Relates to cost-sharing, deductible or co-insurance for tier IV prescription drugs and unlawful discriminatory practice in prescribing such drugs; repealer

Summary of provisions

Section 1 of the bill would amend a provision within the legislative findings set forth in Chapter 536 of the Laws of 2010, § 1, so that disparities in cost-sharing for drugs that are based on the disease or disability of patients are referred to as serious and unjustified "hardships" instead of "discrimination."

Section 2 of the bill would repeal Executive Law § 296(20).

Section 3 of the bill provides that it would take effect at the same time and in the same manner as Chapter 536 of the Laws of 2010, which took effect on October 31, 2010.

Existing law

Section 1 of Chapter 536 of the Laws of 2010 set forth the Legislature's objectives. In particular, the section states that the law was intended "to help patients to afford necessary prescription drugs by prohibiting cost-sharing, deductibles and co-insurance obligations by patients that exceed payments for non-preferred brand prescription drugs or the equivalent thereof" and "to provide patients more affordable access to prescription drugs essential for their treatment of cancer, multiple sclerosis, rheumatoid arthritis, hepatitis C, hemophilia, psoriasis, and other diseases." Additionally, § 1 states that the "extraordinary disparity in cost-sharing, deductible and co-insurance burdens imposed on patients whose life and health depend on these drugs constitutes serious and unjustified discrimination based on their disease or disability."

Sections 2, 3, 4 and 5 of Chapter 536 of the Laws of 2010 amended Public Health Law § 4406-c and Insurance Law §§ 3216, 3221 and 4303, respectively, to prohibit the issuers of certain health insurance policies and contracts that provide coverage for prescription drugs

for which cost-sharing is required from requiring cost-sharing for any prescription drug in an amount that exceeds the cost-sharing amount for non-preferred brand drugs or its equivalent (or brand drugs if there is no non-preferred brand drug category).

Section 6 of Chapter 536 of the Laws of 2010 added Executive Law 296(20), declaring it to be an unlawful discriminatory practice for any employer, labor organization, insurer, health maintenance organization or other entity to limit health care coverage such that the cost-sharing for any prescription drug exceeds the cost-sharing for any non-preferred brand drug. The subdivision expressly does not apply to any self-insured employee welfare benefit plan, as defined in the Employee Retirement Income Security Act of 1974 (ERISA).

Statement in support

Chapter 536 of the Laws of 2010, signed into law on October 1, 2010, amended the Public Health Law and the Insurance Law to prohibit health plans that offer a pharmacy benefit from creating specialty tiers within their prescription drug formularies and charging higher co-payments, deductibles or co-insurance for specialty drugs. Such medications are used in the treatment of diseases such as multiple sclerosis, rheumatoid arthritis, hemophilia, hepatitis C, psoriasis and certain types of cancer. In other states where such specialty tiers (generally known as "Tier IV" or "Tier V") have been permitted, the cost-sharing obligations of consumers for Tier IV or V drugs are set as a percentage of the drug's price, generally between 20 and 35 percent. This means that consumers are responsible for paying hundreds of dollars per month (as much as $875 per month in some cases) for specialty drugs, unlike for other drugs in the lower tiers for which cost-sharing is a fixed co-payment amount. As a result, many individuals can no longer afford to continue purchasing medications needed to prolong life, slow the progression of a disease, maintain functioning or reduce the severity of symptoms, interfering with their quality of life and their ability to support themselves.

In New York, before Chapter 536 of the Laws of 2010 took effect on October 31, 2010, the State Insurance Department relied on its existing regulatory authority to deny requests from insurers to establish a prescription drug benefit with four or more tiers. As Governor Paterson noted in an accompanying approval message (Approval No. 29 of 2010), the new law embodied that policy in statute, representing the first such enactment in the nation. Thus, the new statute insulated against subsequent regulatory change a crucial protection for many vulnerable citizens.

As also noted in the approval message, however, Chapter 536 of the Laws of 2010 made an amendment to the Executive Law that was not necessary for the achievement of the law's intended purpose and will likely have a detrimental impact. Specifically, § 6 of Chapter 536 added a provision to the Human Rights Law (HRL), Executive Law 296(20), declaring it to be an unlawful discriminatory practice for any employer, labor organization, insurer, health maintenance organization or other entity to limit health care coverage by implementing a pricing structure with specialty tiers. The prohibition against such pricing is an insurance regulatory matter that does not fit within the overall construct of the HRL, and the new Executive Law

provision would make the full Division of Human Rights (DHR) investigative and hearing process available to any individual who believed that an insurer has violated the prohibition. This would present a severe strain on the resources of the DHR, and could result in delays for individuals bringing other claims before DHR. Moreover, the subject matter of such cases would fall wholly outside the institutional expertise of DHR, and instead is appropriate for the Insurance Department to address.

Accordingly, this bill would repeal Executive Law § 296(20) and amend the associated statement of legislative intent.

Budget implications

This bill would avoid costs to DHR associated with the investigation and adjudication of complaints brought under the provisions enacted by Chapter 536 of the Laws of 2010.

Effective date

This bill would take effect on October 31, 2010.