New Consumer Protections Related to Prescription Drug Formularies

House Bill 1405, enacted by the Texas state legislature in 2011, expands protections for consumers enrolled in employer and individual health plans with prescription drug formularies. A prescription drug formulary lists the prescription drugs, both generic and brand name, that are available through your health insurance plan.

The new law prohibits plans from making mid-year changes to prescription drug formularies including the removal of a drug from the formulary, changes in prior authorization requirements, cost sharing increases, and changes to step therapy restrictions. Step therapy is the practice of treating a condition with safe, lower cost drugs first and progressing (or stepping) to riskier, more costly therapies if necessary.

Plans must continue to provide prescription drug benefits under an enrollee’s contracted benefit levels until the next renewal period, even if the plan changes the formulary in the middle of the year. When a plan does change the formulary, it must provide written notice to each affected group plan enrollee and individual plan policyholder at least 60 days before the contract period ends. Prior to the enactment of this law, many of these requirements applied to large-employer plans, but small-employer and individual plans were exempt.

The new law applies to policies issued, delivered, or renewed after January 1, 2012.