cal beneficiaries to provide coverage for
prescription drugs that are not required pursuant to those programs
or contracts, or to limit or exclude any prescription drugs that are
required by those programs or contracts.
SEC. 2. Section 10123.193 is added to the Insurance Code, to read:
10123.193. (a) A policy of health insurance that is offered,
amended, or renewed on or after January 1, 2016, shall comply with
this section.
(b) (1) A policy of health insurance that provides coverage for
outpatient prescription drugs shall cover medically necessary
prescription drugs.
(2) A policy of health insurance that provides coverage for
outpatient prescription drugs shall cover a medically necessary
prescription drug for which there is not a therapeutic equivalent.
(c) Copayments, coinsurance, and other cost sharing for outpatient
prescription drugs shall be reasonable so as to allow access to
medically necessary outpatient prescription drugs. The health insurer
shall demonstrate to the commissioner that proposed cost sharing for
a medically necessary prescription drug will not discourage
medication adherence.
(d) Consistent with federal law and guidance, and
notwithstanding Section 1342.7 of the Health and Safety Code, and any
regulations adopted pursuant to that section, a policy of
health insurance that provides coverage for outpatient prescription
drugs shall demonstrate to the satisfaction of the commissioner
that the formulary or formularies maintained by the health insurer do
not discourage the enrollment of individuals with health
conditions. conditions and do not reduce th
e generosity of the benefit for insureds with a particular
condition.
(1) A policy of health insurance shall cover a single-tablet drug
regimen that is as effective as a multitablet regimen unless the
health insurer is able to demonstrate to the commissioner that
consistent with clinical guidelines and peer-reviewed scientific and
medical literature that the multitablet regimen is clinically more
effective and equally or more likely to result in
adherence to a drug regimen. A policy of health insurance shall cover
an extended release prescription drug that is clinically as
effective as a nonextended release product unless the health insurer
is able to demonstrate to the commissioner that consistent with
clinical guidelines and peer-reviewed scientific and medical
literature that the nonextended release product is clinically
equally or more effective. The cost
sharing for the enrollee shall be the same for a single-tablet
regimen as for the drugs included in a multitablet regimen. The same
cost sharing shall apply for an extended release product as for a
nonextended release product.
(2) A policy of health insurance shall not place most or all of
the prescription medications that treat a specific condition on the
highest cost tier tiers of a
formulary. formulary unless the health insurer can
demonstrate to the satisfactio n of the commissioner that
such placement does not reduce the generosity of the benefits for
insureds with a particular condition. In no instance in which there
is more than one treatment that is the standard of care for a
condition shall most or all prescription medications to treat that
condition be placed on the highest cost tiers. This
shall not apply to any medication for which there is a therapeutic
equivalent available on a lower cost tier.
(3) For coverage offered in the individual market, the health
insurer shall demonstrate to the satisfaction of the commissioner
that the formulary or formularies maintained for coverage in the
individual market are the same or comparable to those maintained for
coverage in the group market.
(3)
( 4) A health insurer shall demonstrate to
the commissioner that any limitation or utilization management is
consistent with and based on clinical guidelines and peer-reviewed
scientific and medical literature.
(e) (1) No later than January 1, 2017, the department shall
develop a definition of specialty prescription drugs that is based on
clinical guidelines and peer-reviewed scientific and medical
literature, including the need for special handling, storage,
administration, clinical monitoring, or reporting clinical outcomes
to the federal Food and Drug Administration of such prescription
drugs.
(2) The definition of specialty prescription drugs shall not be
based on the cost of the prescription drug to the health insurer but
shall be based on medical management.
(3) A policy of health insurance shall use the definition of
specialty drug developed by the department in its outpatient
prescription drug benefit plan. The highest cost tier of a formulary
shall be based on clinical guidelines and medical evidence and shall
not be based on the cost of the prescription drug.
(f) Nothing in this section shall be construed to require or
authorize a health insurer that contracts with the State Department
of Health Care Services to provide services to Medi-Cal beneficiaries
to provide coverage for prescription drugs that are not required
pursuant to those programs or health insurance policies, or to limit
or exclude any prescription drugs that are required by those programs
or health insurance policies.
(e) With respect to an individual or group policy of health
insurance subject to Section 10112.28, the copayment, coinsurance, or
any other form of cost sharing for a covered outpatient prescription
drug for an individual prescription shall not exceed 1/24 of the
annual out-of-pocket limit applicable to individual coverage under
Section 10112.28 for a supply of up to 30 days.
(f) (1) If a policy of health insurance maintains a drug formulary
grouped into tiers, including a fourth tier or specialty tier, a
policy of health insurance shall use the following definitions for
each tier of the drug formulary:
(A) Tier one shall consist of preferred generic drugs and
preferred brand name drugs if the cost to the health insurer for a
preferred brand name drug is comparable to those for generic drugs.
(B) Tier two shall consist of nonpreferred generic drugs,
preferred brand name drugs, and any other drugs recommended by the
health insurer's pharmaceutical and therapeutics committee based on
safety and efficacy and not solely based on the cost of the
prescription drug.
(C) Tier three shall consist of nonpreferred brand name drugs that
are recommended by the health insurer's pharmaceutical and
therapeutics committee based on safety and efficacy and not solely
based on the cost of the prescription drug.
(D) Tier four shall consist of specialty drugs that are biologics,
which, according to the federal Food and Drug Administration or the
manufacturer, require distribution through a specialty pharmacy or
the insured to have special training for self-administration or
special monitoring. Specialty drugs may include prescription drugs
that cost more than the Medicare Part D threshold if those drugs are
recommended for Tier four by the health insurer's pharmaceutical and
therapeutics committee based on safety and efficacy, but placement
shall not be solely based on the cost of the prescription drug.
(2) Nothing in this section shall be construed to require a policy
of health insurance to include a fourth tier, but if a policy of
health insurance includes a fourth tier, the policy of health
insurance shall comply with this section.
(g) A policy of health insurance shall ensure that the placement
of prescription drugs on formulary tiers is not based solely on the
cost of the prescription drug to the health insurer, but is based on
clinically indicated, reasonable medical management practices.
SEC. 3. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.