Amended in Assembly May 2, 2013

Amended in Assembly April 23, 2013

Amended in Assembly March 21, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 889

Introduced by Assembly Member Frazier

February 22, 2013

An act to add Section 1367.243 to the Health and Safety Code, and to add Section 10123.192 to the Insurance Code, relating to health care coverage.

LEGISLATIVE COUNSEL’S DIGEST

AB 889, as amended, Frazier. Health care coverage: 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 that act a crime. Existing law also provides for the regulation of health insurers by the Department of Insurance. Commonly referred to as utilization review, existing law governs the procedures that apply to every health care service plan and health insurer that prospectively, retrospectively, or concurrently reviews and approves, modifies, delays, or denies, based on medical necessity, requests by providers prior to, retrospectively, or concurrent with, providing health care services to enrollees or insureds, as specified.

Existing law also imposes various requirements and restrictions on health care service plans and health insurers, including, among other things, requiring a health care service plan that provides prescription drug benefits to maintain an expeditious process by which prescribing providers, as described, may obtain authorization for a medically necessary nonformulary prescription drug, according to certain procedures. Existing law also requires every health care service plan that provides prescription drug benefits that maintains one or more drug formularies to provide to members of the public, upon request, a copy of the most current list of prescription drugs on the formulary.

This bill would begin delete impose specified requirements on end delete begin insert authorize end insert health care service plans begin delete or end delete begin insert and end insert health insurers begin delete that provide coverage for medications pursuant end delete to begin insert require end insert step therapy begin delete or fail first protocol end delete begin insert , as defined, when more than one drug is appropriate for the treatment of a medical condition, subject to specified requirements end insert . The bill would require a plan or insurer begin insert that requires step therapy end insert to have an expeditious process in place to authorize exceptions to step therapy when medically necessary and to conform effectively and efficiently begin delete to end delete begin insert with end insert continuity of care begin insert requirements end insert . The bill would require the duration of any step therapy or fail first protocol to be consistent with up-to-date peer-reviewed, scientific, medical and pharmaceutical evidence, and would, except under certain conditions, prohibit a health care service plan or health insurer from requiring that a patient try and fail on more than 2 medications before allowing the patient access to other medication prescribed by the prescribing provider, as specified. 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 would specify that these provisions would not apply to accident-only, specified disease, hospital indemnity, Medicare supplement, dental-only, or vision-only contracts or policies.

Because a willful violation of these requirements with respect to health care service plans would be a crime, the 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 1367.243 is added to the Health and
Safety Code, to read:

begin delete

1367.243.  

(a) Notwithstanding any other law, a health care
service plan that provides coverage for medications pursuant to
step therapy or fail first protocol shall be subject to the following
requirements:

(1) The

end delete

begin insert

begin insert 1367.243. end insert   

end insert

begin insert (a) end insert begin insert   end insert begin insert (1) end insert begin insert   end insert begin insert When there is more than one drug that is
appropriate for the treatment of a medical condition, a health care
service plan may require step therapy. However, a end insert begin insert plan shall not
require an enrollee to try and fail on more than two medications
before allowing the enrollee access to the medication, or
generically equivalent drug, prescribed by the prescribing
provider, unless the FDA-approved label indication, peer-reviewed,
scientific, medical and pharmaceutical evidence, or clinical
research trials focusing on clinical outcomes supports that more
than two prior therapies should be used before using the requested
medication. end insert

begin insert (2) end insert begin insert   end insert begin insert A end insert health care service plan begin insert that requires step therapy end insert shall
have an expeditious process in place to authorize exceptions to
step therapy when medically necessary and to conform effectively
and efficiently begin delete to end delete begin insert with the end insert continuity of care begin insert requirements of this
chapter and corresponding regulations end insert .

begin delete

(2)

end delete

begin insert (3) end insert  The duration of any step therapy or fail first protocol shall
be consistent with up-to-date peer-reviewed, scientific, medical
and pharmaceutical evidence.

begin delete

(3) The health care service plan shall not require a patient to try
and fail on more than two medications before allowing the patient
access to the medication, or generically equivalent drug, prescribed
by the prescribing provider, unless the FDA-approved label
indication, peer-reviewed, scientific, medical and pharmaceutical
evidence, or clinical research trials focusing on clinical outcomes,
supports that more than two prior therapies should be used before
using the requested medications.

end delete

(4) 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. begin insert end insert
begin insert Nothing in this section shall preclude the new plan from imposing
a prior authorization requirement pursuant to Section 1367.24 end insert begin insert for
the continued coverage of a end insert begin insert 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. end insert

(b) For purposes of this section, the following shall apply:

(1) “Prescribing provider” shall include a provider who is
authorized to write a prescription, as described in subdivision (a)
of Section 4040 of the Business and Professions Code, to treat a
medical condition of an enrollee.

(2) “Generically equivalent drug” means a drug product with
the same active chemical ingredients of the same strength, quantity,
and dosage form, and of the same generic drug name, as determined
by the United States Adopted Names Council and accepted by the
federal Food and Drug Administration, as those drug products
having the same chemical ingredient.

begin insert

(3) “Step therapy” means a protocol that specifies the sequence
in which different prescription drugs for a given medical condition
that are medically appropriate for a particular patient are to be
prescribed.

end insert

(c) This section does not prohibit a health care service plan from
charging a subscriber or enrollee a copayment, coinsurance, or a
deductible for prescription drug benefits or from setting forth, by
contract, limitations on maximum coverage of prescription drug
benefits, provided that the copayments, coinsurance, deductibles,
or limitations are reported to, and held unobjectionable by, the
director and communicated to the subscriber or enrollee pursuant
to the disclosure provisions of Section 1363.

(d) Nothing in this section shall be construed to require coverage
of prescription drugs not in a plan’s drug formulary or to prohibit
generically equivalent drugs or generic drug substitutions as
authorized by Section 4073 of the Business and Professions Code.

(e) This section shall not apply to accident-only, specified
disease, hospital indemnity, Medicare supplement, dental-only, or
vision-only health care service plan contracts.

SEC. 2.  

Section 10123.192 is added to the Insurance Code, to
read:

begin delete

10123.192.  

(a) Notwithstanding any other law, a health insurer
that provides coverage for medications pursuant to step therapy
or fail first protocol shall be subject to the following requirements:

(1) The

end delete

begin insert

begin insert 10123.192. end insert   

end insert

begin insert (a) end insert begin insert   end insert begin insert   end insert begin insert (1) end insert begin insert   end insert begin insert When there is more than one drug that
is appropriate for the treatment of a medical condition, a health
insurer may require step therapy. However, a health insurer shall
not require an insured to try and fail on more than two medications
before allowing the insured access to the medication, or generically
equivalent drug, prescribed by the prescribing provider, unless
the FDA-approved label indication, peer-reviewed, scientific,
medical and pharmaceutical evidence, or clinical research trials
focusing on clinical outcomes supports that more than two prior
therapies should be used before using the requested medication. end insert

begin insert (2) end insert begin insert   end insert begin insert A end insert health insurer begin insert that requires step therapy end insert shall have an
expeditious process in place

to authorize exceptions to step therapy when medically necessary
and to conform effectively and efficiently begin delete to end delete begin insert with the end insert continuity
of care begin insert requirements of this part and corresponding regulations end insert .

begin delete

(2)

end delete

begin insert (3) end insert  The duration of any step therapy or fail first protocol shall
be consistent with up-to-date peer-reviewed, scientific, medical
and pharmaceutical evidence.

begin delete

(3) The health insurer shall not require a patient to try and fail
on more than two medications before allowing the patient access
to the medication, or generically equivalent drug, prescribed by
the prescribing provider, unless the FDA-approved label indication,
peer-reviewed, scientific, medical and pharmaceutical evidence,
or clinical research trials focusing on clinical outcomes, supports
that more than two prior therapies should be used before using the
requested medications.

end delete

(4) In circumstances where an insured is changing plans or
policies, the new plan or policy shall not require the insured 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. begin insert Nothing in this section shall preclude the
new policy from imposing a prior authorization requirement end insert begin insert for
the continued coverage of an outpatient 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. end insert

(b) For purposes of this section, the following shall apply:

(1) “Prescribing provider” shall include a provider who is
authorized to write a prescription, as described in subdivision (a)
of Section 4040 of the Business and Professions Code, to treat a
medical condition of an insured.

(2) “Generically equivalent drug” means a drug product with
the same active chemical ingredients of the same strength, quantity,
and dosage form, and of the same generic drug name, as determined
by the United States Adopted Names Council and accepted by the
federal Food and Drug Administration, as those drug products
having the same chemical ingredient.

begin insert

(3) “Step therapy” means a protocol that specifies the sequence
in which different prescription drugs for a given medical condition
that are medically appropriate for a particular patient are to be
prescribed.

end insert

(c) This section does not prohibit a health insurer from charging
an insured or policyholder a copayment, coinsurance, or a
deductible for prescription drug benefits or from setting forth, by
contract, limitations on maximum coverage of prescription drug
benefits, provided that the copayments, coinsurances, deductibles,
or limitations are reported to, and held unobjectionable by, the
commissioner and communicated to the insured or policyholder
pursuant to the disclosure provisions of Section 10603.

(d) Nothing in this section shall be construed to require coverage
of prescription drugs not in an insurer’s drug formulary or to
prohibit generically equivalent drugs or generic drug substitutions
as authorized by Section 4073 of the Business and Professions
Code.

(e) This section shall not apply to accident-only, specified
disease, hospital indemnity, Medicare supplement, dental-only, or
vision-only health insurance policies.

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.