Update on AB 339, Legislation Placing Restrictions on Patient Cost Sharing

August 8, 2015

CLSA is monitoring Assemblymember Rich Gordon’s (D—Menlo Park) AB 339 (Healthcare Coverage: Outpatient Prescription Drugs), after some CLSA members raised concerns about amendments to the bill at the July 15 State Legislative Committee meeting.

AB 339 generally requires that copayments, coinsurance and other cost sharing imposed by health insurers for outpatient prescription drugs be “reasonable” (so as not to deter access and not to reduce compliance with drug regimens, according to the author); prohibits an insurer from placing most or all of the drugs to treat a single condition on the highest tier of a formulary unless there is a therapeutic equivalent drug available in a lower cost tier; and limits cost sharing for an individual outpatient prescription drug to 1/24 of the annual out-of-pocket limit for a 30-day supply.

The amendments included in the current version reflect the discussions between Health and Human Services Secretary Diana Dooley and Assemblymember Gordon. The Administration would like Covered California individual market actions to apply to commercial and employer plans, which would create more access to vital medications for those newly insured under Covered California. The Administration is strongly opposed to codifying any of the language that is already in regulation at the Department of Managed Healthcare. This is why some of the language deleted from the bill on July 7 remains in the Department of Insurance sections where similar regulatory requirements do not exist. Health Access, the bill’s sponsor, reluctantly agreed to the deletions because they believe existing case law already establishes that “medically necessary” drugs must be covered.

AB 339 passed out of the Senate Health Committee on July 15, and is pending in the Senate Appropriations Committee. We expect additional amendments where concerns have been expressed regarding the definitions for Tier 4 (Specialty Drugs).  The legislature reconvenes on August 17 and more discussions will take place before the end of session. Click here for more information on AB 339.

Should you have any questions, please contact Christina Hwee, CLSA’s state government affairs associate ( or 916-233-3497).