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AB-2984 Prescription drug cost sharing.(2019-2020)

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Date Published: 04/28/2020 09:00 PM
AB2984:v98#DOCUMENT

Amended  IN  Assembly  May 04, 2020

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill
No. 2984


Introduced by Assembly Member Daly

February 21, 2020


An act to add Section 1367.52 to the Health and Safety Code, and to add Section 10123.66 to the Insurance Code, relating to prescription drugs.


LEGISLATIVE COUNSEL'S DIGEST


AB 2984, as amended, Daly. Prescription drug prices. cost sharing.
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 provides for the regulation of health insurers by the Department of Insurance. Existing law limits the maximum amount an enrollee or insured may be required to pay at the point of sale for a covered prescription drug to the lesser of the applicable cost-sharing amount or the retail price.
This bill would require an enrollee’s or insured’s defined cost sharing for each prescription drug to be calculated at the point of sale based on a price that is reduced by an amount equal to 90% of all rebates received, or to be received, in connection with the dispensing or administration of the drug. The bill would prohibit a health care service plan, health insurer, or a plan’s or insurer’s agents from publishing or otherwise revealing information regarding the actual amount of rebates the health care service plan or health insurer receives on a product-specific, manufacturer-specific, or pharmacy-specific basis. Because a willful violation of these provisions 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.

Existing law authorizes the Department of General Services to enter into exclusive or nonexclusive contracts on a bid or negotiated basis with manufacturers and suppliers of single-source or multisource drugs. Existing law authorizes the department to obtain from those manufacturers and suppliers discounts, rebates, or refunds based on quantities purchased insofar as permissible under federal law. Existing law authorizes those contracts to include price discounts, rebates, refunds, or other strategies aimed at managing escalating prescription drug prices. Existing law requires certain state agencies to participate in that prescription drug bulk purchasing program, including, but not limited to, the State Department of State Hospitals and the State Department of Developmental Services.

Existing law generally prohibits a person who manufactures a prescription drug from offering in California any discount, repayment, product voucher, or other reduction in an individual’s out-of-pocket expenses associated with their health insurance, health care service plan, or other health coverage, including, but not limited to, a copayment, coinsurance, or deductible, for any prescription drug if a lower cost generic drug is covered under the individual’s health insurance, health care service plan, or other health coverage on a lower cost-sharing tier that is designated as therapeutically equivalent as indicated by the federal Food and Drug Administration, as specified.

This bill would state the intent of the Legislature to enact legislation to make prescription drugs more affordable.

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: NOYES   Local Program: NOYES  

The people of the State of California do enact as follows:


SECTION 1.

 Section 1367.52 is added to the Health and Safety Code, to read:

1367.52.
 (a) An enrollee’s defined cost sharing for each prescription drug shall be calculated at the point of sale based on a price that is reduced by an amount equal to at least 90 percent of all rebates received, or to be received, in connection with the dispensing or administration of the drug.
(b) This section does not prohibit a health care service plan from decreasing an enrollee’s defined cost sharing by an amount greater than that required pursuant to subdivision (a).
(c) To comply with this section, a health care service plan or its agents shall not publish or otherwise reveal information regarding the actual amount of rebates the health care service plan receives on a product-specific, manufacturer-specific, or pharmacy-specific basis. That information is protected as a trade secret, is not a public record as defined in the California Public Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code), and shall not be disclosed directly or indirectly. A health care service plan shall impose the confidentiality protections of this section on a vendor or downstream third party that performs health care or administrative services on behalf of the health care service plan and that may receive or have access to rebate information.
(d) The director may, after appropriate notice and opportunity for hearing in accordance with Section 1397, by order, assess administrative penalties to the full extent permissible under this chapter if the director determines that a health care service plan has violated this section.
(e) This section shall not be interpreted or implemented in a manner inconsistent with federal law. The provisions of this section are severable. If a provision of this section or its application is held invalid or incapable of being enforced against a health care service plan due to a conflict with federal requirements, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.
(f) For purposes of this section:
(1) “Defined cost sharing” means a deductible payment or coinsurance amount imposed on an enrollee for a covered prescription drug under the enrollee’s health care service plan contract.
(2) “Health care service plan” shall have the meaning set forth in Section 1345 and includes a specialized health care service plan.
(3) “Price protection rebate” means a negotiated price concession that accrues directly or indirectly to a health care service plan, or other party on behalf of the health care service plan, in the event of an increase in the wholesale acquisition cost of a drug above a specified threshold.
(4) “Rebate” means both of the following:
(A) Negotiated price concessions, including base price concessions, whether or not described as a “rebate,” and reasonable estimates of price protection rebates and performance-based price concessions from a manufacturer, dispensing pharmacy, or other party in connection with the dispensing or administration of a prescription drug that may accrue directly or indirectly to the health care service plan during the coverage year.
(B) Reasonable estimates of negotiated price concessions, fees, and other administrative costs that are passed through, or are reasonably anticipated to be passed through, to the health care service plan and serve to reduce the health care service plan’s liabilities for a prescription drug.

SEC. 2.

 Section 10123.66 is added to the Insurance Code, to read:

10123.66.
 (a) An insured’s defined cost sharing for each prescription drug shall be calculated at the point of sale based on a price that is reduced by an amount equal to at least 90 percent of all rebates received, or to be received, in connection with the dispensing or administration of the drug.
(b) This section does not prohibit a health insurer from decreasing an insured’s defined cost sharing by an amount greater than that required pursuant to subdivision (a).
(c) To comply with this section, a health insurer or its agents shall not publish or otherwise reveal information regarding the actual amount of rebates the health insurer receives on a product-specific, manufacturer-specific, or pharmacy-specific basis. That information is protected as a trade secret, is not a public record as defined in the California Public Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code), and shall not be disclosed directly or indirectly. A health insurer shall impose the confidentiality protections of this section on a vendor or downstream third party that performs health care or administrative services on behalf of the health insurer and that may receive or have access to rebate information.
(d) The commissioner may, after appropriate notice and opportunity for hearing in accordance with Section 704, by order, suspend an insurer’s certificate of authority if the commissioner determines that a health insurer has violated this section. Section 704.7 shall apply to a proceeding conducted pursuant to this section.
(e) This section shall not be interpreted or implemented in a manner inconsistent with federal law. The provisions of this section are severable. If a provision of this section or its application is held invalid or incapable of being enforced against a health insurer due to a conflict with federal requirements, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.
(f) For purposes of this section:
(1) “Defined cost sharing” means a deductible payment or coinsurance amount imposed on an insured for a covered prescription drug under the insured’s health insurance policy.
(2) “Health insurer” includes any health insurer holding a certificate of authority pursuant to Article 3 (commencing with Section 699) of Chapter 1 of Part 2 of Division 1.
(3) “Price protection rebate” means a negotiated price concession that accrues directly or indirectly to a health insurer, or other party on behalf of the health insurer, in the event of an increase in the wholesale acquisition cost of a drug above a specified threshold.
(4) “Rebate” means both of the following:
(A) Negotiated price concessions, including base price concessions, whether or not described as a “rebate,” and reasonable estimates of price protection rebates and performance-based price concessions from a manufacturer, dispensing pharmacy, or other party in connection with the dispensing or administration of a prescription drug that may accrue directly or indirectly to the health insurer during the coverage year.
(B) Reasonable estimates of negotiated price concessions, fees, and other administrative costs that are passed through, or are reasonably anticipated to be passed through, to the health insurer and serve to reduce the health insurer’s liabilities for a prescription drug.

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.
SECTION 1.

It is the intent of the Legislature to enact legislation to make prescription drugs more affordable.