BILL NUMBER: AB 339 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MAY 20, 2015
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 make these cost-sharing limits appl
icable only to covered outpatient prescription drugs that
constitute essential health benefits, as defined. 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. The cost-sharing limits established by this
section apply only to outpatient prescription drugs covered by the
contract that constitute essential health benefits, as defined in
Section 1367.005. This section shall
does 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 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, consistent with clinical guidelines and peer-reviewed
scientific and medical 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
equally or more effective than a nonextended release product unless
the health care service plan is able to demonstrate to the director,
consistent with clinical guidelines and peer-reviewed scientific and
medical literature, that the nonextended release product is
clinically equally or more 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 that such placement does not reduce the
generosity of the benefits for enrollees with a particular condition.
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 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 one-twenty-fourth 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
This section does not 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
This section does not 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
This section does not 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. The cost-sharing limits established by this
section apply only to outpatient prescription drugs covered by the
policy that constitute essential health benefits, as defined by
Section 10112.27.
(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 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, consistent
with clinical guidelines and peer-reviewed scientific and medical
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 equally or more effective than
a nonextended release product unless the health insurer is able to
demonstrate to the commissioner, consistent with clinical guidelines
and peer-reviewed scientific and medical literature, that the
nonextended release product is clinically equally or more 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 that such placement does not reduce the generosity of the
benefits for insureds with a particular condition. 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 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
one-twenty-fourth 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
This section does not 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
This section does not 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.