Today's Law As Amended

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SB-1010 Health care: prescription drug costs.(2015-2016)



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, and specialty drugs dispensed at a plan pharmacy, network pharmacy, or mail order pharmacy for outpatient use, all of the following shall be reported:
(A) The 25 most frequently prescribed drugs.
(B) The 25 most costly drugs by total plan spending.
(C) The 25 drugs with the highest year-over-year increase in spending.
(b) The department shall compile the information reported pursuant to subdivision (a) into a report for the public and legislators that demonstrates the overall impact of drug costs on health care premiums.
(1) The data in the report shall be aggregated and shall not reveal information specific to individual health care service plans.
(2) The report shall compare, for the large group market, aggregate prescription drug spending among health care service plans that use a pharmacy benefit manager with aggregate prescription drug spending among health care service plans that do not use a pharmacy benefit manager.
(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 October 1 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 four 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, including cost sharing for  prescription drugs.
(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 out of pocket  out-of-pocket  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 generic drugs excluding specialty generic drugs, prescription brand name drugs excluding specialty drugs, and prescription brand name and generic specialty drugs dispensed at a plan pharmacy, network pharmacy, or mail order pharmacy for outpatient use, 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 drugs as defined in this subparagraph. subparagraph (A). 
(ii) The year-over-year increase, as a percentage, in per-member, per-month total health plan  total  spending for each category of prescription drugs as defined in this subparagraph. subparagraph (A). 
(iii) The year-over-year increase in per-member, per-month  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 covered under the medical benefit as separate from the pharmacy benefit, if available.
(C) (i) The plan shall include information on its use of a pharmacy benefit manager, if any, including which the  components of the prescription drug coverage described in subparagraphs (A) and (B) that  are managed by the pharmacy benefit manager.
(ii) The plan shall also include the name or names  of the pharmacy benefit manager, or managers if the plan uses more than one. manager. 
(d) The information required pursuant to this section shall be submitted to the department on or before October 1, 2018, 2017,  and on or before October 1 annually thereafter. Information submitted pursuant to this section is subject to Section 1385.07.
(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)).

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 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.
(4) A pharmacy benefit manager as defined in subdivision (j) of Section 4430 of the Business and Professions Code.
(b) (1) Effective January 1, 2018, a manufacturer of a prescription drug with a wholesale acquisition cost per month supply or per a course of treatment that lasts less than a month that comes within the schedule set forth in paragraph (2) shall notify each state purchaser, health care service plan, health insurer, or pharmacy benefit manager if it is increasing the wholesale acquisition cost of a prescription drug during any 12-month period by 25 percent or more, or by more than ten thousand dollars ($10,000). The notice shall be provided in writing at least 30 days prior to the planned effective date of the increase.
(2) A manufacturer shall provide the notice required pursuant to paragraph (1) if the prescription drug wholesale acquisition cost per month supply or per a course of treatment that lasts less than a month is within the following amounts:
(A) For the 2018 calendar year: one hundred dollars ($100) or more.
(B) For the 2019 calendar year: one hundred five dollars ($105) or more.
(C) For the 2020 calendar year: one hundred ten dollars ($110) or more.
(D) On and after January 1, 2021: one hundred sixteen dollars ($116) or more.
(3) (A) Within 30 days of notification of a price increase under paragraph (1), a manufacturer shall report all of the following information to the Office of Statewide Health Planning and Development:
(i) The previous year’s marketing budget for the drug. The manufacturer may limit the information to that which is publicly available.
(ii) The date and price of acquisition if the drug was not developed by the manufacturer.
(iii) A schedule of price increases for the drug for the previous five years if it was manufactured by the company, or if the drug was acquired by the manufacturer within the previous five years, the price of the drug at the time of the acquisition and in the calendar year prior to acquisition.
(B) The Office of Statewide Health Planning and Development shall publish data collected pursuant to this paragraph publicly on its Internet Web site no less than quarterly.
(4) (A) Effective January 1, 2018, 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 three days before the commercial availability of a drug approved by the Federal Food and Drug Administration (FDA). In a case in which the commercial availability is expected within three days of FDA approval, a manufacturer may provide a notice pending FDA approval in order to ensure approved drugs are commercially available without delay, unless any other law prohibits that notification, in which case the notice shall be provided as soon as practicable, but no later than three days after FDA approval.
(B) Within 30 days of notification of a new drug under this paragraph, a manufacturer shall report both of the following information to the Office of Statewide Health Planning and Development:
(i) The expected marketing budget for the drug.
(ii) The date and price of acquisition if the drug was not developed by the manufacturer.
(C) The Office of Statewide Health Planning and Development shall publish data collected pursuant to this paragraph publicly on its Internet Web site no less than quarterly.
(c) Except for prescription drugs subject to paragraph (4) of subdivision (b), notice shall not be required for a prescription drug that is not already purchased or reimbursed by a purchaser described in subdivision (a).
(d) The Office of Statewide Health Planning and Development may adopt regulations or issue guidance for the implementation of this chapter.
(e) The Office of Statewide Health Planning and Development may consult with the Department of Managed Health Care, the Department of Insurance, the California State Board of Pharmacy, or any state purchaser of prescription drugs, or entity acting on behalf of a state purchaser, in issuing guidance under subdivision (d), in adopting necessary regulations, in posting information on its Internet Web site under this chapter, and in taking any other action for the purpose of implementing this chapter.
(f) The Office of Statewide Health Planning and Development shall be responsible for the enforcement of these provisions.
(g) (1) Any manufacturer of a prescription drug subject to this section shall comply with the provisions of this chapter.
(2) Any manufacturer of a prescription drug subject to this section that does not report the information required pursuant to this section to state purchasers, health care service plans, health insurers, or pharmacy benefit managers is liable for an administrative penalty of one thousand dollars ($1,000) a day for every day after the 30-day notification period.
(3) An administrative penalty shall be assessed by the Office of Statewide Health Planning and Development. The office may order the penalty to be paid after appropriate notice and an opportunity for a hearing.
(h) This chapter does not restrict the legal ability of a pharmaceutical manufacturer to change prices as permitted under federal law.
(i) (1) For purposes of this subdivision, “pricing information” means advanced notification of a price increase pursuant to paragraph (1) of subdivision (b) or advanced notification of the price of a new drug pursuant to subparagraph (A) of paragraph (4) of subdivision (b).
(2) Until the effective date of the increase, pricing information shall be deemed confidential information that shall not be made public by an entity described in paragraph (1) of subdivision (a) and is 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).
(3) (A) Until the effective date of the increase, pricing information shall be deemed confidential information that shall not be made public by an entity described in paragraph (2), (3), or (4) of subdivision (a).
(B) Notwithstanding subparagraph (A), an entity described in paragraph (2) or (3) of subdivision (a) may, and an entity described in paragraph (4) of subdivision (a) shall, disclose pricing information to its contracting public and private purchasers that agree to maintain the confidentiality of the pricing information until the effective date of the increase. Pricing information received by a contracting public or private purchaser pursuant to this chapter shall be deemed confidential information that shall not be made public by a contracting public or private purchaser and is 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).
(4) Disclosure of pricing information by a pharmaceutical manufacturer pursuant to this chapter shall not constitute a waiver of any protection of the information provided by any other law.
(j) This chapter shall remain in effect only until January 1, 2022, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2022, deletes or extends that date.

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, and specialty drugs dispensed at a pharmacy, network pharmacy, or mail order pharmacy for outpatient use, all of the following shall be reported:
(A) The 25 most frequently prescribed drugs.
(B) The 25 most costly drugs by total insurer spending.
(C) The 25 drugs with the highest year-over-year increase in spending.
(b) The department shall compile the information reported pursuant to subdivision (a) into a report for the public and legislators that demonstrates the overall impact of drug costs on health care premiums.
(1) The data in the report shall be aggregated and shall not reveal information specific to individual health insurers.
(2) The report shall compare, for the large group market, aggregate prescription drug spending among health insurers that use a pharmacy benefit manager with aggregate prescription drug spending among health insurers that do not use a pharmacy benefit manager.
(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 October 1 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 four 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, including cost sharing  for prescription drugs.
(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 out of pocket  out-of-pocket  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 in each of the follow categories,  generic drugs excluding specialty generic drugs, prescription  brand name drugs excluding specialty drugs, and prescription  brand name and generic specialty drugs dispensed at a pharmacy, network pharmacy, or mail order pharmacy for outpatient use, 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 drugs as defined in this subparagraph. subparagraph (A). 
(ii) The year-over-year increase, as a percentage, in per-member, per-month total health insurer  total  spending for each category of prescription drugs as defined in this subparagraph. subparagraph (A). 
(iii) The year-over-year increase in per-member, per-month  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 covered under the medical benefit as separate from the pharmacy benefit, if available.
(C) (i) The insurer shall include information on its use of a pharmacy benefit manager, if any, including which the  components of the prescription drug coverage described in subparagraphs (A) and (B) that  are managed by the pharmacy benefit manager.
(ii) The insurer shall also include the name or names  of the pharmacy benefit manager, or managers if the insurer uses more than one. manager. 
(d) The information required pursuant to this section shall be submitted to the department on or before October 1, 2016, 2017,  and on or before October 1 annually thereafter. Information submitted pursuant to this section is subject to Section 10181.7.
(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)).
SEC. 6.
 The Legislature finds and declares that Sections 1, 3, and 4 of this act, which add Sections 1367.245 and 127675 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.