SB 1199

SB1199:v97#DOCUMENT

Bill Start

CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION

Senate Bill

No. 1199

An act to add Section 1399.852 to the Health and Safety Code, and to add Section 10112.283 to the Insurance Code, relating to health care coverage.

LEGISLATIVE COUNSEL'S DIGEST

SB 1199, as amended, Weber Pierson. Prescription drug cost sharing.

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 also provides for the regulation of health insurers by the Department of Insurance. Existing law, except as provided and under certain circumstances, prohibits a person who manufactures a prescription drug from offering a discount, repayment, product voucher, or other reduction in an individual’s out-of-pocket expenses associated with their health insurance or health care service plan. Existing law generally imposes specified cost sharing limits on covered prescription drugs.

This bill would require a health care service plan or health insurer, when calculating an enrollee’s or insured’s overall contribution to an out-of-pocket maximum or cost sharing requirement under the plan contract or insurance policy, to count any amount paid by the enrollee or insured or on behalf of the enrollee or insured for a covered drug toward the enrollee’s or insured’s cost sharing, including any form of direct support offered by drug manufacturers that is permitted, sharing, except as provided. The bill would prescribe an administrative penalty for each violation by a health insurer that is enforceable by the Insurance Commissioner after appropriate notice and opportunity for hearing. Because a willful violation of these provisions by a health care service plan would be a crime, the bill would impose a state-mandated local program.

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.

Digest Key

Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: YES

Bill Text

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

SECTION 1.

Section 1399.852 is added to the Health and Safety Code, to read:

1399.852.

(a) (1) When calculating an enrollee’s overall contribution to an out-of-pocket maximum or cost sharing requirement under the enrollee’s health care service plan contract, a health care service plan shall count any amount paid by the enrollee or on behalf of the enrollee for a covered drug toward an enrollee’s cost sharing, including any form of direct support offered by drug manufacturers when permitted under Division 114 (commencing with Section 132000). sharing, unless any of the following conditions apply:

(A) There is a covered generic equivalent at a lower cost sharing tier.(B) There is a covered interchangeable biosimilar or biosimilar drug at the same or lower cost sharing.(C) Active ingredients of the drug are contained in products regulated by the United States Food and Drug Administration, are available without prescription at a lower cost, and are not otherwise contraindicated for treatment of the condition for which the prescription drug is approved.(2) The exceptions in subparagraphs (A) to (C), inclusive, of paragraph (1) do not apply if the enrollee has obtained coverage for a medically necessary nonformulary or nonpreferred prescription drug under state or federal law.(3) Amounts paid on behalf of the enrollee, including any form of direct assistance offered by drug manufacturers when permitted under Division 114 (commencing with Section 132000), shall only be counted if the pharmacy processing a claim using assistance notifies the applicable health care service plan of the use of the assistance, the enrollee to whom it was provided, and the amount of assistance that was provided.

(2)

(4) Amounts described in paragraph (1) shall be counted toward the annual limit on cost sharing and the applicable in-network deductible.

(3)Notwithstanding paragraph (1), this subdivision shall not apply to any amount paid on behalf of the enrollee by a drug manufacturer that is permitted under subdivision (b) of Section 132000.

(b) (1) This section shall apply to all nongrandfathered health care service plan contracts that are subject to Section 1367.006.

(2) This section shall not apply to a grandfathered health plan, a specialized health care service plan contract that does not provide essential health benefits, a Medicare supplement plan contract, or accident-only, specified disease, or hospital indemnity plan contracts.

(c) Direct support offered by a drug manufacturer to an enrollee to reduce or eliminate immediate out-of-pocket expenses is subject to the limitations under Sections 132000 and 132002.

(d) For purposes of this section, the following definitions apply:

(1) “Annual limitation on cost sharing” means the limit described in Section 1367.006.

(2) “Biosimilar” has the same meaning as defined in Section 262(i)(2) of Title 42 of the United States Code, as it may be amended from time to time.

(2)

(3) “Cost sharing” means any expenditure required by or on behalf of an enrollee with respect to essential health benefits. As set forth under Section 155.20 of Title 45 of the Code of Federal Regulations, cost sharing includes deductibles, coinsurance, copayments, or similar charges, but does not include premiums, balance billing amounts for nonnetwork providers, and spending for noncovered services.

(3)

(4) “Essential health benefits” has the same meaning as set forth under Section 1367.005.

(5) “Interchangeable biological product” has the same meaning as defined in Section 262(i)(3) of Title 42 of the United States Code, as it may be amended from time to time.

(e) (1) For health savings account-qualified high deductible health plans, if, under federal law, application of this section would result in health savings account ineligibility under Section 223 of Title 26 of the United States Code, then this section applies only with respect to the deductible of those plans after the enrollee has satisfied the minimum deductible under Section 223 of Title 26 of the United States Code.

(2) Paragraph (1) does not apply to items or services that are preventive care pursuant to Section 223(c)(2)(C) of Title 26 of the United States Code, in which case the requirements of this section shall apply regardless of whether the minimum deductible has been satisfied.

SEC. 2.

Section 10112.283 is added to the Insurance Code, to read:

10112.283.

(a) (1) When calculating an insured’s overall contribution to an out-of-pocket maximum or cost sharing requirement under the insured’s health insurance policy, a health insurer shall count any amount paid by the insured or on behalf of the insured for a covered drug toward an insured’s cost sharing, including any form of direct support offered by drug manufacturers when permitted under Division 114 (commencing with Section 132000) of the Health and Safety Code. sharing, unless any of the following conditions apply:

(A) There is a covered generic equivalent at a lower cost sharing tier.(B) There is a covered interchangeable biosimilar or biosimilar drug at the same or lower cost sharing.(C) Active ingredients of the drug are contained in products regulated by the United States Food and Drug Administration, are available without prescription at a lower cost, and are not otherwise contraindicated for treatment of the condition for which the prescription drug is approved.(2) The exceptions in subparagraphs (A) to (C), inclusive, of paragraph (1) do not apply if the insured has obtained coverage for a medically necessary nonformulary or nonpreferred prescription drug under state or federal law.(3) Amounts paid on behalf of the insured, including any form of direct assistance offered by drug manufacturers when permitted under Division 114 (commencing with Section 132000) of the Health and Safety Code, shall only be counted if the pharmacy processing a claim using assistance notifies the applicable health insurer of the use of the assistance, the insured to whom it was provided, and the amount of assistance that was provided.

(2)

(4) Amounts described in paragraph (1) shall be counted toward the annual limit on cost sharing and the applicable in-network deductible.

(3)Notwithstanding paragraph (1), this subdivision shall not apply to any amount paid on behalf of the insured by a drug manufacturer that is permitted under subdivision (b) of Section 132000 of the Health and Safety Code.

(b) (1) This section shall apply to all nongrandfathered health insurance policies that are subject to Section 10112.28.

(2) This section shall not apply to a grandfathered health insurance policy, a specialized health insurance policy that does not provide essential health benefits, Medicare supplement insurance, or accident-only, specified disease, or hospital indemnity policies.

(c) Direct support offered by a drug manufacturer to an insured to reduce or eliminate immediate out-of-pocket expenses is subject to the limitations under Sections 132000 and 132002 of the Health and Safety Code.

(d) In addition to any other remedies that are available to the commissioner for a violation of this code, the commissioner may enforce this section pursuant to Chapter 4.5 (commencing with Section 11400) or Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code. After appropriate notice and opportunity for hearing in accordance with either of those provisions, the commissioner shall, by order, assess an administrative penalty not to exceed five thousand dollars ($5,000) for each violation, or, if a violation was willful, an administrative penalty not to exceed ten thousand dollars ($10,000) for each violation.

(e) For purposes of this section, the following definitions apply:

(1) “Annual limitation on cost sharing” means the limit described in Section 10112.28.

(2) “Biosimilar” has the same meaning as defined in Section 262(i)(2) of Title 42 of the United States Code, as it may be amended from time to time.

(2)

(3) “Cost sharing” means any expenditure required by or on behalf of an insured with respect to essential health benefits. As set forth under Section 155.20 of Title 45 of the Code of Federal Regulations, cost sharing includes deductibles, coinsurance, copayments, or similar charges, but does not include premiums, balance billing amounts for nonnetwork providers, and spending for noncovered services.

(3)

(4) “Essential health benefits” has the same meaning as set forth under Section 10112.27.

(5) “Interchangeable biological product” has the same meaning as defined in Section 262(i)(3) of Title 42 of the United States Code, as it may be amended from time to time.

(f) (1) For health savings account-qualified high deductible health plans, if, under federal law, application of this section would result in health savings account ineligibility under Section 223 of Title 26 of the United States Code, then this section applies only with respect to the deductible of those plans after the insured has satisfied the minimum deductible under Section 223 of Title 26 of the United States Code.

(2) Paragraph (1) does not apply to items or services that are preventive care pursuant to Section 223(c)(2)(C) of Title 26 of the United States Code, in which case the requirements of this section shall apply regardless of whether the minimum deductible has been satisfied.

SEC. 3.

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.