Requires insurers to cover the substitution of a brand name prescription drug when the federal food and drug administration has declared that there is a supply issue with a generic drug.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A1428
SPONSOR: Forrest TITLE OF BILL:
An act to amend the insurance law, in relation to substituting brand
name prescription drugs in the case of a drug shortage
PURPOSE OR GENERAL IDEA OF BILL:
This bill would ensure that if a covered generic drug is unavailable due
to a drug shortage insurers would be required to cover the brand-name
drug at the same cost as the generic for the duration of the shortage.
SUMMARY OF SPECIFIC PROVISIONS:
Section 1 amends section 3242 of the insurance law to provide that
during a supply issue recognized by the FDA, insurers covering a generic
drug in their formulary will also cover the brand-name equivalent at no
increased price.
Section 2 amends section 4329 of the insurance law to provide that
during a supply issue recognized by the FDA, insurers covering a generic
drug in their formulary will also cover the brand-name equivalent at no
increased price.
Section 3 sets the effective date.
JUSTIFICATION:
In light of recent shortages of generic drugs, it is imperative that
insurance providers cover brand-name drugs at the same price as generics
during times of shortage. Drug shortages pose a public health concern,
as they can impact the availability of essential medications for a wide
range of conditions. Ensuring that patients have access to needed medi-
cations at affordable prices is crucial for maintaining public health
and preventing unnecessary complications. This bill would ensure such
access by requiring that, in the event the FDA recognizes that there is
an ongoing supply issue with a generic drug, insurers providing coverage
of that generic drug in their formulary will also cover the brand-name
version of that drug for the duration of the shortage. This proactive
measure can help safeguard patient health, maintain continuity of care,
and promote cost-effectiveness within the healthcare system.
During drug shortages, patients may have to switch from their prescribed
generic medication to the brand-name version of that same medication.
However, many insurers only provide coverage for the generic version of
drugs, regardless of their availability. This often requires patients to
choose between doing without the medication they have been prescribed,
paying exorbitant fees, or attempting to switch to a different medica-
tion entirely than the one that they have been prescribed by their
doctor. Such switches may disrupt a patient's continuity of care and
treatment plan. By covering brand-name drugs currently experiencing
shortages at generic prices, insurers can ensure that patients have
access to the medication they need without compromising their health or
continuity of care.
Finally, while brand-name drugs are typically more expensive than gener-
ics, covering them at generic prices during shortages can actually be
cost-effective in the long run. Avoiding potential health complications
or hospitalizations resulting from medication switches can ultimately
save money for insurers and the healthcare system as a whole.
PRIOR LEGISLATIVE HISTORY:
2023-2024: A.10185 (Forrest) - referred to insurance
FISCAL IMPLICATIONS:
TBD
EFFECTIVE DATE:
Immediately
STATE OF NEW YORK
________________________________________________________________________
1428
2025-2026 Regular Sessions
IN ASSEMBLY
January 9, 2025
___________
Introduced by M. of A. FORREST -- read once and referred to the Commit-
tee on Insurance
AN ACT to amend the insurance law, in relation to substituting brand
name prescription drugs in the case of a drug shortage
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Section 3242 of the insurance law is amended by adding a
2 new subsection (d) to read as follows:
3 (d) (1) As used in this subsection:
4 (A) "Eligible prescription drug" means a prescription drug approved
5 under 21 U.S.C. 355(c) that is not under patent.
6 (B) "Generic drug" means a drug that is approved pursuant to an appli-
7 cation referencing an eligible prescription drug that is submitted under
8 subsection (j) of Section 505 of the Federal Food, Drug, and Cosmetic
9 Act, 21 U.S.C. 355.
10 (C) "Supply issue" means a drug shortage or meaningful disruption as
11 defined in 21 U.S.C. 356(c).
12 (2) In the event an AB-rated generic equivalent or interchangeable
13 biological product for an eligible prescription drug is covered in an
14 insurer's formulary and such generic drug equivalent is unavailable due
15 to a supply issue which has been recognized by the federal food and drug
16 administration pursuant to 21 U.S.C. 356e and the dosage cannot be
17 adjusted, an insurer that delivers or issues for delivery in this state
18 a policy that provides coverage for prescription drugs shall provide
19 coverage for a brand name eligible prescription drug to an insured who
20 is already receiving such prescription drug as a generic equivalent or
21 has been diagnosed with or presented with a condition on or prior to the
22 start of the plan year that is treated by such eligible prescription
23 drug or is an eligible prescription drug that is or would be part of the
24 insured's treatment regimen for such condition. Such brand name eligible
25 prescription drug shall be covered at the same level of coverage as the
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD03949-01-5
A. 1428 2
1 generic drug in the insurer's formulary until such time as the supply
2 issue is resolved and the drug has been removed from the federal food
3 and drug administration's shortage list.
4 § 2. Section 4329 of the insurance law is amended by adding a new
5 subsection (d) to read as follows:
6 (d) (1) As used in this subsection:
7 (A) "Eligible prescription drug" means a prescription drug approved
8 under 21 U.S.C. 355(c) that is not under patent.
9 (B) "Generic drug" means a drug that is approved pursuant to an appli-
10 cation referencing an eligible prescription drug that is submitted under
11 subsection (j) of Section 505 of the Federal Food, Drug, and Cosmetic
12 Act, 21 U.S.C. 355.
13 (C) "Supply issue" means a drug shortage or meaningful disruption as
14 defined in 21 U.S.C. 356(c).
15 (2) In the event an AB-rated generic equivalent or interchangeable
16 biological product for an eligible prescription drug is covered in an
17 insurer's formulary and such generic drug equivalent is unavailable due
18 to a supply issue which has been recognized by the federal food and drug
19 administration pursuant to 21 U.S.C. 356e and the dosage cannot be
20 adjusted, a corporation subject to the provisions of this article that
21 issues a contract that provides coverage for prescription drugs shall
22 provide coverage for a brand name eligible prescription drug to an
23 insured who is already receiving such prescription drug as a generic
24 equivalent or has been diagnosed with or presented with a condition on
25 or prior to the start of the plan year that is treated by such eligible
26 prescription drug or is an eligible prescription drug that is or would
27 be part of the insured's treatment regimen for such condition. Such
28 brand name eligible prescription drug shall be covered at the same level
29 of coverage as the generic drug in the insurer's formulary until such
30 time as the supply issue is resolved and the drug has been removed from
31 the federal food and drug administration's shortage list.
32 § 3. This act shall take effect immediately.
