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This Article will analyze whether specialty drug tiers violate HIPAA. This is a question of first impression—no federal or state court decision provides an answer. Part II of this Article provides relevant background material. We begin with a discussion about the development of prescription drug coverage in the United States and the emergence of drug tiers as a cost-saving mechanism. In Part III of this Article, we begin with an historical overview of accepted discrimination and risk classification within insurance. Next, we discuss HIPAA's statutory language, legislative history, and key parts of the Final Rule implementing the law. We also address the impact of national health care reform under the Patient Protection and Affordable Care Act (Affordable Care Act). Based on the foregoing, we will argue that HIPAA, its statutory history, and the relevant federal regulations demonstrate that specialty drug tiers violate HIPAA's anti-discrimination provisions, yet we acknowledge that reasonable minds could differ on that conclusion. Therefore, we note that courts, regulators, and legislators may have to ask and answer certain questions. What is good public policy? Should courts or regulators act or leave the question unresolved and wait for Congress to act? Generally, statutes regulating the business of insurance do not prevent all discrimination, only unfair discrimination. If specialty tier formularies do not violate HIPAA's anti-discrimination provisions specifically, are these benefit structures still wholly inconsistent with the overall legislative intent of HIPAA”to improve the portability and continuity of health coverage for all insured Americans? To conclude this Part, we argue that specialty drug tiers should be universally rejected because such drug plans not only violate HIPAA, but are inconsistent with HIPAA's broader goals of ensuring that Americans continue to have access to affordable health insurance benefits and repudiating discrimination on the basis of an insured's health status. Additionally, such drug tiers fail to satisfy the basic principles of insurance, do not further the same salutary social goals as traditional prescription drug formularies (i.e., formularies with three tiers), and adversely affect patient access to specialty drugs. In Part IV of this Article, we conclude that legislators and regulators should promote the public policy used to pass HIPAA into law and exercise their authority to end the proliferation of specialty tier drug plans.

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Northern Illinois University Law Review

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Joseph J. Hylak-Reinholtz & Jay R. Naftzger, Is It Time to Shed a “Tier” for Four-Tier Prescription Drug Formularies? Specialty Drug Tiers May Violate HIPAA’s Anti-Discrimination Provisions and Statutory Goals, 32 N. Ill. U. L. Rev. 33 (2011).

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