ASSEMBLY FINANCIAL INSTITUTIONS AND INSURANCE COMMITTEE

STATEMENT TO

ASSEMBLY COMMITTEE SUBSTITUTE FOR

ASSEMBLY, No. 1825

STATE OF NEW JERSEY

DATED:  JANUARY 27, 2025

      The Assembly Financial Institutions and Insurance Committee reports favorably an Assembly Committee Substitute for Assembly Bill No. 1825.

      This substitute bill requires health insurance carriers and utilization review organizations to meet certain guidelines in the administration and review of step therapy protocols.  The bill defines “step therapy protocol” as a protocol, policy, or program that establishes the specific sequence in which prescription drugs for a specified medical condition, and medically appropriate for a particular patient, are required to be administered in order to be covered by a health benefits plan.

      The bill provides that clinical review criteria used to establish a step therapy protocol will be based on clinical practice guidelines developed by the carrier that:

      (1)  recommend that the prescription drugs be taken in the specific sequence required by the step therapy protocol;

      (2)  are developed and endorsed by a multidisciplinary panel of experts that rely on objective data and manages conflicts of interest among the members by requiring members to disclose any potential conflict of interests with entities, including carriers and pharmaceutical manufacturers and recuse themselves from voting if they have a conflict of interest;

      (3)  are based on high quality studies, research, and medical practice;

      (4)  are created by an explicit and transparent process that minimizes biases and conflicts of interest, explains the relationship between treatment options and outcomes, rates the quality of the evidence supporting recommendations, and considers relevant patient subgroups and preferences; and

      (5)  are reviewed annually or quarterly if there is a new indication or new clinical information available and updated when such review reveals new evidence necessitating modification.

      The bill further provides that when coverage of a prescription drug for the treatment of any medical condition is restricted for use by a carrier or utilization review organization pursuant to a step therapy protocol, the carrier or utilization review organization must provide the covered person and prescribing practitioner a clear, readily accessible, and convenient process to request a step therapy exception. A carrier or utilization review organization may use its existing medical exceptions process to satisfy this requirement.  An explanation of the process will be made available on the carrier or utilization review organization’s website. 

      A step therapy exception will be granted if the prescribing health care provider determines that:

      (1)  the required prescription drug is contraindicated or is likely to cause an adverse reaction or physical or mental harm to the patient;

      (2)  the required prescription drug is expected to be ineffective or less effective than an alternative based on the known clinical characteristics of the patient and the known characteristics of the prescription drug regimen; or

      (3)  all formulary drugs used to treat each disease state have been ineffective or less effective than an alternative in the treatment of the covered person's disease or condition, or all such drugs have caused or are reasonably expected to cause adverse or harmful reactions in the covered person.

      If requested by a carrier, the prescribing health care provider is to provide documentation to support the determinations made by the provider.

      Additionally, the bill provides that when a step therapy exception is granted, the carrier or utilization review organization will authorize coverage for the prescription drug prescribed by the patient’s treating health care provider at least 180 days or the duration of therapy if less than 180 days, provided that the prescription drug is covered by the patient’s health care plan.

      The bill provides that any step therapy exception is eligible for appeal by a covered person.  The carrier or utilization review organization must grant or deny a step therapy exception request or an appeal of a step therapy exception request within a time frame appropriate to the medical exigencies of the case but no later than 24 hours for urgent requests and 72 hours for non-urgent requests after obtaining all necessary information to make the approval or adverse determination.

      The bill finally provides that a carrier or utilization review organization is to make available on its Internet website certain information regarding step therapy exception request approvals and denials, as determined by the Commissioner of Human Services.