There was a problem sending you an sms. Check your phone number or try again later.
We've sent a link to the Scribd app. If you didn't receive it, try again.
The National Association of Insurance Commissioners
(NAIC) is made up of insurance regulators from each state
that are concerned with both consumer protection and the
assurance of a viable, competitive insurance market. This
means they must balance issues of affordability and
operational efficiency with consumer concerns. The NAIC
provides a forum for stakeholders to provide input into
the development of insurance-related public policy.
Model acts developed by the NAIC are often adopted by
states or used as a basis for developing their own state-
specific legislation or regulation.
NAIC has recently completed the \u201cHealth Carrier
Prescription Drug Benefit Management Model Act.\u201d This
model act establishes requirements pertaining to
insurance company programs for managing
pharmaceutical benefits. Many insurers, and their
subcontracted pharmacy benefit management companies
(PBMs), limit their pharmaceutical benefits through
formularies, prior authorization requirements, tiered co-
pay structures, and other techniques. Such techniques are
collectively known as \u201cpharmacy benefit management
procedures\u201d or \u201cPBMPs.\u201d PBMPs are used to give
preference to selected drugs and discourage use of other
non-preferred drugs. The NAIC\u2019s model act establishes
some very helpful consumer protections, but in other
ways falls short of what consumer groups might like to see.
The NAIC model act does establish a requirement that
formularies and certain other PBMPs be established by a
committee of health care professionals (called Pharmacy &
Therapeutic or P&T committees) that determines which
drugs should receive preferential treatment based in part
on the documented clinical effectiveness. The model also
requires that information about formularies and the use of
PBMPs be disclosed to consumers. In addition, the model
act requires health plans to have a process for considering
cases in which the consumer has been denied access to a
drug as a result of the application of a PBMP. The
consumer may receive coverage if the doctor can show
that the drug is medically necessary.
While the NAIC model act represents an improvement
over the current lack of rules, it does not go far enough.
The model act does not include certain common insurance
practices in NAIC\u2019s definition of PBMPs, including tiered
co-pays, therapeutic substitution, and generic substitution.
Therefore, the protections afforded by the model do not
apply to these practices. For example, there is no right of
appeal if a medically necessary drug is placed in a very
high tier co-pay structure and is therefore unaffordable to
a consumer. Furthermore, there are no limits on out-of-
pocket liability for consumers. So the accumulation of
expenses from numerous high tier co-pays is unlimited.
In addition, the NAIC model act does not establish parity
between pharmacy and other benefits. For example, when
an insurer denies coverage of a particular drug (because it
is not on the formulary or because the consumer has not obtained proper authorization), the NAIC model act does not explicitly require notice of denial or notice of appeal rights to the consumer. Such notices are required by state and federal law when any benefit is denied, but it is not enforced or even recognized as it pertains to pharmacy benefits. Had the NAIC model act required such notice, it would have made clear that the existing law has no
The model act itself does not have any legal authority. In
order for states to adopt the NAIC model act (with or without
modifications), states must actually pass legislation or
regulation through their usual process. Therefore, there is an
opportunity for consumers and other stakeholders to
influence the ultimate policy on pharmacy benefits as each
state considers this model act.
The industry clearly opposes many provisions of NAIC\u2019s
model act. Insurer\u2019s offered an alternative that was
significantly less favorable to consumers. The table on the
following pages provides a comparison of NAIC\u2019s model
act, the insurance industry alternative, and provisions that
consumer groups might wish to have included in the
The insurance industry is likely to actively lobby the states
against any legislation to establish even the modest
consumer protections provided in the NAIC model act.
Consumer groups will be the best advocates of legislation
to adopt the NAIC model act, as well as to seek additional
protections not currently included. Consumer groups can
also share personal examples of cases where existing laws
have not been followed or enforced, and seek compliance
through dialogue with health plans, Departments of
Since 1953, the National Pharmaceutical Council (NPC) has sponsored and conducted scientific, evidence-based analyses of the appropriate use of pharmaceuticals and the clinical and economic value of pharmaceutical innovations. NPC provides educational resources to a variety of health care stakeholders, including patients, clinicians, payers and policy makers. More than 20 research-based pharmaceutical companies are members of the NPC.
PBMPs are defined to include
only formularies, prior
authorization, step therapy, and
No consumer protections are
established for tiered co-pays,
therapeutic substitution, or
any other type of access
limitation that may be
designed in the future.
No regulation of PBMPs except
for formularies. There are,
however, some disclosure
requirements about dose
NAIC language generally
achieves this, though it could
formulary or otherwise given
preferred status should be
adequate for most consumers
(e.g., there should be at least
one type of drug from each
preferred drugs in the class for the majority of the population. This language was cut.
Consumers should be
protected from unlimited out-
of-pocket (OOP) costs,
especially in a tiered co-pay
plan. This protection should
include an OOP limit , a limit
on how high tiered co-pays
can be, or an appeal right to
obtain upper tier drugs at a
lower co-pay when medically
plans have OOP limits on all
benefits except pharmacy, and
many states limit how high the
co-pays can be on in- and out-
of-network benefits in a PPO,
but not on drug benefits.
Consumers should be given a
notice of denial when they
attempt to get coverage for a
non-formulary or otherwise
unapproved drug. Such notice
should include a statement of
Now bringing you back...
Does that email address look wrong? Try again with a different email.