Amended in Senate May 31, 2016

Amended in Senate March 30, 2016

Senate Bill No. 1010

Introduced by Senator Hernandez

February 11, 2016

An act to amend Section 1385.045 of, to add Section 1367.245 to, and to add Chapter 9 (commencing with Section 127675) to Part 2 of Division 107 begin delete of end delete begin insert of, end insert the Health and Safety Code, and to amend Section 10181.45 of, and to add Section 10123.204 to, the Insurance Code, relating to health care.

LEGISLATIVE COUNSEL’S DIGEST

SB 1010, as amended, Hernandez. Health care: prescription drug costs.

Existing law, the Knox-Keene Health Care Service Plan Act of 1975 (Knox-Keene Act), provides for the licensure and regulation of health care service plans by the Department of Managed Health Care (DMHC) 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 (DOI). Existing law requires health care service plans and health insurers to file specified rate information with DMHC or DOI, as applicable, for health care service plan contracts or health insurance policies in the individual or small group markets and for health care service plan contracts and health insurance policies in the large group market.

This bill would require health care service plans or health insurers that file the above-described rate information to report to DMHC or DOI, on a date no later than the reporting of the rate information, specified cost information regarding covered prescription drugs, including generic drugs, brand name drugs, begin delete specialty drugs, and prescription drugs provided in an outpatient setting or sold in a retail end delete begin insert and specialty drugs provided in an outpatient end insert setting. The information reported would include, but not be limited to, the 25 most frequently prescribed drugs begin delete and the average wholesale price for each drug and the 25 most costly drugs by total plan or insurer spending and the average wholesale price for each drug. end delete begin insert and the 25 most costly drugs by total plan or insurer spending. end insert DMHC and DOI would be required to compile the reported information into a begin delete consumer-friendly report end delete begin insert report for the public and legislators end insert that demonstrates the overall impact of drug costs on health care premiums and publish the reports on their Internet Web sites by begin delete January 1 end delete begin insert October 1 end insert of each year. Except for the report, DMHC and DOI would be required to keep confidential all information provided pursuant to these provisions.

Because a willful violation of the Knox-Keene Act is a crime, this bill would impose a state-mandated local program.

This bill would require a manufacturer of a branded prescription drug to notify begin insert in writing end insert state purchasers, health care service plans, health insurers, begin insert pharmacy benefit managers, end insert and the chairs of specified Senate and Assembly committees if it is increasing the wholesale acquisition cost of the drug by more than 10% begin insert or by more than $10,000 end insert during any 12-month begin delete period or if it intends to introduce to market a prescription drug that has a wholesale acquisition cost of $10,000 or more annually or per course of treatment. end delete begin insert period. end insert The bill would require a manufacturer of a generic prescription drug with a specified begin delete price end delete begin insert wholesale acquisition cost end insert to notify state purchasers, health care service plans, health insurers, begin insert pharmacy benefit managers, end insert and the chairs of specified Senate and Assembly committees if it is increasing the wholesale acquisition cost of the drug by more than begin delete 10% end delete begin insert 25% end insert during any 12-month period. begin insert The bill would require a manufacturer of a prescription drug to notify in writing, within 3 days of approval by the federal Food and Drug Administration, state purchasers, health care service plans, health insurers, pharmacy benefit managers, and the chairs of specified Senate and Assembly committees if it is introducing a new prescription drug to market at a wholesale acquisition cost of $10,000 or more annually or per course of treatment. end insert The bill would require a manufacturer, within 30 days of notification of a price increase, or begin insert notification end insert of the introduction to market of a prescription drug that has a wholesale acquisition cost of $10,000 or more annually or per course of treatment, to report specified information regarding the drug price to each state purchaser, health care service plan, begin delete and end delete health insurer, begin insert or pharmacy benefit manager end insert and would require a manufacturer who fails to provide the required information within the 30 days to be subject to a civil penalty of $1,000 per day. The bill would also require the Legislature to conduct an annual public hearing regarding the begin delete price increases and information reported, end delete begin insert aggregate trends in prescription drug pricing, end insert as prescribed. begin insert Except for the hearing, the Legislature would be required to keep confidential all information provided pursuant to these provisions. end insert

Existing law requires, for large group health care service plan contracts and health insurance policies, each health care service plan or health insurer to file with DMHC or DOI the weighted average rate increase for all large group benefit designs during the 12-month period ending January 1 of the following calendar year, and to also disclose specified information for the aggregate rate information for the large group market.

This bill would add to that disclosure of information for the aggregate rate information for the large group market, the requirement for health care service plans or health insurers to disclose specified cost information regarding covered prescription drugs, including generic begin delete drugs, end delete begin insert drugs but excluding generic specialty drugs, end insert brand name drugs excluding specialty drugs, and specialty drugs dispensed at a pharmacy, network pharmacy, or mail order pharmacy for outpatient use.

Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.

This bill would make legislative findings to that effect.

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 1367.245 is added to the Health and
Safety Code, immediately preceding Section 1367.25, to read:

1367.245.  

(a) (1) A health care service plan that reports rate
information pursuant to Section 1385.03 or 1385.045 shall report
the information described in paragraph (2) to the department on a
date no later than it reports the rate information.

(2) For all covered prescription drugs, including generic drugs,
brand name drugs, begin delete specialty drugs, and prescription drugs provided
in an outpatient setting or sold in a retail end delete begin insert and specialty drugs
provided in an outpatient end insert setting, all of the following shall be
reported:

(A) The 25 most frequently prescribed begin delete drugs and the average
wholesale price for each drug. end delete begin insert drugs. end insert

(B) The 25 most costly drugs by total plan begin delete spending and the
average wholesale price for each drug. end delete begin insert spending. end insert

(C) The 25 drugs with the highest year-over-year increase begin delete and
the average wholesale price for each drug. end delete begin insert in spending. end insert

(b) The department shall compile the information reported
pursuant to subdivision (a) into a begin delete consumer-friendly report end delete begin insert report
for the public and legislators end insert that demonstrates the overall impact
of drug costs on health care premiums. The data in the report shall
be aggregated and shall not reveal information specific to
individual health care service plans.

(c) For the purposes of this section, a “specialty drug” is one
that exceeds the threshold for a specialty drug under the Medicare
Part D program (Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (Public Law 108-173)).

(d) By begin delete January 1 end delete begin insert October 1 end insert of each year, the department shall
publish on its Internet Web site the report required pursuant to
subdivision (b).

(e) After the report required in subdivision (b) is released, the
department shall include the report as part of the public meeting
required pursuant to subdivision (b) of Section 1385.045.

(f) Except for the report required pursuant to subdivision (b),
the department shall keep confidential all of the information
provided to the department pursuant to this section, and that
information shall be exempt from disclosure under the California
Public Records Act (Chapter 3.5 (commencing with Section 6250)
of Division 7 of Title 1 of the Government Code).

SEC. 2.  

Section 1385.045 of the Health and Safety Code is
amended to read:

1385.045.  

(a) For large group health care service plan
contracts, each health plan shall file with the department the
weighted average rate increase for all large group benefit designs
during the 12-month period ending January 1 of the following
calendar year. The average shall be weighted by the number of
enrollees in each large group benefit design in the plan’s large
group market and adjusted to the most commonly sold large group
benefit design by enrollment during the 12-month period. For the
purposes of this section, the large group benefit design includes,
but is not limited to, benefits such as basic health care services
and prescription drugs. The large group benefit design shall not
include cost sharing, including, but not limited to, deductibles,
copays, and coinsurance.

(b) (1) A plan shall also submit any other information required
pursuant to any regulation adopted by the department to comply
with this article.

(2) The department shall conduct an annual public meeting
regarding large group rates within three months of posting the
aggregate information described in this section in order to permit
a public discussion of the reasons for the changes in the rates,
benefits, and cost sharing in the large group market. The meeting
shall be held in either the Los Angeles area or the San Francisco
Bay area.

(c) A health care service plan subject to subdivision (a) shall
also disclose the following for the aggregate rate information for
the large group market submitted under this section:

(1) For rates effective during the 12-month period ending
January 1 of the following year, number and percentage of rate
changes reviewed by the following:

(A) Plan year.

(B) Segment type, including whether the rate is community
rated, in whole or in part.

(C) Product type.

(D) Number of enrollees.

(E) The number of products sold that have materially different
benefits, cost sharing, or other elements of benefit design.

(2) For rates effective during the 12-month period ending
January 1 of the following year, any factors affecting the base rate,
and the actuarial basis for those factors, including all of the
following:

(A) Geographic region.

(B) Age, including age rating factors.

(C) Occupation.

(D) Industry.

(E) Health status factors, including, but not limited to,
experience and utilization.

(F) Employee, and employee and dependents, including a
description of the family composition used.

(G) Enrollees’ share of premiums.

(H) Enrollees’ cost sharing.

(I) Covered benefits in addition to basic health care services,
as defined in Section 1345, and other benefits mandated under this
article.

(J) Which market segment, if any, is fully experience rated and
which market segment, if any, is in part experience rated and in
part community rated.

(K) Any other factor that affects the rate that is not otherwise
specified.

(3) (A) The plan’s overall annual medical trend factor
assumptions for all benefits and by aggregate benefit category,
including hospital inpatient, hospital outpatient, physician services,
prescription drugs and other ancillary services, laboratory, and
radiology for the applicable 12-month period ending January 1 of
the following year. A health plan that exclusively contracts with
no more than two medical groups in the state to provide or arrange
for professional medical services for the enrollees of the plan shall
instead disclose the amount of its actual trend experience for the
prior contract year by aggregate benefit category, using benefit
categories, to the maximum extent possible, that are the same as,
or similar to, those used by other plans.

(B) The amount of the projected trend separately attributable
to the use of services, price inflation, and fees and risk for annual
plan contract trends by aggregate benefit category, including
hospital inpatient, hospital outpatient, physician services,
prescription drugs and other ancillary services, laboratory, and
radiology. A health plan that exclusively contracts with no more
than two medical groups in the state to provide or arrange for
professional medical services for the enrollees of the plan shall
instead disclose the amount of its actual trend experience for the
prior contract year by aggregate benefit category, using benefit
categories that are, to the maximum extent possible, the same or
similar to those used by other plans.

(C) A comparison of the aggregate per enrollee per month costs
and rate of changes over the last five years for each of the
following:

(i) Premiums.

(ii) Claims costs, if any.

(iii) Administrative expenses.

(iv) Taxes and fees.

(D) Any changes in enrollee cost sharing over the prior year
associated with the submitted rate information, including both of
the following:

(i) Actual copays, coinsurance, deductibles, annual begin delete out of pocket end delete
begin insert out-of-pocket end insert maximums, and any other cost sharing by the benefit
categories determined by the department.

(ii) Any aggregate changes in enrollee cost sharing over the
prior years as measured by the weighted average actuarial value,
weighted by the number of enrollees.

(E) Any changes in enrollee benefits over the prior year,
including a description of benefits added or eliminated, as well as
any aggregate changes, as measured as a percentage of the
aggregate claims costs, listed by the categories determined by the
department.

(F) Any cost containment and quality improvement efforts since
the plan’s prior year’s information pursuant to this section for the
same category of health benefit plan. To the extent possible, the
plan shall describe any significant new health care cost containment
and quality improvement efforts and provide an estimate of
potential savings together with an estimated cost or savings for
the projection period.

(G) The number of products covered by the information that
incurred the excise tax paid by the health plan.

(4) (A) For covered prescription drugs, including generic begin delete drugs, end delete
begin insert drugs but excluding specialty generic drugs, end insert brand name drugs
excluding specialty drugs, and specialty drugs dispensed at a plan
pharmacy, network pharmacy, or mail order pharmacy for
outpatient use all of the following shall be disclosed:

(i) The percentage of the premium attributable to prescription
drug costs for the prior year for each category of prescription begin delete drugs. end delete

begin insert drugs as defined in subparagraph (A). end insert

(ii) The year-over-year begin delete increase in the percentage of the
premium attributable to each category of prescription drugs. end delete

begin insert increase, as a percentage, in total spending for each category of
prescription drugs as defined in subparagraph (A). end insert

(iii) The year-over-year increase in per member, per month costs
for drug prices compared to other components of the health care
premium.

(iv) The specialty tier formulary list.

(B) The plan shall include the percentage of the premium
attributable to prescription drugs administered in a doctor’s office
that are begin delete part of end delete begin insert covered under end insert the medical benefit as separate from
the pharmacy benefit, if available.

(d) The information required pursuant to this section shall be
submitted to the department on or before October 1, 2016, and on
or before October 1 annually thereafter. Information submitted
pursuant to this section is subject to Section 1385.07.

begin insert

(e) For the purposes of this section, a “specialty drug” is one
that exceeds the threshold for a specialty drug under the Medicare
Part D program (Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (Public Law 108-173)).

end insert

SEC. 3.  

Chapter 9 (commencing with Section 127675) is added
to Part 2 of Division 107 of the Health and Safety Code, to read:

 

Chapter  9. Prescription Drug Pricing for begin delete State end delete
Purchasers

 

127675.  

(a) This chapter shall apply to any manufacturer of
a prescription drug that is purchased or reimbursed by any of the
following:

(1) A state purchaser in California, including, but not limited
to, the Public Employees’ Retirement System, the State Department
of Health Care Services, the Department of General Services, and
the Department of Corrections and Rehabilitation, or an entity
acting on behalf of a state purchaser.

(2) A health care service plan licensed pursuant to Section 1353.

(3) A health insurer holding a valid outstanding certificate of
authority from the Insurance Commissioner.

begin insert

(4) A pharmacy benefit manager as defined in subdivision (j)
of Section 4430 of the Business and Professions Code.

end insert

(b) (1) A manufacturer of a branded prescription drug shall
notify each state purchaser, health care service plan, begin delete or end delete health
begin delete insurer end delete begin insert insurer, or pharmacy benefit manager end insert if it is increasing
the wholesale acquisition cost of a prescription drug by more than
10 percent begin insert or by more than ten thousand dollars ($10,000) end insert during
any 12-month begin delete period or if it intends to introduce to market a
prescription drug that has a wholesale acquisition cost of ten
thousand dollars ($10,000) or more annually or per course of
treatment. end delete begin insert period. end insert The notice shall be provided in writing at least
60 days prior to the planned effective date of the increase. A copy
of the notice shall be provided concurrently to the Chairs of the
Senate Committee on Appropriations, the Senate Committee on
Budget and Fiscal Review, the Assembly Committee on
Appropriations, and the Assembly Committee on Budget.

(2) A manufacturer of a generic prescription drug with a begin delete price end delete
begin insert wholesale acquisition cost end insert of one hundred dollars ($100) or more
per begin delete 30-day end delete begin insert month end insert supply shall notify a state purchaser, health care
service plan, begin delete or end delete health begin delete insurer end delete begin insert insurer, or pharmacy benefit
manager end insert if it is increasing the wholesale acquisition cost of the
prescription drug by more than begin delete 10 end delete begin insert 25 end insert percent during a 12-month
period. The notice shall be provided in writing at least 60 days
prior to the planned effective date of the increase. A copy of the
notice shall be provided concurrently to the Chairs of the Senate
Committee on Appropriations, the Senate Committee on Budget
and Fiscal Review, the Assembly Committee on Appropriations,
and the Assembly Committee on Budget.

(3)  begin delete (A) end delete begin delete   end delete Within 30 days of notification of a price begin delete increase, or of
the introduction to market of a prescription drug that has a
wholesale acquisition cost of ten thousand dollars ($10,000) or
more annually or per course of treatment, end delete begin insert increase under
paragraph (1) or (2), end insert a manufacturer shall report all of the
following information to each state purchaser, health care service
plan, begin delete or health insurer: end delete begin insert health insurer, or pharmacy benefit
manager: end insert

begin delete

(i)

end delete

begin insert (A) end insert  A justification for the proposed begin delete increase in the price of the
drug, including all information and supporting documentation as
to why the increase is justified. end delete begin insert end insert begin insert price increase. The manufacturer
may limit the information in the justification to that which is
publicly available. end insert

begin delete

(ii) The total dollar amount of public funding received by the
manufacturer for the development and marketing, including, but
not limited to, state and federal tax credits, grants, and all other
public subsidies.

end delete begin delete

(iii) 

end delete

begin insert (B) end insert begin insert   end insert The begin delete expected end delete begin insert previous year’s end insert marketing budget for the drug.

begin delete

(iv)

end delete

begin insert (C) end insert  The date begin delete the drug was purchased if it end delete begin insert and price of acquisition
if the drug end insert was not developed by the manufacturer.

begin delete

(v)

end delete

begin insert (D) end insert  A schedule of begin delete past end delete price increases for the begin delete drug. end delete begin insert drug for the
previous five years. end insert

begin insert

(4) (A) A manufacturer of a prescription drug shall notify in
writing each state purchaser, health care service plan, health
insurer, or pharmacy benefit manager if it is introducing a new
prescription drug to market at a wholesale acquisition cost of ten
thousand dollars ($10,000) or more annually or per course of
treatment. The notice shall be provided in writing within three
days of the federal Food and Drug Administration approval. A
copy of the notice shall be provided concurrently to the Chairs of
the Senate Committee on Appropriations, the Senate Committee
on Budget and Fiscal Review, the Assembly Committee on
Appropriations, and the Assembly Committee on Budget.

end insert begin insert

(B) Within 30 days of notification of a new drug under this
paragraph, a manufacturer shall report all of the following
information to each state purchaser, health care service plan,
health insurer, or pharmacy benefit manager:

end insert begin insert

(i) A justification for the introductory price. The manufacturer
may limit the contents of the justification to publicly available
information.

end insert begin insert

(ii) The expected marketing budget for the drug.

end insert begin insert

(iii) The date and price of acquisition if the drug was not
developed by the manufacturer.

end insert begin delete

(B)

end delete

begin insert (5) end insert  Failure to report the information begin insert required pursuant to
paragraph (3) or subparagraph (B) of paragraph (4) end insert to state
purchasers, health care service plans, begin delete or end delete health begin delete insurers end delete begin insert insurers,
or pharmacy benefit managers end insert shall result in a civil penalty of one
thousand dollars ($1,000) per day for every day after the 30-day
notification period.

(c) The Legislature shall conduct an annual public hearing

begin delete regarding the price increases and information reported pursuant
to this section. The hearing shall provide for public discussion of
the reasons for the price increases, emerging trends, decreases in
drug prices, and the impact on health care affordability and
premiums. end delete begin insert on aggregate trends in prescription drug pricing. The
hearing shall provide for public discussion of overall price
increases, emerging trends, decreases in drug spending, and the
impact of prescription drug spending on health care affordability
and premiums. end insert

begin insert

(d) Except for the hearing required pursuant to subdivision (c),
the Legislature shall keep confidential all of the information
provided to the Legislature pursuant to this section, and that
information shall be exempt from disclosure under the California
Public Records Act (Chapter 3.5 (commencing with Section 6250)
of Division 7 of Title 1 of the Government Code).

end insert begin delete

(d)

end delete

begin insert (e) end insert  This chapter shall not restrict the legal ability of a
pharmaceutical manufacturer to change prices as permitted under
federal law.

SEC. 4.  

Section 10123.204 is added to the Insurance Code, immediately preceding Section 10123.206, to read:

10123.204.  

(a) (1) A health insurer that reports rate
information pursuant to Section 10181.3 or 10181.45 shall report
the information described in paragraph (2) to the department on a
date no later than it reports the rate information.

(2) For all covered prescription drugs, including generic drugs,
brand name drugs, begin delete specialty drugs, and prescription drugs provided
in an outpatient setting or sold in a retail end delete begin insert and specialty drugs
provided in an outpatient end insert setting, all of the following shall be
reported:

(A) The 25 most frequently prescribed begin delete drugs and the average
wholesale price for each drug. end delete begin insert drugs. end insert

(B) The 25 most costly drugs by total insurer begin delete spending and the
average wholesale price for each drug. end delete begin insert spending. end insert

(C) The 25 drugs with the highest year-over-year increase begin delete and
the average wholesale price for each drug. end delete begin insert in spending. end insert

(b) The department shall compile the information reported
pursuant to subdivision (a) into a begin delete consumer-friendly report end delete begin insert report
for the public and legislators end insert that demonstrates the overall impact
of drug costs on health care premiums. The data in the report shall
be aggregated and shall not reveal information specific to
individual health insurers.

(c) For the purposes of this section, a “specialty drug” is one
that exceeds the threshold for a specialty drug under the Medicare
Part D program (Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (Public Law 108-173)).

(d) By begin delete January 1 end delete begin insert October 1 end insert of each year, the department shall
publish on its Internet Web site the report required pursuant to
subdivision (b).

(e) After the report required in subdivision (b) is released, the
department shall include the report as part of the public meeting
required pursuant to subdivision (b) of Section 10181.45.

(f) Except for the report required pursuant to subdivision (b),
the department shall keep confidential all of the information
provided to the department pursuant to this section, and that
information shall be exempt from disclosure under the California
Public Records Act (Chapter 3.5 (commencing with Section 6250)
of Division 7 of Title 1 of the Government Code).

SEC. 5.  

Section 10181.45 of the Insurance Code is amended
to read:

10181.45.  

(a) For large group health insurance policies, each
health insurer shall file with the department the weighted average
rate increase for all large group benefit designs during the 12-month
period ending January 1 of the following calendar year. The
average shall be weighted by the number of insureds in each large
group benefit design in the insurer’s large group market and
adjusted to the most commonly sold large group benefit design by
enrollment during the 12-month period. For the purposes of this
section, the large group benefit design includes, but is not limited
to, benefits such as basic health care services and prescription
drugs. The large group benefit design shall not include cost sharing,
including, but not limited to, deductibles, copays, and coinsurance.

(b) (1) A health insurer shall also submit any other information
required pursuant to any regulation adopted by the department to
comply with this article.

(2) The department shall conduct an annual public meeting
regarding large group rates within three months of posting the
aggregate information described in this section in order to permit
a public discussion of the reasons for the changes in the rates,
benefits, and cost sharing in the large group market. The meeting
shall be held in either the Los Angeles area or the San Francisco
Bay area.

(c) A health insurer subject to subdivision (a) shall also disclose
the following for the aggregate rate information for the large group
market submitted under this section:

(1) For rates effective during the 12-month period ending
January 1 of the following year, number and percentage of rate
changes reviewed by the following:

(A) Plan year.

(B) Segment type, including whether the rate is community
rated, in whole or in part.

(C) Product type.

(D) Number of insureds.

(E) The number of products sold that have materially different
benefits, cost sharing, or other elements of benefit design.

(2) For rates effective during the 12-month period ending
January 1 of the following year, any factors affecting the base rate,
and the actuarial basis for those factors, including all of the
following:

(A) Geographic region.

(B) Age, including age rating factors.

(C) Occupation.

(D) Industry.

(E) Health status factors, including, but not limited to,
experience and utilization.

(F) Employee, and employee and dependents, including a
description of the family composition used.

(G) Insureds’ share of premiums.

(H) Insureds’ cost sharing.

(I) Covered benefits in addition to basic health care services,
as defined in Section 1345 of the Health and Safety Code, and
other benefits mandated under this article.

(J) Which market segment, if any, is fully experience rated and
which market segment, if any, is in part experience rated and in
part community rated.

(K) Any other factor that affects the rate that is not otherwise
specified.

(3) (A) The insurer’s overall annual medical trend factor
assumptions for all benefits and by aggregate benefit category,
including hospital inpatient, hospital outpatient, physician services,
prescription drugs and other ancillary services, laboratory, and
radiology for the applicable 12-month period ending January 1 of
the following year. A health insurer that exclusively contracts with
no more than two medical groups in the state to provide or arrange
for professional medical services for the health insurer’s insureds
shall instead disclose the amount of its actual trend experience for
the prior contract year by aggregate benefit category, using benefit
categories, to the maximum extent possible, that are the same or
similar to those used by other insurers.

(B) The amount of the projected trend separately attributable
to the use of services, price inflation, and fees and risk for annual
policy trends by aggregate benefit category, including hospital
inpatient, hospital outpatient, physician services, prescription drugs
and other ancillary services, laboratory, and radiology. A health
insurer that exclusively contracts with no more than two medical
groups in the state to provide or arrange for professional medical
services for the insureds shall instead disclose the amount of its
actual trend experience for the prior contract year by aggregate
benefit category, using benefit categories that are, to the maximum
extent possible, the same or similar to those used by other insurers.

(C) A comparison of the aggregate per insured per month costs
and rate of changes over the last five years for each of the
following:

(i) Premiums.

(ii) Claims costs, if any.

(iii) Administrative expenses.

(iv) Taxes and fees.

(D) Any changes in insured cost sharing over the prior year
associated with the submitted rate information, including both of
the following:

(i) Actual copays, coinsurance, deductibles, annual begin delete out of pocket end delete
begin insert out-of-pocket end insert maximums, and any other cost sharing by the benefit
categories determined by the department.

(ii) Any aggregate changes in insured cost sharing over the prior
years as measured by the weighted average actuarial value,
weighted by the number of insureds.

(E) Any changes in insured benefits over the prior year,
including a description of benefits added or eliminated as well as
any aggregate changes as measured as a percentage of the aggregate
claims costs, listed by the categories determined by the department.

(F) Any cost containment and quality improvement efforts made
since the insurer’s prior year’s information pursuant to this section
for the same category of health insurer. To the extent possible, the
insurer shall describe any significant new health care cost
containment and quality improvement efforts and provide an
estimate of potential savings together with an estimated cost or
savings for the projection period.

(G) The number of products covered by the information that
incurred the excise tax paid by the health insurer.

(4) (A) For covered prescription drugs, including generic begin delete drugs, end delete
begin insert drugs but excluding specialty generic drugs, end insert brand name drugs
excluding specialty drugs, and specialty drugs dispensed at a
pharmacy, network pharmacy, or mail order pharmacy for
outpatient use all of the following shall be disclosed:

(i) The percentage of the premium attributable to prescription
drug costs for the prior year for each category of prescription begin delete drugs. end delete

begin insert drugs as defined in subparagraph (A). end insert

(ii) The year-over-year begin delete increase in the percentage of the
premium attributable to each category of prescription drugs. end delete

begin insert increase, as a percentage, in total spending for each category of
prescription drugs as defined in subparagraph (A). end insert

(iii) The year-over-year increase in per member, per month costs
for drug prices compared to other components of the health care
premium.

(iv) The specialty tier formulary list.

(B) The insurer shall include the percentage of the premium
attributable to prescription drugs administered in a doctor’s office
that are begin delete part of end delete begin insert covered under end insert the medical benefit as separate from
the pharmacy benefit, if available.

(d) The information required pursuant to this section shall be
submitted to the department on or before October 1, 2016, and on
or before October 1 annually thereafter. Information submitted
pursuant to this section is subject to Section 10181.7.

begin insert

(e) For the purposes of this section, a “specialty drug” is one
that exceeds the threshold for a specialty drug under the Medicare
Part D program (Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (Public Law 108-173)).

end insert

SEC. 6.  

The Legislature finds and declares that Sections begin delete 1 and end delete
begin insert 1, 3, and end insert 4 of this act, which add begin delete Section 1367.245 end delete begin insert Sections
1367.245 and 127675 end insert to the Health and Safety Code and Section
10123.204 to the Insurance Code, impose a limitation on the
public’s right of access to the meetings of public bodies or the
writings of public officials and agencies within the meaning of
Section 3 of Article I of the California Constitution. Pursuant to
that constitutional provision, the Legislature makes the following
findings to demonstrate the interest protected by this limitation
and the need for protecting that interest:

In order to protect proprietary, confidential information reported
by prescription drug manufacturers, health care service plans, and
health insurers, and to protect the integrity of the competitive
market, it is necessary that this act limit the public’s right of access
to that information.

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.