BILL ANALYSIS Ó
AB 2436
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ASSEMBLY THIRD READING
AB
2436 (Roger Hernández)
As Amended April 27, 2016
Majority vote
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Health |11-5 |Wood, Bonilla, Burke, |Maienschein, |
| | |Campos, Dababneh, |Lackey, Olsen, |
| | |Gomez, |Patterson, |
| | | |Steinorth |
| | | | |
| | |Roger Hernández, | |
| | |Nazarian, | |
| | | | |
| | | | |
| | |Ridley-Thomas, | |
| | |Rodriguez, Santiago | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Appropriations |14-6 |Gonzalez, Bloom, |Bigelow, Patterson, |
| | |Bonilla, Bonta, |Gallagher, Jones, |
| | |Calderon, Daly, |Obernolte, Wagner |
| | |Eggman, Eduardo | |
| | |Garcia, Roger | |
| | |Hernández, Holden, | |
| | |Quirk, Santiago, | |
AB 2436
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| | |Weber, Wood | |
| | | | |
| | | | |
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SUMMARY: Requires a health care service plan (health plan)
contract or health insurance policy issued, amended, or renewed
on or after January 1, 2017, that provides coverage for
prescription drug benefits to notify the enrollee or insured of
the following at the time of delivery of a prescription drug or
within 30 days of purchase:
1)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; and,
2)The publicly available, nonproprietary wholesale acquisition
cost of a prescription drug.
This bill also requires the Department of Managed Health Care
(DMHC) to adopt regulations regarding the manner in which health
plans will implement these requirements by January 1, 2018.
FISCAL EFFECT: This bill will result in regulatory costs to
both DMHC and the California Department of Insurance (CDI), to
implement and establish a standardized process and notice
requirements.
1)Costs to CDI of $40,000-$50,000 in Fiscal Year (FY) 2016-17
and $40,000-$50,000 in FY 2017-18.
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2)Costs to the DMHC's Office of Legal Services (OLS) of around
$65,000 in FY 2016-17, $68,000 in FY 2017-18, and $65,000 in
FY 2018-19.
COMMENTS: The author states that this bill takes an important
step, by requiring transparency on prescription drug pricing for
consumers. The high price of some prescription drugs has raised
questions about their affordability, whether their cost is worth
the clinical benefits they provide, and the financial model of
the current healthcare system. The rising costs of prescription
drugs are placing an increasing burden on payers, employers, and
patients. Notably, new Hepatitis C virus treatment options that
cure the underlying disease with remarkable efficiency offer a
drastic improvement over previous therapies. Payment systems
have been significantly impacted by the cost of these drugs
since their arrival on the market, but many argue that patients
and payers will benefit in the long run by the avoided
downstream costs to cancer treatment and liver transplants.
Other high priced drugs offer striking therapeutic advances for
a range of very serious conditions, including cancer, rheumatoid
arthritis, multiple sclerosis, and many others. Policymakers
are faced with balancing the need to reward pharmaceutical
breakthroughs in order to ensure the innovation of future cures
with the fact that payers and patients have limited resources to
afford very high prices.
Health Access California, the sponsor of this bill, states that
this bill would inform consumers about the costs of their
prescription medications, including consumer cost sharing and
cost of the drug to the health plan or health insurer. Asian
Law Alliance (ALA) states that the soaring cost of prescription
drugs ranks at the top of the problems consumers have with the
health care system and United States prescription drug costs are
far higher than in Europe or nearby countries like Canada and
Mexico. ALA also contends that prescription drugs are the
health service most commonly used by consumers. Doctors for
America states that consumers deserve to know how much their
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medication will cost them, how much their insurance will pay,
and be able to compare this price to the price for the same drug
in other countries. The California School Employees
Association, AFL-CIO, states that this bill will unveil some of
the secrecy in prescription drug costs and maybe through
disclosure of this data we can rein in, or at least understand,
the costs of prescription drugs.
Kaiser Permanente states that this bill will not encourage the
lowering of drug prices and instead will increase costs for
businesses and consumers. The Association of California Life
and Health Insurance Companies states that this bill only
provides the final cost of purchase between seller and buyer
without addressing the underlying, and still mysterious, costs
used by the seller to determine the sales price.
Blue Shield of California (BSC) states that this bill imposes
duplicative requirements on health plans to disclose information
to members since the standardized benefit design and the retail
prescription drug price cap provide consumers with useful
information about their cost sharing responsibility, rendering
most of the requirement of this bill useless. BSC also states
that the accumulation of cost sharing is an unworkable
requirement as health plans do not always know in real-time when
services have been rendered and what an enrollee has paid toward
their share of cost and that this requirement would be both
costly and impossible to implement at a time when plans are
being pressured to keep administrative costs low. Finally, BSC
contends that the onus should be placed on drug manufacturers to
provide pricing information to consumers and more importantly,
to be part of the quest for sustainably affordable healthcare
for all consumers.
Analysis Prepared by:
Kristene Mapile / HEALTH / (916) 319-2097 FN:
0003011
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