Legislative Analysis
Phone: (517) 373-8080
UTILIZATION MANAGEMENT http://www.house.mi.gov/hfa
House Bill 4358 (H-2) as passed by the House Analysis available at
Sponsor: Rep. Abdullah Hammoud http://www.legislature.mi.gov
Committee: Health Policy
Complete to 2-4-22
SUMMARY:
House Bill 4358 would amend the Insurance Code to prohibit insurers that deliver, issue
for delivery, or renew a health insurance policy that provides prescription drug coverage
in Michigan (“specified insurers”) from taking certain actions regarding that coverage.
Specifically, with the accommodation described below, a specified insurer could not
remove a covered prescription drug from its list of prescription drugs or add utilization
management restrictions to a formulary or reclassify a drug to a more restrictive drug tier
or move a drug to a higher cost-sharing tier or a tier with a larger deductible, copayment,
or coinsurance unless one of the following conditions applied:
• The U.S. Food and Drug Administration (FDA) has done any of the following:
o Issued a statement that calls into question the clinical safety of the drug.
o Required the manufacturers to conduct postmarket safety studies and
clinical trials after the approval of the drug.
o Issued any drug safety–related labeling changes.
o Required the manufacturers to implement special risk management
programs.
• The change is based on clinically accepted medical best practices.
• The change is a result of a newly approved drug with clinical advantage over
existing drugs.
• A generic equivalent or biosimilar alternative of the drug has received FDA
approval.
• The drug has changed from prescription to over-the-counter (OTC).
• The price of the drug has increased by at least 10% over the price in the previous
plan year, or by at least 20% over the price in the previous three plan years.
• The insured is notified in writing 90 days before the drug is removed from the
formulary. (Notice could be by electronic communication. If the drug were being
removed, the notice would have to include a telephone number for the insured to
call for information regarding alternative therapeutically equivalent medication
options.)
• The insurer uses a pharmacy and therapeutics committee and the committee
approves the change.
• The insurer grandfathers the insured on the affected drug to maintain coverage with
current cost sharing, deductible, copayment, or coinsurance for the remainder of
the plan year.
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 Additionally, a specified insurer could remove a covered prescription drug from its list of
prescription drugs or add utilization management restrictions to a formulary if any of the
following conditions applied:
• The manufacturer of the drug has notified the Secretary of the U.S. Department of
Health and Human Services of a manufacturing discontinuance of the drug under
the Federal Food, Drug, and Cosmetic Act.
• The drug is being added to the formulary.
• The drug receives a new FDA approval and has become available.
Finally, a specified insurer could reclassify a drug to a more restrictive drug tier or move
a drug to a higher cost-sharing tier or a tier with a larger deductible, copayment, or
coinsurance if the drug receives a new FDA indication.
The bill would provide the following accommodation: during a qualified health plan year,
if an insurer removed or added restrictions to a drug or reclassified or moved the drug to
a more expensive tier, as described above, the insurer would have to treat the drug as if the
drug had not been removed, restricted, reclassified, or moved.
The bill would not prohibit the addition of prescription drugs to a policy’s list of covered
drugs during the plan year. It also would not affect or limit a generic or biosimilar
substitution. Additionally, it would not prohibit specified insurers from requiring a
pharmacist to effect allowed generic substitutions of prescription drugs, which allow a
pharmacist to substitute an interchangeable biological drug product for a prescribed
biological drug product or to select a generic drug determined to be therapeutically
equivalent by the FDA.
The bill’s provisions would apply throughout the benefit period, from the beginning to the
end of the qualified health plan’s deductible year.
If any provision of the bill conflicted with a federal law, the federal law would prevail.
Proposed MCL 500.3406v
BACKGROUND:
As introduced, the bill was identical to the H-1 substitute for HB 5939 of the 2019-20
legislative session,1 which was considered by the House Health Policy committee and
referred to the House Ways and Means committee.
FISCAL IMPACT:
House Bill 4358 would have an indeterminate fiscal impact on the state and could have an
impact on local units of government. Individuals violating provisions under the bill would
be afforded an opportunity for a hearing before the director of the Department of Insurance
1
http://www.legislature.mi.gov/documents/2019-2020/billanalysis/House/pdf/2019-HLA-5939-102F5CB8.pdf
House Fiscal Agency HB 4358 (H-2) as passed by the House as amended Page 2 of 3
 and Financial Services. If the director finds that a violation has occurred, the director could
order payment of a civil fine as well as suspension, limitation, or revocation of the
individual’s license or certificate of authority. Civil fine revenue received would be turned
over to the state treasurer and credited to the general fund. The director could apply to the
Court of Claims for an order of the court enjoining a violation. If this were to happen, local
court systems would be impacted and costs would depend on the effect on court caseloads
and related administrative costs. There is no practical way to determine the number of
violations that will occur under provisions of the bill, so we cannot estimate the amount of
costs to the state or to local units.
POSITIONS:
The Epilepsy Foundation indicated support for the bill with changes. (3-11-21)
The following entities indicated opposition to the bill (3-11-21):
• Michigan Manufacturers Association
• Blue Cross Blue Shield of Michigan
Legislative Analyst: Jenny McInerney
Fiscal Analysts: Robin Risko
Marcus Coffin
■ This analysis was prepared by nonpartisan House Fiscal Agency staff for use by House members in their
deliberations and does not constitute an official statement of legislative intent.
House Fiscal Agency HB 4358 (H-2) as passed by the House as amended Page 3 of 3


Statutes affected:
House Introduced Bill: 500.100, 500.8302
As Passed by the House: 500.100, 500.8302