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2018 HB 5384: An Act Concerning Prescription Drug Costs.

Sponsors

  • Scanlon, Sean,
  • Duff, William,
  • Albis, James M.,
  • Storms, Scott A.,
  • Petit, William A.,
  • Guerrera, Antonio,
  • Betts, Whit,
  • Haddad, Gregory,
  • Ackert, Tim,
  • Currey, Jeff,
  • Frey, John H.,
  • Godfrey, Bob,
  • Linehan, Liz,
  • Riley, Emmett D.,
  • Looney, Martin M.,
  • Gerratana, Terry B.,
  • Perone, Chris,
  • Gibson, Bobby G.,
  • Mushinsky, Mary M.,
  • Belsito, Sam,
  • Kelly, Kevin C.,
  • Young, Philip L.,
  • Logan, George S.,
  • Gentile, Linda M.,
  • Rose, Kim,
  • Lopes, Rick,
  • Moore, Marilyn V.,
  • Simanski, Bill,
  • Steinberg, Jonathan,
  • Floren, Livvy R.,
  • Winkler, Michael,
  • Dillon, Patricia A.,
  • Yaccarino, Dave W.,
  • Somers, Heather B.,
  • Simmons, Caroline,
  • Tercyak, Peter A.,
  • Kennedy, Ted,
  • Demicco, Mike,
  • Kokoruda, Noreen S.,
  • Miller, Patricia Billie,
  • Gresko, Joseph P.,
  • Cook, Michelle L.,
  • Wood, Terrie E.,
  • Elliott, Josh,
  • Sanchez, Robert,
  • Rojas, Jason,
  • Altobello, Emil,
  • Fleischmann, Andrew M.,
  • Ryan, Kevin,
  • Santiago, Hilda E.,
  • Lemar, Roland J.,
  • Carpino, Christie M.,
  • Arconti, David,

Actions

2018-03-01 lower REF. TO JOINT COMM. ON Insurance and Real Estate
2018-03-02 lower PUBLIC HEARING 0306
2018-03-20 lower Joint Favorable Substitute
2018-03-21 lower FILED WITH LCO
2018-04-02 lower REFERRED TO Office of Legislative Research AND Office of Fiscal Analysis 04/09/18
2018-04-09 lower RPTD. OUT OF LCO
2018-04-09 lower FAV. RPT., TABLED FOR HOUSE CALENDER
2018-04-09 lower HOUSE CALENDAR NUMBER 212
2018-04-09 lower FILE NO. 317
2018-05-04 lower HOUSE ADOPTED HOUSE AMEND. SCH. A
2018-05-04 lower HOUSE PASSED, HOUSE AMEND. SCH. A
2018-05-04 lower IMMEDIATE TRANSMITTAL TO THE SENATE
2018-05-05 lower FAV. RPT., TAB. FOR CAL., SEN.
2018-05-05 lower SENATE CALENDAR NUMBER 524
2018-05-08 lower SEN. ADOPTED HO. AMEND. SCH. A
2018-05-08 lower SEN. PASSED, HO. AMEND. SCH. A
2018-05-08 lower ON CONSENT CALENDAR /IN CONCURRENCE
2018-05-17 lower PUBLIC ACT 18-41
2018-05-18 lower TRANSMITTED TO SECRETARY OF THE STATE
2018-05-18 lower TRANSMITTED BY SECRETARY OF THE STATE TO GOVERNOR
2018-05-31 lower SIGNED BY GOVERNOR

Bill Text

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Section 38a-479aaa of the general statutes is repealed and the following is substituted in lieu thereof (Effective January 1, 2019):

As used in this section and sections 38a-479bbb to 38a-479iii, inclusive, and sections 2 and 3 of this act:

(1) "Commissioner" means the Insurance Commissioner;

(2) "Department" means the Insurance Department;

(3) "Drug" means drug, as defined in section 21a-92;

(4) "Person" means person, as defined in section 38a-1;

(5) "Pharmacist services" includes (A) drug therapy and other patient care services provided by a licensed pharmacist intended to achieve outcomes related to the cure or prevention of a disease, elimination or reduction of a patient's symptoms, and (B) education or intervention by a licensed pharmacist intended to arrest or slow a disease process;

(6) "Pharmacist" means an individual licensed to practice pharmacy under section 20-590, 20-591, 20-592 or 20-593, and who is thereby recognized as a health care provider by the state of Connecticut;

(7) "Pharmacy" means a place of business where drugs may be sold at retail and for which a pharmacy license has been issued to an applicant pursuant to section 20-594; and

(8) "Pharmacy benefits manager" or "manager" means any person that administers the prescription drug, prescription device, pharmacist services or prescription drug and device and pharmacist services portion of a health benefit plan on behalf of plan sponsors such as self-insured employers, insurance companies, labor unions and health care centers.

Sec. 2. (NEW) (Effective January 1, 2019) (a) As used in this section:

(1) "Health benefit plan" means a health benefit plan, as defined in section 38a-591a of the general statutes, that includes a pharmacy benefit;

(2) "Health carrier" means a health carrier, as defined in section 38a-591a of the general statutes; and

(3) "Rebate" means a discount or concession, including a volume-based discount or concession, which affects the price of a prescription drug, and is provided by a pharmaceutical manufacturer, directly or indirectly, to a pharmacy benefits manager after the pharmacy benefits manager processes a claim from a pharmacy for a prescription drug manufactured by such pharmaceutical manufacturer.

(b) Not later than March 1, 2019, and annually thereafter, each pharmacy benefits manager shall file a report with the Office of Health Strategy, established pursuant to section 19a-754a of the general statutes, as amended by this act, for the immediately preceding calendar year. The report shall contain the following information for each health benefit plan that included a pharmacy benefit managed by the pharmacy benefits manager during such calendar year:

(1) The total dollar amount of all rebates that such pharmacy benefits manager received from pharmaceutical manufacturers that manufactured drugs covered by such health benefit plan during such calendar year;

(2) The total dollar amount of all rebates that such pharmacy benefits manager received from pharmaceutical manufacturers that manufactured drugs covered by such health benefit plan during such calendar year, excluding any portion of such rebates received by the health carrier that delivered, issued for delivery, renewed, amended or continued such plan; and

(3) The total dollar amount of all administrative fees that such pharmacy benefits manager received during such calendar year from the health carrier that delivered, issued for delivery, renewed, amended or continued such health benefit plan.

(c) The commissioner may adopt regulations, in accordance with the provisions of chapter 54 of the general statutes, to implement the provisions of this section.

Sec. 3. (NEW) (Effective January 1, 2019) (a) Each pharmacy benefits manager shall, for each health benefit plan that includes a pharmacy benefit managed by such pharmacy benefits manager, publish on such pharmacy benefits manager's Internet web site (1) such health benefit plan's drug formulary, and (2) timely notice regarding any (A) change to such formulary, or (B) exclusion from such formulary.

(b) The commissioner may adopt regulations, in accordance with the provisions of chapter 54 of the general statutes, to implement the provisions of this section.

Sec. 4. (NEW) (Effective January 1, 2019) (a) Each insurer, health care center, hospital service corporation, medical service corporation or fraternal benefit society that delivers, issues for delivery, renews, amends or continues an individual or group health insurance policy in this state on or after January 1, 2019, providing coverage of the type specified in subdivisions (1), (2), (4), (11) and (12) of section 38a-469 of the general statutes shall, on or before May 1, 2019, and annually thereafter, submit a report to the Insurance Commissioner containing statistical information for the immediately preceding calendar year, including, but not limited to, information concerning:

(1) Decisions on requests for coverage of noncovered benefits; and

(2) Prior authorizations, including, but not limited to, (A) the ratio of prior authorizations denied to prior authorizations requested, (B) for each level of review, the ratio of prior authorization appeals denied to prior authorization appeals conducted, and (C) the maximum, minimum and average number of hours that passed between submission of a request for prior authorization and entry of a decision regarding such request, including any internal or external appeals from such decision.

(b) Each report submitted pursuant to subsection (a) of this section shall be in a format that permits the Insurance Commissioner to make a comparison between health insurance policies.

(c) The Insurance Commissioner may adopt regulations, in accordance with the provisions of chapter 54 of the general statutes, to implement the provisions of this section.

Sec. 5. (NEW) (Effective January 1, 2019) (a) For the purposes of this section:

(1) "Drug" has the same meaning as provided in section 21a-92 of the general statutes;

(2) "Health benefit plan" means a health benefit plan, as defined in section 38a-591a of the general statutes, that includes prescription drug coverage;

(3) "Health carrier" has the same meaning as provided in section 38a-591a of the general statutes;

(4) "Rebate" means any direct or indirect rebate, discount or other price concession that the state or a health carrier receives, or expects to receive, from a pharmaceutical manufacturer related to use of a prescription drug manufactured by such pharmaceutical manufacturer;

(5) "Research and development cost" means any cost that a pharmaceutical manufacturer incurs in researching and developing a new product, process or service, including, but not limited to, any cost that a pharmaceutical manufacturer incurs in researching and developing a product, process or service that the pharmaceutical manufacturer acquires from another person by license; and

(6) "Wholesale acquisition cost" has the same meaning as provided in 42 USC 1395w-3a.

(b) (1) Not later than March 1, 2019, and annually thereafter, a health carrier may submit a written complaint to the Insurance Commissioner, in a form and manner prescribed by the commissioner, regarding a prescription drug if:

(A) The health carrier delivered, issued for delivery, renewed, amended or continued a health benefit plan in this state during the immediately preceding calendar year;

(B) The health carrier included the prescription drug in the health benefit plan's drug formulary;

(C) The wholesale acquisition cost of the prescription drug increased by at least twenty-five per cent during the immediately preceding calendar year; and

(D) The health carrier determines, through an actuarial analysis performed by an independent third-party actuary (i) that the increase in the wholesale acquisition cost of the prescription drug, less all rebates paid to the health carrier during the immediately preceding calendar year for such prescription drug and controlling for all other changes in expenses and costs incurred under the terms of the health benefit plan, caused the premium of such health benefit plan to increase by at least one dollar per member, per month, (ii) the dollar amount of such increase, and (iii) the dollar amount of such increase attributable to increased utilization of such prescription drug.

(2) Each health carrier that submits a complaint to the commissioner pursuant to subdivision (1) of this subsection shall simultaneously submit a copy of such complaint to the pharmaceutical manufacturer that manufactured the prescription drug that is the subject of such complaint.

(c) Not later than thirty days after a pharmaceutical manufacturer receives a complaint submitted pursuant to subsection (b) of this section, the pharmaceutical manufacturer shall submit to the Insurance Commissioner, in a form and manner prescribed by the commissioner, a written response to the complaint. The response shall include information regarding (1) all rebates that the pharmaceutical manufacturer paid, directly or indirectly, to the health carrier during the year for the prescription drug that is the subject of such complaint, and (2) utilization of the prescription drug that is the subject of the complaint under the relevant health benefit plan.

(d) (1) The Insurance Commissioner shall (A) review each complaint and response submitted pursuant to subsections (b) and (c) of this section, and (B) determine whether the increase in the cost of the prescription drug caused the premium of the health benefit plan to increase by at least one dollar per member, per month.

(2) If the commissioner determines, pursuant to subdivision (1) of this subsection, that the increase in the cost of the prescription drug caused the premium of the health benefit plan to increase by at least one dollar per member, per month, the commissioner shall (A) certify such determination, and (B) issue written notice of such determination, in a form and manner prescribed by the commissioner, to the health carrier and the pharmaceutical manufacturer.

(e) If the wholesale acquisition cost of a prescription drug increases by at least twenty-five per cent during the immediately preceding calendar year, the pharmaceutical manufacturer that manufactured such drug shall submit to the Insurance Commissioner, in a form and manner prescribed by the commissioner, (1) aggregate, company-level research and development costs and such other capital expenditures that the commissioner, in the commissioner's discretion, deems relevant for the most recent year for which final audited data are available, and (2) a written, narrative description, suitable for public release, of all factors that contributed to the increase in the cost of such drug.

(f) The quality and types of information and data that a pharmaceutical manufacturer submits to the Insurance Commissioner pursuant to this section shall be consistent with the quality and types of information and data that the pharmaceutical manufacturer includes in (1) such pharmaceutical manufacturer's annual consolidated report on Securities and Exchange Commission Form 10-K, or (2) any other public disclosure.

(g) The Insurance Commissioner shall consult with pharmaceutical manufacturers to establish a single standardized form for reporting information and data pursuant to this section. The form shall minimize the administrative burden and cost imposed by this section on the state and pharmaceutical manufacturers.

(h) Except as otherwise provided in subsection (e) of this section, information and data submitted to the Insurance Commissioner pursuant to this section shall not be available for public inspection, and the commissioner shall withhold such information and data from public disclosure under the Freedom of Information Act, as defined in section 1-200 of the general statutes. The commissioner shall not disclose such information and data in a manner that would enable a third party to identify an individual drug, therapeutic class of drugs or pharmaceutical manufacturer, or that is likely to compromise the financial, competitive or proprietary nature of such information and data.

Sec. 6. Section 19a-754a of the 2018 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective January 1, 2019):

(a) (b) There is established an Office of Health Strategy, which shall be within the Department of Public Health for administrative purposes only. The department head of said office shall be the executive director of the Office of Health Strategy office, who shall be appointed by the Governor in accordance with the provisions of sections 4-5 to 4-8, inclusive, with the powers and duties therein prescribed.

(b) (c) On or before July 1, 2018, the Office of Health Strategy office shall be responsible for the following:

(1) Developing and implementing a comprehensive and cohesive health care vision for the state, including, but not limited to, a coordinated state health care cost containment strategy;

(2) Directing and overseeing (A) the all-payers claims database program established pursuant to section 19a-755a, and (B) the State Innovation Model Initiative and related successor initiatives;

(3) Coordinating the state's health information technology initiatives;

(4) Directing and overseeing the Office of Health Care Access and all of its duties and responsibilities as set forth in chapter 368z; and

(5) Convening forums and meetings with state government and external stakeholders, including, but not limited to, the Connecticut Health Insurance Exchange exchange, to discuss health care issues designed to develop effective health care cost and quality strategies.

(c) (j) The Office of Health Strategy office shall constitute a successor, in accordance with the provisions of sections 4-38d, 4-38e and 4-39, to the functions, powers and duties of the following:

(1) The Connecticut Health Insurance Exchange, established pursuant to section 38a-1081, exchange relating to the administration of the all-payer claims database pursuant to section 19a-755a; and

(2) The Office of the Lieutenant Governor, relating to the (A) development of a chronic disease plan pursuant to section 19a-6q, (B) housing, chairing and staffing of the Health Care Cabinet pursuant to section 19a-725, and (C) (i) appointment of the health information technology officer pursuant to section 19a-755, and (ii) oversight of the duties of such health information technology officer as set forth in sections 17b-59, 17b-59a and 17b-59f.

(d) (k) Any order or regulation of the entities listed in subdivisions (1) and (2) of subsection (c) (j) of this section that is in force on July 1, 2018, shall continue in force and effect as an order or regulation until amended, repealed or superseded pursuant to law.

(m) The Commissioner of Public Health may adopt regulations, in accordance with the provisions of chapter 54, to implement the provisions of this section.

Sec. 7. Subsection (a) of section 38a-477d of the 2018 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective January 1, 2019):

(a) Each insurer, health care center, hospital service corporation, medical service corporation, fraternal benefit society or other entity that delivers, issues for delivery, renews, amends or continues a health insurance policy providing coverage of the type specified in subdivisions (1), (2), (4), (11) and (12) of section 38a-469 in this state, shall:

(1) Make available to consumers, in an easily readable, accessible and understandable format, the following information for each such policy: (A) Any coverage exclusions; (B) any restrictions on the use or quantity of a covered benefit, including on prescription drugs or drugs administered in a physician's office or a clinic; (C) a specific description of how prescription drugs are included or excluded from any applicable deductible, including a description of other out-of-pocket expenses that apply to such drugs; and (D) the specific dollar amount of any copayment and the percentage of any coinsurance imposed on each covered benefit, including each covered prescription drug; and (E) information regarding any process available to consumers, and all documents necessary, to seek coverage of a health care service on the grounds that such service is medically necessary;

(2) Make available to consumers a way to determine accurately (A) whether a specific prescription drug is available under such policy's drug formulary; (B) the coinsurance, copayment, deductible or other out-of-pocket expense applicable to such drug; (C) whether such drug is covered when dispensed by a physician or a clinic; (D) whether such drug requires prior authorization or the use of step therapy; (E) whether specific types of health care specialists are in-network; and (F) whether a specific health care provider or hospital is in-network.

Sec. 8. Section 38a-478j of the general statutes is repealed and the following is substituted in lieu thereof (Effective January 1, 2019):

(a) Each managed care plan that requires a percentage coinsurance payment by the insured shall calculate the insured's coinsurance payment on the lesser of the provider's or vendor's charges for the goods or services or the amount payable by the managed care organization for such goods or services, except as otherwise required by the laws of a foreign state when applicable to providers, vendors or patients in such foreign state.

Sec. 9. Section 38a-479bbb of the general statutes is repealed and the following is substituted in lieu thereof (Effective January 1, 2019):

(a) Except as provided in subsection (d) of this section, no No person shall act as a pharmacy benefits manager in this state without first obtaining a certificate of registration from the commissioner.

(b) Any person seeking a certificate of registration shall apply to the commissioner, in writing, on a form provided by the commissioner. The application form shall state (1) the name, address, official position and professional qualifications of each individual responsible for the conduct of the affairs of the pharmacy benefits manager, including all members of the board of directors, board of trustees, executive committee, other governing board or committee, the principal officers in the case of a corporation, the partners or members in the case of a partnership or association and any other person who exercises control or influence over the affairs of the pharmacy benefits manager, and (2) the name and address of the applicant's agent for service of process in this state.

(c) Each application for a certificate of registration shall be accompanied by (1) a nonrefundable fee of fifty dollars, and (2) evidence of a surety bond in an amount equivalent to ten per cent of one month of claims in this state over a twelve-month average, except that such bond shall not be less than twenty-five thousand dollars or more than one million dollars.

(d) Any pharmacy benefits manager operating as a line of business or affiliate of a health insurer, health care center, hospital service corporation, medical service corporation or fraternal benefit society licensed in this state or any affiliate of such health insurer, health care center, hospital service corporation, medical service corporation or fraternal benefit society shall not be required to obtain a certificate of registration. Such health insurer, health care center, hospital service corporation, medical service corporation or fraternal benefit society shall notify the commissioner annually, in writing, on a form provided by the commissioner, that it is affiliated with or operating a business as a pharmacy benefits manager.

Section 2(a)(3) was rewritten for clarity; in Section 4(b), "the Insurance Commissioner to make a" was inserted for clarity; in Section 5(b)(1), "Beginning on" was changed to "Not later than" for clarity; and in Section 5(e) "an amount that is not less than the amount specified in subparagraph (C) of subdivision (1) of subsection (b) of this section" was changed to "at least twenty-five per cent during the immediately preceding calendar year" for conciseness.