Fiscal Note
Fiscal Services Division
HF 2199 – Prescription Drug Formularies, Preserving Patient Stability (LSB2091HZ)
Staff Contact: Xavier Leonard (515.725.0509) xavier.leonard@legis.iowa.gov
Fiscal Note Version – New
Description
House File 2199 relates to the continuity of care for a person covered by a health benefit plan
and does the following:
• Prohibits nonmedical switching by health carriers, health benefit plans, and utilization review
organizations.
• Allows a prescription drug to be removed from a formulary if the U.S. Food and Drug
Administration (FDA) issues a statement regarding the clinical safety of the drug or the
manufacturer notifies the FDA of a manufacturing discontinuance or potential
discontinuance of the drug as required by Section 506c of the Federal Food, Drug, and
Cosmetic Act.
• Provides that a drug product with the same generic name and demonstrated bioavailability,
or an interchangeable biological product, is considered equivalent to the prescription drug
prescribed by the covered person’s health care professional.
• Requires a covered person and prescribing health care professional to have access to a
process to request a coverage exemption determination.
• Defines “coverage exemption determination” as a determination made by a health carrier,
health benefit plan, or utilization review organization whether to cover a prescription drug
that is otherwise excluded from coverage.
• Requires a coverage exemption determination request to be approved or denied by the
health carrier, health benefit plan, or utilization review organization within five calendar days
or within 72 hours under extenuating circumstances.
• Requires a coverage exemption to be expeditiously granted for a health benefit plan that is
discontinued for the next plan year if a covered person enrolls in a comparable plan offered
by the same health carrier and, in comparison to the discontinued health benefit plan, the
new health benefit plan limits or reduces the maximum coverage for a prescription drug;
increases cost-sharing for the prescription drug; moves the prescription drug to a more
restrictive tier; or excludes the prescription drug from the formulary.
• If a coverage exemption is granted, requires an authorization of coverage that is no more
restrictive than that offered in a discontinued health benefit plan or than that offered prior to
implementation of restrictive changes to the health benefit plan’s formulary after the current
plan year began.
• Requires a reason for denial and a procedure to appeal the denial to be provided to the
requestor in the event that a determination is made to deny a request for a coverage
exemption.
• Allows the Insurance Commissioner to take any necessary enforcement action under the
Commissioner’s authority to enforce compliance with this Bill.
The Bill applies to health benefit plans that are delivered, issued for delivery, continued, or
renewed in the State of Iowa on or after January 1, 2023.
1
Background
Nonmedical switching is the practice of switching a covered individual’s prescribed drug to a
less costly alternative while the individual has been determined to be medically stable while on
the drug, without medical reasons given by the individual’s prescribing health care professional.
House File 2199 is estimated to impact approximately 25.8% of the population (822,000). This
includes individual coverage, fully insured small and large employer groups, self-insured public
employees, and the State of Iowa Plan.
Of the individuals not covered by the mandate, approximately 45.2% are covered by
government-sponsored health insurance, 23.0% are covered by employer coverage which is
governed by the federal Employee Retirement Income Security Act of 1974 (ERISA), and the
remaining 6.0% are uninsured.
Source: Iowa Insurance Division.
Assumptions
The Bill is expected to increase pharmacy costs for the State of Iowa Insurance Plan by 1.0% to
6.0%.
Fiscal Impact
House File 2199 is estimated to increase the annual cost to the State of Iowa Insurance Plan
and will increase expenses from State funds used to pay state employees’ health insurance
costs. The estimated increase in pharmacy costs for the State of Iowa Plan range from a
minimum impact of $890,000, which is associated with a 1.0% increase in pharmacy costs, to a
maximum of $5.4 million, which is associated with a 6.0% increase in pharmacy costs. The Bill’s
provisions for nonmedical switching in approved cases is estimated to reduce expense for the
State which will offset increases in expenses due to changes related to pharmacy costs.
However, the impact cannot be determined.
2
Sources
Iowa Insurance Division
Wellmark
/s/ Holly M. Lyons
February 9, 2022
Doc ID 1286797
The fiscal note for this Bill was prepared pursuant to Joint Rule 17 and the Iowa Code. Data used in
developing this fiscal note is available from the Fiscal Services Division of the Legislative Services
Agency upon request.
www.legis.iowa.gov
3