Senate Bill S68004

                                BILL NUMBER:S68004

TITLE OF BILL:

An act to amend chapter 536 of the laws of 2010, amending the public
health law and the insurance law, relating to cost-sharing, deductible
or co-insurance for tier IV prescription drugs, and amending the
executive law, relating to unlawful discriminatory practice in
relation to tier IV prescription drugs, in relation to making certain
technical corrections; and to repeal certain provisions of the
executive law, relating to unlawful discriminatory practice in
relation to tier IV prescription drugs

PURPOSE:

This bill would repeal Executive Law § 296(20), which was added by
Chapter 536 of the Laws of 2010 but is not necessary to achieve the
goal of that legislation: 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.

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.