Bill Text: NJ S3746 | 2018-2019 | Regular Session | Introduced


Bill Title: Restricts certain practices by carriers and pharmacy benefits managers related to medications and drugs.

Spectrum: Bipartisan Bill

Status: (Introduced) 2019-05-16 - Introduced in the Senate, Referred to Senate Commerce Committee [S3746 Detail]

Download: New_Jersey-2018-S3746-Introduced.html

SENATE, No. 3746

STATE OF NEW JERSEY

218th LEGISLATURE

 

INTRODUCED MAY 16, 2019

 


 

Sponsored by:

Senator  JAMES BEACH

District 6 (Burlington and Camden)

Senator  JOSEPH P. CRYAN

District 20 (Union)

 

 

 

 

SYNOPSIS

     Restricts certain practices by carriers and pharmacy benefits managers related to medications and drugs.

 

CURRENT VERSION OF TEXT

     As introduced.

 


An Act concerning health insurance coverage for medication and supplementing Title 17B of the New Jersey Statutes.

 

     Be It Enacted by the Senate and General Assembly of the State of New Jersey:

 

     1.    As used in this act:

     "Carrier" means an insurance company, health service corporation, hospital service corporation, medical service corporation, or health maintenance organization authorized to issue health benefits plans in this State.

     "Covered person" means a person on whose behalf a carrier offering the plan is obligated to pay benefits or provide services pursuant to the health benefits plan.

     "Department" means the Department of Banking and Insurance.

     "Generic equivalent" means a drug that is the same chemical compound as another drug and is the same dosage form, strength, route of administration, and intended use, and is listed as equivalent in the U.S. Food and Drug Administration's Approved Drug Products with Therapeutic Equivalence Evaluations, or "Orange Book."

     "Health benefits plan" means a benefits plan which pays or provides hospital and medical expense benefits for covered services, and is delivered or issued for delivery in this State by or through a carrier.  Health benefits plan includes, but is not limited to, Medicare supplement coverage and risk contracts to the extent not otherwise prohibited by federal law.  For the purposes of this act, health benefits plan shall not include the following plans, policies, or contracts:  accident only, credit, disability, long-term care, TRICARE supplement coverage, coverage arising out of a workers' compensation or similar law, automobile medical payment insurance, personal injury protection insurance issued pursuant to P.L.1972, c.70 (C.39:6A-1 et seq.), or hospital confinement indemnity coverage.

     "Pharmacy benefits manager" means a corporation, business, or other entity, or unit within a corporation, business, or other entity, that administers prescription drug benefits.  

     "Plan sponsor" means an employer or other entity that provides a  group health benefits plan.

     "Prescriber" means a physician, advanced practice nurse, or other prescriber licensed pursuant to Title 45 of the Revised Statutes who is authorized to prescribe drugs pursuant to State law.

     "Switch communication" means a written communication from a carrier or a pharmacy benefits manager to a patient or the patient's prescriber that recommends a patient's medication be switched by the original prescriber to a different medication than the medication originally prescribed by the prescriber.

     "Therapeutic substitution" means the dispensing of a chemically different drug in the place of the drug originally prescribed by the prescriber, including biologics and plasma-derived therapies. "Therapeutic substitution" shall not include substitution of a generic equivalent.

 

     2.    a.  A carrier that offers a health benefits plan that covers prescription drugs shall not limit, reduce, or deny coverage for any drug if, prior to the limitation, reduction, or denial of coverage:

     (1)   any covered person was using the drug;

     (2)   the covered person was covered under the plan; and

     (3)   the drug was covered under the plan for the covered person.

     A limitation, reduction, or denial of coverage includes removing a drug from the formulary or other drug list, imposing new prior authorization or other utilization management tools, placing the drug on a formulary tier that increases the covered person's cost-sharing obligations, or otherwise increasing the covered person's cost-sharing obligations.

     b.    Nothing in this section shall prohibit a carrier from making uniform changes in its benefit design that apply to all covered  drugs, uniformly removing a drug from the formulary list for all covered persons, or increasing cost-sharing obligations merely due to a percentage coinsurance payment that necessarily increases with an increase in the underlying drug prices.

     c.     A therapeutic substitution of a medication by any person  authorized to dispense medications for self or home administration by a covered person shall not be allowed without the express authorization  of the original prescriber and a notice to the covered person and the plan sponsor as provided for in section 3 of this act.

     d.    Prior to making a therapeutic substitution in a covered person's prescription, including but not limited to, changes in product selection and changes in dosage, a dispensing pharmacist shall verbally: 

     (1)   request the covered person to agree to a change to the prescription, and explain that the change cannot be made unless both the patient and the prescriber expressly agree to the change; 

     (2)   describe the proposed change that would be made to the prescription, including clearly identifying the originally prescribed medication and the medication that would be substituted for the originally prescribed medication; and

     (3)   inform the covered person of the impact, if any, on the covered person's out-of-pocket cost.

 

     3.    a.  If a carrier or a pharmacy benefits manager recommends that a covered person's prescribed medication be switched to a medication other than that originally prescribed by the prescriber, the carrier or pharmacy benefits manager, as applicable, shall send a switch communication to:

     (1)   the covered person, in which case the switch communication shall provide information about why the switch is proposed and the covered person's right to refuse the recommended change in treatment; and

     (2)   the plan sponsor, in which case the switch communication shall inform the plan sponsor of the pharmaceutical wholesale acquisition cost, shown in currency form, of the recommended drug and the wholesale acquisition cost, shown in currency form, of the originally prescribed drug.

     b.    The carrier or pharmacy benefits manager, as applicable, shall ensure that the switch communication:

     (1)   clearly identifies the originally prescribed medication and the medication to which it has been proposed that the covered person should be switched;

     (2)   provides information which is truthful, accurate, and not misleading, with appropriate fair balance, consistent with the United States Food and Drug Administration guidelines for medications;

     (3)   includes current approved product labeling and information about risks associated with the recommended medication;

     (4)   clearly acknowledges that no therapeutic substitution shall be allowed without the express authorization of the original prescriber;

     (5)   advises the covered person of his or her rights to:

     (a)   discuss the proposed change in treatment before the switch takes place, including the right to a discussion with the covered person's prescriber;

     (b)   file an appeal with the carrier as part of the Independent Health Care Appeals Program established pursuant to sections 11 and 12 of P.L.1997, c.192 (C.26:2S-11 and 26:2S-12) to prevent the switch if the switch is based on a financial incentive; and

     (c)  file a complaint with the department; and

     (6)   explain any cost-sharing changes for which the covered person is responsible.

     c.     A copy of a switch communication sent to a covered person by a carrier or a pharmacy benefits manager shall also be sent to the prescriber.

     d.    Carriers and pharmacy benefits managers shall notify covered persons and plan sponsors, of therapeutic substitutions and any therapeutic substitution programs adopted by carriers or pharmacy benefit managers in any health benefits plan.

     e.     The department shall create one form for carriers and pharmacy benefit managers to use in providing switch communications to covered persons, prescribers, carriers, and plan sponsors.

     f.     Pursuant to section 5 of this act, the Commissioner of Banking and Insurance, in consultation with the Commissioner of Health, shall adopt rules and regulations governing switch communications.  The rules and regulations shall include, but not be limited to, the following:

     (1)   procedures for verifying the accuracy of any switch communication from a carrier and pharmacy benefits manager to ensure that switch communications are truthful, accurate, and not misleading based on cost to the covered person and carrier or plan sponsor, the product package labeling, medical compendia recognized by the Drug Utilization Review Board established pursuant to section 2 of P.L.1998, c.41 (C.30:4D-17.17a), and peer-reviewed medical literature, with appropriate references provided;

     (2)   except for a substitution due to the Food and Drug Administration's withdrawal of a drug for prescription, a requirement that all switch communications contain a prominent notice on the first page that states:  "This is not a product safety notice. This is a promotional announcement from your health insurance carrier or pharmacy benefits manager about one of your current prescribed medications.";  and

     (3)   a requirement that the notification of request for the change shall:

     (a)   expressly state that the change involves a therapeutic substitution, not a generic substitution;

     (b)   explain the difference between therapeutic substitution and generic substitution; and

     (c)   provide a truthful, fair, and balanced explanation regarding the potential ramifications of the therapeutic substitution, including but not limited to, that medications in the same therapeutic class are associated with different risks and benefits and may affect different patients differently.

 

     4.    a.  Notwithstanding any other law or contract to the contrary, whenever a carrier that offers a health benefits plan restricts coverage for a medication for the treatment of any medical condition through the use of a step therapy or fail first protocol, the carrier shall provide the prescriber access to a clear and convenient process, at no charge to the prescriber or covered person, that the prescriber may use to override the coverage restriction. The prescriber may use the process, and the carrier shall provide coverage for the medication prescribed by the prescriber, if:

     (1)   the prescriber, in the prescriber's professional judgment, determines, at any time, that the drug preferred by the carrier as part of a step therapy or fail first protocol has been ineffective in the treatment of the covered person's disease or medical condition or has caused an adverse reaction or other harm to the covered person; or

     (2)   based on sound clinical evidence and medical and scientific evidence, the prescriber, in the prescriber's professional judgment, determines that:

     (a)   the drug preferred by the carrier or the pharmacy benefits manager is expected to be ineffective based on the known relevant physical or mental characteristics of the covered person and known characteristics of the drug regimen, and is likely to adversely affect patient compliance; or

     (b)   the preferred drug is expected to cause an adverse reaction or other harm to the covered person.

     b.    The duration of any step therapy or fail first protocol shall not be longer than the period deemed necessary by the prescriber to determine the treatment's clinical effectiveness.

     c.     For medications with no generic equivalent and for which the prescriber in their clinical judgment feels that no appropriate therapeutic alternative is available, a carrier or pharmacy benefits manager shall provide access to U.S. Food and Drug Administration (FDA) labeled medications without restriction to treat the medical conditions for which FDA labeled mediation is available.

 

     5.    The Commissioner of Banking and Insurance, in consultation with the Commissioner of Health, shall adopt, pursuant to the "Administrative Procedure Act'" P.L.1968, c.410 (C.52:14B-1 et seq.), rules and regulations, including any penalty provisions the commissioners deem necessary, to effectuate the purposes of this act.

 

     6.    This act shall take effect on the 90th day next following enactment.

 

 

STATEMENT

 

     This bill places certain restrictions on health insurance carriers and pharmacy benefits managers relating to the switching of drugs and medication, and step therapy and fail first practices.

     The bill requires that a health insurance carrier that offers a health benefits plan that covers prescription drugs shall not limit, reduce, or deny coverage for any drugs currently in use by a person covered under the plan, except in certain situations.  The bill also places certain restrictions and disclosure requirements on therapeutic substitutions of medications.

   The bill also places certain requirements on carriers and pharmacy benefits managers in situations in which a covered person's prescribed medication is switched to a medication other than that originally prescribed by the prescriber. The bill requires a switch communication to be provided, which must contain certain disclosures to covered persons and health benefit plan sponsors, including the right of a covered person to file an appeal with respect to the switch.  The Department of Banking and Insurance is required to create one form for carriers and pharmacy benefit managers to use in providing switch communications to covered persons, prescribers, carriers, and plan sponsors, and to adopt certain rules and regulations governing switch communications, as set forth in the bill.

     The bill also provides that, notwithstanding any other law or contract to the contrary, whenever a carrier that offers a health benefits plan restricts coverage for a medication for the treatment of any medical condition through the use of a step therapy or fail first protocol, the carrier shall provide the prescriber access to a clear and convenient process, at no charge to the prescriber or covered person, that the prescriber may use to override the coverage restriction. The prescriber may use the process, and the carrier shall provide coverage for the medication prescribed by the prescriber, if:

     (1)   the prescriber, in the prescriber's professional judgment, determines, at any time, that the drug preferred by the carrier as part of a step therapy or fail first protocol has been ineffective in the treatment of the covered person's disease or medical condition or has caused an adverse reaction or other harm to the covered person; or

     (2)   based on sound clinical evidence and medical and scientific evidence, the prescriber, in the prescriber's professional judgment, determines that:

         the drug preferred by the carrier or the pharmacy benefits manager is expected to be ineffective based on the known relevant physical or mental characteristics of the covered person and known characteristics of the drug regimen, and is likely to adversely affect patient compliance; or

         the preferred drug is expected to cause an adverse reaction or other harm to the covered person.

     The bill specifies that the duration of any step therapy or fail first protocol shall not be longer than the period deemed necessary by the prescriber to determine the treatment's clinical effectiveness.

     For medications with no generic equivalent and for which the prescriber in their clinical judgment feels that no appropriate therapeutic alternative is available, a carrier or pharmacy benefits manager shall provide access to U.S. Food and Drug Administration (FDA) labeled medications without restriction to treat the medical conditions for which FDA labeled mediation is available.

     Finally, the bill provides that the Commissioner of Banking and Insurance, in consultation with the Commissioner of Health, shall adopt, pursuant to the "Administrative Procedure Act'" P.L.1968, c.410 (C.52:14B-1 et seq.), rules and regulations, including any penalty provisions the commissioners deem necessary, to effectuate the purposes of the bill.

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