Prescription drugs., the official text

An act to amend Section 4073.5 of the Business and Professions Code, to amend Section 1367.22 of the Health and Safety Code, and to add Section 10123.190 to the Insurance Code, relating to prescription drugs.

LEGISLATIVE COUNSEL'S DIGEST

(1) The Pharmacy Law governs the practice of pharmacy in this state, including the permissible duties of licensed pharmacists. A knowing violation of the Pharmacy Law is a misdemeanor. Existing law authorizes a pharmacist to select an alternative biological product when filling a prescription order for a prescribed biological product if the alternative biological product is interchangeable, as defined, and the prescriber does not personally indicate in a specified manner that a substitution is not to be made.
This bill would additionally authorize a pharmacist to select an alternative biological product when filling a prescription order for a prescribed biological product if the alternative biological product is biosimilar to, as defined, or interchangeable with, the prescribed reference product, and the prescriber does not personally indicate in a specified manner that a substitution is not to be made. Because a knowing violation of this provision would be a misdemeanor, the bill would create a new crime, thereby imposing a state-mandated local program.
(2) 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 prohibits a health care service plan that covers prescription drug benefits from limiting or excluding coverage for a drug that was previously approved for coverage if an enrollee continues to be prescribed that drug and that drug is appropriately prescribed and considered safe and effective for treating the enrollee’s medical condition. Existing law specifies that these provisions do not preclude a prescribing provider from prescribing another drug covered by the plan that is medically appropriate for the enrollee or a generic drug substitution authorized by a pharmacist, as specified.
This bill would prohibit a health insurance policy that covers prescription drug benefits from limiting or excluding coverage for a drug that was previously approved for coverage if an insured continues to be prescribed that drug and the drug is appropriately prescribed, and is considered safe and effective for treating the insured’s medical condition. With respect to both health care service plans and health insurers, the bill would specify that these provisions do not prohibit a prescribing provider from prescribing a biosimilar drug substitution authorized by a pharmacist, as described above. The bill would authorize a health care service plan, health insurer, or utilization review organization to require an enrollee or insured to try a biosimilar or interchangeable biological product of a reference product that was previously approved for coverage by the plan or insurer if specified conditions are met. The bill would prohibit a pharmacy benefit manager, health care service plan, health insurer, or affiliated entity from requiring utilization of only a biosimilar product in which the entity has a direct or indirect financial interest if biosimilars not affiliated with these entities may also be available. Because a violation of these provisions by a health care service plan would be a crime, the bill would impose a state-mandated local program.
(3) This bill would provide that its provisions are severable.
(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.

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

SECTION 1.
It is the intent of the Legislature to promote the use of equally effective lower cost treatments to ensure access and affordability for Californians and to promote the coverage of equally safe and effective lower cost products within three calendar months of national availability.

SEC. 2.
Section 4073.5 of the Business and Professions Code is amended to read:
4073.5.
(a) A pharmacist filling a prescription order for a prescribed biological product may select an alternative biological product only if all of the following:
(1) The alternative biological product is biosimilar to, or interchangeable with, the prescribed reference product.
(2) The prescriber does not personally indicate “Do not substitute,” or words of similar meaning, in the manner provided in subdivision (e).
(b) Within five days following the dispensing of a biological product, a dispensing pharmacist or the pharmacists’ designee shall make an entry of the specific biological product provided to the patient, including the name of the biological product and the manufacturer. The communication shall be conveyed by making an entry that can be electronically accessed by the prescriber through one or more of the following electronic records systems:
(1) An interoperable electronic medical records system.
(2) An electronic prescribing technology.
(3) A pharmacy benefit management system.
(4) A pharmacy record.
(c) Entry into an electronic records system as described in subdivision (b) is presumed to provide notice to the prescriber.
(d) If the pharmacy does not have access to one or more of the entry systems in subdivision (b), the pharmacist or the pharmacist’s designee shall communicate the name of the biological product dispensed to the prescriber using facsimile, telephone, electronic transmission, or other prevailing means, except that communication shall not be required in this instance to the prescriber when either of the following apply:
(1) There is no biosimilar or interchangeable biological product approved by the federal Food and Drug Administration for the product prescribed.
(2) A refill prescription is not changed from the product dispensed on the prior filling of the prescription.
(e) A selection shall not be made pursuant to this section if the prescriber personally indicates, either orally or in the prescriber’s own handwriting, “Do not substitute,” or words of similar meaning.
(1) This subdivision shall not prohibit a prescriber from checking a box on a prescription marked “Do not substitute,” provided that the prescriber personally initials the box or checkmark.
(2) To indicate that a selection shall not be made pursuant to this section for an electronic data transmission prescription, as defined in subdivision (c) of Section 4040, a prescriber may indicate “Do not substitute,” or words of similar meaning, in the prescription as transmitted by electronic data, or may check a box marked on the prescription “Do not substitute.” In either instance, it shall not be required that the prohibition on substitution be manually initialed by the prescriber.
(f) Selection pursuant to this section is within the discretion of the pharmacist, except as provided in subdivision (e). A pharmacist who selects an alternative biological product to be dispensed pursuant to this section shall assume the same responsibility for substituting the biological product as would be incurred in filling a prescription for a biological product prescribed by name. There shall be no liability on the prescriber for an act or omission by a pharmacist in selecting, preparing, or dispensing a biological product pursuant to this section. In no case shall the pharmacist select a biological product that meets the requirements of subdivision (a) unless the cost to the patient of the biological product selected is the same or less than the cost of the prescribed biological product. Cost, as used in this subdivision, includes any professional fee that may be charged by the pharmacist.
(g) This section shall apply to all prescriptions, including those presented by or on behalf of persons receiving assistance from the federal government or pursuant to the Medi-Cal Act set forth in Chapter 7 (commencing with Section 14000) of Part 3 of Division 9 of the Welfare and Institutions Code.
(h) When a selection is made pursuant to this section, the substitution of a biological product shall be communicated to the patient.
(i) The board shall maintain on its public internet website a link to the United States Food and Drug Administration’s Purple Book Database of Licensed Biological Products.
(j) For purposes of this section, the following terms shall have the following meanings:
(1) “Biological product” has the same meaning that applies to that term under Section 351 of the federal Public Health Service Act (42 U.S.C. Sec. 262(i)).
(2) “Biosimilar” has the same meaning as defined in Section 262(i) of Title 42 of the United States Code.
(3) “Interchangeable” means a biological product that the federal Food and Drug Administration has determined meets the standards set forth in Section 262(k)(4) of Title 42 of the United States Code, or has been deemed therapeutically equivalent by the federal Food and Drug Administration as set forth in the latest addition or supplement of the Approved Drug Products with Therapeutic Equivalence Evaluations.
(4) “Reference product” has the same meaning as defined in Section 262(i)(4) of Title 42 of the United States Code.
(5) “Prescription,” with respect to a biological product, means a prescription for a product that is subject to Section 503(b) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. Sec. 353(b)).
(k) This section shall not prohibit the administration of immunizations, as permitted in Sections 4052 and 4052.8.
(l) This section shall not prohibit a disability insurer or health care service plan from requiring prior authorization or imposing other appropriate utilization controls in approving coverage for any biological product.

SEC. 3.
Section 1367.22 of the Health and Safety Code is amended to read:
1367.22.
(a) (1) A health care service plan contract, issued, amended, or renewed on or after July 1, 1999, that covers prescription drug benefits shall not limit or exclude coverage for a drug for an enrollee if the drug previously had been approved for coverage by the plan for a medical condition of the enrollee and the enrollee’s prescribing provider continues to prescribe the drug for the medical condition, provided that the drug is appropriately prescribed and is considered safe and effective for treating the enrollee’s medical condition.
(2) This section does not preclude the prescribing provider from prescribing another drug covered by the plan that is medically appropriate for the enrollee, and does not prohibit generic or biosimilar drug substitutions as authorized by Sections 4073 and 4073.5 of the Business and Professions Code. For purposes of this section, a prescribing provider shall include a provider authorized to write a prescription, pursuant to subdivision (a) of Section 4059 of the Business and Professions Code, to treat a medical condition of an enrollee.
(b) (1) A health care service plan or utilization review organization may require an enrollee to try a biosimilar or interchangeable biological product of a reference product that was previously approved for coverage by the plan if all of the following conditions are met:
(A) The prescriber has not personally indicated “Do not substitute,” or words of similar meaning in the manner provided in subdivision (b) of Section 4073 or subdivision (e) of Section 4073.5 of the Business and Professions Code, as applicable.
(B) The net cost to the plan of the alternative is lower than the brand name or reference product.
(C) An enrollee’s cost sharing is based on the net cost of the drug or biological product.
(D) An enrollee’s cost sharing is the same or less than the cost sharing of the brand name drug or reference product.
(E) (i) The plan provides at least 60 days’ advance notice to the enrollee and prescribing provider of a formulary change pursuant to this paragraph prior to requiring an enrollee to try an alternative pursuant to this paragraph. The notice to a prescribing provider and enrollee shall contain all of the following information:
(I) The name of the affected reference product.
(II) Whether the reference product is being removed from the formulary, moved to a higher cost-sharing tier, or will have a change in prior authorization or step therapy.
(III) The appropriate alternative biological products in the same or a lower cost-sharing tier and the expected cost sharing for those products.
(IV) The means by which an enrollee may obtain an authorization for the medically necessary nonformulary reference product through a formulary exception request, if necessary.
(V) That the prescription may be reissued by the prescribing provider with “Do not substitute” to maintain current coverage without additional authorization.
(ii) The notice to a prescribing provider shall indicate the prescriber’s affected plan enrollees.
(F) The prescribing provider is not required to seek new prior authorization for the alternative biosimilar or interchangeable biological product if prior authorization was previously approved for the original product.
(2) An enrollee required to try an alternative pursuant to paragraph (1) or the enrollee’s prescribing provider may request an exception pursuant to Section 1367.206 or 1367.24.
(3) The plan shall include with the information required to be provided to the department pursuant to Section 1367.243 both of the following information:
(A) The proportion of prescriptions filled for an alternative product resulting from the authority provided in paragraph (1) of this subdivision that resulted in reduced cost sharing as well as information about the factors affecting when an enrollee’s cost sharing is not reduced.
(B) The impact the authority provided in paragraph (1) has on premiums.
(4) This subdivision does not authorize a health care service plan to alter or issue a prescription.
(5) No later than January 1, 2027, a plan shall notify prescribing providers of any reference biological product and any biosimilar or interchangeable biological product for that reference product that is already included on the plan formulary. The notification shall inform prescribing providers that, pursuant to Section 4073.5 of the Business and Professions Code, a pharmacist dispensing a prescribed biological product may substitute a biosimilar or interchangeable biological product for the prescribed reference product unless the prescriber indicates “Do not substitute,” or words of similar meaning, in the manner specified in subdivision (e) of Section 4073.5 of the Business and Professions Code. The notification shall also identify any of the prescribing provider’s enrollees whose prescribed reference biological product may be subject to that substitution.
(c) This section does not apply to coverage for any drug that is prescribed for a use that is different from the use for which that drug has been approved for marketing by the federal Food and Drug Administration. Coverage for different-use drugs is subject to Section 1367.21.
(d) This section shall not be construed to restrict or impair the application of any other provision of this chapter, including, but not limited to, Section 1367, which includes among its requirements that plans furnish services in a manner providing continuity of care and demonstrate that medical decisions are rendered by qualified medical providers unhindered by fiscal and administrative management.
(e) This section does not prohibit a health care service plan from charging a subscriber or enrollee a copayment or a deductible for prescription drug benefits or from setting forth, by contract, limitations on maximum coverage of prescription drug benefits, provided that the copayments, deductibles, or limitations are reported to, and held unobjectionable by, the director and set forth to the subscriber or enrollee pursuant to the disclosure provisions of Section 1363.
(f) A pharmacy benefit manager, health care service plan, or affiliated entity shall not require utilization of only a biosimilar product in which the pharmacy benefit manager, health care service plan, or affiliated entity has a direct or indirect financial interest if biosimilars not affiliated with these entities may also be available.
(g) For purposes of this section, the following definitions apply:
(1) “Biological product” has the same meaning as defined in Section 262(i)(1) of Title 42 of the United States Code.
(2) “Biosimilar” has the same meaning as defined in Section 262(i)(2) of Title 42 of the United States Code.
(3) “Cost sharing” includes a copayment, coinsurance, deductible, or any other form of cost sharing.
(4) “Interchangeable biological product” has the same meaning as defined in Section 262(i)(3) of Title 42 of the United States Code.
(5) “Reference product” has the same meaning as defined in Section 262(i)(4) of Title 42 of the United States Code.

SEC. 4.
Section 10123.190 is added to the Insurance Code, to read:
10123.190.
(a) (1) A health insurance policy issued, amended, or renewed on or after January 1, 2027, that covers prescription drug benefits shall not limit or exclude coverage for a drug for an insured if the drug previously had been approved for coverage by the insurer for a medical condition of the insured and the insured’s prescribing provider continues to prescribe the drug for the medical condition, if the drug is appropriately prescribed and is considered safe and effective for treating the insured’s medical condition.
(2) This section does not preclude the prescribing provider from prescribing another drug covered by the insurer that is medically appropriate for the insured, and does not prohibit generic or biosimilar drug substitutions as authorized by Sections 4073 and 4073.5 of the Business and Professions Code. For purposes of this section, a prescribing provider shall include a provider authorized to write a prescription, pursuant to subdivision (a) of Section 4059 of the Business and Professions Code, to treat a medical condition of an insured.
(b) (1) A health insurer or utilization review organization may require an insured to try a biosimilar or interchangeable biological product of a reference product that was previously approved for coverage by the insurer if all of the following conditions are met:
(A) The prescriber has not personally indicated “Do not substitute,” or words of similar meaning in the manner provided in subdivision (b) of Section 4073 or subdivision (e) of Section 4073.5 of the Business and Professions Code, as applicable.
(B) The net cost to the insurer of the alternative is lower than the brand name or reference product.
(C) An insured’s cost sharing is based on the net cost of the drug or biological product.
(D) An insured’s cost sharing is the same or less than the cost sharing of the brand name drug or reference product.
(E) (i) The insurer provides at least 60 days’ advance notice to the insured and prescribing provider of a formulary change pursuant to this paragraph prior to requiring an insured to try an alternative pursuant to this paragraph. The notice to a prescribing provider and insured shall contain all of the following information:
(I) The name of the affected reference product.
(II) Whether the reference product is being removed from the formulary, moved to a higher cost-sharing tier, or will have a change in prior authorization or step therapy.
(III) The appropriate alternative biological products in the same or a lower cost-sharing tier and the expected cost sharing for those products.
(IV) The means by which an insured may obtain an authorization for the medically necessary nonformulary reference product through a formulary exception request, if necessary.
(V) That the prescription may be reissued by the prescribing provider with “Do not substitute” to maintain current coverage without additional authorization.
(ii) The notice to a prescribing provider shall indicate the affected insureds.
(F) The prescribing provider is not required to seek new prior authorization for the substituted biosimilar or interchangeable biological product if prior authorization was previously approved for the original product.
(2) An insured required to try an alternative pursuant to paragraph (1) or the insured’s prescribing provider may request an exception pursuant to Section 10123.201 or 10123.191.
(3) The insurer shall include with the information required to be provided to the department pursuant to Section 10123.205 both of the following information:
(A) The proportion of prescriptions filled for an alternative product resulting from the authority provided in paragraph (1) of this subdivision that resulted in reduced cost sharing as well as information about the factors affecting when an insured’s cost sharing is not reduced.
(B) The impact the authority provided in paragraph (1) has on premiums.
(4) This subdivision does not authorize a health insurer to alter or issue a prescription.
(5) No later than January 1, 2027, an insurer shall notify prescribing providers of any reference biological product and any biosimilar or interchangeable biological product for that reference product that is already included on the insurer’s formulary. The notification shall inform prescribing providers that, pursuant to Section 4073.5 of the Business and Professions Code, a pharmacist dispensing a prescribed biological product may substitute a biosimilar or interchangeable biological product for the prescribed reference product unless the prescriber indicates “Do not substitute,” or words of similar meaning, in the manner specified in subdivision (e) of Section 4073.5 of the Business and Professions Code. The notification shall also identify any of the prescribing provider’s insureds whose prescribed reference biological product may be subject to that substitution.
(c) This section does not apply to coverage for any drug that is prescribed for a use that is different from the use for which that drug has been approved for marketing by the federal Food and Drug Administration. Coverage for different-use drugs is subject to Section 10123.195.
(d) This section shall not be construed to restrict or impair the application of any other provision of this article.
(e) This section does not prohibit a health insurer from charging an insured a copayment or a deductible for prescription drug benefits or from setting forth, by contract, limitations on maximum coverage of prescription drug benefits, if the copayments, deductibles, or limitations are reported to, and held unobjectionable by, the commissioner and disclosed to the insured.
(f) A pharmacy benefit manager, health insurer, or affiliated entity shall not require utilization of only a biosimilar product in which the pharmacy benefit manager, health insurer, or affiliated entity has a direct or indirect financial interest if biosimilars not affiliated with these entities may also be available.
(g) For purposes of this section, the following definitions apply:
(1) “Biological product” has the same meaning as defined in Section 262(i)(1) of Title 42 of the United States Code.
(2) “Biosimilar” has the same meaning as defined in Section 262(i)(2) of Title 42 of the United States Code.
(3) “Cost sharing” includes a copayment, coinsurance, deductible, or any other form of cost sharing.
(4) “Interchangeable biological product” has the same meaning as defined in Section 262(i)(3) of Title 42 of the United States Code.
(5) “Reference product” has the same meaning as defined in Section 262(i)(4) of Title 42 of the United States Code.

SEC. 5.
The provisions of this act are severable. If any provision of this act or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.

SEC. 6.
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.