Bill Text: CA SB1010 | 2015-2016 | Regular Session | Amended
Bill Title: Health care: prescription drug costs.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Failed) 2016-11-30 - From Assembly without further action. [SB1010 Detail]
Download: California-2015-SB1010-Amended.html
BILL NUMBER: SB 1010 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY AUGUST 16, 2016
AMENDED IN ASSEMBLY AUGUST 2, 2016
AMENDED IN SENATE MAY 31, 2016
AMENDED IN SENATE MARCH 30, 2016
INTRODUCED BY Senator Hernandez
(Principal coauthor: Assembly Member Chiu)
FEBRUARY 11, 2016
An act to amend Section 1385.045 of, to add Section 1367.245 to,
and to add and repeal Chapter 9 (commencing with Section
127675) to of Part 2 of Division 107
of, the Health and Safety Code, and to amend Section 10181.45 of, and
to add Section 10123.204 to, the Insurance Code, relating to health
care.
LEGISLATIVE COUNSEL'S DIGEST
SB 1010, as amended, Hernandez. Health care: prescription drug
costs.
Existing law, the Knox-Keene Health Care Service Plan Act of 1975
(Knox-Keene Act), provides for the licensure and regulation of health
care service plans by the Department of Managed Health Care (DMHC)
and makes a willful violation of the act a crime. Existing law also
provides for the regulation of health insurers by the Department of
Insurance (DOI). Existing law requires health care service plans and
health insurers to file specified rate information with DMHC or DOI,
as applicable, for health care service plan contracts or health
insurance policies in the individual or small group markets and for
health care service plan contracts and health insurance policies in
the large group market.
This bill would require health care service plans or health
insurers that file the above-described rate information to report to
DMHC or DOI, on a date no later than the reporting of the rate
information, specified cost information regarding covered
prescription drugs, including generic drugs, brand name drugs, and
specialty drugs provided in an outpatient setting.
dispensed as provided. The information reported would
include, but not be limited to, the 25 most frequently prescribed
drugs and the 25 most costly drugs by total plan or insurer spending.
DMHC and DOI would be required to compile the reported information
into a report for the public and legislators that demonstrates the
overall impact of drug costs on health care premiums and publish the
reports on their Internet Web sites by October 1 of each year. Except
for the report, DMHC and DOI would be required to keep confidential
all information provided pursuant to these provisions.
Because a willful violation of the Knox-Keene Act is a crime, this
bill would impose a state-mandated local program.
This bill, effective January 1, 2018, except as
provided, would require a manufacturer of a branded
prescription drug to notify in writing state purchasers,
health care service plans, health insurers, and pharmacy
benefit managers, and the chairs of specified Senate and
Assembly committees managers if it is increasing
the wholesale acquisition cost of the drug by more than 10%
or by more than $10,000 during any 12-month period. The bill, except
as provided, would require a manufacturer of a generic prescription
drug, as defined, with a specified wholesale acquisition cost to
notify state purchasers, health care service plans, health insurers,
pharmacy benefit managers, and the chairs of specified Senate and
Assembly committees if it is increasing the wholesale acquisition
cost of the drug by more than 25% during any 12-month period. The
bill during any 12-month period by 25% or more based
upon the wholesale acquisition cost of the drug and pursuant to a
specified schedule, or by more than $10,000. The bill, effective
January 1, 2018, would require a manufacturer of a prescription
drug to notify in writing, within 3 days of approval by the
federal Food and Drug Administration, writing, 3 days
before the commercial availability of the drug, state
purchasers, health care service plans, health insurers, and
pharmacy benefit managers, and the chairs of specified
Senate and Assembly committees managers if it
is introducing a new prescription drug to market at a wholesale
acquisition cost of $10,000 or more annually or per course of
treatment. The bill would require a manufacturer, within 30 days of
notification of a price increase, or notification of the introduction
to market of a prescription drug that has a wholesale acquisition
cost of $10,000 or more annually or per course of treatment, to
report specified information regarding the drug price to
each state purchaser, health care service plan, health insurer, or
pharmacy benefit manager the Office of Statewide
Health Planning and Development and would require a
manufacturer who fails to provide the required information
within the 30 days to be subject to a civil
an administrative penalty of $1,000 per
day. day for every day after the 30-day notification
period. The bill would also require a pharmacy benefit manager
that receives notice of a price increase consistent with these
provisions to provide notice of the price increase to its contracting
public and private purchasers, as provided. The Legislature
would be required to keep confidential all information provided
pursuant to these provisions. The bill would define
"pricing information," as specified, would deem it to be confidential
information, as specified, would provide that the information is
exempt from disclosure under the California Public Records Act, and
would require or authorize, as specified, other entities to disclose
the information under a certain condition. The bill would make the
Office of Statewide Health Planning and Development the entity
charged with implementing and enforcing these provisions and would
require that office to publish specified information
collected pursuant to these provisions on its Internet Website. The
bill would repeal these provisions by January 1, 2022.
Existing law requires, for large group health care service plan
contracts and health insurance policies, each health care service
plan or health insurer to file with DMHC or DOI the weighted average
rate increase for all large group benefit designs during the 12-month
period ending January 1 of the following calendar year, and to also
disclose specified information for the aggregate rate information for
the large group market.
This bill would add to that disclosure of information for the
aggregate rate information for the large group market, the
requirement for health care service plans or health insurers to
disclose specified information regarding the cost of covered
prescription drugs, including generic drugs but
excluding generic specialty drugs, brand name drugs
drugs, excluding brand name specialty
drugs, and brand name and generic specialty drugs
dispensed at a pharmacy, network pharmacy, or mail order pharmacy for
outpatient use and regarding the use of a pharmacy benefit manager,
as prescribed.
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.
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.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
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 provided in an
outpatient setting, dispensed at a plan pharmacy,
network pharmacy, or mail order pha rmacy 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. The data in the report shall be aggregated and
shall not reveal information specific to individual health care
service plans.
(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 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 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
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 drugs, including generic
drugs but 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 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 subparagraph (A).
(ii) The year-over-year increase, as a percentage, in total
spending for each category of prescription drugs as defined in
subparagraph (A).
(iii) The year-over-year increase in 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 the components of the
prescription drug coverage described in subparagraphs (A) and (B)
for which the pharmacy benefit manager is responsible.
that are managed by the pharmacy benefit manager.
(ii) The plan shall also include the name of the pharmacy benefit
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 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) A Effective January 1, 2018, a
manufacturer of a branded 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 by more than 10 percent or by more than
ten thousand dollars ($10,000) during any 12-month period.
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. A copy of the notice shall be provided
concurrently to the Chairs of the Senate Committee on
Appropriations, the Senate Committee on Budget and Fiscal Review, the
Assembly Committee on Appropriations, and the Assembly Committee on
Budget.
(2) (A) A manufacturer of a generic prescription drug with a
wholesale acquisition cost of one hundred dollars ($100) or more per
month supply or per a course of treatment that lasts less than a
month shall notify a state purchaser, health care service plan,
health insurer, or pharmacy benefit manager if it is increasing the
wholesale acquisition cost of the prescription drug by more than 25
percent during a 12-month period. The notice shall be provided in
writing at least 30 days prior to the planned effective date of the
increase. A copy of the notice shall be provided concurrently to the
Chairs of the Senate Committee on Appropriations, the Senate
Committee on Budget and Fiscal Review, the Assembly Committee on
Appropriations, and the Assembly Committee on Budget.
(B) For purposes of this section, a generic prescription drug is
any product that qualifies as a "noninnovator multi-source drug" as
defined by Section 1396r-8 (k)(7)(A)(iii) of Title 42 of the United
States Code, excluding any product approved by the federal Food and
Drug Administration under Section 262(k) of Title 42 of the United
States Code. Prescription drugs that do not meet this definition are
subject to reporting requirements pursuant to paragraph (1).
(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) or (2),
(1), a manufacturer shall report all of the following
information to each state purchaser, health care service
plan, health insurer, or pharmacy benefit manager: the
Office of Statewide Health Planning and Development:
(A) A justification for the proposed price increase. The
manufacturer may limit the information in the justification to that
which is publicly available.
(B)
(i ) The previous year's marketing budget
for the drug. The manufacturer may limit the information to that
which is publicly available.
(C)
(ii) The date and price of acquisition if the drug was
not developed by the manufacturer.
(D)
(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) 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 within three days of the
federal Food and Drug Administration approval. A copy of the notice
shall be provided concurrently to the Chairs of the Senate Committee
on Appropriations, the Senate Committee on Budget and Fiscal Review,
the Assembly Committee on Appropriations, and the Assembly Committee
on Budget. 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 all
both of the following information to each state
purchaser, health care service plan, health insurer, or pharmacy
benefit manager: the Office of Statewide Health
Planning and Development:
(i) A justification for the introductory price. The manufacturer
may limit the contents of the justification to publicly available
information.
(ii)
(i) The expected marketing budget for the drug.
(iii)
(ii) The date and price of acquisition if the drug was
not developed by the manufacturer.
(5) Failure to report the information required pursuant to
paragraph (3) or subparagraph (B) of paragraph (4) to state
purchasers, health care service plans, health insurers, or pharmacy
benefit managers shall result in a civil penalty of one thousand
dollars ($1,000) per day for every day after the 30-day notification
period.
(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 Legislature shall keep confidential all of the information
provided to the Legislature 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) and the Legislative
Open Records Act (Article 3.5 (commencing with Section 9071) of
Chapter 1.5 of Part 1 of Division 2 of Title 2 of the Government
Code).
(e) If a pharmacy benefit manager receives a notice of a price
increase consistent with subdivision (b), the pharmacy benefit
manager shall provide notice of the price increase to its contracting
public and private purchasers. Upon request of the purchaser, the
pharmacy benefit manager shall also provide the purchaser the
justification provided by the pharmaceutical manufacturer consistent
with subdivision (b).
(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.
(f)
(h) This chapter shall 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 provided in an
outpatient setting, 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. The data in the report shall be aggregated and
shall not reveal information specific to individual health insurers.
(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 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 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
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, including generic
drugs but drugs in each of the follow categories,
generic drugs excluding specialty generic drugs, brand name
drugs excluding specialty drugs, and brand name and generic
specialty drugs dispensed at a pharmacy, network pharmacy, or
mail order pharmacy for outpatient 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 subparagraph (A).
(ii) The year-over-year increase, as a percentage, in total
spending for each category of prescription drugs as defined in
subparagraph (A).
(iii) The year-over-year increase in 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 the components of the
prescription drug coverage described in subparagraphs (A) and (B)
for which the pharmacy benefit manager is responsible.
that are managed by the pharmacy benefit manager.
(ii) The insurer shall also include the name of the pharmacy
benefit 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.
