SB1164 - 562R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Title 20, chapter 25, article 2, Arizona Revised Statutes, is amended by adding section 20-3335, to read:

START_STATUTE20-3335. Pharmacy benefit managers; prescribing; coverage exemption determination process; enforcement; definitions

A. If a pharmacy benefit manager enters into an agreement with a health care insurer to provide pharmacy benefit management services to covered individuals, the pharmacy benefit manager, on behalf of the pharmacy benefit manager or a health care insurer:

1. May not limit or exclude coverage of a prescription drug for any covered individual who is medically stable on a specific prescription drug as determined by the covered individual's prescribing health care professional, if both of the following apply:

(a) The prescription drug was previously approved by the pharmacy benefit manager or health care insurer for coverage for the covered individual.

(b) The covered individual continues to be an enrollee of the health care insurer that the pharmacy benefit manager has contracted with to provide pharmacy benefit management services.

2. Shall continue coverage of a covered individual's prescription drug as described in paragraph 1 of this subsection through the last day of the covered individual's eligibility under the covered individual's health benefit plan, including any open enrollment period.

B. For the purposes of subsection A, paragraph 1 of this section, a pharmacy benefit manager, on behalf of the pharmacy benefit manager or a health care insurer, may not do any of the following:

1. Limit or reduce the maximum coverage of prescription drug benefits.

2. Increase cost sharing for a covered prescription drug.

3. Move a prescription drug to a more restrictive formulary tier.

4. Remove a prescription drug from a formulary unless either of the following applies:

(a) The United States food and drug administration revokes approval for or removes a prescription drug from the prescription drug market.

(b) The prescription drug manufacturer notifies the United States food and drug administration of a manufacturing discontinuation or a potential discontinuation, as required by section 506c of the federal food, drug, and cosmetic act.

C. A prescription coverage exemption determination process is available to covered individuals and the prescribing health care professional to ensure continuity of care as follows:

1. A health care insurer, pharmacy benefit manager or utilization review agent that is contracted to provide pharmacy benefit management services for the health care insurer shall provide a covered individual and prescribing health care professional with access to a clear and convenient process to request a coverage exemption determination. A health care insurer, pharmacy benefit manager or utilization review agent that is contracted to provide pharmacy benefit management services for the health care insurer may use its existing medical exceptions process to satisfy this requirement if the medical exceptions process is consistent with the requirements prescribed in this section.

2. A health care insurer, pharmacy benefit manager or utilization review agent shall respond to a coverage exemption determination request within seventy-two hours after receipt. In cases where exigent circumstances exist, the health care insurer, pharmacy benefit manager or utilization review agent shall respond within twenty-four hours after receipt if provided with sufficient justification and any supporting clinical documentation. If a response by the health care insurer, pharmacy benefit manager or utilization review agent is not received within the applicable time frame, the coverage exemption is automatically granted.

3. A coverage exemption shall be expeditiously granted for a discontinued health benefit plan, including a health benefit plan from an individual's prior plan year, if a covered individual enrolls in a comparable plan offered by the same group health plan offering group or individual health insurance coverage, and all of the following conditions apply:

(a) The covered individual is medically stable on a prescription drug as determined by the covered individual's prescribing health care professional.

(b) The prescribing health care professional continues to prescribe the drug for the covered individual for the covered individual's medical condition.

(i) Limits or reduces the maximum coverage of prescription drug benefits.

(ii) Increases cost sharing for the prescription drug.

(iii) Moves the prescription drug to a more restrictive tier if the carrier, insurer or pharmacy benefit manager uses a formulary with tiers.

(iv) Excludes the prescription drug from the carrier's, insurer's or pharmacy benefit manager's formulary.

4. A coverage exemption shall be expeditiously granted for a covered individual without a discontinued health benefit plan if the covered individual has previously received the prescription drug by any means, including participation in a clinical trial, third-party patient assistance or other financial support programs, and all of the following conditions apply:

(a) The covered individual is medically stable on a prescription drug as determined by the covered individual's prescribing health care professional.

(b) The prescribing health care professional continues to prescribe the drug for the covered individual for the covered individual's medical condition.

5. If a request for a coverage exemption is denied, the health care insurer, pharmacy benefit manager or utilization review agent contracted to provide pharmacy benefit management services shall provide the covered individual or the covered individual's prescribing health care professional with the reasons for the denial and information regarding the procedure to appeal the denial. A covered individual or the covered individual's authorized representative may appeal Any determination to deny a coverage exemption.

6. A health care insurer, pharmacy benefit manager or utilization review agent contracted to provide pharmacy benefit management services must uphold or reverse a determination to deny a coverage exemption within seventy-two hours after receiving an appeal of denial. In cases where exigent circumstances exist, a health care insurer or pharmacy benefit manager contracted to provide pharmacy benefit management services shall uphold or reverse a determination to deny a coverage exemption within twenty-four hours after receipt if provided with sufficient justification and any supporting clinical documentation. If the determination to deny a coverage exemption is not upheld or reversed on appeal within the application time period, the denial is considered reversed and the coverage exemption is automatically approved.

7. If a determination to deny a coverage exemption is upheld on appeal, the denial shall be considered a final agency action and the covered individual or covered individual's authorized representative may challenge that determination in state court.

D. This section does not do any of the following:

1. Prevent a health care professional from prescribing another drug covered by the carrier, the insurer or the pharmacy benefit manager contracted to provide pharmacy benefit management services that the health care professional deems medically necessary for the covered individual.

2. Prevent a health care insurer or pharmacy benefit manager contracted to provide pharmacy benefit management services from either:

(a) Adding a prescription drug to its formulary.

(b) Removing a prescription drug from its formulary if the drug manufacturer has removed the drug for sale in the United States.

E. If a health care insurer, pharmacy benefit manager or utilization review agent contracted to provide pharmacy benefit management services violates this section, the director has authority to take any enforcement action against that health care insurer, pharmacy benefit manager or utilization review agent.

f. a policy that is issued or renewed by a DISABILITY insurer does not include a policy that provides limited benefit coverage as defined in section 20-1137.

g. For the purposes of this section:

1. "Coverage exemption" means that immediate coverage of a health care provider's selected prescription drug is granted.

2. "Exigent Circumstances" means a health care insurer's, pharmacy benefit manager's or utilization review agent's nonexpedited action on a coverage exemption request could seriously jeopardize the insured's, enrollee's or subscriber's life, health or ability to regain maximum function or cause a significant negative change in medical condition.

3. "Health care insurer" has the same meaning prescribed in section 20-2501.

4. "Health care plan" means a policy, contract or evidence of coverage that a health care insurer issues to an insured, enrollee or subscriber.

5. "Pharmaceutical sample" means a prescription drug that is packaged in small quantities that are consistent with limited dosage therapy of the particular drug and that:

(a) Is intended to either:

(i) Provide the health care provider with a drug for the immediate need of a patient for a short-term trial purpose.

(ii) Be provided to the patient until the patient can fill the prescription drug at a pharmacy.

(b) Is not intended to be sold.

6. "Utilization review agent" has the same meaning prescribed in section 20-2530. END_STATUTE

Sec. 2. Applicability

This act applies to contracts entered into, amended, extended or renewed on or after December 31, 2024.