100 
the delivery of such services in the State, is so 
licensed. 
(3) SERIOUS AND COMPLEX CONDITION.—The 
term ‘‘serious and complex condition’’ means, with 
respect to a participant, beneficiary, or enrollee 
under the plan or coverage— 
(A) in the case of an acute illness, a condi-
tion that is serious enough to require special-
ized medical treatment to avoid the reasonable 
possibility of death or permanent harm; or 
(B) in the case of a chronic illness or con-
dition, is an ongoing special condition (as de-
fined in section 114(b)(2)(B)). 
(4) TERMINATED.—The term ‘‘terminated’’ in-
cludes, with respect to a contract, the expiration or 
nonrenewal of the contract, but does not include a 
termination of the contract for failure to meet appli-
cable quality standards or for fraud. 
SEC. 118. ACCESS TO NEEDED PRESCRIPTION DRUGS. 
(a) IN GENERAL.—To the extent that a group health 
plan, or health insurance coverage offered by a health in-
surance issuer, provides coverage for benefits with respect 
to prescription drugs, and limits such coverage to drugs 
included in a formulary, the plan or issuer shall—
101 
(1) ensure the participation of physicians and 
pharmacists in developing and reviewing such for-
mulary; 
(2) provide for disclosure of the formulary to 
providers; and 
(3) in accordance with the applicable quality as-
surance and utilization review standards of the plan 
or issuer, provide for exceptions from the formulary 
limitation when a non-formulary alternative is medi-
cally necessary and appropriate and, in the case of 
such an exception, apply the same cost-sharing re-
quirements that would have applied in the case of a 
drug covered under the formulary. 
(b) COVERAGE OF APPROVED DRUGS AND MEDICAL 
DEVICES.— 
(1) IN GENERAL.—A group health plan (and 
health insurance coverage offered in connection with 
such a plan) that provides any coverage of prescrip-
tion drugs or medical devices shall not deny coverage 
of such a drug or device on the basis that the use 
is investigational, if the use— 
(A) in the case of a prescription drug— 
(i) is included in the labeling author-
ized by the application in effect for the 
drug pursuant to subsection (b) or (j) of
102 
section 505 of the Federal Food, Drug, 
and Cosmetic Act, without regard to any 
postmarketing 
requirements 
that 
may 
apply under such Act; or 
(ii) is included in the labeling author-
ized by the application in effect for the 
drug under section 351 of the Public 
Health Service Act, without regard to any 
postmarketing 
requirements 
that 
may 
apply pursuant to such section; or 
(B) in the case of a medical device, is in-
cluded in the labeling authorized by a regula-
tion under subsection (d) or (3) of section 513 
of the Federal Food, Drug, and Cosmetic Act, 
an order under subsection (f) of such section, or 
an application approved under section 515 of 
such Act, without regard to any postmarketing 
requirements that may apply under such Act. 
(2) CONSTRUCTION.—Nothing in this sub-
section shall be construed as requiring a group 
health plan (or health insurance coverage offered in 
connection with such a plan) to provide any coverage 
of prescription drugs or medical devices.