Arizona House of Representatives Committee on Regulatory Affairs — Report of Regular Meeting, March 20, 2024 (Fifty-sixth Legislature, Second Regular Session)

Summary

Minutes of the regular meeting of the Arizona House of Representatives Committee on Regulatory Affairs, Fifty-sixth Legislature, Second Regular Session, held Wednesday, March 20, 2024 under Chairman Laurin Hendrix. The report records committee action on five Senate bills: SB1164 do pass amended 7-0-0-0, SB1163 do pass 7-0-0-0, SB1154 failed 2-5-0-0, SB1016 do pass 6-1-0-0 and SB1634 do pass 4-3-0-0. Attachments include the agenda, the Request to Speak report listing organizations and individuals registered on each bill, and the attendance record. A House bill analysis of SB 1164, pharmacy benefits; coverage, describes limits on formulary changes by pharmacy benefit managers and insurers, and proposed House amendments to the bill follow. The document closes with an analysis of SB 1634 on board decisions and a roll call vote on that bill.

Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used

Full text

ARIZONA HOUSE OF REPRESENTATIVES
Fifty-sixth Legislature - Second Regular Session

COMMITTEE ON REGULATORY AFFAIRS

Report of Regular Meeting
Wednesday, March 20, 2024

House Hearing Room 5 -- 2:00 P.M.

Convened 2:27 P.M.

Recessed

Reconvened
Adjourned 3:32 P.M.

Members Present

Representative Crews

Representative Hernandez
Representative Liguori

Representative Payne

Representative Pefia

Representative McGarr, Vice-Chairman
Representative Hendrix, Chairman

Agenda

Original Agenda — Attachment 1

Request to Speak

Report — Attachment 2

Committee Attendance

Report — Attachment 3

Committee Action

Bill
SB1164
SB1163
SB1154
SB1016
SB1634

Action
DPA

DP
FAILED
DP

DP

Members Absent

Vote

7-0-0-0
7-0-0-0
2-5-0-0
6-1-0-0
4-3-0-0

D
MINUTES RECEIVE
CHIEF CLERK'S OFFICE

Hela/4

Attachments
4,5,6

7,8

9,10

11,12

13, 14

JulRyberg, Committee Secretary

March 22, 2024

(Original attachments on file in the Office of the Chief Clerk; video archives available at http://www.azleg.gov)

COMMITTEE ON REGULATORY AFFAIRS

March 20, 2024
ARIZONA HOUSE OF REPRESENTATIVES
Fifty-sixth Legislature - Second Regular Session

LonterrA 0827 fm

REGULAR MEETING AGENDA Af ourned] A Ieé ft;

COMMITTEE ON REGULATORY AFFAIRS

DATE Wednesday, March 20, 2024 ROOM HHR5 TIME = 2:00 P.M.

Members of the public may access a livestream of the meeting here:
https:/Avww.azleg.gov/videoplayer/?clientID=6361 162879&eventID=202403 1078

Members:
Representative Crews Representative Payne Representative McGarr, Vice-Chairman
Representative Hernandez A Representative Pefia Representative Hendrix, Chairman
Representative Liguori

Bills Short Title Strike Everything Title

Y SB1016 homeowners’ associations; flagpoles
DP (Kavanagh)
RA, RULES
VL oe - 2

3 SBI154 ; dental board; dental hygienists
he (Shamp)

of, RA, RULES
oe SB1163 fp) 2 homeopathic medicine; integrated medicine;

qualifications(now: homeopathic medicine;

qualifications)
Lid? +f 7(Shamp: Burch)
RA, RULES

pharmacy benefits; coverage; exemptions(now:
O24 pharmacy benefits; coverage)

z. _ (Shamp: Burch)
f-OP* 2» APPROP, RULES

*SB1634 nonhealth regulatory boards; challenges;
ae LE prohibition

(Hoffman)
Ved :LL2 RN held 0-0-0-0-0, RULES

SB1164
} SB116

* On previous agenda

ORDER OF BILLS TO BE SET BY THE CHAIRMAN

RA
03/14/2024

People with disabilities may request reasonable accommodations such as interpreters, alternative formats, or
assistance with physical accessibility. If you require accommodations, please contact the Chief Clerk's Office at
(602) 926-3032 or through Arizona Relay Service 7-I-1.

Page 1 of 1
Attachment ft
Information Registered on the Request to Speak System

House Regulatory Affairs (3/20/2024)

SB1016, homeowners' associations: flagpoles

Testified in support:
Dennis J Legere, ARIZONA HOMEOWNERS COALITION

Support:

Paul Fitch, representing self; Carolyn Wefsenmoe, representing self

All Comments:

Dennis J Legere, ARIZONA HOMEOWNERS COALITION: Simple bill to address unreasonable restriction from an
association to ban a veteran's widow from flying both a US Flag and Marine corps flag at the same time to honor
her husband.

$B1154, dental board: dental hygienists

Testified in support:
Jessie Armendt, ARIZONA DENTAL HYGIENISTS' ASSOCIATION

Testified as opposed:
Ryan Edmonson, AZ STATE BOARD OF DENTAL EXAMINERS; Regina Cobb, representing self

Support:
Cody Hruby, ARIZONA DENTAL HYGIENISTS' ASSOCIATION

Oppose:

Jason Barraza, Associate Director, Arizona Dental Association; Ryan Sullivan, Arizona Dental Association

All Comments:
Cody Hruby, ARIZONA DENTAL HYGIENISTS' ASSOCIATION: Speak if necessary; Regina Cobb, Self: Arizona Dental
Associaton

$B1163, homeopathic medicine; integrated medicine: qualifications
(NOW: homeopathic medicine: qualifications)

Testified in support:

David Geriminsky, representing self; Shannon Whiteaker, (AHIMA) Arizona Homeopathic And Integrated Medicine
Association, ARIZONA CHIROPRACTIC DEFENSE FEDERATION, Envita Medical Centers, Phoenix Institute Of Herbal
Medicine & Acupuncture (PIHMA), College & Clinic.

Attachment om
Support:
Catherine Niemiec, President PIHMA Acupuncture College, representing self; Lisa Platt, representing self; Mario
Fontes, representing self

Oppose:

Donaida Bond, representing self

All Comments:

David Geriminsky, Self: Executive Director for Board of Homeopathy and Board of Acupuncture.; Catherine
Niemiec, President PIHMA Acupuncture College, Self: This Jobs bill benefits the state with creation of greater
access for patients to qualified practitioners. It is a much needed cleanup bill for the board. Strengthening this
board supports the entire state of Arizona with qualified practitioners.; Mario Fontes, Self: President/Chairman of
Homeopathic and Integrated Medicine Board

$B1164, pharmacy benefits; coverage: exemptions (NOW: pharmacy
benefits; coverage)

Testified in support:
Dianne McCallister, ARIZONA PHARMACY BUSINESS COUNCIL, AZ PHARMACY ASSOCIATION; Chaz Gilbert,
representing self

Testified as neutral:
Kelsey Lundy, Pharmaceutical Care Management Association (PCMA)

Support:

Dominic Braham, NATIONAL MULTIPLE SCLEROSIS SOCIETY; Judy Wilson, representing self; Maura Crossin,
representing self; Brian Hummell, American Cancer Society Cancer Action Network; Steve Barclay, Arizona Bleeding
Disorders, MAYO CLINIC ARIZONA

Neutral:
Marc Osborn, AMERICA'S HEALTH INSURANCE PLANS (AHIP)

All Comments:

Dominic Braham, NATIONAL MULTIPLE SCLEROSIS SOCIETY: When a person living with MS loses access to the
treatment that best controls their disease progression, they may experience loss of function and possibly
irreversible increase in disability. The National MS Society supports $B1164.; Judy Wilson, Self: 1am a person with
MS and | support this bill regarding non-medical switching. It is very important that members understand the
possible outcomes of using non-medical switching with MS Disease Modifying Drugs; Brian Hummeil, American
Cancer Society Cancer Action Network: Protects patients ability to receive medications that make them medically
stable; Kelsey Lundy, Pharmaceutical Care Management Association (PCMA): Neutral w/ Payne Amendment; Marc
Osborn, AMERICA'S HEALTH INSURANCE PLANS {AHIP}: Working with the sponsor on some small additional
amendments for appropriations committee. We appreciate the stakeholder process.
$B1634, nonhealth regulatory boards: challenges: prohibition

Oppose:

Kenneth Bierman, representing self; Dianne Post, representing self; Kathleen Pettycrew, representing self; Sharon
Lee, representing self; Martha O'Connor, representing self; Kathleen Dubbs, representing self; Carol Waymire,
representing self

All Comments:
Dianne Post, Self: Attempt to hamstring the regulatory process.
ARIZONA STATE LEGISLATURE
Fifty-sixth Legislature - Second Regular Session

COMMITTEE ATTENDANCE RECORD

COMMITTEE ON REGULATORY AFFAIRS
CHAIRMAN: Laurin Hendrix VICE-CHAIRMAN: Cory McGarr
DATE 03/20/24 124 124 124 124
CONVENED a-a7em m m m m
RECESSED
RECONVENED
ADJOURNED 322 pe
MEMBERS
Crews ~~
Hernandez A LY
Liguori 7
Payne 7
Pefia iv
McGarr, Vice-Chairman Y
Hendrix, Chairman a

V Present --- Absent exc Excused

Attachment a
ARIZONA HOUSE OF REPRESENTATIVES
Fifty-sixth Legislature

Second Regular Session

Senate: FICO DPA 7-0-0-0 | APPROP DPA S/E 7-2-0-0 | 3*4 Read 27-1-2-0

SB 1164: pharmacy benefits; coverage
Sponsor: Senator Shamp, LD 29
Committee on Regulatory Affairs

Overview

Effective December 31, 2024, outlines the prohibitions, limitations and permissive actions for
a health care provider (provider), health care insurer (insurer), Pharmacy Benefits Manager
(PBM) and the covered individual. Establishes a process to review and determine a
prescription drug coverage exemption.

History
Statute outlines the procedures for in-person and desktop audits performed by an auditing

entity working on behalf of an insurer or PBM for the purposes of auditing drug claims
adjudicated by pharmacies. The auditing entity must deliver a preliminary audit report to
the pharmacy within 60 days after the conclusion of the audit. A pharmacy is allowed at least
30 days after receipt of the preliminary audit to provide documentation to address any
discrepancy found in the audit. Unless otherwise required by state or federal law, audit
information may not be shared with any entity other than the insurer on whose behalf the

audit was conducted (A.R.S. §§ 20-3822-3328).

The Department of Insurance and Financial Institutions (DIFI) regulates and monitors
insurance companies and professionals operating in Arizona to protect the public and help
ensure that these entities follow state and federal laws (Ariz. Const. § 15-5). Beginning
January 1, 2025, PBMs must apply and pay a fee to DIFI for a valid certificate of authority
to operate as a PBM who performs services for a health plan subject to state jurisdiction
(A.R.S, § 20-3333). A PBM is a person, business or entity that manages the prescription drug
coverage provided by a contracted insurer or other third-party payor. Responsibilities include
the processing and payment of claims for prescription drugs, the performance of drug
utilization review, the processing of drug prior authorization requests, the adjudication of
appeals related to prescription drug coverage, contracting with network pharmacies and
controlling the cost of covered prescription drugs (A.R.S, § 20-3321).

Provisions
1, States that if a PBM enters into an agreement with a health care insurer (insurer) to
provide pharmacy benefit management services (services), the PBM:
a) cannot limit or exclude prescription drug coverage for a covered individual who takes
a specific prescription drug that was previously approved by the PBM or insurer and
the covered individual continues to be enrolled by the insurer; and
b) requires coverage of the specific prescription drug through the last day of the covered
individual's plan year. (Sec. 1)

2. Stipulates that a PBM or insurer cannot:

£1] Prop 105 (45 votes) O Prop 108 (40 votes) O Emergency (40 votes) 0 Fiscal Note

SB 1164
Initials DC/RP Page 1 Regulatory Affairs

Attachment Y
a) limit or reduce the maximum coverage of prescription drug benefits;
b) increase cost sharing for a covered prescription drug;

c) move a prescription drug to a more restrictive formulary tier; or

d) remove a prescription drug from a formulary, except as noted. (Sec. 1)

3. Requires the PBM or insurer to give written notice of a formulary change for the
prescription drug on the drug formulary to each impacted individual and health care
provider (provider) at least 60 days before the change during the plan year. (Sec. 1)

4, Permits the PBM or insurer to only change a covered individual from the previously
prescribed drug if the covered individual's provider gives written authorization to the
PBM or insurer for the change in the prescription drug. (Sec. 1)

5. Requires a PBM or insurer provide written notice of the removal from, or an increase in
cost sharing for any prescription drug on the drug formulary to each impacted covered
individual and the prescribing provider at least 60 days before the plan year ends if the
covered individual's prescribing provider did not previously approve a change. (Sec. 1)

6. States that the notice sets the process for the covered individual's provider to request a
prescription drug coverage exemption for the continued use of the nonformulary
prescription drug as outlined. (Sec. 1)

7. Creates a prescription drug coverage exemption determination process to ensure
continuity of care after a covered individual's renewal as follows:

a) an insurer, PBM or utilization review agent (agent) that is contracted for services for
the insurer must provide a covered individual and prescribing provider with access
to a clear and convenient process to request a coverage exemption;

b) an insurer, PBM or agent may use their existing medical exceptions process to satisfy
the stated requirements;

c) an insurer, PBM or agent must respond to a coverage exemption determination
request within the timelines detailed in federal law;

d) an insurer, PBM or agent must approve an exemption for a covered individual who
was previously approved to receive the nonformulary prescription drug by the covered
individual’s current Insurer or PBM and the provider continues to prescribe the
medication for the medical condition;

e) a denial must be in writing and state the reasons for the denial, signed by either the
licensed pharmacist or medical director as outlined in the bill;

f) notice of a denial must be sent to the covered individual's provider that made the
request and maintain copies for inspection during regular business hours;

g) the covered individual or the person's representative may appeal a denial
determination and the process must be included in the notification; and

h) an approved authorization for a coverage exemption must be in writing, delivered to
the covered person and the provider and valid until the end of the covered person’s

plan year. (Sec. 1)

8. States the provider is not prevented from prescribing another prescription drug as
outlined. (Sec. 1)

9. Stipulates the insurer or PBM may contract to provide services. (Sec. 1)

10. Authorizes the director to assess a civil penalty for violations against the insurer, PBM
or agent as outlined. (Sec. 1)

SB 1164
Initials DC/RP Page 2 Regulatory Affairs
11. States that a policy that is issued or renewed by a disability insurer does not include a
policy that provides limited benefit coverage. (Sec. 1)

12. Defines pertinent terms. (Sec. 1)

13. Applies these requirements and prohibitions to contracts entered into, amended,
extended or renewed on December 31, 2024. (Sec. 2)

SB 1164
Initials DC/RP Page 3 Regulatory Affairs
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Fifty-sixth Legislature Regulatory Affairs
Second Regular Session S.B. 1164

PROPOSED
HOUSE OF REPRESENTATIVES AMENDMENTS TO S.B. 1164

(Reference to Senate engrossed bill)

Page 1, line 3, strike "section" insert "sections"; after "20-3335" insert
"and 20-3336"
Line 4, strike "coverage"
Line 5, strike “exemption determination process" insert "formulary change:
notice; exemption"

Line 6, strike "applicability;:"
Line 18, strike "INSURER" insert "PLAN"

Line 22, after "INDIVIDUAL'S" insert "HEALTH CARE"

Strike lines 23 through 38, insert:
"B. A PHARMACY BENEFIT MANAGER OR HEALTH CARE INSURER MAY NOT CHANGE

A COVERED INDIVIDUAL FROM THE PREVIOUSLY COVERED PRESCRIPTION DRUG IF THE
COVERED INDIVIDUAL'S PRESCRIBING HEALTH CARE PROVIDER PROVIDES ELECTRONIC
OR WRITTEN NOTICE TO THE PHARMACY BENEFIT MANAGER OR HEALTH CARE INSURER
NOTIFYING THE PHARMACY BENEFIT MANAGER OR HEALTH CARE INSURER THAT IT WILL
CONTINUE ON THE CURRENT PRESCRIPTION DRUG."

Line 40, strike "DURING A PLAN YEAR" insert "THAT LIMITS OR EXCLUDES COVERAGE
OF A PRESCRIPTION DRUG"

Line 41, after "PROVIDE" insert “ELECTRONIC OR"; strike "FORMULARY" insert
"REMOVAL OF OR"

Page 2, line 1, after "CHANGE" insert a period strike remainder of line
Strike lines 2 through 12
Line 13, strike "APPROVE A CHANGE IN THE PRESCRIPTION DRUG." insert:
npn
Line 14, strike "REQUEST"

Attachment se
House Amendments to S.B. 1164

1 Page 2, line 15, strike “A PRESCRIPTION DRUG COVERAGE EXEMPTION” insert "NOTIFY
2 THE PHARMACY BENEFIT MANAGER OR HEALTH CARE INSURER"

3 Strike Tines 16 through 43

4 Strike page 3

5 Page 4, strike lines 1 through 10, insert "NONFORMULARY PRESCRIPTION DRUGS. THE
6 NOTICE SHALL ALSO INCLUDE NOTIFICATION TO THE PRESCRIBING HEALTH CARE
7 PROVIDER THAT IF THE HEALTH CARE PROVIDER NOTIFIES THE PHARMACY BENEFIT
8 MANAGER OR HEALTH CARE INSURER THAT THE ENROLLEE WILL CONTINUE ON THE
9 NONFORMULARY PRESCRIPTION DRUG FOR THE REMAINDER OF THE HEALTH CARE PLAN

10 YEAR, THE PROVIDER WILL NEED TO APPLY FOR A FORMULARY EXCEPTION PURSUANT TO

ii SECTION 20-3336 FOR THE CONTINUED USE OF THE NONFORMULARY PRESCRIPTION DRUG

12 ON RENEWAL OF THE HEALTH CARE PLAN.

13 E, THIS SECTION DOES NOT:

14 1, PREVENT A HEALTH CARE PROVIDER FROM PRESCRIBING ANOTHER

15 PRESCRIPTION DRUG COVERED BY THE HEALTH CARE INSURER OF THE PHARMACY

16 BENEFIT MANAGER IF THE HEALTH CARE PROVIDER DEEMS THE PRESCRIPTION DRUG

17 MEDICALLY NECESSARY FOR THE COVERED INDIVIDUAL.

18 2. PREVENT A HEALTH CARE INSURER OR PHARMACY BENEFIT MANAGER

19 CONTRACTED TO PROVIDE PHARMACY BENEFIT MANAGEMENT SERVICES FROM:

20 (a) ADDING A PRESCRIPTION DRUG TO ITS FORMULARY.

21 (b) REMOVING A PRESCRIPTION DRUG FROM ITS FORMULARY IF THE DRUG

22 MANUFACTURER HAS REMOVED THE PRESCRIPTION DRUG FOR SALE IN THE UNITED

23 STATES.

24 (c) MAKING ANY FORMULARY CHANGES FOR PATIENTS WHO ARE NOT ON A

25 PREVIOUSLY APPROVED PRESCRIPTION DRUG.

26 F, IF A HEALTH CARE INSURER, PHARMACY BENEFIT MANAGER OR UTILIZATION

27 REVIEW AGENT THAT IS CONTRACTED TO PROVIDE PHARMACY BENEFIT MANAGEMENT

28 SERVICES VIOLATES THIS SECTION, THE DIRECTOR MAY ENFORCE THIS SECTION

29 PURSUANT TO SECTION 20-3333.

30 G. FOR THE PURPOSES OF THIS SECTION:

31 1. “HEALTH CARE INSURER" HAS THE SAME MEANING PRESCRIBED IN SECTION
| 32 20-2501.
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House Amendments to $.B. 1164

2, “LIMIT OR EXCLUDE COVERAGE" MEANS TO:

(a) LIMIT OR REDUCE THE MAXIMUM COVERAGE OF PRESCRIPTION DRUG
BENEFITS.

(b) INCREASE COST SHARING FOR A COVERED PRESCRIPTION DRUG.

(c) MOVE A PRESCRIPTION DRUG TO A MORE RESTRICTIVE FORMULARY TIER.

(d) REMOVE A PRESCRIPTION DRUG FROM A FORMULARY UNLESS EITHER OF THE
FOLLOWING APPLIES:

(i) THE UNITED STATES FOOD AND DRUG ADMINISTRATION REVOKES APPROVAL
FOR OR REMOVES A PRESCRIPTION DRUG FROM THE PRESCRIPTION DRUG MARKET.

(i7) THE PRESCRIPTION DRUG MANUFACTURER NOTIFIES THE UNITED STATES
FOOD AND DRUG ADMINISTRATION OF A MANUFACTURING DISCONTINUATION OR A
POTENTIAL DISCONTINUATION AS REQUIRED BY SECTION 506C OF THE FEDERAL FOOD,
DRUG, AND COSMETIC ACT (21 UNITED STATES CODE SECTION 356c).

3. "UTILIZATION REVIEW AGENT" HAS THE SAME MEANING PRESCRIBED IN
SECTION 20-2530.

20-3336. Pharmacy benefit managers: prescribing: formulary

exception process requirements: exception:

enforcement: definitions

A. ON RENEWAL OF A HEALTH CARE PLAN, A HEALTH CARE INSURER, PHARMACY
BENEFIT MANAGER OR UTILIZATION REVIEW AGENT THAT IS CONTRACTED TO PROVIDE
PHARMACY BENEFIT MANAGEMENT SERVICES FOR THE HEALTH CARE INSURER SHALL
PROVIDE A COVERED INDIVIDUAL AND PRESCRIBING HEALTH CARE PROVIDER WITH
ACCESS TO A CLEAR AND CONVENIENT PROCESS TO REQUEST A FORMULARY EXCEPTION
PROCESS. THE HEALTH CARE INSURER, PHARMACY BENEFIT MANAGER OR UTILIZATION
REVIEW AGENT MAY USE ITS EXISTING FORMULARY EXCEPTION PROCESS TO SATISFY
THIS REQUIREMENT IF THE MEDICAL EXCEPTIONS PROCESS IS CONSISTENT WITH THE
REQUIREMENTS PRESCRIBED IN THIS SECTION.

B. A HEALTH CARE INSURER, PHARMACY BENEFIT MANAGER OR UTILIZATION
REVIEW AGENT SHALL FOLLOW THE PROCESS AND RESPOND TO A FORMULARY EXCEPTION
DETERMINATION REQUEST IN ACCORDANCE WITH 45 CODE OF FEDERAL REGULATIONS

SECTION 156.122.
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House Amendments to S.B. 1164

C. FOR A COVERED INDIVIDUAL RENEWING THE SAME HEALTH CARE PLAN, A
HEALTH CARE INSURER, PHARMACY BENEFIT MANAGER OR UTILIZATION REVIEW AGENT
SHALL APPROVE A FORMULARY EXCEPTION FOR A COVERED INDIVIDUAL WHO HAS BEEN
PREVIOUSLY APPROVED TO RECEIVE THE NONFORMULARY PRESCRIPTION DRUG UNDER THE
SAME HEALTH CARE PLAN IF THE PRESCRIBING HEALTH CARE PROVIDER USES THE
FORMULARY EXCEPTION PROCESS AND PROVIDES RELEVANT CLINICAL DOCUMENTATION TO
CERTIFY ALL OF THE FOLLOWING:

1. THE COVERED INDIVIDUAL HAS TRIED A FORMULARY EQUIVALENT
PRESCRIPTION DRUG THAT WAS A PART OF THE COVERED INDIVIDUAL'S PRESCRIPTION
DRUG BENEFIT AT THE TIME OF THE TRIAL, THE FORMULARY EQUIVALENT
PRESCRIPTION DRUG WAS NOT EFFECTIVE IN THE TREATMENT OF THE COVERED
INDIVIDUAL'S MEDICAL CONDITION AND THE HEALTH CARE PROVIDER SPECIFIES THE
CONTRAINDICATION OR ADVERSE OR HARMFUL REACTION IN THE COVERED INDIVIDUAL.

2. THE COVERED INDIVIDUAL HAS EXPERIENCED A POSITIVE THERAPEUTIC
OUTCOME ON THE REQUESTED DRUG FOR MORE THAN NINETY DAYS.

3. FORMULARY EQUIVALENT PRESCRIPTION DRUGS ARE CONTRAINDICATED OR
WILL LIKELY CAUSE A SERIOUS ADVERSE REACTION.

D. IF A COVERED INDIVIDUAL DOES NOT QUALIFY FOR A FORMULARY
EXCEPTION PURSUANT TO SUBSECTION C OF THIS SECTION, THE COVERED INDIVIDUAL
MAY STILL APPLY FOR A FORMULARY EXCEPTION USING THE HEALTH CARE INSURER'S,
PHARMACY BENEFIT MANAGER'S OR UTILIZATION REVIEW AGENT'S FORMULARY
EXCEPTION PROCESS. WHEN EVALUATING WHETHER THE COVERED INDIVIDUAL SHOULD
QUALIFY FOR A FORMULARY EXCEPTION TO CONTINUE ON A  NONFORMULARY
PRESCRIPTION DRUG, THE HEALTH CARE INSURER, PHARMACY BENEFIT MANAGER OR
UTILIZATION AGENT SHALL CONSIDER THE FOLLOWING FACTORS:

1. WHETHER THE COVERED INDIVIDUAL HAS EXPERIENCED A_ POSITIVE
THERAPEUTIC OUTCOME ON THE PREVIOUSLY APPROVED DRUG.

2. WHETHER THE FORMULARY PRESCRIPTION DRUG IS NOT IN THE BEST
INTEREST OF THE COVERED INDIVIDUAL BASED ON MEDICAL NECESSITY BECAUSE THE
COVERED INDIVIDUAL'S USE OF THE FORMULARY PRESCRIPTION DRUG IS EXPECTED TO
CAUSE EITHER OF THE FOLLOWING:
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House Amendments to S.B. 1164

(a) A NEGATIVE IMPACT ON THE COVERED INDIVIDUAL'S COMORBID
CONDITION,

(b) A CLINICALLY PREDICTABLE NEGATIVE DRUG INTERACTION.

3. WHETHER THE FORMULARY PRESCRIPTION DRUG IS CONTRAINDICATED OR
WILL LIKELY CAUSE A SERIOUS ADVERSE REACTION.

E. DENIAL OF COVERAGE FOR A HEALTH CARE INSURER'S OR PHARMACY
BENEFIT MANAGER'S DENIAL OF COVERAGE FOR A NONFORMULARY PRESCRIPTION DRUG
SHALL BE MADE IN WRITING BY A LICENSED PHARMACIST OR MEDICAL DIRECTOR. THE
WRITTEN DENIAL SHALL CONTAIN AN EXPLANATION OF THE DENIAL THAT INCLUDES THE
MEDICAL OR PHARMACOLOGICAL REASONS WHY THE AUTHORIZATION WAS DENIED AND A
SIGNATURE BY THE LICENSED PHARMACIST OR MEDICAL DIRECTOR WHO MADE THE
DECISION TO DENY COVERAGE. THE HEALTH CARE INSURER, PHARMACY BENEFIT
MANAGER OR UTILIZATION REVIEW AGENT SHALL SEND A COPY OF THE WRITTEN DENTAL
TO THE COVERED INDIVIDUAL'S TREATING HEALTH CARE PROVIDER WHO REQUESTED THE
FORMULARY EXCEPTION. THE HEALTH CARE INSURER, PHARMACY BENEFIT MANAGER OR
UTILIZATION REVIEW AGENT SHALL MAINTAIN COPIES OF ALL WRITTEN DENIALS AND
SHALL MAKE THE COPIES AVAILABLE TO THE DEPARTMENT FOR INSPECTION. A
COVERED INDIVIDUAL OR THE COVERED INDIVIDUAL'S AUTHORIZED REPRESENTATIVE
MAY APPEAL ANY DETERMINATION TO DENY A FORMULARY EXCEPTION UNDER CHAPTER
15, ARTICLE 2 OF THIS TITLE. THE WRITTEN NOTIFICATION SHALL INCLUDE THE
PROCESS IN WHICH A COVERED INDIVIDUAL MAY APPEAL THE DETERMINATION.

F. IF THE HEALTH CARE INSURER, PHARMACY BENEFIT MANAGER OR
UTILIZATION REVIEW AGENT AUTHORIZES A FORMULARY EXCEPTION FOR A COVERED
INDIVIDUAL PURSUANT TO THIS SECTION, THAT AUTHORIZATION SHALL BE IN EFFECT
UNTIL THE END OF THE COVERED INDIVIDUAL'S PLAN YEAR. THE APPROVAL OF A
FORMULARY EXCEPTION SHALL BE IN WRITING AND DELIVERED TO THE COVERED
INDIVIDUAL AND THE COVERED INDIVIDUAL'S TREATING HEALTH CARE PROVIDER.

G. THIS SECTION DOES NOT:

1. PREVENT A HEALTH CARE PROVIDER FROM PRESCRIBING ANOTHER
PRESCRIPTION DRUG COVERED BY THE HEALTH CARE INSURER OR THE PHARMACY
BENEFIT MANAGER IF THE HEALTH CARE PROVIDER DEEMS THE PRESCRIPTION DRUG
MEDICALLY NECESSARY FOR THE COVERED INDIVIDUAL.

-5-
House Amendments to S.B. 1164

1 2. PREVENT A HEALTH CARE INSURER OR PHARMACY BENEFIT MANAGER
2 CONTRACTED TO PROVIDE PHARMACY BENEFIT MANAGEMENT SERVICES FROM:

3 (a) ADDING A PRESCRIPTION DRUG TO ITS FORMULARY.

4 (b) REMOVING A PRESCRIPTION DRUG FROM ITS FORMULARY IF THE DRUG
5 MANUFACTURER HAS REMOVED THE PRESCRIPTION DRUG FOR SALE IN THE UNITED
6 STATES.

7 (c) SETTING THE COST SHARING FOR NONFORMULARY PRESCRIPTION DRUGS.

8 H. IF A HEALTH CARE INSURER, PHARMACY BENEFIT MANAGER OR UTILIZATION
9 REVIEW AGENT THAT IS CONTRACTED TO PROVIDE PHARMACY BENEFIT MANAGEMENT
10 SERVICES VIOLATES THIS SECTION, THE DIRECTOR MAY ENFORCE THIS SECTION
11 PURSUANT TO SECTION 20-3333.

12 I. A POLICY THAT IS ISSUED OR RENEWED BY A DISABILITY INSURER DOES
13 NOT INCLUDE A POLICY THAT PROVIDES LIMITED BENEFIT COVERAGE AS DEFINED IN
14 SECTION 20-1137.

15 J. FOR THE PURPOSES OF THIS SECTION:

16 1, “FORMULARY EXCEPTION" MEANS THAT HEALTH PLAN COVERAGE OF A HEALTH
17 CARE PROVIDER'S SELECTED PRESCRIPTION DRUG IS GRANTED.

18 2. “HEALTH CARE INSURER” HAS THE SAME MEANING PRESCRIBED IN SECTION
19 20-2501.

20 3. “HEALTH CARE PLAN" MEANS A POLICY, CONTRACT OR EVIDENCE OF
21 COVERAGE THAT A HEALTH CARE INSURER ISSUES TO AN INSURED, ENROLLEE OR
22 SUBSCRIBER.
23 4. "UTILIZATION REVIEW AGENT" HAS THE SAME MEANING PRESCRIBED IN
24 SECTION 20-2530."
25 Page 4, line i2, after the "contracts" insert "“, policies or evidences of
26 coverage that are”

27 Amend title to conform

KEVIN PAYNE

L1I64PAYNE. docx
03/19/2024
12:37 PM

C: SK
ARIZONA HOUSE OF REPRESENTATIVES
Fifty-sixth Legislature - Second Regular Session

ROLL CALL VOTE

COMMITTEE ON Regulatory Affairs BILL NO. SB 1164

DATE March 20, 2024 MOTION: DPA
PASS AYE NAY PRESENT | ABSENT

Crews VA

Hernandez A a

Liguori L7”

Payne A

Pefia Wed

McGarr, Vice-Chairman i

Hendrix, Chairman ~~

7 ey CO Oo

APPROVED: OMMITTE? SECRETARY

AOAAY NDRIX, Chairman
Cc MCGARR, Vice-Chairman

ATTACHMENT A
ARIZONA HOUSE OF REPRESENTATIVES
Fifty-sixth Legislature

Second Regular Session
Senate: HHS DPA 7-0-0-0 | 8 Read DPA 20-8-2-0

SB 1163: homeopathic medicine; qualifications
Sponsor: Senator Shamp, LD 29
Committee on Regulatory Affairs

Overview

Modifies the requirements by which the Board of Homeopathic and Integrated Medicine
Examiners (Board) may license an applicant. Replaces the Executive Director of the Board
with the Executive Director of the Acupuncture Board of Examiners.

History
The Board licenses and regulates medical physicians who practice homeopathic and

integrated medicine, a system of medical treatment based on the use of smal! quantities of
remedies which in larger doses produce symptoms of the disease. This agency is one of several
housed within the Arizona Department of Administration Central Services Bureau (A.R.S.
§§ 82-2901, 32-2904).

The Board must grant a license to practice homeopathic medicine to an applicant who: 1)
holds a degree from an approved school of medicine or has received an equivalent medical
education; 2) holds a license to practice medicine as a medical or osteopathic physician in
Arizona or is licensed in another state, district or territory of the United States; and 3) meets
specified criteria relating to the applicant's professional record. However, an applicant may
also be licensed as a homeopath without holding a license as a medical or osteopathic
physician if the applicant meets all other requirements (A.R.S. 32-2912).

The Joint Legislative Budget Committee fiscal note presumes 5.B. 1163 will result in
additional licensing fee revenues for the Board, 10 percent of which is deposited into the state
General Fund. However, the magnitude of this impact cannot be determined in advance, as
it is unknown how many newly eligible individuals will apply for licensure (JLBC).

Provisions
1. Removes the requirement that the Board:

a) elect a secretary-treasurer;
b) include the signatures of Board members with the Board's seal as evidence of its

official acts; and
c) appoint an Executive Director. (Sec. 2, 3, 4)
2. Directs the Board to meet with the Acupuncture Board of Examiners each January to set
financial compensation for staff and operating expense sharing. (Sec. 3)

3. Eliminates the ability of the Board to appoint a temporary secretary to perform the duties
of the Executive Director if that office is vacant. (Sec. 3)

4, Requires the Executive Director of the Acupuncture Board of Examiners to serve as the
Executive Director of the Board. (Sec. 4)

SB 1163
Initials IG Page 1 Regulatory Affairs

Attachment VA
Instructs the staff of the Acupuncture Board of Examiners to carry out the administrative
responsibilities of the Board. (Sec. 4)

on

6. Requires the Executive Director of the Board to perform all administrative duties of the
Board and employ personnel necessary to carry out Board functions. (Sec. 4)

7. Directs the Board to issue a license to an applicant who meets specified requirements and
who either:
a) holds a degree from an approved school of medicine; or
b) has completed an approved training program. (Sec. 5)

8. Adds that the Board must issue a license without examination to an applicant that holds,
or has passed the examination to hold, a certification from the Council for Homeopathic
Certification or its equivalent. (Sec. 6)

9. Removes the specification that a notification pertaining to license renewal must be sent
via first class mail. (Sec. 8)

10. Includes personal email address and work email address in the list of information a
licensee must share with the Board. (Sec. 9)

11. Adds the term homeopathic practitioner to the following violations:
a) practicing medicine without being licensed or exempt from licensure; and
b) self-designating under a specified title without being licensed as such. (Sec. 11)

12. Specifies which titles can be used for the different types of licenses and graduation
requirements, (Sec. 12)

13. Authorizes the Board to adopt abbreviations for the titles listed in statute. (Sec. 12)
14. Defines approved training program. (Sec. 1)
15. Makes technical and conforming changes. (Sec. 1-9, 11-14)

D Prop 105 (45 votes) C] Prop 108 (40 votes) OO Emergency (40 votes) Fiscal Note

SB 1163
Initials IG Page 2 Regulatory Affairs
ARIZONA HOUSE OF REPRESENTATIVES
Fifty-sixth Legislature - Second Regular Session

ROLL CALL VOTE

COMMITTEE ON

Regulatory Affairs

BILLNO. SB 1163

DATE March 20, 2024

motion: _{2P

PASS

AYE

NAY PRESENT | ABSENT

Crews

\

Hernandez A

Liguori

Payne

Pefia

McGarr, Vice-Chairman

Hendrix, Chairman

APPROVED:

LBZ, yp Fe

NARAN SNE

GZ | 6 \2

a HENDRIX, Charman
He BENOR Vice-Chairman

Le
OMMITTE SECRETARY

ATTACHMENT. &
ARIZONA HOUSE OF REPRESENTATIVES

Fifty-sixth Legislature

Second Regular Session
Senate: HHS DP 6-0-1-0 | 3rd Read 19-10-1-0

SB 1154: dental board; dental hygienists
Sponsor: Senator Shamp, LD 29
Committee on Regulatory Affairs

Overview
Expands the number of dental hygienists on the Arizona State Board of Dental Examiners

(Board) from two to three.

History
The Board regulates and licenses dental professionals including dentists, dental hygienists,

dental consultants, dental therapists and denturists. The Board has 11 members which
consists of six licensed dentists, two licensed dental hygienists, two public members and one
business entity member appointed by the governor for a term of four years that begins and
ends on January 1. Before members are appointed, they must submit a full set of fingerprints
for a state and federal criminal records check. The business entity member and public
members may participate in all Board proceedings and determinations, except in preparing,
giving or grading examinations for licensure. Dental hygienists' Board members may
participate in all Board proceedings and determinations, except in preparing, giving and
grading examinations that do not relate to dental hygiene procedures. Board members are
prohibited from serving more than two consecutive terms (A.R.S. §§ 32-1203 and 32-1207).

A dental hygienist is any person who is licensed and engaged in the general practice of dental
hygiene and all related and associated duties, including educational, clinical and therapeutic
dental hygiene procedures (A.R.S. § 32-1201).

Provisions
1. Increases the number of licensed dental hygienists on the Board from two to three. (Sec.

1)

C1) Prop 105 (45 votes) 0 Prop 108 (40 votes) 0 Emergency (40 votes) ( Fiscal Note

SB 1154
Initials AG/KT Page 1 Regulatory Affairs

Attachment GF
ARIZONA HOUSE OF REPRESENTATIVES
Fifty-sixth Legislature - Second Regular Session

ROLL CALL VOTE
COMMITTEE ON Regulatory Affairs BILL NO. SB 1154
DATE March 20, 2024 MOTION: bailed
PASS AYE NAY PRESENT | ABSENT

Crews ~~

Hernandez A Va

Liguori ea

Payne 7

Pefia ~

McGarr, Vice-Chairman ~~

Hendrix, Chairman i

a? ae 2

oO
APPROVED: a SECRETARY

UR ‘NDRIX, Chairman
CORY GARR, Vice-Chairman

ATTACHMENT. /2
ARIZONA HOUSE OF REPRESENTATIVES
Fifty-sixth Legislature

Second Regular Session

Senate: GOV DPA 5-0-3-0 | 34 Read 24-4-2-0

SB 1016: homeowners' associations; flagpoles
Sponsor: Senator Kavanagh, LD 3
Committee on Regulatory Affairs

Overview
Allows a planned community association (Association) to adopt rules that limit a member's
number of wall mounted flagpole holders.

History
An Association is permitted by statute to regulate the location, size and height of flag poles

and to limit the number of flags a member can display to two flags at once. An Association
cannot prevent a member from installing a flag pole in the front or back yard of the member's
property or prohibit the display of: 1) the American flag or an official or replica flag of a
branch of the U.S. Armed Forces; 2) the POW/MIA flag; 3) the Arizona state flag; 4) an Indian
nations flag; 5) the Gadsen flag; 6) a first responder flag; 7) a blue or gold star service flag; or
8) any historic version of the American flag (A.R.S. § 33-1808).

Provisions
1. Permits an Association to limit a member to two wall mounted flagpole holders. (Sec. 1)

2, Makes technical and conforming changes. (Sec. 1)

O Prop 105 (45 votes) QO Prop 108 (40 votes) O Emergency (40 votes) Fiscal Note

SB 1016
Initials DC/RP Page 1 Government

Attachment W/L
ARIZONA HOUSE OF REPRESENTATIVES
Fifty-sixth Legislature - Second Regular Session

ROLL CALL VOTE

COMMITTEE ON Regulatory Affairs BILLNO. SB 1016

DATE March 20, 2024 MOTION: Zt

McGarr, Vice-Chairman

Hendrix, Chairman

Co |e

PASS AYE NAY PRESENT | ABSENT

Crews \~
Hernandez A L~
Liguori Va
Payne ~
Pefia t~

—

i

A

APPROVED: dbs be clone

PER ee Chairman
RY MCGARR, Vice-Chairman

ATTACHMENT. 2%
ARIZONA HOUSE OF REPRESENTATIVES
Fifty-sixth Legislature

Second Regular Session

Senate: GOV DPA 4-3-1-0 | 3 Read DPA 16-13-1-0

SB 1634: nonhealth regulatory boards; challenges; prohibition
Sponsor: Senator Hoffman, LD 15
Committee on Regulatory Affairs

Overview
Amends statute pertaining to final administrative decisions to include a Nonhealth

Profession Regulatory Board (Board).

History
Statute requires an agency to serve notice of an appealable agency action or contested case.

A party may obtain a hearing on an appealable agency action or contested case by filing a
notice of appeal or request for a hearing with the agency within 30 days after receiving the
notice. The agency must notify the Office of Administrative Hearings (Office) of the appeal or
request for a hearing and the Office then schedules a hearing (A.R.S. § 41-1092.03).

The process for judicial review of an agency action allows the court to affirm, reverse, modify
or vacate the agency action after reviewing the administrative record and evidence presented
at the hearing. The court must affirm the agency action unless it is found that the agency's
action is contrary to law, not supported by substantial evidence, arbitrary or an abuse of
discretion. In a proceeding brought by or against the regulated party, the court shall decide
the following, without deference to any previous determination that may have been made by
the agency:

1) all questions of law, including the interpretation of a constitutional or statutory

provision or a rule adopted by an agency; and
2) all questions of fact (A.R.S. § 12-910).

Costs may be awarded to the appellee agency if a judgment adverse to the appellant is
rendered. Such costs may be awarded in an amount deemed reasonable by the superior court,
based on the expense the appellee agency has incurred in preparing the record of the
proceedings before judicial review. The final judgment of the superior court entered in an
action to review a decision of an administrative agency may be appealed to the Arizona
Supreme Court (A.R.S. § 12-912, 12-913).

Provisions
1. Specifies that the Board's decision is the final administrative decision unless the
regulated person accepts the ALJ's decision instead. (Sec. 1)

2. Prohibits the Board from appealing the final administrative decision to the superior court.
(Sec. 1)

3. Instructs Legislative Council to prepare conforming legislation for the next legislative
session. (Sec 2)

0 Prop 105 (45 votes) [1 Prop 108 (40 votes) 0 Emergency (40 votes) UO Fiscal Note

SB 1634
Initials IG Page 1 Regulatory Affairs

Attachment 13
ARIZONA HOUSE OF REPRESENTATIVES
Fifty-sixth Legislature - Second Regular Session

ROLL CALL VOTE

COMMITTEE ON Regulatory Affairs BILL NO. SB 1634

DATE March 20, 2024 MOTION: Df

PASS AYE NAY PRESENT | ABSENT

Crews

Hernandez A

Liguori

\AN

Payne

Pefa

McGarr, Vice-Chairman

Hendrix, Chairman

NEG

hy

(a

APPROVED: COMMIT SECRETARY

;

eoweenrnnnenest

7 “LAURIN-AENDRIX Chairman
CORY MCGARR, Vice-Chairman

ATTACHMENT. JY

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