Amended in Assembly April 6, 2016

California Legislature—2015–16 Regular Session

Assembly Bill No. 2436

Introduced by Assembly Member Roger Hernández

February 19, 2016

An act to add Section 1367.207 to the Health and Safety Code, begin delete immediately following Section 1367.205, end delete and to add Section 10123.202 to the Insurance Code, relating to health care coverage.

LEGISLATIVE COUNSEL’S DIGEST

AB 2436, as amended, Roger Hernández. Health care coverage: disclosures: drug pricing.

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 imposes various requirements on contracts and policies that cover prescription drug benefits.

This bill would require a health care service plan contract or a policy of health insurance that is issued, amended, or renewed on or after January 1, 2017, and that provides coverage for prescription drug benefits to notify the enrollee or begin delete insured end delete begin insert insured, at the time that a prescription drug is delivered or within 30 days of purchase, end insert of specified information related to the cost of begin delete a end delete begin insert the end insert prescription begin delete drug at the time that the drug is purchased or delivered. end delete begin insert drug. The bill would require a health care service plan or a health insurer, in contracting with a pharmaceutical manufacturer for the purchase of a prescription drug, to require the manufacturer to disclose to the plan or insurer the cost of the prescription drug in United States dollars in Canada, Germany, and Mexico. The bill would make related legislative findings and declarations. end insert Because a willful violation of the bill’s requirements by a health care service plan 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:

begin insert

begin insert SECTION 1. end insert   

end insert begin insert

(a) The Legislature finds and declares that the
escalating cost of prescription drugs is a major concern for
Californians.

end insert begin insert

(b) It is the intent of the Legislature in enacting this bill to
provide consumers with information about the cost of prescription
drugs, including the cost to the health plan or insurer and the cost
in other countries.

end insert begin insert

(c) It is not the intent of the Legislature in enacting this bill to
encourage Californians to purchase or otherwise obtain
prescription drugs from other countries in violation of federal law.

end insert

begin delete SECTION 1. end delete

begin insert SEC. 2. end insert   

Section 1367.207 is added to the Health and Safety
Code, immediately following Section 1367.205 begin insert , end insert to read:

1367.207.  

begin insert (a) end insert begin insert   end insert A health care service plan contract issued,
amended, or renewed on or after January 1, 2017, that provides
coverage for prescription drug benefits shall require the plan to
notify the enrollee of the following at the begin delete time of purchase or end delete time
of delivery begin insert or within 30 days of purchase end insert of a prescription drug:

begin delete

(a)

end delete

begin insert (1) end insert  The enrollee’s share of the cost for the prescription drug,
including any copayment, coinsurance, or other cost sharing, and
the accumulation of that cost sharing to the enrollee’s deductible,
if any, or out-of-pocket maximum.

begin delete

(b)

end delete

begin insert (2) end insert  The cost of the prescription drug to the plan, after applying
any discounts, rebates, or other reductions in cost to the plan.

begin delete

(c)

end delete

begin insert (3) end insert  The cost of the prescription drug in United States dollars in
the following countries:

begin delete

(1)

end delete

begin insert (A) end insert  Canada.

begin delete

(2)

end delete

begin insert (B) end insert  Germany.

begin delete

(3)

end delete

begin insert (C) end insert  Mexico.

begin insert

(b) In contracting with a pharmaceutical manufacturer for the
purchase of a prescription drug, a health care service plan or its
contracting pharmacy benefits manager, if any, shall require the
pharmaceutical manufacturer to disclose to the plan the cost of
the prescription drug in United States dollars in Canada, Germany,
and Mexico. If the pharmaceutical manufacturer fails to provide
that information, the health care service plan may take that failure
into account in determining whether to include the prescription
drug in the plan’s drug formulary or in which tier of the plan’s
drug formulary to place the prescription drug.

end insert

begin delete SEC. 2. end delete

begin insert SEC. 3. end insert   

Section 10123.202 is added to the Insurance Code, immediately following Section 10123.201, to read:

10123.202.  

begin insert (a) end insert begin insert   end insert A policy of health insurance issued, amended,
or renewed on or after January 1, 2017, that provides coverage for
prescription drug benefits shall require the insurer to notify the
insured of the following at the begin delete time of purchase or end delete time of delivery
begin insert or within 30 days of purchase end insert of a prescription drug:

begin delete

(a)

end delete

begin insert (1) end insert  The insured’s share of the cost for the prescription drug,
including any copayment, coinsurance, or other cost sharing, and
the accumulation of that cost sharing to the insured’s deductible,
if any, or out-of-pocket maximum.

begin delete

(b)

end delete

begin insert (2) end insert  The cost of the prescription drug to the insurer, after applying
any discounts, rebates, or other reductions in cost to the insurer.

begin delete

(c)

end delete

begin insert (3) end insert  The cost of the prescription drug in United States dollars in
the following countries:

begin delete

(1)

end delete

begin insert (A) end insert  Canada.

begin delete

(2)

end delete

begin insert (B) end insert  Germany.

begin delete

(3)

end delete

begin insert (C) end insert  Mexico.

begin insert

(b) In contracting with a pharmaceutical manufacturer for the
purchase of a prescription drug, a health insurer or its contracting
pharmacy benefits manager, if any, shall require the
pharmaceutical manufacturer to disclose to the insurer the cost
of the prescription drug in United States dollars in Canada,
Germany, and Mexico. If the pharmaceutical manufacturer fails
to provide that information, the health insurer may take that failure
into account in determining whether to include the prescription
drug in the insurer’s drug formulary or in which tier of the
insurer’s drug formulary to place the prescription drug.

end insert

begin delete SEC. 3. end delete

begin insert SEC. 4. end insert   

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.