SB2173.DOC

SECTION 1. The legislature finds that as the costs of specialty drugs increase, health plans have started creating a cost-sharing mechanism known as specialty tiers. Specialty tiers greatly increase the potential financial burden on patients.

The legislature further finds that high out-of-pocket costs for specialty drugs could preclude patients from complying with the treatment protocols prescribed by their doctors. The increased cost-sharing associated with specialty tier drugs presents a significant financial strain on very ill individuals and their families. The financial burden of specialty drugs affects patients facing serious health conditions such as hemophilia, human immunodeficiency virus (HIV), hepatitis, multiple sclerosis, lupus, some cancers, rheumatoid arthritis, and others.

The purpose of this Act is to:

(1) Impose dollar limits on specialty tiers in order to protect patients from unaffordable coinsurance or copayment amounts;

(2) Limit patients' coinsurance or copayment fees for specialty tier drugs to $150 per month for up to a thirty day period supply of any single specialty tier drug; and

(3) Allow patients to request an exception to obtain a specialty drug that would not otherwise be available on a health plan formulary.

SECTION 2. Chapter 431:10A, Hawaii Revised Statutes, is amended by adding a new section to part I be appropriately designated and to read as follows:

"§431:10A- Specialty tier prescription coverage. (a) All individual and group accident and health or sickness insurance policies that include coverage for prescription drugs and use a specialty drug tier shall ensure that any required copayment or coinsurance applicable to specialty drugs on a specialty drug tier does not exceed $150 per month for each specialty drug, up to a thirty day supply of any single drug.

(b) All individual and group accident and health or sickness insurance policies that include coverage for prescription drugs and use a specialty drug formulary shall implement an exceptions process that allows insureds to request an exception to the formulary. Under such an exception, a non-formulary specialty drug may be deemed covered under the formulary if the prescribing physician determines that the formulary drug for treatment of the same condition would not be as effective for the insured, would have adverse effects for the insured, or both. In the event an insured is denied an exception, such denial shall be considered an adverse event and will be subject to the health plan internal review process set forth in section 432E-5 and the external review process set forth in section 432E-34.

(c) All individual and group accident and health or sickness insurance policies that include coverage for prescription drugs shall be prohibited from placing all drugs in a given class of drugs on a specialty drug tier.

(d) Nothing in this section shall be construed to require an insurance policy to:

(1) Provide coverage for any additional drugs not otherwise required by law;

(2) Implement specific utilization management techniques, such as prior authorization or step therapy; or

(3) Cease use of tiered cost-sharing structures, including those strategies used to incentivize use of preventive services, disease management, and low-cost treatment options.

(e) Nothing in this section shall be construed to require a pharmacist to substitute a drug without the consent of the prescribing physician.

(f) Nothing contained in any other provision of law or rule shall preclude an insurance policy subject to this chapter from requiring specialty drugs to be obtained through a designated pharmacy or other source of such drugs.

(g) The commissioner shall have the authority to adopt rules regarding the enforcement processes for this section.

(h) As used in this section, unless the context otherwise requires:

"Class of drugs" means a group of medications having similar actions designed to treat a particular disease process.

"Coinsurance" means a cost-sharing amount set as a dollar value.

"Commissioner" means the insurance commissioner.

"Copayment" means a cost-sharing amount set as a dollar value.

"Non-preferred drug" means a specialty drug formulary classification for certain specialty drugs deemed non-preferred and therefore subject to limits on eligibility for coverage or to higher cost-sharing amounts than preferred specialty drugs.

"Preferred drug" means a specialty drug formulary classification for certain specialty drugs deemed preferred and therefore not subject to limits on eligibility for coverage or not subject to higher cost-sharing amounts than non-preferred specialty drugs.

"Specialty drug" means a prescription drug that:

(1) Is prescribed for a person with a:

(A) Complex or chronic medical condition, defined as a physical, behavioral, or developmental condition that may have no known cure, is progressive, or can be debilitating or fatal if left untreated or undertreated, such as multiple sclerosis, hepatitis C, and rheumatoid arthritis; or

(B) Rare medical condition, defined as any disease or condition that affects fewer than 200,000 persons in the United States, or about one in 1,500 people, such as cystic fibrosis, hemophilia, and multiple myeloma;

(2) Has a total monthly prescription cost of $600 or more;

(3) Is not stocked at a majority of retail pharmacies; and

(4) Has one or more of the following characteristics:

(A) It is an oral, injectable, or infusible drug product;

(B) It has unique storage or shipment requirements, such as refrigeration; and

"Specialty drug formulary" means a specialty drug benefit design that distinguishes, for purposes of eligibility for coverage or for cost-sharing, between preferred drugs and non-preferred drugs.

"Specialty drug tier" means a tier of cost-sharing designed for specialty drugs that exceeds the amount for non-specialty drugs and such a cost-sharing amount is based on coinsurance."

SECTION 3. Chapter 432, Hawaii Revised Statutes, is amended by adding a new section to article 1 to be appropriately designated and to read as follows:

"§432:1- Specialty tier prescription coverage. (a) All individual and group hospital and medical service corporation contracts that provide coverage for prescription drugs and use a specialty drug tier shall ensure that any required copayment or coinsurance applicable to specialty drugs on a specialty tier does not exceed $150 per month for each specialty drug, up to a thirty day supply of any single drug.

(b) All individual and group hospital and medical service corporation contracts that provide coverage for prescription drugs and use a specialty drug formulary shall implement an exceptions process that allows members to request an exception to the formulary. Under such an exception, a non-formulary specialty drug may be deemed covered under the formulary if the prescribing physician determines that the formulary drug for treatment of the same condition would not be as effective for the member, would have adverse effects for the member, or both. In the event a member is denied an exception, such denial shall be considered an adverse event and will be subject to the health plan internal review process set forth in section 432E-5 and the external review process set forth in section 432E-34.

(c) All individual and group hospital and medical service corporation contracts that provide coverage for prescription drugs shall be prohibited from placing all drugs in a given class of drugs on a specialty tier.

(d) Nothing in this section shall be construed to require a contract to:

(1) Provide coverage for any additional drugs not otherwise required by law;

(2) Implement specific utilization management techniques, such as prior authorization or step therapy; or

(3) Cease utilization of tiered cost-sharing structures, including those strategies used to incentivize use of preventive services, disease management, and low-cost treatment options.

(e) Nothing in this section shall be construed to require a pharmacist to substitute a drug without the consent of the prescribing physician.

(f) Nothing contained in any other provision of law or rule shall preclude a contract subject to this chapter from requiring specialty drugs to be obtained through a designated pharmacy or other source of such drugs.

(g) The commissioner shall have the authority to adopt rules regarding the enforcement processes for this section.

(h) The terms "class of drugs", "coinsurance", "commissioner", "copayment", "non-preferred drug", "preferred drug", "specialty drug", "specialty drug formulary", and "specialty drug tier" shall have the same respective meanings as in section 431:10A‑ ."

SECTION 4. Section 432D-23, Hawaii Revised Statutes, is amended to read as follows:

"§432D-23 Required provisions and benefits. Notwithstanding any provision of law to the contrary, each policy, contract, plan, or agreement issued in the State after January 1, 1995, by health maintenance organizations pursuant to this chapter, shall include benefits provided in sections 431:10-212, 431:10A-115, 431:10A-115.5, 431:10A-116, 431:10A-116.2, 431:10A-116.5, 431:10A-116.6, 431:10A-119, 431:10A-120, 431:10A-121, 431:10A-122, 431:10A-125, 431:10A-126, [~~431:10A-122, and 431:10A-116.2,~~] and 431:10A‑ , and chapter 431M."

SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 6. This Act shall take effect on July 1, 2014; provided that this Act shall apply to all health plan contracts issued or renewed in this State on or after January 1, 2015.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	2173
TWENTY-SEVENTH LEGISLATURE, 2014
STATE OF HAWAII