BILL NUMBER: AB 339 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MAY 4, 2015
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 contract or a
health insurance policy that is offered, renewed, or amended on or
after January 1, 2016, and that provides coverage for outpatient
prescription drugs, to provide coverage for medically necessary
prescription drugs, including those for which there is not a
therapeutic equivalent. The bill would require copayments,
coinsurance, and other cost sharing for these drugs to be 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 bill would require 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 clinically equally or
more effective, as specified. The bill would prohibit, except
as specified, a plan contract or policy from placing prescription
medications that treat a specific condition on the highest cost tiers
of a drug formulary. The bill would require 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 formularies maintained
by the health care service plan do not discourage the enrollment of
individuals with health 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 director, consistent
with clinical guidelines and peer-reviewed scientific and medical
literature literature, that the
multitablet regimen is clinically equally or more
effective and 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
equally or more effective as than
a nonextended release product unless the health care service plan is
able to demonstrate to the director that
director, consistent with clinical guidelines and peer-reviewed
scientific and medical literature
literature, that the nonextended release product is clinically
equally or more effective.
effective than the extended 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 tiers of a 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. If there is more than one treatment that is the
standard of care for a specific condition, the health care service
plan shall not place most or all prescription medications that treat
that condition 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.
(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) 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.
(3) Nothing in this section shall be construed to require the
health care service plan's pharmaceutical and therapeutics committee
to consider the cost of the prescription drug to the health care
service plan.
(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.
(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, 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 and do not reduce the 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 commissioner, consistent with clinical
guidelines and peer-reviewed scientific and medical
literature literature, that the multitablet
regimen is clinically equally or more effective and 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 equally or more effective
as than a nonextended release product
unless the health insurer is able to demonstrate to the
commissioner that commissioner, consistent with
clinical guidelines and peer-reviewed scientific and medical
literature literature, that the nonextended
release product is clinically equally or more
effective. effective than the extended 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 tiers of a formulary unless the health insurer can
demonstrate to the satisfaction 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. If there is more than one treatment that is the
standard of care for a specific condition, the health insurer shall
not place most or all prescription medications that treat that
condition 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.
(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) 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.
(3) Nothing in this section shall be construed to require the
health insurer's pharmaceutical and therapeutics committee to
consider the cost of the prescription drug to the health insurer.
(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.