Prescription drugs.

Removed redundant possessive constructions such as changing 'the enrollee's plan's prescribing provider' to 'the plan's prescribing provider' and 'the insured's insurer's prescribing provider' to 'the insurer's prescribing provider' in Sections 1367.22 and 10123.190.

Standardized references by removing 'brand name or' before 'reference product' in multiple cost-comparison provisions (e.g., 'lower than the brand name or reference product' became 'lower than the reference product'), since 'reference product' already encompasses the brand-name drug.

Clarified cost-sharing language by changing 'the net cost of the drug or biological product' to 'the net cost of the proposed biosimilar or interchangeable biological product alternative' in both Section 1367.22 and Section 10123.190.

Cleaned up transitional amendment language in the 60-day notice provisions, replacing convoluted phrasing like 'of a formulary change pursuant to this paragraph prior to requirement pursuant to this subdivision before requiring an enrollee to try an alternative pursuant to this paragraph' with the clearer 'of a requirement pursuant to this subdivision before requiring an enrollee to try an alternative biosimilar or interchangeable biological product.'

Removed the duplicate section number 'SEC. 3.' that appeared twice in the amended version, and updated the bill header to reflect enrolled status with passage dates (Senate August 27, Assembly August 26) and signature blocks for transmittal to the Governor.

New Health and Safety Code Section 1342.77 requires health care service plan contracts issued, amended, or renewed on or after January 1, 2027 that include a reference product on their formulary to also include at least one biosimilar or interchangeable biological product for the same reference product if it has a lower net cost to the plan.

The AB-rated generic equivalent option was removed from the substitution authority. Plans and insurers can now only require enrollees/insureds to try a biosimilar or interchangeable biological product, not an AB-rated generic of a brand name drug.

A new Insurance Code Section 10123.1937 was added (referenced in the bill title), expanding the bill's reach into additional insurance code provisions.

The continuity-of-coverage protection no longer requires that the drug 'continues to be medically necessary' for the condition. The requirement is now only that the drug is appropriately prescribed and considered safe and effective.

The advance notice period before requiring an enrollee or insured to try a biosimilar alternative was increased from 30 days to 60 days.

The deadline for plans to notify prescribing providers about available biosimilar substitutions on their formulary was changed from January 1, 2027 to January 15, 2027.

New reporting requirement: beginning on or before October 1, 2027, plans must report to the department (in coordination with the Department of Insurance) the proportion of prescriptions filled for alternatives that resulted in reduced cost sharing, the impact on premiums, and any other related information requested.

The notice content requirements were restructured to require identification of all biosimilars or interchangeable biological products in the same or lower cost-sharing tier, and detailed instructions for both formulary exception requests and step therapy exception requests separately.

The department is now authorized to adopt guidance to health care service plans to implement the section, and this guidance is exempt from the Administrative Procedure Act.

A new definition of 'net cost' was added, specifying that it shall be defined by the department in coordination with the Department of Insurance.

Advance notice period for formulary changes or substitution requirements increased from at least 30 days to at least 60 days for both health care service plans and health insurers.

New detailed content requirements for the advance notice: must include the name of the affected reference product, whether it is being removed from formulary or moved to a higher tier, appropriate alternative products in the same or lower tier with expected cost sharing, how to obtain a formulary exception, and that the prescription can be reissued with 'Do not substitute' to maintain current coverage.

New anti-conflict-of-interest provision prohibiting a pharmacy benefit manager, health care service plan, health insurer, or affiliated entity from requiring utilization of only a biosimilar product in which they have a direct or indirect financial interest if unaffiliated biosimilars are also available.

New condition that a prescribing provider is not required to seek new prior authorization for an alternative biosimilar or interchangeable biological product if prior authorization was previously approved for the original reference product.

New requirement that no later than January 1, 2027, plans and insurers must notify prescribing providers of any reference biological product and its biosimilar or interchangeable alternatives on their formulary, informing prescribers about pharmacist substitution authority and identifying affected patients.

The framing of plan/insurer authority changed from 'does not prohibit' (removing a barrier) to an affirmative authorization ('may require'), making the power more explicit rather than implied by absence of prohibition.

A severability clause was added as a new Section 5, providing that if any provision is held invalid, the remaining provisions continue in effect.

Terminology shifted from 'substitute' to 'alternative' and from 'substitution requirement' to 'formulary change' throughout the plan and insurer sections, reframing the action as a formulary decision rather than a substitution mandate.

The intent statement (Section 1) was changed from promoting 'equally effective lower cost treatments' to 'equally safe and effective lower cost products,' adding a safety requirement and broadening the term from treatments to products.

The 'Do not substitute' cross-reference in both Section 1367.22(b)(1)(A) and Section 10123.190(b)(1)(A) now specifies the manner of indication by referencing subdivision (b) of Section 4073 or subdivision (e) of Section 4073.5, as applicable, rather than just stating 'or words of similar meaning.'

Section 4073.5(a)(1) now requires that the alternative biological product be 'a biosimilar, biosimilar to, or interchangeable with, the prescribed reference product,' explicitly tying the substitution to the specific reference product rather than just being a biosimilar or interchangeable product in general.

New definition of 'reference product' was added to Section 4073.5(j), defined by reference to Section 262(i)(4) of Title 42 U.S.C.

New definitions of 'AB-rated generic equivalent' (a drug rated with an AB code in the FDA's Approved Drug Products with Therapeutic Equivalence Evaluations) and 'biological product' were added to both Section 1367.22(f) and Section 10123.190(f).

Sections 1367.22(b)(1) and 10123.190(b)(1) were changed from 'does not prohibit a plan/insurer from requiring' to an affirmative statement that the plan/insurer 'may require' an enrollee/insured to try a substitute. This shifts the legal character from a carve-out from existing restrictions to a positive grant of authority.

New condition (E) in both Section 1367.22(b)(1) and Section 10123.190(b)(1) requires the plan or insurer to provide at least 30 days' advance notice to the enrollee/insured and prescribing provider before requiring them to try a substitute.

New condition (D) in both Section 1367.22(b)(1) and Section 10123.190(b)(1) adds a standalone requirement that the enrollee's/insured's cost sharing must be the same or less than the cost sharing of the brand name drug or reference product, separate from the existing net-cost-based condition in (C).

New paragraph (2) in both Section 1367.22(b) and Section 10123.190(b) allows an enrollee/insured or their prescribing provider to request an exception to a substitution requirement under existing exception procedures (Sections 1367.206/1367.24 for health plans; Sections 10123.201/10123.191 for insurers).

New paragraph (4) in both Section 1367.22(b) and Section 10123.190(b) explicitly states that the substitution authority does not authorize a health care service plan or health insurer to alter or issue a prescription.

Section 4073.5(i) now specifically references the FDA's Purple Book Database of Licensed Biological Products as the source for the list of interchangeable biological products that the board must link to on its website.