Provides relative to formulary placement and cost-sharing requirements for certain generic drugs and biosimilars (EG NO IMPACT See Note)

HB 870 enacts a new section of Louisiana's insurance code establishing mandatory formulary placement and cost-sharing requirements for generic drugs and biosimilars that cost less than their brand-name counterparts. The statute creates definitions for five key terms: biosimilar, generic drug, reference listed drug, reference product, and wholesale acquisition cost, with wholesale acquisition cost defined by reference to federal Medicare regulations. When a generic drug with a lower wholesale acquisition cost than its reference listed drug enters the market, health insurance issuers that cover the brand-name drug must immediately place the generic on their formulary at a cost-sharing tier more favorable than the reference drug's tier. The statute similarly requires insurers to make at least one lower-cost biosimilar available on a more favorable formulary tier when one is marketed. Critically, the statute prohibits insurers from imposing prior authorization, step therapy, or any other utilization management barriers that would make accessing the cheaper generic or biosimilar more difficult than accessing the reference product, and it prohibits restrictions on which pharmacies can dispense these lower-cost alternatives.

The practical effect of this legislation falls primarily on health insurance issuers offering coverage in Louisiana and the enrollees they serve. Insurers must modify their formularies and cost-sharing structures to provide preferential treatment to lower-cost generics and biosimilars immediately upon their market entry, potentially reducing administrative burden on enrollees by eliminating step therapy and prior authorization requirements for these drugs. Enrollees benefit from lower out-of-pocket costs when lower-cost alternatives become available and from easier access to these medications without utilization management barriers. Healthcare providers, particularly pharmacists and prescribers, will experience changes in how patients access medications, as the utilization management restrictions traditionally used to steer patients toward brand-name drugs or higher-cost alternatives will be prohibited. The requirements remain in effect only so long as the generic or biosimilar maintains a lower wholesale acquisition cost than the reference product, creating a dynamic system responsive to market pricing.

This statute operates within Louisiana's existing regulatory framework for health insurance found in Title 22 of the Louisiana Revised Statutes. The new section integrates with and potentially modifies existing formulary management practices that insurers currently use under Louisiana and federal insurance law. The definitions of biosimilar and generic drug reference FDA approval categories and processes, connecting state law directly to federal pharmaceutical regulatory authority. The wholesale acquisition cost metric references the federal definition in 42 U.S.C. Section 1395w-3a, linking state requirements to the federal Medicare payment system. The statute addresses utilization management practices that are otherwise permissible under state and federal law, effectively restricting the discretion insurers have in formulary design and prior authorization practices when lower-cost alternatives meeting the statute's criteria are involved. Any constitutional issues would likely center on whether the statute impermissibly regulates insurance practices in a manner preempted by federal law or violates carriers' contract or property rights, though the statute's reliance on FDA approval categories and federal wholesale acquisition cost definitions suggests an intent to operate within permissible state insurance regulation.