BILL ANALYSIS                                                                                                                                                                                                    






                                 SENATE HEALTH
                               COMMITTEE ANALYSIS
                        Senator Elaine K. Alquist, Chair


          BILL NO:       AB 1826                                      
          A
          AUTHOR:        Huffman and Feuer                            
          B
          AMENDED:       May 28, 2010                                
          HEARING DATE:  June 30, 2010                                
          1
          CONSULTANT:                                                 
          8
          Chan-Sawin/cjt                                               
              2
                                                                       
              6
                                                                 
                                        
                                     SUBJECT
                                         
                      Health care coverage: prescriptions

                                     SUMMARY  

          Requires a health care service plan (health plan) or health  
          insurer that covers outpatient prescription drug benefits  
          to provide coverage for a drug that has been prescribed for  
          the treatment of pain.  Prohibits the health plan or  
          insurer from requiring the subscriber or enrollee to first  
          use an alternative prescription drug or over-the-counter  
          drug, as specified.  

                             CHANGES TO EXISTING LAW  

          Existing federal law:
          Defines, under the federal health reform law, the Patient  
          Protection and Affordable Care Act (PPACA), a list of  
          "essential health benefits package," including prescription  
          drug coverage, which health insurance coverage and group  
          health plans must provide, beginning in 2014.

          Existing law:
          Provides for the regulation of health plans and insurers by  
          the Department of Managed Health Care (DMHC) and the  
                                                         Continued---



          STAFF ANALYSIS OF ASSEMBLY BILL 1826 (Huffman, Feuer) Page  
          2


          

          California Department of Insurance (CDI), respectively. 

          Prohibits health plans and insurers that cover prescription  
          drugs from limiting or excluding coverage for a drug on the  
          basis that the drug is prescribed for a use different from  
          the use for which the drug has been approved by the federal  
          Food and Drug Administration (FDA), provided that specified  
          conditions have been met (including that the drug is  
          prescribed by a participating licensed health care  
          professional for the treatment of a chronic and seriously  
          debilitating condition, the drug is medically necessary to  
          treat that condition, and the drug is on the plan  
          formulary).

          Prohibits health plans covering prescription drug benefits  
          from limiting, or excluding coverage for a drug for an  
          enrollee, if the drug was previously approved for coverage  
          by the plan for a medical condition of the enrollee and the  
          plan's prescribing provider continues to provide the drug  
          for the medical condition, provided that it is safe and  
          effective for treatment.  This prohibition does not  
          preclude the prescribing provider from prescribing another  
          drug that is covered by the plan and is medically  
          appropriate, nor does it prohibit generic drug  
          alternatives. 

          Requires health plans that provide prescription drug  
          benefits, and maintain one or more drug formularies, to  
          provide to the public, upon request, a copy of the most  
          current list of prescription drugs by major therapeutic  
          category, with an indication of whether any drugs on the  
          list are preferred over other listed drugs.  Requires plans  
          that maintain more than one formulary to notify the  
          requester that a choice of formulary lists is available.

          Requires health plans that provide prescription drug  
          benefits to maintain an expedited process by which  
          prescribing providers may obtain authorization for a  
          medically necessary non-formulary drug.  Requires any  
          health plan disapproval to provide the enrollee with the  
          reasons for the disapproval, and notify the enrollee of the  
          right to file a grievance if the enrollee objects to the  
          disapproval, as specified.

          Requires the process for authorization of medically  




          STAFF ANALYSIS OF ASSEMBLY BILL 1826 (Huffman, Feuer) Page  
          3


          

          necessary non-formulary drugs to be described in the health  
          plan disclosure form.

          Requires, in regulations, health plans that cover  
          outpatient prescription drug benefits to cover all  
          medically necessary outpatient prescription drugs, as  
          specified.

          This bill:
          Requires a health plan or insurer that covers outpatient  
          prescription drug benefits to provide coverage for a drug  
          that has been prescribed by a participating licensed health  
          care provider for the treatment of pain.

          Prohibits the health plan or insurer from requiring the  
          subscriber or enrollee to first use an alternative  
          prescription drug or over-the-counter drug, but allows the  
          health plan or insurer to require the subscriber or  
          enrollee to first use a generically equivalent drug.

          Defines "generically equivalent drug" to mean drug products  
          with the same active chemical ingredients of the same  
          strength, quantity, and dosage form, and of the same  
          generic drug name, as determined by the United States  
          Adopted Names Council and accepted by the federal Food and  
          Drug Administration, as those drug products having the same  
          chemical ingredients.

          Specifies that nothing in this bill prohibits a health plan  
          or insurer from charging copayments or deductibles for  
          prescription drug benefits or imposing limitations on  
          maximum coverage of prescription drug benefits, as  
          specified.

          Exempts a health plan or health insurance policy purchased  
          by the California Public Employees' Retirement System  
          (CalPERS) from the requirements of this bill.   

          Prohibits this bill from being construed to require  
          coverage of prescription drugs not in a health plan or  
          insurer's drug formulary, or to prohibit use of generically  
          equivalent drugs or generic drug substitutions, as  
          specified.
          
                                  FISCAL IMPACT  




          STAFF ANALYSIS OF ASSEMBLY BILL 1826 (Huffman, Feuer) Page  
          4


          


          According to the Assembly Appropriations Committee  
          analysis, unknown increased costs to Medi-Cal and the  
          Healthy Families program in the range of $5 million (50  
          percent General Fund (GF) and 33 percent GF, respectively).  
           Although recent amendments address brand name drug cost  
          pressures, many drugs that remain under patent do not have  
          generic versions available.  

                            BACKGROUND AND DISCUSSION  

          According to the author, p  ain   is   a   growing   national   public   
           health   crisis   that   affects   an   estimated   76   million   people   
           and   has   serious  economic   ramifications  , and that c  hronic   
           pain   affects   more  Americans   than   diabetes,   heart   disease,   
           and   cancer  combined.   The author points to  a   2006   survey   by   
           the   National   Center   for   Health   Statistics  which states that  
           the   annual   cost   of   chronic   pain   in   the   U.S.,   including   
           health   care   expenses,   lost   income,   and   lost   productivity,   
           is   about   $100   billion.   

          The author states that a  troubling   and   dangerous   trend   is   
          the  frequent   denial   of   coverage  by health plans and  
          insurers  for   proven   and   effective   pain   treatments.    Used   as   
           a   cost-saving   measure,   many   health   plans  and insurers  
           utilize   step   therapy   or  "  fail  -  first  "  policies  ,  which   
           require   a   patient  in pain  to   try   an   alternative   medication,   
           which   in   some   cases   include   over-the-counter   medications,   
           before   the   medication   recommended   by   the   physician   is   
           approved.   

          The author points out that s  ome   patients   are   required   to   
           try   up   to   five   different   medicines   before   receiving   the  one   
           prescribed   by   their   physician   and  , more often than not,  the   
           alternative   drugs   have   a   completely   different  molecular   
           structure   that   can  be harmful to patients  .   While insurers  
          argue that step therapy is helpful in managing rising drug  
          costs, the author questions the basic fairness of denying  
          coverage for a drug that a doctor believes is the most  
          effective drug for the treatment of someone who is,  
          oftentimes, in severe, debilitating pain.  The author  
          believes that it is essential that patients in pain receive  
          the drug treatment prescribed by their physicians and do  
          not suffer the needless consequences caused by step  
          therapy.




          STAFF ANALYSIS OF ASSEMBLY BILL 1826 (Huffman, Feuer) Page  
          5


          


          The author also asserts that, n  ot   only   is   this   policy   
           extremely   dangerous   to   patient   health,   step   therapy   can   
           actually   increase   the   direct   cost   of   health   care   in   the   
           long   run  ,  due   to   increased   emergency   room   visits,   unplanned   
           doctor's   visits,   and   other   health   complications.    Indirect   
           costs   include   lost   wages   and   productivity   of   both   people   
           with   pain   and   their   caregivers.  The author points to  
          findings from a recent study published in the February 2009  
          issue of the American Journal of Managed Care, that  
          suggests that step therapy programs may increase overall  
          health care costs for employers.  In the study, researchers  
          analyzed insurance claims data from 2003 through 2006 for  
          11,851 people with employer-sponsored health coverage that  
          incorporated a step therapy protocol for anti-hypertensive  
          drugs, and compared their use of health care services to a  
          group of 30,882 anti-hypertensive drug users who did not  
          participate in a step therapy program.  What the  
          researchers found was that the group of patients treated  
          for hypertension under the step therapy program had 3.1  
          percent lower drug costs.  But these savings were wiped out  
          by the increase in hospital admissions and emergency room  
          visits.  

          Pain and pain management
          According to the American Academy of Pain Management, pain  
          is a silent epidemic in the United States.  An estimated 50  
          million Americans live with chronic pain caused by disease,  
          disorder or accident.  An additional 25 million people  
          suffer acute pain resulting from surgery or accident.   
          Approximately two-thirds of these individuals in pain have  
          been living with their pain for more than five years.  The  
          most common types of pain include arthritis, lower back,  
          bone/joint pain, muscle pain, and fibromyalgia.  The loss  
          of productivity and daily activity due to pain is  
          substantial.  According to the American Pain Society, pain  
          is the second leading cause of medically related work  
          absenteeism, resulting in more than 50 million lost  
          workdays annually.

          According to a 2006 survey by the National Center for  
          Health Statistics (NCHS), back pain is the leading cause of  
          disability in Americans under 45 years old, and more than  
          26 million Americans between the ages of 20 to64 experience  
          frequent back pain.  The NCHS survey also indicated that  




          STAFF ANALYSIS OF ASSEMBLY BILL 1826 (Huffman, Feuer) Page  
          6


          

          adults who reported low back pain were three times as  
          likely to be in poorer health and more than four times as  
          likely to experience serious psychological distress as  
          people without low back pain problems.  The survey  
          estimated that the annual cost of chronic pain in the U.S.,  
          including health care expenses, lost income, and lost  
          productivity is about $100 billion. 

          Pain management is a branch of medicine employing an  
          interdisciplinary approach to easing the suffering and  
          improving quality of life of those living in pain.   
          According to the National Institutes of Health (NIH),  
          common treatments for pain include medication, acupuncture,  
          local electrical stimulation, brain stimulation, surgery,  
          psychotherapy, relaxation therapy, biofeedback, and  
          behavior modification.

          Step therapy 
          In its analysis of this bill (described in detail later in  
          this analysis), CHBRP defines "fail-first protocols" as the  
          group of utilization management techniques that would be  
          prohibited by this bill for pain medications.  Step  
          therapy, also known as "step edit" is one type of  
          "fail-first" protocol; others include generic substitution  
          or certain types of prior authorization protocols.

          According to a 2001 report by the California HealthCare  
          Foundation (CHCF) relating to prescription drug coverage  
          and formulary use in California, step therapy requires  
          patients and physicians to follow a particular sequence of  
          drug treatment.  In general, a patient must fail to respond  
          to a recommended first-line therapy before a second- or  
          third-line medication is prescribed.  Typically, this means  
          that patients will be required to try medications that have  
          been on the market for a longer period of time and are  
          usually less expensive than the newer medications available  
          to treat a specific condition.  For example, the CHCF  
          report suggests that newer inhibitors for the relief of  
          arthritic pain, such as Celebrex, which are part of a large  
          class of anti-inflammatory drugs, may be subject to step  
          therapy requirements.

          Generic substitution vs. therapeutic substitution.  Generic  
          substitution refers to the substitution of a brand name  
          drug for a generic drug that is the chemical equivalent and  




          STAFF ANALYSIS OF ASSEMBLY BILL 1826 (Huffman, Feuer) Page  
          7


          

          the same dosage of the brand name.  Therapeutic  
          substitution refers to the substitution of one drug with a  
          chemically different drug within the same therapeutic  
          category (that is used for the treatment of the same  
          condition).  For example, aspirin is the therapeutic  
          equivalent of ibuprofen, even though they are chemically  
          different, as they are used for the treatment of the same  
          condition. 

          The California Health Benefits Review Program (CHBRP)
          Pursuant to AB 1996 (Thomson), Chapter 795, Statutes of  
          2002, and SB 1704 (Kuehl), Chapter 684, Statutes of 2006,  
          the University of California is requested to assess  
          legislation proposing a mandated benefit or service, or the  
          repeal of a mandated benefit or service, through the  
          California Health Benefits Review Program (CHBRP).  CHBRP  
          prepares a written analysis of the public health, medical,  
          and economic impacts of such measures.  

          Earlier versions of AB 1826 would have prohibited health  
          plans and insurers from using all fail-first protocols in  
          determining outpatient pharmacy benefit coverage for pain  
          medication.  The May 28, 2010 version of this bill would  
          allow the use of one type of fail-first protocol, generic  
          substitution, while still prohibiting others.  Pursuant to  
          a letter from CHBRP, dated June 23, 2010, the cost impact  
          analysis of their April 16, 2010 report would change.   The  
          following are highlights from the CHBRP analysis, including  
          the applicable changes to the cost impact section as noted  
          in the June 23, 2010 letter:  

                 Assumptions of the analysis
               Prescription medications may be covered as inpatient  
               medical benefits, and/or through an outpatient  
               pharmacy benefit, if included in the plan contract or  
               insurance policy.  Some plan contracts or insurance  
               policies do not include outpatient pharmacy benefits.   
               The CHBRP report assumes that AB 1826 would not  
               increase the number of enrollees with an outpatient  
               prescription drug benefit.  

               Providers, independent of plan or policy protocols,  
               may choose to utilize fail-first protocols by  
               requiring patients to try any number of alternate  
               medications before prescribing a particular pain  




          STAFF ANALYSIS OF ASSEMBLY BILL 1826 (Huffman, Feuer) Page  
          8


          

               medication.  The report also assumes that provider  
               prescribing practices would not be subject to AB 1826.

                 Potential impact of federal health care reform
               In March of this year, the President signed the  
               federal health reform law, the Patient Protection and  
               Affordable Care Act (PPACA).  PPACA would make  
               significant changes to the California health insurance  
               market and its regulatory environment.  Effective  
               January 1, 2014, PPACA requires health plans and  
               insurers to provide coverage for "essential health  
               benefits," as defined by the Secretary of the  
               Department of Health and Human Services.  Included in  
               the list of required "essential health benefits" is  
               coverage of prescription drugs.  How these provisions  
               are implemented in California would depend on  
               regulations from federal agencies, and statutory and  
               regulatory actions taken by the state.

               PPACA also includes provisions that take effect by  
               September 2010, which would expand the number of  
               Californians with insurance, such as requiring  
               coverage for dependents up to age 26.  This would  
               decrease the number of uninsured and increase the  
               number of people impacted by this mandate.  The CHBRP  
               analysis does not reflect the impact from  
               implementation of federal health reform requirements.
          
                 Medical effectiveness
               Due to the variety of causal conditions and types of  
               pain (acute and chronic), there is no standard  
               treatment for pain.  Pain treatment varies according  
               to type, severity, and duration of pain, as well as  
               the causal condition (if known), patient  
               co-morbidities, and other factors (e.g., medication  
               intolerance or patient compliance).  Health care  
               providers use clinical judgment to select among  
               various pain medications and treatments in efforts to  
               resolve or control pain for individual patients.   
               CHBRP found no medical effectiveness literature  
               addressing the direct effects of fail-first protocols  
               on resolving or controlling pain.  

               Of more than 200 prescription medications used to  
               treat pain, CHBRP reported that 54 were subject to  




          STAFF ANALYSIS OF ASSEMBLY BILL 1826 (Huffman, Feuer) Page  
          9


          

               fail-first protocols for at least some portion of  
               enrollees with health insurance subject to this bill.   
               However, among the 54 medications identified, there is  
               variation in frequency of medications subject to  
               fail-first protocols.   It is not clear which of these  
               medications, if any, would be subject to generic  
               substitution, as allowed for under the most recent  
               version of the bill.  

               Additionally, CHBRP found insufficient evidence to  
               characterize the medical effectiveness of fail-first  
               protocols for pain medications.  Therefore, CHBRP  
               concluded that the impact of this bill on the medical  
               effectiveness of pain treatment is unknown, and points  
               out that the lack of evidence for the effectiveness of  
               fail-first protocols is not evidence that these  
               protocols produce either positive or negative health  
               outcomes.

                 Impact on coverage
               Not all enrollees and insureds have an outpatient  
               pharmacy benefit.  Of those who do, not all of the  
               pain medications are subject to any fail-first  
               protocol.  For some enrollees, no pain medications are  
               subject to fail-first protocols.  Other enrollees,  
               depending on the provisions of their plan contracts or  
               insurance policies, have anywhere between 1 and 38  
               (out of the 54) pain medications, that is covered by  
               their outpatient pharmacy benefits, that is subject to  
               fail-first protocols.   It is not clear which of these  
               medications, if any, would be subject to generic  
               substitution, as allowed for under the most recent  
               version of the bill.   According to CHBRP, it is  
               possible that two enrollees with plan contracts from a  
               single health plan (or policies from a single insurer)  
               might not have outpatient pharmacy benefits for pain  
               medications that are subject to the same list of  
               fail-first protocols - or one of them might not be  
               subject to any list at all.  

               About 18.7 million enrollees in DMHC-regulated health  
               plans or CDI-regulated policies have health insurance  
               subject to this bill.  CHBRP assumed that this bill  
               would not increase the number of enrollees with an  
               outpatient pharmacy benefit.  CHBRP reports that 18.1  




          STAFF ANALYSIS OF ASSEMBLY BILL 1826 (Huffman, Feuer) Page  
          10


          

               million, or 97.2 percent, of insured Californians have  
               outpatient pharmacy benefit coverage.  Of these:

                                     8.3 million enrollees (45.5  
                         percent) have pharmacy coverage subject to  
                         fail-first protocols for one or more pain  
                         medications.

                                     9 million enrollees (49.3  
                         percent) have pharmacy coverage that is not  
                         subject to  any  fail-first protocols and not  
                         affected by this bill.

                 There are 417,000 enrollees (2.2 percent) who have  
               generic-only outpatient pharmacy benefit coverage and  
               would not be affected by this bill.
                 There are also 521,000 insured Californians (2.8  
               percent) who do not have outpatient pharmacy coverage  
               and would not be affected by this bill.  CHBRP  
               confirmed that a portion of beneficiaries in Medi-Cal,  
               the Healthy Families program, Access for Infants and  
               Mothers (AIM) Program, and the Major Risk Medical  
               Insurance Program (MRMIP) have outpatient pharmacy  
               benefits for pain medication that is subject to some  
               fail-first protocols.  However, as was found to be the  
               case for privately funded health insurance, the  
               presence of fail-first protocols varied by plan.  

                 Impact on utilization
               According to CHBRP, 610 per 1,000 enrollees receive  
               prescriptions for identified medications approved by  
               the FDA and commonly used for pain, both generic and  
               brand name, over the course of one year.  This bill is  
               not expected to measurably affect this number because  
               outpatient pharmacy benefit coverage is not expanded  
               by this bill.  AB 1826 is also not expected to result  
               in an increase in diagnosis or treatment of pain.   
                This bill is expected to affect the percentage of  
               filled pain prescriptions that are for generic versus  
               brand name medications, but the extent is unclear  
                                                     given the recent amendments.  

                 Impact on cost
               In its report released April 16, 2010, CHBRP estimates  
               total net expenditures (including premiums and  




          STAFF ANALYSIS OF ASSEMBLY BILL 1826 (Huffman, Feuer) Page  
          11


          

               out-of-pocket expenses) for prescriptions for pain  
               medications would increase by about $27.7 million or  
               0.04 percent due to this bill.  Total premiums for  
               private employers are expected to increase by about  
               $9.3 million or 0.02 percent.  Premiums for  
               individually purchased insurance are expected to  
               increase by about $2 million or 0.03 percent.   
               Enrollee out-of-pocket expenses are also estimated to  
               increase by approximately $3.19 million or 0.05  
               percent.  

               The average cost per prescription associated with pain  
               medications on at least one fail-first protocol list  
               is projected to increase $30, or 14 percent.  The post  
               mandate increase in average cost per prescription  
               reflects a decrease in use of generic, and an increase  
               in use of brand-name, medications.  The per-unit cost  
               of the medications themselves is not expected to  
               increase.  

               Medi-Cal expenditures are estimated to increase by  
               about $8.12 million, or 0.2 percent, and state  
               expenditures for Healthy Families, AIM, and MRMIP are  
               estimated to increase by about $2.10 million or 0.2  
               percent.  This is an increase of $0.24 per member per  
               month (PMPM) for Medi-Cal, Healthy Families, AIM, and  
               MRMIP.  

               Expected PMPM increases in other market segments are  
               as follows:  $0.08 PMPM in large-group market  
               DMHC-regulated plans; $0.11 PMPM in large-group marked  
               CDI-regulated policies; $0.11 PMPM in small-group  
               market DMHC-regulated plans; $0.17 PMPM in small-group  
               market CDI-regulated policies; $0.10 PMPM in  
               individual market DMHC-regulated plans; and, $0.10  
               PMPM in individual market CDI-regulated policies. 

                Per the June 23, 2010 CHBRP update letter, these cost  
               projections would likely be lower.   However, the  
               extent to which the cost estimates would decrease  
               would require another analysis, since the underlying  
               analytic approach would need to be re-assessed.   
               Specifically, the approach for identifying the number  
               of medications on fail-first protocol lists, and the  
               number of enrollees affected, may need to be modified.  




          STAFF ANALYSIS OF ASSEMBLY BILL 1826 (Huffman, Feuer) Page  
          12


          

                

                 Public health impact
               CHBRP reports that, although there is some evidence  
               that fail-first protocols can lead to lower levels of  
               patient satisfaction, delays in receiving medications,  
               and higher rates of unfilled prescriptions, this  
               research is not generalizable to populations outside  
               of those studied . Therefore, the public health impact  
               of this bill is unknown.  

               Additionally, CHBRP was unable to determine the extent  
               to which this bill would impact people of different  
               genders or racial/ethnic groups differentially.  

               Lastly, CHBRP states that pain conditions are known to  
               be relevant factors in terms of lost productivity and  
               associated economic loss through days missed from work  
               as well as reduced ability to perform tasks at work.   
               However, no research was identified that assessed the  
               impact of fail-first protocols for pain medications on  
               measures of productivity.  Therefore, the impact of  
               this bill on lost productivity and economic loss  
               associated with conditions requiring the use of pain  
               medications is unknown. 

          Arguments in support
          The sponsor of this bill, For Grace, writes that this bill  
          highlights the inadequacies of step therapy because a  
          patient in pain can tell immediately whether or not a pain  
          medication is working and should not be forced to stay on  
          medicine that does not relieve their pain.  

          Chronic pain advocacy groups, and community and labor  
          organizations support this bill because it will ensure that  
          patients have access to the right treatment at the right  
          time.  The American Chronic Pain Association asserts that  
          treatment decisions should rely on the physician's clinical  
          expertise, patient's health history, and the best  
          scientific evidence available, rather than driven by cost.   
          The Community Life Improvement Program adds that applying  
          step therapy protocols rigidly to a pain patient is not in  
          the patient's best interest especially when women are more  
          likely than men to be under-treated for their pain and  
          minorities receive even less quality of care.  Labor  




          STAFF ANALYSIS OF ASSEMBLY BILL 1826 (Huffman, Feuer) Page  
          13


          

          groups, such as the American Federation of State, County  
          and Municipal Employees, point out in support that it is  
          fundamentally unfair to permit patients to suffer  
          unnecessary pain in the hopes that a cheaper drug will be  
          as effective as the medication their physicians actually  
          prescribe and they argue that, in the long run, there is no  
          convincing evidence that step therapy actually even saves  
          money.

          Health care professional organizations, such as the  
          Association of Northern California Oncologists and  
          California Medical Association, writes in support of this  
          bill, asserting that AB 1826 will remove roadblocks and  
          obstacles that prevent patients with pain from receiving  
          the medically necessary, reasonable, and most appropriate  
          pain management and treatment options prescribed by their  
          physicians, who best understand their patients' health  
          needs.  The California Nurses Association states that  
          requiring patients to fail first may cause unnecessary  
          delays in access and subsequently compromise patient care  
          and increase health care costs for employers.

          Pharmaceutical and biotechnology companies, and related  
          associations, such as the California Healthcare Institute  
          (CHI) and BIOCOM, write in support, stating that the health  
          care provider should have access to a full range of  
          therapeutic options to use as they see fit for that  
          particular patients.  CHI states that their member company  
          treatments are only effective when patients have access to  
          them.  AstraZeneca asserts that physicians should not have  
          their hands tied with cost containment techniques when it  
          comes to making the best possible decision for the patient.

          Arguments in opposition
          The Department of Managed Health Care opposes this bill,  
          stating that step therapy, when used appropriately by  
          providers, should continue to be one of the many effective  
          tools for ensuring the delivery of quality and  
          cost-effective health care services.  DMHC also points out  
          that federal health care reform incorporates prescription  
          drugs under its essential benefits requirement, but since  
          there is no guidance from the federal government regarding  
          the scope of these benefits, it is premature to consider AB  
          1826.





          STAFF ANALYSIS OF ASSEMBLY BILL 1826 (Huffman, Feuer) Page  
          14


          

          Many health plans and insurers write in opposition to this  
          bill.  America's Health Insurance Plans argues that this  
          bill not only fails to further advance the goals of patient  
          safety and quality of care, but threatens the ability of  
          health plans to ensure their enrollees are prescribed the  
          correct course of treatment in clinically appropriate  
          amounts.  The California Association of Health Plans writes  
          in opposition that requiring coverage for any prescribed  
          pill or other medication for pain is highly questionable,  
          particularly when the ability of a plan to encourage safe  
          alternatives is also eliminated.  The Association of  
          California Life and Health Insurance Companies points out  
          that providers and patients are already protected under  
          current law, as they may file grievances through the  
          Independent Medical Review System, including through an  
          expedited appeals process if there is an imminent and  
          serious threat to the health of the insured, which includes  
          suffering from serious pain.  Health Net asserts that  
          requiring plans and insurers to cover any pain medication  
          prescribed by a provider, without regard to guidelines,  
          will drive up health care costs.  Molina Healthcare of  
          California points to a recent article in the Journal of the  
          American Medical Association that called for physicians to  
          be critical of new drugs and pointed out that prescribing  
          generic medication, which have a longer track record  
          compared to new drugs, have safety benefits beyond cost.  

          Pharmacy benefit managers (PBMs), including Medco Health  
          Solutions, Inc., and Express Scripts, Inc., maintain that  
          implementation of a well-designed step therapy program  
          ensures that patients receive appropriate medications in a  
          cost effective manner, while reducing waste, error and  
          unnecessary drug use.  PBMs contend that prohibiting the  
          use of this key drug management tool for pain medications  
          will make it more difficult to manage the costs of  
          prescription drugs and increase premiums and copayments for  
          all patients.  

          The California Chamber of Commerce opposes the bill because  
          they say it eliminates current cost controls and unravels  
          consumer protections by eliminating the practice of step  
          therapy, the practice of beginning drug therapy with the  
          most cost-effective and safest medication, and progressing  
          to other more costly or risky medications, as necessary.   
          The California Association of Joint Powers Authorities  




          STAFF ANALYSIS OF ASSEMBLY BILL 1826 (Huffman, Feuer) Page  
          15


          

          objects to the exemption provided to CalPERS from complying  
          with this bill because it ignores that all local public  
          entities will be forced to absorb the prescription coverage  
          cost increases resulting from this bill.
          
          Prior legislation
          AB 1144 (Price) of 2009 would have required health plans  
          and insurers to report specified information relating to  
          chronic pain medication management requirements for their  
          enrollees or insureds to DMHC and CDI, respectively.   
          Failed passage in the Assembly Appropriations Committee.

          AB 974 (Gallegos), Chapter 68, Statutes of 1998, prohibits  
          health plans that cover prescription drugs from limiting or  
          excluding coverage for a drug that had previously been  
          approved by the plan.

          SB 625 (Rosenthal), Chapter 69, Statutes of 1998, requires  
          health plans that cover prescription drugs and that have  
          one or more formularies to publicly disclose, upon request,  
          a copy of the current list of prescription drugs that  
          includes specified information and to maintain an expedited  
          prior authorization process for medically necessary  
          non-formulary prescription drugs, and clarifies the content  
          of the notice, including grievance information, that is  
          required to be sent to an enrollee when a prior  
          authorization request is denied by the plan.

          AB 1985 (Speier), Chapter 1268, Statutes of 1992, prohibits  
          health plans and insurers that provide coverage for  
          prescription drugs, from limiting or excluding coverage for  
          a drug on the basis that it is prescribed for an off-label  
          use, if specified criteria are met.

                                  PRIOR ACTIONS

           Assembly Health:    11-6
          Assembly Appropriations: 12-0 
          Assembly Floor:          45-26

                                     COMMENTS  
          
        1.Bill could require plans and insurers to cover medications  
          in situations that are contrary to established guidelines.   
          As currently written, the bill could require plans and  




          STAFF ANALYSIS OF ASSEMBLY BILL 1826 (Huffman, Feuer) Page  
          16


          

          insurers to cover any prescribed pain medication.  There  
          may be cases where a prescribing physician may have good  
          reason why certain pain medication is necessary for a  
          specific patient.  Should the bill be amended to ensure  
          that the physician's intention is clear when they prescribe  
          pain medications in a way that is at odds with established  
          guidelines?

        2.Is the exemption for CalPERS appropriate?  This bill is  
          intended to address barriers that patients in pain may face  
          while trying to access pain medication.  However, there is  
          nothing to suggest that enrollees and insureds in CalPERS  
          plans and policies would not be similarly affected.  
          
                                    POSITIONS  
                                        
          Support:   For Grace (sponsor)
                 American Academy of Pain Medicine
                 American Chronic Pain Association
                            American Federation of State, County and  
          Municipal Employees, AFL-CIO
                 American Pain Foundation
                 Arthritis Care Center, Inc.
                 Arthritis Foundation
                  Association of California Neurologists
                 Association of Northern California Oncologists
                 AstraZeneca
                 Bay Area Women's Health Advocacy Council
                 BIOCOM
                 California Academy of Pain Medicine
                  California Academy of Physician Assistants
                  California Alliance for Retired Americans
                 California Conference Board of the Amalgamated  
                 Transit Union
                 California Conference of Machinists
                 California Healthcare Institute
                 California Medical Association
                  California NeuroAlliance
                 California Nurses Association
                 California Orthopedic Association
                 California Professional Firefighters
                 California Society of Dermatology and Dermatologic  
                 Surgery
                 Community Life Improvement Program
                  Congress of California Seniors




          STAFF ANALYSIS OF ASSEMBLY BILL 1826 (Huffman, Feuer) Page  
          17


          

                  Consumer Attorneys of California
                  Consumer Federation of California
                  Engineers and Scientists of California, IFPTE Local  
                 20
                 Familia Unida Living with Multiple Sclerosis
                 Foundation for Peripheral Neuropathy
                 Global Healthy Living Foundation
                 Healthy African American Families
                  International Longshore and Warehouse Union
                  Intractable Pain Patients United
                  Jockeys' Guild
                 Latina Breast Cancer Agency
                 Marin County Pharmaceutical Association (MCPhA)
                  Medical Oncology Association of Southern California  
                 (MOSAC)
                  Metropolitan Pain Management Consultants, Inc.
                  National Kidney Foundation
                  National Multiple Sclerosis Society
                  Osteopathic Physicians and Surgeons
                  Pharmacists Planning Service, Inc. (PPSI)
                 Power of Pain Foundation
                  Professional and Technical Engineers, IFPTE Local  
                 21
                  Southern California Cancer Pain Initiative
                  United Food and Commercial Workers Region 8 States  
                 Council
                  UNITE-HERE
                  United Leukodystrophy Foundation 
                  12 individuals

          Oppose:  America's Health Insurance Plans (AHIP)
                 Anthem Blue Cross
                 Association of California Life and Health Insurance  
          Companies 
                 Blue Shield of California
                 California Association of Health Plans
                 California Association of Joint Powers Authorities  
          (CAJPA)
                 California Chamber of Commerce (CalChamber)
                 Community Health Group
                 CSAC Excess Insurance Authority
                 Department of Managed Health Care
                 Express Scripts, Inc.
                 Health Net
                 Medco Health Solutions, Inc.




          STAFF ANALYSIS OF ASSEMBLY BILL 1826 (Huffman, Feuer) Page  
          18


          

                 Molina Health Cares

                                   -- END --