AZ SB1164

Prohibits pharmacy benefit managers from limiting or excluding coverage of prescription drugs previously approved for a covered individual who remains enrolled, requiring continued coverage through the end of the plan year.

Bans pharmacy benefit managers from reducing maximum coverage, increasing cost sharing, or moving drugs to more restrictive formulary tiers for previously approved drugs, except when the FDA revokes approval or the manufacturer discontinues the drug.

Requires pharmacy benefit managers and health care insurers to provide 60 days' written notice before formulary changes, with written authorization from the prescribing provider required to switch covered individuals to different drugs.

Establishes a prescription drug coverage exemption process requiring response within federal timelines (45 CFR 156.122), with automatic approval for individuals previously approved for nonformulary drugs when the prescribing provider continues prescribing for the same medical condition.

Allows the director to impose civil penalties for violations and applies to contracts entered into, amended, extended, or renewed on or after December 31, 2024.