STATE OF NEW YORK ________________________________________________________________________ 7018 2017-2018 Regular Sessions IN ASSEMBLY March 29, 2017 ___________ Introduced by M. of A. TITONE, JAFFEE -- Multi-Sponsored by -- M. of A. HIKIND, PRETLOW, SIMOTAS -- read once and referred to the Committee on Insurance AN ACT to amend the insurance law, in relation to the prohibition on first fail policies The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. The insurance law is amended by adding a new article 33 to 2 read as follows: 3 ARTICLE 33 4 PROHIBITION ON FIRST FAIL POLICIES AND 5 UNAUTHORIZED THERAPEUTIC SUBSTITUTION 6 Section 3301. Definitions. 7 3302. Prescription drug denials. 8 3303. Switch communications/consumer right to know. 9 3304. Penalties. 10 3305. Prescription drug restriction overrides. 11 § 3301. Definitions. As used in this article: 12 (a) "Insurer" shall mean any person or entity who offers a policy of 13 accident and/or health insurance pursuant to section three thousand two 14 hundred sixteen, three thousand two hundred twenty-one, or four thousand 15 three hundred three of this chapter or article forty-four of the public 16 health law; except when such health care services are provided, deliv- 17 ered, arranged for, paid for, or reimbursed by any state, department or 18 agency; 19 (b) "Pharmacy benefits manager" or "PBM", means a person or entity 20 other than a pharmacy or pharmacist acting as an administrator in 21 connection with pharmacy benefits; 22 (c) "Switch communication", means a written communication from any 23 insurer or PBM to a patient or the patient's physician that recommends a 24 patient's medication be switched by the original prescribing health care EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD09193-01-7

A. 7018 2 1 professional to a different medication than the medication originally 2 prescribed by the prescribing health care professional. 3 (d) "Generic equivalent" means a drug that is the same chemical 4 compound as another drug and is the same dosage form, strength, route of 5 administration, and intended use, and is listed as equivalent in FDA's 6 approved drug products with therapeutic equivalence evaluations (orange 7 book). 8 (e) "Therapeutic substitution" means the dispensing of a chemically 9 different drug in the place of the drug originally prescribed by the 10 patient's physician or other prescribing health care professional, 11 including biologics and plasma-derived therapies. Therapeutic substi- 12 tution does not include substitution of a generic equivalent. 13 § 3302. Prescription drug denials. (a) A policy of accident and/or 14 health insurance that covers prescription drugs shall not limit, reduce, 15 or deny coverage for any drug if, prior to the limitation, reduction, or 16 denial of coverage: 17 (1) Any insured was using the drug; 18 (2) Such insured or insureds were covered under the policy; and 19 (3) The drug was covered under the policy for such insured individual 20 or individuals. 21 (b) A limitation, reduction, or denial of coverage includes removing a 22 drug from the formulary or other drug list, imposing new prior authori- 23 zation or other utilization management tools, or placing the drug on a 24 formulary tier that increases the patient's cost-sharing obligations or 25 otherwise increases the patient's cost-sharing obligations. 26 (c) Nothing in this section shall prohibit an insurer from making 27 uniform changes in its benefit design that apply to all covered drugs, 28 uniformly removing a drug from the formulary list for all insureds, or 29 increasing cost-sharing obligations merely due to a percentage coinsu- 30 rance payment that necessarily increases with an increase in the under- 31 lying drug prices. 32 (d) No therapeutic substitution of a medication by anyone authorized 33 to dispense medications for self or home administration by a consumer 34 shall be allowed without the express authorization of the original 35 prescribing physician or health care professional and notice to the 36 patient and the policy sponsor as provided for in section three thousand 37 three hundred three of this article. Prior to making a therapeutic 38 substitution in a patient's prescription including but not limited to 39 changes in product selection and changes in dosage, the dispensing phar- 40 macist shall: 41 (1) Verbally request the patient to agree to a change to the 42 prescription, and explain that the change cannot be made unless both the 43 patient and the prescribing physician (or other prescribing health care 44 professional) expressly agree to the change; 45 (2) Verbally describe the proposed change that would be made to the 46 prescription, including clearly identifying the originally prescribed 47 medication and the medication that would be substituted for the 48 originally prescribed medication; and 49 (3) Verbally inform the patient of the impact, if any, on the 50 patient's out-of-pocket cost. 51 § 3303. Switch communications/consumer right to know. (a) Any time a 52 patient's prescribed medication is recommended to be switched to a medi- 53 cation other than that originally prescribed by the prescribing practi- 54 tioner, a switch communication shall be sent to:

A. 7018 3 1 (1) The patient and shall provide information about why the switch is 2 proposed and the patient's rights for refusing the recommended change in 3 treatment; and 4 (2) The policy sponsor and shall inform such sponsor of the pharmaceu- 5 tical wholesale acquisition cost, shown in currency form, of the recom- 6 mended medication and the wholesale acquisition cost, shown in currency 7 form, of the originally prescribed medication. 8 (b) Such switch communication shall: 9 (1) Clearly identify the originally prescribed medication and the 10 medication to which it has been proposed that the patient should be 11 switched; 12 (2) Provide information which is truthful, accurate, and not mislead- 13 ing, with appropriate fair balance, consistent with the United States 14 Food and Drug Administration for medications; 15 (3) Include current approved product labeling and information about 16 risks associated with the recommended medication; 17 (4) Clearly acknowledge that no therapeutic substitution shall be 18 allowed without the express authorization of the original prescribing 19 physician or other original prescribing health care professional; 20 (5) Advise the patient of his or her rights to discuss the proposed 21 change in treatment before such a switch takes place, including a 22 discussion with the patient's prescribing practitioner, the filing of a 23 grievance with the insurer to prevent the switch if such a switch is 24 based on a financial incentive and the filing of a grievance with the 25 department; and 26 (6) Explain any cost-sharing changes for which the patient is respon- 27 sible. 28 (c) A copy of any switch communication sent to a patient shall also be 29 sent to the prescribing practitioner. 30 (d) Health insurance payers, including employers responsible for 31 paying the health care premium or portions thereof, shall be notified of 32 therapeutic substitutions among policy participants and of any therapeu- 33 tic substitution programs adopted by health plans and pharmacy benefit 34 managers in any plan offered by such premium payer or employer. 35 (e) The department shall create one form for insurers and pharmacy 36 benefit managers to use in switch communications to patients, prescrib- 37 ing practitioners, and health insurance payers including employers. 38 (f) The department shall promulgate rules governing switch communi- 39 cations. Such rules shall include, but not be limited to the following: 40 (1) Procedures for verifying the accuracy of any switch communications 41 from policies of accident and/or health insurance and pharmacy benefit 42 managers to ensure that such switch communications are truthful, accu- 43 rate, and not misleading based on cost to the patient and policy spon- 44 sor, the product package labeling, medical compendia recognized by the 45 drug utilization review board, and peer-reviewed medical literature, 46 with appropriate references provided; 47 (2) Except for a substitution due to the Food and Drug Adminis- 48 tration's withdrawal of a drug for prescription, a requirement that all 49 switch communications bear a prominent legend on the first page that 50 states: "This is not a product safety notice. This is a promotional 51 announcement from your health care insurer or pharmacy benefits manager 52 about one of your current prescribed medications."; 53 (3) A requirement that, the notification of request for medication 54 change (i) expressly states that the change involves a therapeutic 55 substitution, not a generic substitution; (ii) explain the difference 56 between therapeutic substitution and generic substitution; and (iii)

A. 7018 4 1 provide a truthful, fair, and balanced explanation regarding the poten- 2 tial, ramifications of the therapeutic substitution, including but not 3 limited to, that medications in the same therapeutic class are associ- 4 ated with different risks and benefits and may work differently in 5 different patients. 6 § 3304. Penalties. (a) Issuing or delivering or causing to be issued 7 or delivered a switch communication that has not been approved and is 8 not in compliance with the requirements of section three thousand three 9 hundred three of this article is punishable by a fine not to exceed 10 twenty-five thousand dollars. 11 (b) Providing a misrepresentation or false statement in a switch 12 communication under section three thousand three hundred three of this 13 article is punishable by a fine not to exceed twenty-five thousand 14 dollars. 15 (c) Any other material violation of section three thousand three 16 hundred three of this article is punishable by a fine not to exceed 17 twenty-five thousand dollars. 18 § 3305. Prescription drug restriction overrides. (a) When medications 19 for the treatment of any medical condition are restricted for use by an 20 insurer or PBM by a step therapy or fail first protocol, a prescriber 21 shall have access to a clear and convenient process to override such 22 restrictions from the insurer and may expeditiously override such 23 restriction if: 24 (1) The preferred treatment by the insurer or the PBM has been inef- 25 fective in the treatment of the covered person's disease or medical 26 condition; or 27 (2) Based on sound clinical evidence and medical and scientific 28 evidence: 29 (A) The preferred treatment is expected to be ineffective based on the 30 known relevant physical or mental characteristics of the covered person 31 and known characteristics of the drug regimen, and is likely to be inef- 32 fective or adversely affect the drug's effectiveness or patient compli- 33 ance; or 34 (B) The preferred treatment has caused or is likely to cause an 35 adverse reaction or other harm to the covered person. 36 (b) The duration of any step therapy or fail first protocol shall not 37 be longer than the period deemed necessary by the prescribing physician 38 or health care professional to determine the treatment's clinical effec- 39 tiveness or a period of fourteen days. 40 (c) For medications with no generic equivalent and for which the 41 prescribing physician in their clinical judgment feels that no appropri- 42 ate therapeutic alternative is available an insurer or PBM shall provide 43 access to United States Food and Drug Administration (FDA) labeled medi- 44 cations without restriction to treat such medical conditions for which 45 an FDA labeled medication is available. 46 (d) Nothing in this section shall require coverage for an additional 47 condition not already covered by the policy or which is not otherwise 48 covered by law. 49 § 2. This act shall take effect on the one hundred twentieth day after 50 it shall have become a law.