Prescription drug coverage for rare diseases., the official text

An act to add Section 1342.76 to the Health and Safety Code, and to add Section 10123.1936 to the Insurance Code, relating to health care coverage.

LEGISLATIVE COUNSEL'S DIGEST

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 sets forth specified prior authorization and step therapy limitations for health care service plans and health insurers.
This bill would require a health care service plan contract or health insurance policy issued, amended, or renewed on or after January 1, 2027, to require a health care service plan or health insurer to complete prior authorization within 30 days upon initial request, as specified, for a drug approved for the treatment of a rare disease if the drug is prescribed by a specialist with expertise in the condition or disease being treated and the specialist has determined the drug is medically necessary. 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.

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

SECTION 1.
Section 1342.76 is added to the Health and Safety Code, to read:
1342.76.
(a) (1) A health care service plan contract issued, amended, or renewed on or after January 1, 2027, shall require a health care service plan to complete prior authorization within 30 days upon initial request for a prescription drug approved by the United States Food and Drug Administration that is approved for the treatment of a rare disease if the drug is prescribed by a specialist with expertise in the condition or disease being treated and the specialist has determined the drug is medically necessary.
(2) For purposes of paragraph (1), an initial request occurs when a health care provider or the health care provider’s staff sends a prior authorization request to the health care service plan or health care service plan’s delegate.
(3) Prior authorization for a drug prescribed pursuant to paragraph (1) shall be immediately approved under either of the following conditions:
(A) A decision approving or denying prior authorization has not been made by the end of the 30-day period.
(B) A dispute between the plan and provider or enrollee regarding the prior authorization is ongoing at the end of the 30-day period.
(b) For purposes of this section, “rare disease” means a disease that affects fewer than 200,000 people in the United States.
(c) This section does not affect the timelines described in paragraph (2) of subdivision (h) of Section 1367.01.
(d) This section does not apply to Medi-Cal managed care contracts with the State Department of Health Care Services entered into pursuant to Chapter 7 (commencing with Section 14000) of, or Chapter 8 (commencing with Section 14200) of, Part 3 of Division 9 of the Welfare and Institutions Code.

SEC. 2.
Section 10123.1936 is added to the Insurance Code, to read:
10123.1936.
(a) (1) A health insurance policy issued, amended, or renewed on or after January 1, 2027, shall require a health insurer to complete prior authorization within 30 days upon initial request for a prescription drug approved by the United States Food and Drug Administration that is approved for the treatment of a rare disease if the drug is prescribed by a specialist with expertise in the condition or disease being treated and the specialist has determined the drug is medically necessary.
(2) For purposes of paragraph (1), an initial request occurs when a health care provider or the health care provider’s staff sends a prior authorization request to the health insurer or health insurer’s delegate.
(3) Prior authorization for a drug prescribed pursuant to paragraph (1) shall be immediately approved under either of the following conditions:
(A) A decision approving or denying prior authorization has not been made by the end of the 30-day period.
(B) A dispute between the insurer and provider or insured regarding the prior authorization is ongoing at the end of the 30-day period.
(b) For purposes of this section, “rare disease” means a disease that affects fewer than 200,000 people in the United States.
(c) This section does not affect the timelines described in paragraph (2) of subdivision (h) of Section 10123.135.

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.