BILL ANALYSIS AB 1826 Page 1 Date of Hearing: May 19, 2010 ASSEMBLY COMMITTEE ON APPROPRIATIONS Felipe Fuentes, Chair AB 1826 (Huffman) - As Amended: April 28, 2010 Policy Committee: Health Vote:11-6 Urgency: No State Mandated Local Program: Yes Reimbursable: No SUMMARY This bill requires health plans and health insurers to provide coverage for a medication prescribed for pain without first requiring a patient to use an alternative prescription or over-the-counter product. By establishing this mandate, this bill prohibits the use of "step therapy" or "fail-first" protocols. Step therapy is the practice of beginning drug therapy with the most cost-effective and safest drug therapy and progressing to other more costly or risky medications, as necessary. Fail-first protocols require proof a patient has tried other medications before the preferred medication is approved. FISCAL EFFECT 1)According to the California Health Benefits Review Program (CHBRP) annual increased costs to Medi-Cal and the Healthy Families Program, combined, of more than $10 million (50% GF and 33% GF, respectively). The bill exempts CalPERS from the requirements established by this bill. 2)Increased premium costs in the private insurance market of more than $11 million. 3)Recent amendments were adopted to address cost concerns related to the bill being construed as prohibiting generic drug substitutions. According to a subsequent review by CHBRP of the bill and amendments, the cost impacts remain unchanged. COMMENTS AB 1826 Page 2 1)Rationale . This bill is sponsored by For Grace, a group focused on increasing awareness of the gender disparity women experience in the assessment and treatment of pain. According to the author and sponsors, some patients are required to try up to five medications prior to being prescribed a recommended pain drug. The author indicates these treatment decisions should be left up to provider and patient, not the health plan or insurer. 2)Background . Health plans and pharmacy benefit managers use strategies such as step therapy and fail-first protocols to balance cost, quality, and utilization concerns. Cost control and clinical considerations include proof of medication intolerance, prevention of unapproved use, and adherence to clinical guidelines. Step therapy requires a patient to try a specified medication, often a generic alternative, prior to receiving coverage for a second-line medication. A fail-first protocol may require a patient to confirm to a health plan that alternate medications have been unsuccessfully tried by the patient before the preferred medication is covered. According to CHBRP, of the more than 200 prescription drugs used to treat pain, 54 are subject to first-fail protocols for a portion of insured patients. 3)Focus on Pain Medication . This bill singles out a cohort of prescription medications, those used to treat pain. There are several hundred different medications used to treat pain associated with numerous medical conditions. Included in this group of medications are potent, potentially addictive and dangerous drugs, including narcotics. Narcotics are increasingly associated with addiction and overdose. Strategies such as step therapy and first-fail protocols provide tools to ensure these kinds of medications are taken safely and conservatively. This bill reduces methods available to manage access to specified medications. 4)Concerns . Health plans, insurers, and pharmacy benefit managers (PBM) are opposed to this bill. Opponents indicate requiring coverage for prescriptions without allowing for safe management in the course of treatment is problematic. Insurers indicate the use of step therapy and first-fail protocols help manage medication management and adherence. Pharmacy benefit managers maintain that implementation of a well-designed step therapy program ensures that patients receive appropriate AB 1826 Page 3 medications in a cost effective manner, while reducing waste, error and unnecessary drug use. 5)Other Health Mandates in the Current Session . There are nine health mandates under legislative consideration this year, including AB 1826. Other proposed health mandates include: a) AB 1600 (Beall): mental health parity b) AB 1825 (De La Torre): maternity services c) AB 1904 (Villines): out-of-state carriers d) AB 2587 (Berryhill): benefit mandates e) SB 220 (Yee): tobacco cessation services f) SB 890 (Alquist): basic health treatment services g) SB 961 (Wright): cancer treatment h) SB 1104 (Cedillo): diabetes related treatment 6)Related Legislation . AB 1104 (Price) in 2009 required health plans and health insurers to submit written reports about step therapy each year to the California Department of Managed Health Care (DMHC) and the California Department of Insurance (CDI). AB 1104 was held on the Suspense File of this committee. Analysis Prepared by : Mary Ader / APPR. / (916) 319-2081