California Department of Finance opposes AB 339

The California Department of Finance has released a fiscal summary and notes saying that the department is opposed to proposed health bill AB 339.

The bill, according to the Department of Finance, will result in one-time costs to the Department of Managed Health Care to issue regulations and review plan compliance of approximately $3.7 million over three fiscal years, and $450,000 ongoing to ensure plan compliance. The bill will also result in one-time costs to the Department of Insurance to issue regulations and review insurance policy compliance in the low hundreds of thousands.

“The Department of Finance is opposed to this bill because it creates a regulatory framework that limits a health plan or insurer's ability to effectively control and manage health care costs related to drug formularies,” the Department of Finance’s bill analysis said. “Prohibiting a plan contract or policy from placing more than 50 percent of drugs approved by the United States Food and Drug Administration that are in the same drug class into the two highest cost tiers of a drug formulary severely limits a health plan's ability to negotiate for drug discounts.”

The Department of Finance’s opposition to the bill follows a previous announcement by the California Chamber of Commerce, who opposes the bill because it would restrict the ability of health insurers and pharmacy benefit managers to control health care costs and would place strict caps on prescription drug copayments, therefore shifting costs, encouraging utilization of expensive medications and reducing flexibility.