Delaware's insurance regulator is warning carriers they may be overstepping on how they apply step therapy exceptions to biologics.
On March 24, 2026, the Delaware Department of Insurance issued Domestic and Foreign Insurers Bulletin No. 165, signed by Commissioner Trinidad Navarro and directed at all insurers, health service corporations, and managed care organizations that deliver or issue individual and group insurance policies or plans subject to regulation under Title 18 of the Delaware Code. The Department said it had reviewed carrier practices and found that clarification was needed to ensure uniform and accurate implementation of the state's step therapy provisions.
The bulletin concerns Sections 3381 and 3591 of Title 18 of the Delaware Code, provisions that took effect on March 18, 2020, through HS 1 for HB 105. Those sections created a standardized, patient-centered framework requiring carriers to maintain a clear and accessible process for requesting exceptions to step therapy requirements, and to identify specific clinical circumstances in which an exception must be granted. The provisions also ensure that a health-care provider's clinical judgment remains central to treatment decisions by preserving the ability to request an override when step therapy is not medically appropriate for a particular patient.
Tucked inside those statutes is a narrow exclusion in subsection (e). It allows carriers to require a patient to try an AB-rated generic equivalent before covering the equivalent branded prescription drug. It also preserves a provider's ability to prescribe a drug that is determined to be medically necessary.
The Department, however, says carriers may have stretched that exception beyond the plain language enacted by the General Assembly, applying it to biologics and their biosimilars. The Department's position is that biologics are not branded prescription drugs, nor do they have AB-rated generic equivalents. Therefore, the language in subsection (e)(1) does not apply to biologics.
The Department acknowledged that the relationship between biologics and biosimilars may resemble the one between brand-name drugs and generics, but noted that the statutory language passed by the General Assembly is explicit in the scope of its exception. It is the Department's position that it is inappropriate for a carrier to expand this language to include biologics and their biosimilars when interpreting or implementing Sections 3381 and 3591.
The bulletin took effect immediately and will remain in force unless withdrawn or superseded by subsequent law, regulation, or bulletin. The Department directed questions to compliance@delaware.gov.
For carriers doing business in Delaware, the message is clear enough: if your step therapy protocols have been treating biologics the same way you treat brand-name drugs under the generic-equivalent exception, now is the time to revisit those practices.
