BILL NUMBER: AB 339 AMENDED
BILL TEXT
AMENDED IN SENATE JUNE 24, 2015
AMENDED IN ASSEMBLY JUNE 1, 2015
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 amend Sections 1367.24 and 1367.205 of, and to
add Section 1342.71 to to, the
Health and Safety Code, and to amend Section 10123.192 of, and
to add Section Sections 10123.193
to and 10123.201 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 nongrandfathered group health
care service plan contract or a health insurance
policy that is offered, renewed, or amended on or after
January 1, July 1, 2016, and a
nongrandfathered individual health care service plan contract or
health insurance policy that is offered, renewed, or amended on or
after January 1, 2017, 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 these cost sharing limitations for
a plan contract or policy that is a high deductible health plan to
apply only once an enrollee's or insured's deductible has been
satisfied for the year. The bill would make these cost-sharing
limits applicable 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.
Existing law requires every health care service plan that provides
prescription drug benefits to maintain an expeditious process by
which prescribing providers may obtain authorization for a medically
necessary nonformulary prescription drug, and requires these plans to
maintain specified information that is required to be made available
to the Director of the Department of Managed Health Care upon
request.
This bill would also impose these requirements on a health insurer
that provides prescription drug benefits, as provided. The bill
would require a plan or insurer to respond to authorization requests
for nonformulary prescription drugs within specified timeframes. The
bill would authorize a plan or insurer to require step therapy, as
defined, when more than one drug is appropriate for the treatment of
a medical condition, subject to specified requirements. The bill
would require a plan or insurer that requires step therapy to have an
expeditious process in place to authorize exceptions to step therapy
when medically necessary and to conform effectively and efficiently
with continuity of care requirements. The bill, with regard to an
enrollee or insured changing plans or policies, would prohibit a new
plan or insurer from requiring the enrollee or insured to repeat step
therapy when that person is already being treated for a medical
condition by a prescription drug, as specified. The bill, except as
specified, would require a plan or insurer that provides essential
health benefits to allow an enrollee or insured to access his or her
prescription drug benefits at an in-network retail pharmacy, and
would authorize a plan or insurer to charge an enrollee or insured a
different cost sharing for obtaining a covered drug at a retail
pharmacy, and would require that cost-sharing amount to count towards
the plan's or insurer's annual out-of-pocket limitation, as
specified.
This bill would require a plan or insurer to maintain a pharmacy
and therapeutics committee that is responsible for developing,
maintaining, and overseeing any drug formulary list, as provided. The
bill would require the committee to, among other things, evaluate
and analyze treatment protocols and procedures related to the plan's
or insurer's drug formulary at least annually.
Existing law requires the Department of Managed Health Care and
the Department of Insurance to jointly develop a standard formulary
template by January 1, 2017, and requires plans and insurers to use
that template to display formularies, as specified. Existing law
requires the standard formulary template to include specified
information.
This bill would require the standard formulary template to include
additional specified information, including which medications are
covered, including both generic and brand name.
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 nongrandfathered group health care
service plan contract that is offered, amended, or renewed on or
after January 1, July 1, 2016, shall
comply with this section. A nongrandfathered individual health
care service plan contract that is offered, amended, or renewed on or
after January 1, 2017, 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 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. In proposing
cost sharing, the health care service plan shall consider the impact
of cost sharing on medication adherence as demonstrated in
peer-reviewed literature.
(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) (1) 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 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.
(2) For a health care service plan contract that is a "high
deductible health plan" under the definition set forth in Section 223
(c)(2) of Title 26 of the United States Code, paragraph (1) of this
subdivision shall apply only once an enrollee's deductible has been
satisfied for the year.
(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
pharmacy 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 pharmacy 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 pharmacy and therapeutics
committee based on safety and efficacy, but placement shall not be
solely based on the cost of the prescription drug.
(2) 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) This section does not require the health care service plan's
pharmaceutical pharmacy 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) This section shall not be construed to require a health care
service plan to impose cost sharing. This section shall not be
construed to require cost sharing for prescription drugs that state
or federal law otherwise requires to be provided without cost
sharing.
(h)
( i) 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 1367.24 of the Health
and Safety Code is amended to read:
1367.24. (a) (1) Every health care service
plan that provides prescription drug benefits shall maintain an
expeditious process by which prescribing providers may obtain
authorization for a medically necessary nonformulary prescription
drug. On or before July 1, 1999, every health care service plan that
provides prescription drug benefits shall file with the department a
description of its process, including timelines,
process for responding to authorization requests for
nonformulary drugs. Any changes to this process shall be filed with
the department pursuant to Section 1352. The plan shall provide
that the enrollee, the enrollee's designee, or the enrollee's
prescribing provider may seek an authorization for a nonformulary
prescription drug . Each
(2) Each plan shall respond to an authorization request within 72
hours following receipt of the authorization request for a nonurgent
authorization. If the plan grants the authorization request, the plan
shall provide coverage of the nonformulary drug for the duration of
the prescription, including refills.
(3) Each plan shall provide that an urgent authorization may be
obtained within 24 hours if an enrollee is suffering from a health
condition that may seriously jeopardize the enrollee's life, health,
or ability to regain maximum function, or if an enrollee is
undergoing a current course of treatment using a nonformulary
prescription drug. A plan that grants an exception based on these
urgent circumstances shall provide coverage of the nonformulary
prescription drug for the duration of that urgent condition.
(4) If a plan imposes step therapy, the plan shall provide an
expeditious process to authorize an exception to step therapy when
medically necessary and to conform effectively and efficiently with
continuity of care requirements of this chapter and federal law, and
any regulations issued thereunder. The process to authorize an
exception to step therapy shall be consistent with this section,
including the timelines provided in this section.
(5) Each plan shall provide a
written description of its most current process, including
timelines, process to its prescribing providers.
For purposes of this section, a prescribing provider shall include a
provider authorized to write a prescription, pursuant to subdivision
(a) of Section 4040 of the Business and Professions Code, to treat a
medical condition of an enrollee.
(b) Any plan that disapproves a request made pursuant to
subdivision (a) by a prescribing provider to obtain authorization for
a nonformulary drug shall provide the reasons for the disapproval in
a notice provided to the enrollee. The notice shall indicate that
the enrollee may file a grievance with the plan if the enrollee
objects to the disapproval, including any alternative drug or
treatment offered by the plan. The notice shall comply with
subdivision (b) of Section 1368.02.
(c) The process described in subdivision (a) by which prescribing
providers may obtain authorization for medically necessary
nonformulary drugs shall not apply to a nonformulary drug that has
been prescribed for an enrollee in conformance with the provisions of
Section 1367.22.
(d) (1) A plan shall maintain a pharmacy and therapeutics
committee that shall be responsible for developing, maintaining, and
overseeing any drug formulary list. If the plan delegates
responsibility for the formulary to any entity, the obligation of the
plan to comply with this chapter shall not be waived.
(2) The pharmacy and therapeutics committee board membership shall
conform with both of the following:
(A) Represent a sufficient number of clinical specialties to
adequately meet the needs of enrollees.
(B) Consist of a majority of individuals who are practicing
physicians, practicing pharmacists, and other practicing health
professionals who are licensed to prescribe drugs.
(3) Members of the board shall abstain from voting on any issue in
which the member has a conflict of interest with respect to the
issuer or a pharmaceutical manufacturer.
(4) At least 20 percent of the board membership shall not have a
conflict of interest with respect to the issuer or any pharmaceutical
manufacturer.
(5) The pharmacy and therapeutics committee shall meet at least
quarterly and shall maintain written documentation of the rationale
for its decisions regarding the development of, or revisions to, the
formulary drug list.
(6) The pharmacy and therapeutics committee shall do all of the
following:
(A) Develop and document procedures to ensure appropriate drug
review and inclusion.
(B) Base clinical decisions on the strength of the scientific
evidence and standards of practice, including assessing peer-reviewed
medical literature, pharmacoeconomic studies, outcomes research
data, and other related information.
(C) Consider the therapeutic advantages of drugs in terms of
safety and efficacy when selecting formulary drugs.
(D) Review policies that guide exceptions and other utilization
management processes, including drug utilization review, quantity
limits, and therapeutic interchange.
(E) Evaluate and analyze treatment protocols and procedures
related to the plan's formulary at least annually.
(F) Review and approve all clinical prior authorization criteria,
step therapy protocols, and quantity limit restrictions applied to
each covered drug.
(G) Review new federal Food and Drug Administration-approved drugs
and new uses for existing drugs.
(H) Ensure the plan's formulary drug list or lists cover a range
of drugs across a broad distribution of therapeutic categories and
classes and recommended drug treatment regimens that treat all
disease states and does not discourage enrollment by any group of
enrollees.
(I) Ensure the plan's formulary drug list or lists provide
appropriate access to drugs that are included in broadly accepted
treatment guidelines and that are indicative of general best
practices at the time.
(e) (1) A health care service plan may impose prior authorization
requirements on prescription drug benefits, consistent with the
requirements of this chapter.
(2) (A) When there is more than one drug that is appropriate for
the treatment of a medical condition, a plan may require step
therapy. A plan that requires step therapy shall comply with the
requirements specified in paragraph (4) of subdivision (a).
(B) In circumstances where an enrollee is changing plans, the new
plan shall not require the enrollee to repeat step therapy when that
enrollee is already being treated for a medical condition by a
prescription drug provided that the drug is appropriately prescribed
and is considered safe and effective for the enrollee's condition.
Nothing in this section shall preclude the new plan from imposing a
prior authorization requirement pursuant to this section for the
continued coverage of a prescription drug prescribed pursuant to step
therapy imposed by the former plan, or preclude the prescribing
provider from prescribing another drug covered by the new plan that
is medically appropriate for the enrollee.
(3) A plan shall provide coverage for the medically necessary
dosage and quantity of the drug prescribed for the treatment of a
medical condition consistent with professionally recognized standards
of practice.
(4) A plan that provides essential health benefits shall allow an
enrollee to access prescription drug benefits at an in-network retail
pharmacy unless the prescription drug is subject to restricted
distribution by the federal Food and Drug Administration or requires
special handling, provider coordination, or patient education that
cannot be provided by a retail pharmacy. A health care service plan
that provides essential health benefits may charge an enrollee a
different cost sharing for obtaining a covered drug at a retail
pharmacy, but all cost sharing shall count toward the plan's annual
limitation on cost sharing consistent with Section 1367.006.
(d)
( f) The process described in subdivision
(a) by which enrollees may obtain medically necessary nonformulary
drugs, including specified timelines for responding to prescribing
provider authorization requests, shall be described in evidence of
coverage and disclosure forms, as required by subdivision (a) of
Section 1363, issued on or after July 1, 1999.
(e)
( g) Every health care service plan that
provides prescription drug benefits shall maintain, as part of its
books and records under Section 1381, all of the following
information, which shall be made available to the director upon
request:
(1) The complete drug formulary or formularies of the plan, if the
plan maintains a formulary, including a list of the prescription
drugs on the formulary of the plan by major therapeutic category with
an indication of whether any drugs are preferred over other drugs.
(2) Records developed by the pharmacy and therapeutic committee of
the plan, or by others responsible for developing, modifying, and
overseeing formularies, including medical groups, individual practice
associations, and contracting pharmaceutical benefit management
companies, used to guide the drugs prescribed for the enrollees of
the plan, that fully describe the reasoning behind formulary
decisions.
(3) Any plan arrangements with prescribing providers, medical
groups, individual practice associations, pharmacists, contracting
pharmaceutical benefit management companies, or other entities that
are associated with activities of the plan to encourage formulary
compliance or otherwise manage prescription drug benefits.
(f)
( h) If a plan provides prescription drug
benefits, the department shall, as part of its periodic onsite
medical survey of each plan undertaken pursuant to Section 1380,
review the performance of the plan in providing those benefits,
including, but not limited to, a review of the procedures and
information maintained pursuant to this section, and describe the
performance of the plan as part of its report issued pursuant to
Section 1380.
(g)
( i) The director shall not publicly
disclose any information reviewed pursuant to this section that is
determined by the director to be confidential pursuant to state law.
(h)
( j) For purposes of this section, the
following definitions shall apply: "authorization"
(1) " Authorization"
means approval by the health care service plan to provide payment for
the prescription drug.
(2) "Step therapy" means a type of protocol that specifies the
sequence in which different prescription drugs for a given medical
condition and medically appropriate for a particular patient are to
be prescribed.
(i)
( k) (1) Nonformulary
prescription drugs shall include any drug for which an enrollee's
copayment or out-of-pocket costs are different than the copayment for
a formulary prescription drug, except as otherwise provided by law
or regulation or in cases in which the drug has been excluded in the
plan contract pursuant to Section 1342.7.
(2) If a nonformulary drug is authorized consistent with this
section, the cost sharing shall be the same as for a formulary drug
consistent with subdivision (e) of Section 1342.71.
(j)
( l) Nothing in this section shall be
construed to restrict or impair the application of any other
provision of this chapter, including, but not limited to, Section
1367, which includes among its requirements that a health care
service plan furnish services in a manner providing continuity of
care and demonstrate that medical decisions are rendered by qualified
medical providers unhindered by fiscal and administrative
management.
SEC. 3. Section 1367.205 of the Health
and Safety Code is amended to read:
1367.205. (a) In addition to the list required to be provided
under Section 1367.20, a health care service plan that provides
prescription drug benefits and maintains one or more drug formularies
shall do all of the following:
(1) Post the formulary or formularies for each product offered by
the plan on the plan's Internet Web site in a manner that is
accessible and searchable by potential enrollees, enrollees,
and providers. providers, the general public, the
department, and federal agencies as required by federal law or
regulations.
(2) Update the formularies posted pursuant to paragraph (1) with
any change to those formularies on a monthly basis.
(3) No later than six months after the date that a standard
formulary template is developed under subdivision (b), use that
template to display the formulary or formularies for each product
offered by the plan.
(b) (1) By January 1, 2017, the department and the Department of
Insurance shall jointly, and with input from interested parties from
at least one public meeting, develop a standard formulary template
for purposes of paragraph (3) of subdivision (a). In developing the
template, the department and Department of Insurance shall take into
consideration existing requirements for reporting of formulary
information established by the federal Centers for Medicare and
Medicaid Services. To the extent feasible, in developing the
template, the department and the Department of Insurance shall
evaluate a way to include on the template, in addition to the
information required to be included under paragraph (2), cost-sharing
information for drugs subject to coinsurance.
(2) The standard formulary template shall include the notification
described in subdivision (c) of Section 1363.01, and as applied to a
particular formulary for a product offered by a plan, shall do all
of the following:
(A) Include information on cost-sharing
cost sharing tiers and utilization controls, including prior
authorization or step therapy requirements, for each drug covered by
the product.
(B) Indicate any drugs on the formulary that are preferred over
other drugs on the formulary.
(C) Include information to educate enrollees about the differences
between drugs administered or provided under a health care service
plan's medical benefit and drugs prescribed under a health care
service plan's prescription drug benefit and about how to obtain
coverage information regarding drugs that are not covered under the
plan's prescription drug benefit.
(D) Include information to educate enrollees that health care
service plans that provide prescription drug benefits are required to
have a method for enrollees to obtain prescription drugs not listed
in the health plan drug formulary if the drugs are deemed medically
necessary by a clinician pursuant to Section 1367.24.
(E) Include information on which medications are covered,
including both generic and brand name.
(F) Include information on what tier of the plan's drug formulary
each medication is in.
(c) For purposes of this section, "formulary" means the complete
list of drugs preferred for use and eligible for coverage under a
health care service plan product and includes the drugs covered under
the pharmacy benefit of the product.
SEC. 4. Section 10123.192 of the
Insurance Code is amended to read:
10123.192. (a) A health insurer that provides prescription drug
benefits and maintains one or more drug formularies shall do all of
the following:
(1) Post the formulary or formularies for each product offered by
the insurer on the insurer's Internet Web site in a manner that is
accessible and searchable by potential insureds, insureds,
and providers. providers, the general public, the
department, and federal agencies as required by federal law or
regulations.
(2) Update the formularies posted pursuant to paragraph (1) with
any change to those formularies on a monthly basis.
(3) No later than six months after the date that a standard
formulary template is developed under subdivision (b), use that
template to display the formulary or formularies for each product
offered by the insurer.
(b) (1) By January 1, 2017, the department and the Department of
Managed Health Care shall jointly, and with input from interested
parties from at least one public meeting, develop a standard
formulary template for purposes of paragraph (3) of subdivision (a).
In developing the template, the department and Department of Managed
Health Care shall take into consideration existing requirements for
reporting of formulary information established by the federal Centers
for Medicare and Medicaid Services. To the extent feasible, in
developing the template, the department and the Department of Managed
Health Care shall evaluate a way to include on the template, in
addition to the information required to be included under paragraph
(2), cost-sharing information for drugs subject to coinsurance.
(2) The standard formulary template shall include a notification
that the presence of a drug on the insurer's formulary does not
guarantee that an insured will be prescribed that drug by his or her
prescribing provider for a particular medical condition. As applied
to a particular formulary for a product offered by an insurer, the
standard formulary template shall do all of the following:
(A) Include information on cost-sharing
cost sharing tiers and utilization controls, including prior
authorization or step therapy requirements, for each drug covered by
the product.
(B) Indicate any drugs on the formulary that are preferred over
other drugs on the formulary.
(C) Include information to educate insureds about the differences
between drugs administered or provided under a health insurer's
medical benefit and drugs prescribed under a health insurer's
prescription drug benefit and about how to obtain coverage
information about drugs that are not covered under the health insurer'
s prescription
drug benefit.
(D) Include information to educate insureds that health insurers
that provide prescription drug benefits are required to have a method
for insureds to obtain prescription drugs not listed in the health
insurer's drug formulary if the drugs are deemed to be medically
necessary by a clinician pursuant to Section 1367.24 of the Health
and Safety Code, as required by clause (iv) of subparagraph (A) of
paragraph (2) of subdivision (a) of Section 10112.27.
(E) Include information on which medications are covered,
including both generic and brand name.
(F) Include information on what tier of the health insurer's drug
formulary each medication is in.
(c) The commissioner may adopt regulations as may be necessary to
carry out the purposes of this section. In adopting regulations, the
commissioner shall comply with Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code.
(d) For purposes of this section, "formulary" means the complete
list of drugs preferred for use and eligible for coverage under a
health insurance product and includes the drugs covered under the
pharmacy benefit of the product.
SEC. 2. SEC. 5. Section 10123.193 is
added to the Insurance Code, to read:
10123.193. (a) A policy of health insurance
nongrandfathered group policy of health insurance
that is offered, amended, or renewed on or after
January 1, July 1, 2016, shall comply with this
section. A nongrandfathered individual policy of health
insurance that is offered, amended, or renewed on or after January 1,
2017, 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. In proposing
cost sharing, the health insurer shall consider the impact of cost
sharing on medication adherence as demonstrated in peer-reviewed
literature.
(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) (1) 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 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.
(2) For a policy of health insurance that is a "high deductible
health plan" under the definition set forth in Section 223(c)(2) of
Title 26 of the United States Code, paragraph (1) of this subdivision
shall apply only once an insured's deductible has been satisfied for
the year.
(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 pharmacy
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
pharmacy 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 pharmacy and therapeutics
committee based on safety and efficacy, but placement shall not be
solely based on the cost of the prescription drug.
(2) 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) This section does not require the health insurer's
pharmaceutical pharmacy and therapeutics
committee to consider the cost of the prescription drug to the health
insurer.
(g) This section shall not be construed to require a health
insurer to impose cost sharing. This section shall not be construed
to require cost sharing for prescription drugs that state or federal
law otherwise requires to be provided without cost sharing.
(g)
( h) 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. 6. Section 10123.201 is added to the
Insurance Code , to read:
10123.201. (a) (1) Every health insurer that provides
prescription drug benefits shall maintain an expeditious process by
which prescribing providers may obtain authorization for a medically
necessary nonformulary prescription drug. On or before July 1, 2016,
every insurer that provides prescription drug benefits shall file
with the commissioner a description of its process for responding to
authorization requests for nonformulary drugs. Any changes to this
process shall be filed with the commissioner. The insurer shall
provide that the insured, the insured's designee, or the insured's
prescribing provider may seek an authorization for a nonformulary
prescription drug.
(2) Each insurer shall respond to an authorization request within
72 hours following receipt of the authorization request for a
nonurgent authorization. If the insurer grants the authorization
request, the insurer shall provide coverage of the nonformulary drug
for the duration of the prescription, including refills.
(3) Each insurer shall provide that an urgent authorization may be
obtained within 24 hours if an insured is suffering from a health
condition that may seriously jeopardize the insured's life, health,
or ability to regain maximum function, or if an insured is undergoing
a current course of treatment using a nonformulary prescription
drug. An insurer that grants an exception based on these urgent
circumstances shall provide coverage of the nonformulary prescription
drug for the duration of that urgent condition.
(4) If an insurer imposes step therapy, the insurer shall provide
an expeditious process to authorize an exception to step therapy when
medically necessary and to conform effectively and efficiently with
continuity of care requirements of this part and federal law, and any
regulations issued thereunder. The process to authorize an exception
to step therapy shall be consistent with this section, including the
timelines provided in this section.
(5) Each insurer shall provide a written description of its most
current process to its prescribing providers. For purposes of this
section, a prescribing provider shall include a provider authorized
to write a prescription, pursuant to subdivision (a) of Section 4040
of the Business and Professions Code, to treat a medical condition of
an insured.
(b) Any insurer that disapproves a request made pursuant to
subdivision (a) by a prescribing provider to obtain authorization for
a nonformulary drug shall provide the reasons for the disapproval in
a notice provided to the insured. The notice shall indicate that the
insured may file a grievance with the insurer if the insured objects
to the disapproval, including any alternative drug or treatment
offered by the insurer. The notice shall comply with Section
10133.661.
(c) (1) An insurer shall maintain a pharmacy and therapeutics
committee that shall be responsible for developing, maintaining, and
overseeing any drug formulary list. If the insurer delegates
responsibility for the formulary to any entity, the obligation of the
insurer to comply with this part shall not be waived.
(2) The pharmacy and therapeutics committee board membership shall
conform with both of the following:
(A) Represent a sufficient number of clinical specialties to
adequately meet the needs of insureds.
(B) Consist of a majority of individuals who are practicing
physicians, practicing pharmacists, and other practicing health
professionals who are licensed to prescribe drugs.
(3) Members of the board shall abstain from voting on any issue in
which the member has a conflict of interest with respect to the
issuer or a pharmaceutical manufacturer.
(4) At least 20 percent of the board membership shall not have a
conflict of interest with respect to the issuer or any pharmaceutical
manufacturer.
(5) The pharmacy and therapeutics committee shall meet at least
quarterly and shall maintain written documentation of the rationale
for its decisions regarding the development of, or revisions to, the
formulary drug list.
(6) The pharmacy and therapeutics committee shall do all of the
following:
(A) Develop and document procedures to ensure appropriate drug
review and inclusion.
(B) Base clinical decisions on the strength of the scientific
evidence and standards of practice, including assessing peer-reviewed
medical literature, pharmacoeconomic studies, outcomes research
data, and other related information.
(C) Consider the therapeutic advantages of drugs in terms of
safety and efficacy when selecting formulary drugs.
(D) Review policies that guide exceptions and other utilization
management processes, including drug utilization review, quantity
limits, and therapeutic interchange.
(E) Evaluate and analyze treatment protocols and procedures
related to the insurer's formulary at least annually.
(F) Review and approve all clinical prior authorization criteria,
step therapy protocols, and quantity limit restrictions applied to
each covered drug.
(G) Review new federal Food and Drug Administration-approved drugs
and new uses for existing drugs.
(H) Ensure the insurer's formulary drug list or lists cover a
range of drugs across a broad distribution of therapeutic categories
and classes and recommended drug treatment regimens that treat all
disease states and does not discourage enrollment by any group of
insureds.
(I) Ensure the insurer's formulary drug list or lists provide
appropriate access to drugs that are included in broadly accepted
treatment guidelines and that are indicative of general best
practices at the time.
(d) (1) A health insurer may impose prior authorization
requirements on prescription drug benefits, consistent with the
requirements of this part.
(2) (A) When there is more than one drug that is appropriate for
the treatment of a medical condition, a health insurer may require
step therapy. A health insurer that requires step therapy shall
comply with the requirements specified in paragraph (4) of
subdivision (a).
(B) In circumstances where an insured is changing policies, the
new policy shall not require the insureds to repeat step therapy when
that insured is already being treated for a medical condition by a
prescription drug provided that the drug is appropriately prescribed
and is considered safe and effective for the insured's condition.
Nothing in this section shall preclude the new policy from imposing a
prior authorization requirement pursuant to subdivision (a) for the
continued coverage of a prescription drug prescribed pursuant to step
therapy imposed by the former policy, or preclude the prescribing
provider from prescribing another drug covered by the new policy that
is medically appropriate for the insured.
(3) An insurer shall provide coverage for the medically necessary
dosage and quantity of the drug prescribed for the treatment of a
medical condition consistent with professionally recognized standards
of practice.
(4) An insurer that provides essential health benefits shall allow
an insured to access prescription drug benefits at an in-network
retail pharmacy unless the prescription drug is subject to restricted
distribution by the federal Food and Drug Administration or requires
special handling, provider coordination, or patient education that
cannot be provided by a retail pharmacy. An insurer that provides
essential health benefits may charge an insured a different cost
sharing for obtaining a covered drug at a retail pharmacy, but all
cost sharing shall count toward the policy's annual limitation on
cost sharing consistent with Section 10112.28.
(e) The process described in subdivision (a) by which insureds may
obtain medically necessary nonformulary drugs, including specified
timelines for responding to prescribing provider authorization
requests, shall be described in evidence of coverage and disclosure
forms, as required by Section 10603, issued on or after January 1,
2016.
(f) Every health insurer that provides prescription drug benefits
shall maintain all of the following information, which shall be made
available to the commissioner upon request:
(1) The complete drug formulary or formularies of the insurer, if
the insurer maintains a formulary, including a list of the
prescription drugs on the formulary of the insurer by major
therapeutic category with an indication of whether any drugs are
preferred over other drugs.
(2) Records developed by the pharmacy and therapeutic committee of
the insurer, or by others responsible for developing, modifying, and
overseeing formularies, including medical groups, individual
practice associations, and contracting pharmaceutical benefit
management companies, used to guide the drugs prescribed for the
insureds of the insurer, that fully describe the reasoning behind
formulary decisions.
(3) Any insurer arrangements with prescribing providers, medical
groups, individual practice associations, pharmacists, contracting
pharmaceutical benefit management companies, or other entities that
are associated with activities of the insurer to encourage formulary
compliance or otherwise manage prescription drug benefits.
(g) If an insurer provides prescription drug benefits, the
commissioner shall, as part of its market conduct examination, review
the performance of the insurer in providing those benefits,
including, but not limited to, a review of the procedures and
information maintained pursuant to this section, and describe the
performance of the insurer as part of its report issued as part of
its market conduct examination.
(h) The commissioner shall not publicly disclose any information
reviewed pursuant to this section that is determined by the
commissioner to be confidential pursuant to state law.
(i) For purposes of this section, the following definitions shall
apply:
(1) "Authorization" means approval by the health insurer to
provide payment for the prescription drug.
(2) "Step therapy" means a type of protocol that specifies the
sequence in which different prescription drugs for a given medical
condition and medically appropriate for a particular patient are to
be prescribed.
(j) (1) Nonformulary prescription drugs shall include any drug for
which an insured's copayment or out-of-pocket costs are different
than the copayment for a formulary prescription drug, except as
otherwise provided by law or regulation.
(2) If a nonformulary drug is authorized consistent with this
section, the cost sharing shall be the same as for a formulary drug
consistent with subdivision (e) of Section 10123.193.
(k) Nothing in this section shall be construed to restrict or
impair the application of any other provision of this part.
SEC. 3. SEC. 7. 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.