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AB-933 Prescription drug cost sharing.(2021-2022)

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Date Published: 01/14/2022 09:00 PM
AB933:v97#DOCUMENT

Amended  IN  Assembly  January 14, 2022
Amended  IN  Assembly  January 06, 2022

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill
No. 933

Introduced by Assembly Member Daly
(Coauthors: Assembly Members Carrillo, Gipson, Medina, O’Donnell, and Rodriguez)
(Coauthor: Senator Wiener)

February 17, 2021

An act to add Section 1367.52 to amend, repeal, and add Section 1367.243 of, and to add and repeal Section 1367.52 of, the Health and Safety Code, and to add Section 10123.66 to amend, repeal, and add Section 10123.205 of, and to add and repeal Section 10123.66 of, the Insurance Code, relating to prescription drugs.


LEGISLATIVE COUNSEL'S DIGEST


AB 933, as amended, Daly. Prescription drug cost sharing.

Existing

(1) 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 under authority of the Director of 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 under the authority of the Insurance Commissioner. 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 require a health care service plan or health insurer to, among other things, pass through to each enrollee or insured at the point of sale a good faith estimate of their decrease in cost sharing. The bill would require a health care service plan or health insurer to calculate an enrollee’s or insured’s defined cost sharing and provide that information to the dispensing pharmacy, as specified. The bill would require a health care service plan or health insurer to disclose information information, as specified, sufficient to show compliance with these provisions to the director or commissioner. 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. The bill would make a violation of its provisions not a crime under the act. The bill would authorize the director or commissioner to assess a civil penalty for each violation of these provisions, as specified. The bill would make those provisions inoperative on January 1, 2025.
The bill would require the department and the commissioner, on or before March 1 each year, to provide a report on the impact of those provisions on drug prices and health care premium rates, as specified.
The bill would repeal those provisions January 1, 2026.
(2) Existing law requires a health care service plan or health insurer that files certain rate information to report to the appropriate department specified cost information regarding covered prescription drugs, including generic drugs, brand name drugs, and specialty drugs, dispensed as provided.
This bill, until January 1, 2025, would require a health care service plan or health insurer to report additional information on the above-described point of sale provision. 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.

Existing

(3) 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.
(4) 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   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.
(1) The health care service plan shall pass through to each enrollee at the point of sale a good faith estimate of the enrollee’s decrease in cost sharing required pursuant to this subdivision.
(2) In addition to the pass through at the point of sale described in paragraph (1), the health care service plan shall provide the enrollee with an end-of-calendar-year reconciliation for any cost-sharing reductions owed to the enrollee pursuant to this subdivision that were not passed on to the enrollee through the estimated amount at the point of sale.
(b) Each health care service plan shall, either directly or indirectly through its agents, calculate the enrollee’s defined cost sharing and provide the dispensing pharmacy with the enrollee’s defined cost sharing for each prescription drug as required pursuant to subdivision (a). Nothing in this subdivision authorizes a health care service plan or its agents to publish or otherwise reveal information prohibited from disclosure pursuant to subdivision (e).
(c) Neither a pharmacy nor a pharmacist licensed pursuant to Chapter 9 (commencing with Section 4000) of Division 2 of the Business and Professions Code shall have any liability, penalty, or be subject to any disciplinary action if such information has not been provided by the health care service plan providing the benefit to the pharmacy’s customer. A health care service plan nor its contracted agents shall not impose any form of monetary penalty or withhold any payments for a pharmacy that engaged in good faith efforts to comply with this statute.
(d) 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).
(e) A health care service plan shall disclose information information, including, but not limited to, wholesale acquisition cost and actual amounts of rebates, sufficient to show compliance with this section to the director upon request. A health care service plan and the director, and their respective 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.
(f) (1) The director may, after appropriate notice and opportunity for hearing in accordance with the Administrative Procedure Act (Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code), by order, assess a civil penalty not to exceed five thousand dollars ($5,000) for each violation of this section, or, if a violation was determined to be willful, a civil penalty not to exceed ten thousand dollars ($10,000) for each violation of this section.
(2) A violation of this section does not constitute a crime under Section 1390.
(g) 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.
(h) 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, good faith 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, or other party on behalf of the health care service plan, including, but not limited to, health care service plan-owned pharmacy benefit managers, during a calendar year.
(B) Reasonable, good faith 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.
(i) (1) On or before March 1 each year, the department shall provide a report on this section’s impact on drug prices and health care premium rates to the appropriate policy committees.
(2) The report required to be submitted pursuant to paragraph (1) shall be submitted in compliance with Section 9795 of the Government Code.
(j) Subdivisions (a) to (h), inclusive, of this section shall become inoperative on January 1, 2025.
(k) This section shall remain in effect only until January 1, 2026, and as of that date is repealed.

SEC. 2.

 Section 1367.243 of the Health and Safety Code is amended to read:

1367.243.
 (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 no later than October 1 of each year, beginning October 1, 2018.
(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 annual plan spending.
(C) The 25 drugs with the highest year-over-year increase in total annual plan spending.
(D) The 25 most frequently prescribed drugs with a point-of-sale rebate pursuant to Section 1367.52.
(E) The 25 most costly drugs by total annual plan spending with a point-of-sale rebate pursuant to Section 1367.52.
(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. 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 January 1 of each year, beginning January 1, 2019, the department shall publish on its Internet Web internet website 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 the information shall be protected from public disclosure.
(g) This section shall remain in effect only until January 1, 2025, and as of that date is repealed.

SEC. 3.

 Section 1367.243 is added to the Health and Safety Code, to read:

1367.243.
 (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 no later than October 1 of each year, beginning October 1, 2018.
(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 annual plan spending.
(C) The 25 drugs with the highest year-over-year increase in total annual plan 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. 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 January 1 of each year, beginning January 1, 2019, the department shall publish on its internet website 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 the information shall be protected from public disclosure.
(g) This section shall become operative on January 1, 2025.

SEC. 2.SEC. 4.

 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.
(1) The health insurer shall pass through to each insured at the point of sale a good faith estimate of the insured’s decrease in cost sharing required pursuant to this subdivision.
(2) In addition to the pass through at the point of sale described in paragraph (1), the health insurer shall provide the insured with an end-of-calendar-year reconciliation for any cost-sharing reductions owed to the insured pursuant to this subdivision that were not passed on to the insured through the estimated amount at the point of sale.
(b) Each health insurer shall, either directly or indirectly through its agents, calculate the insured’s defined cost sharing and provide the dispensing pharmacy with the insured’s defined cost sharing for each prescription drug as required pursuant to subdivision (a). Nothing in this subdivision authorizes a health insurer or its agents to publish or otherwise reveal information prohibited from disclosure pursuant to subdivision (e).
(c) Neither a pharmacy nor a pharmacist licensed pursuant to Chapter 9 (commencing with Section 4000) of Division 2 of the Business and Professions Code shall have any liability, penalty, or be subject to any disciplinary action if such information has not been provided by the health insurer providing the benefit to the pharmacy’s customer. A health insurer nor its contracted agents shall not impose any form of monetary penalty or withhold any payments for a pharmacy that engaged in good faith efforts to comply with this statute.
(d) 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).
(e) A health insurer shall disclose information information, including, but not limited to, wholesale acquisition cost and actual amounts of rebates, sufficient to show compliance with this section to the commissioner upon request. A health insurer and the commissioner, and their respective 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.
(f) The commissioner may, after appropriate notice and opportunity for hearing in accordance with the Administrative Procedure Act (Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code), by order, assess a civil penalty not to exceed five thousand dollars ($5,000) for each violation of this section, or, if a violation was determined to be willful, a civil penalty not to exceed ten thousand dollars ($10,000) for each violation of this section.
(g) 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.
(h) 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, good faith 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, or other party on behalf of the health insurer, including, but not limited to, health insurer-owned pharmacy benefit managers, during a calendar year.
(B) Reasonable, good faith 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.
(i) (1) On or before March 1 each year, the commissioner shall provide a report on this section’s impact on drug prices and health care premium rates to the appropriate policy committees.
(2) The report required to be submitted pursuant to paragraph (1) shall be submitted in compliance with Section 9795 of the Government Code.
(j) Subdivisions (a) to (h), inclusive, of this section shall become inoperative on January 1, 2025.
(k) This section shall remain in effect only until January 1, 2026, and as of that date is repealed.

SEC. 5.

 Section 10123.205 of the Insurance Code is amended to read:

10123.205.
 (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 no later than October 1 of each year, beginning October 1, 2018.
(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 annual plan spending.
(C) The 25 drugs with the highest year-over-year increase in total annual plan spending.
(D) The 25 most frequently prescribed drugs with a point-of-sale rebate pursuant to Section 1367.52 of the Health and Safety Code.
(E) The 25 most costly drugs by total annual health insurer spending with a point-of-sale rebate pursuant to Section 1367.52 of the Health and Safety Code.
(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. 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 January 1 of each year, beginning January 1, 2018, the department shall publish on its Internet Web site internet website 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 the information shall be protected from public disclosure.
(g) This section shall remain in effect only until January 1, 2025, and as of that date is repealed.

SEC. 6.

 Section 10123.205 is added to the Insurance Code, to read:

10123.205.
 (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 no later than October 1 of each year, beginning October 1, 2018.
(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 annual plan spending.
(C) The 25 drugs with the highest year-over-year increase in total annual plan 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. 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 January 1 of each year, beginning January 1, 2018, the department shall publish on its internet website 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 the information shall be protected from public disclosure.
(g) This section shall become operative on January 1, 2025.

SEC. 3.SEC. 7.

 The Legislature finds and declares that Section 1 of this act, which adds Section 1367.52 to the Health and Safety Code and Section 2 4 of this act, which adds Section 10123.66 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:
The act is necessary to protect patients and the limitation is necessary in order to ensure fair competition amongst health care service plans and health insurers.

SEC. 8.

 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.