BILL ANALYSIS
SB 161
Page 1
SENATE THIRD READING
SB 161 (Wright)
As Amended September 3, 2009
Majority vote
SENATE VOTE :36-0
HEALTH 13-6 APPROPRIATIONS 12-5
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|Ayes:|Jones, Ammiano, Block, |Ayes:|De Leon, Ammiano, Charles |
| |Carter, | |Calderon, Coto, Davis, |
| | De La Torre, De Leon, | |Fuentes, Hall, |
| |Hall, Hayashi, Hernandez, | |John A. Perez, Skinner, |
| | | |Solorio, Torlakson, Hill |
| |Bonnie Lowenthal, Nava, | | |
| |V. Manuel Perez, Salas | | |
| | | | |
|-----+--------------------------+-----+----------------------------|
|Nays:|Fletcher, Adams, Conway, |Nays:|Conway, Harkey, Miller, |
| |Emmerson, Gaines, Audra | |Nielsen, |
| |Strickland | |Audra Strickland |
| | | | |
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SUMMARY : Requires a health care service plan (health plan)
contract or health insurance policy that provides coverage for
anticancer treatment to provide coverage for a prescribed,
orally administered anticancer medication on a basis no less
favorable than intravenously administered or injected anticancer
medications. Specifically, this bill :
1)Requires health plan contracts and health insurance policies
issued, amended, or renewed on or after January 1, 2010, that
provide coverage for cancer chemotherapy treatment to provide
coverage for a prescribed, orally administered cancer
medication used to kill or slow the growth of cancerous cells
on a basis "no less favorable" than intravenously administered
or injected cancer medications covered under the contract.
2)Requires health plan contracts and health insurance policies,
in order to comply with 1) above, to compare the percentage
cost share for oral cancer medications with that for
intravenous (IV) or injected cancer medications and to apply
the lower of the two as the cost-sharing provision for oral
cancer medications.
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3)Prohibits health plans and health insurance policies from
increasing enrollee cost sharing for cancer medications to any
greater extent than provided for other covered medications.
4)Defines "cost share" to mean copayment, coinsurance, or
deductible provisions applicable to coverage for oral, IV or
injected cancer medications.
5)Exempts from this bill health plan contracts or health
insurance policies purchased by the Board of Administration of
the Public Employees' Retirement System (CalPERS) pursuant to
the Public Employees' Medical and Hospital Care Act.
EXISTING LAW :
1)Provides for the regulation of health plans by the Department
of Managed Health Care (DMHC) and regulation of disability
insurers who sell health insurance by the California
Department of Insurance (CDI).
2)Requires health plan contracts and health insurance policies
to provide coverage for all generally medically accepted
cancer screening tests and requires those plans and policies
to also provide coverage for the treatment of breast cancer.
3)Imposes various requirements on contracts and policies that
cover prescription drug benefits, such as a requirement to
cover "off-label" uses, as specified, and a requirement to
cover previously prescribed drugs, as specified.
4)Authorizes DMHC to regulate the provision of medically
necessary prescription drug benefits by a health plan to the
extent that the plan provides coverage for those benefits.
Existing regulation requires health plans providing outpatient
prescription drugs to provide all medically necessary
prescription drugs, except as specified in that regulation.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)No fiscal impact to Medi-Cal or the Healthy Families Program,
according to the California Health Benefits Review Program
(CHBRP).
2)Increased premium costs in the employer-based and individual
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insurance markets of $18 million, largely offset by a
reduction in out-of-pocket costs paid under current law by
individuals for oral chemotherapy treatments that are not a
covered benefit or with less favorable cost sharing
requirements.
3)According to CHRBP, 100% of Californians with health insurance
have some coverage for inpatient cancer medications and some
outpatient coverage for IV and injected cancer medications.
In addition, 98% of Californians with health insurance have
coverage for some outpatient oral chemotherapy. Therefore,
the main group of patients, almost 500,000 statewide, who reap
the greatest benefit from this legislation are those with
either no coverage for medications generally or no coverage
for oral chemotherapy specifically.
COMMENTS : According to the author, although the emergence of
safe, clinically effective, orally administered anticancer
medication has significantly increased the treatment options for
cancer patients, many barriers currently impede their adoption
as the main form of cancer therapy. The author maintains that
one of the most significant barriers is greater patient
out-of-pocket costs for oral therapies covered under the
pharmacy benefit than IV therapies covered under the medical
benefit. The author further maintains that, where intravenously
administered anticancer medications are typically covered under
a plan's medical benefit, most patients are only responsible for
a co-payment for the office visit and are not required to pay a
separate fee for the IV drug. In contrast, orally administered
anticancer medications are typically covered under a plan's
pharmacy benefit, where many of these agents are placed on a 4th
or specialty tier of a prescription plan's formulary. The
author points out that, according to the Kaiser Family
Foundation, the average coinsurance rate for 4th tier drugs is
28%, which, for a $3,000 per month oral anticancer medication,
could expose a patient to $900 in out-of-pocket spending. The
author believes that this disparity restricts patient access to
life-saving oral anticancer therapies.
The author additionally points out that Oregon and Indiana
enacted similar legislation in 2007 and 2008, respectively.
This year several other states have introduced similar oral
anticancer therapy parity legislation, including Texas,
Washington, Hawaii, Indiana, and Oklahoma.
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According to CHBRP, which evaluates legislation proposing a
mandated health benefit or service for its medical, economic,
and public health impacts:
1)Nearly one in two Californians born today will develop cancer
at some point in their lifetime. There are an estimated
140,000 cases of cancer diagnosed each year, while
approximately 1.2 million Californians alive today have a
history with the disease. Sixty-five percent of the
prescriptions and 33% of the total cost for oral anticancer
medications are for drugs used to treat breast cancer, the
most prevalent cancer in the state.
2)Oral anticancer medications are being prescribed more
frequently for cancer treatment. Four of the five most
prevalent cancers in California, including breast, colorectal,
prostate, and lung cancers, can be treated using oral
anticancer medications. To date the federal Food and Drug
Administration has approved 38 oral anticancer medications
used to treat 52 different types of cancer. When compared to
IV and injectable anticancer medications, oral anticancer
medications have the advantage of allowing administration of
the medication on a daily basis; may be more convenient for
patients; and may reduce the risk of infection or other
infiltration complications. Disadvantages include less
certainty in patient adherence to treatment regimens and a
reduction in interaction between patients and their health
care providers to manage complications of treatment.
3)Coverage for anticancer medications depends on provisions of a
person's contract or policy with a health plan or insurer. At
a very broad level, anticancer medications may be covered as
pharmacy plan benefits or as medical plan benefits, and most
plans and insurers depend on the dispensing site to determine
which will be the form of coverage. IV anticancer medication,
which is usually provided in a hospital or a physician's
office, is generally covered as a medical benefit. Oral
anticancer medications (usually pills) dispensed by a pharmacy
are usually covered as a pharmacy benefit. Some injected
anticancer medications are considered "self-injectable," and
so are regularly delivered through a pharmacy and covered as a
pharmacy benefit. For both medical and pharmacy benefits,
payers have devised strategies to promote appropriate
utilization and control of costs. The variety of cost sharing
provisions currently used in California makes it difficult to
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generalize about the ways in which a cancer patient may be
required to pay out-of-pocket for any anticancer medication.
Fixed copayments are a common form of cost sharing for
medications delivered through a pharmacy. However, some plans
and polices specify coinsurance for one or more medications.
The terms of coverage may or may not include a deductible.
The coverage of medications delivered as medical benefits is
equally variable.
4)Based on a survey of the six largest plans and insurers, 100%
of enrollees are estimated to have at least some coverage for
inpatient anticancer medications and outpatient IV and
injected anticancer medications, while 97.8% of enrollees are
estimated to have at least some coverage for outpatient oral
anticancer medications. Approximately 472,000 enrollees
(2.2%) have no coverage for outpatient oral anticancer
medication. This group includes persons with coverage from
small group or individual market policies regulated by CDI.
5)An estimated 0.5% of people with coverage subject to the
mandate will use oral anticancer medications during the year
following implementation. Of the people using anticancer
medications, CHBRP estimates that 69.5% use oral only, 20.2%
use injected or IV only, and 10.3% use a combination of oral
and injected/IV anticancer medications.
6)The greatest impact on premiums will be in the small group and
individual markets regulated by CDI. While it is possible
that this bill will have the unintended consequence of causing
small group employers or individuals to drop health care
coverage altogether as a result of an increase in premiums,
CHBRP projects no measurable impact on the number of persons
who are uninsured because the estimated premium increase is
only 0.025%. For the more than 21.3 million persons enrolled
in group or individual insurance plans or policies with
anticancer therapy coverage, premiums paid by both employers
and employees are projected to increase by $19.7 million, of
which $7.3 million (0.0144%) will be paid by private
employers.
7)Out-of-pocket costs paid by members using oral anticancer
medications incurred through the cost sharing provisions of a
policy or contract would decrease by $14.7 million.
Approximately 1.6% of the enrollees who use oral anticancer
medications have out-of-pocket costs for such medications over
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$1,000 per year. Post-mandate amounts shifted from patient to
plan/insurer would range from $0 to $7,800 per user per year.
The wide variation is related to the price of particular oral
anticancer medications and the cost sharing provisions of any
one person's contract or policy.
8)Longer-term impacts on health care costs as a result of the
mandate are unknown but are likely to increase over time. It
is estimated that a quarter of chemotherapy treatments in the
pipeline are planned as oral medications. According to a
recent pharmaceutical report on cancer medication development,
almost 650 new medications and new indications for existing
cancer medications are in clinical development. Several other
factors may be influential, such as an increase in the number
of patients receiving long-term treatment with more targeted
oral anticancer medications, continued growth in the use of
combination treatment for various types of cancers, and
expanding indications or off-label use of existing drugs for
the treatment of various cancers.
Carrie's Touch and The American Cancer Society, sponsors of this
bill, state that this is an important issue to address as more
cancer therapies move toward being provided through oral
anticancer medications. Both organizations maintain that many
of the oral anticancer treatments do not have IV counterparts,
making the need to ensure access to them critical. Carrie's
Touch, an organization dedicated to addressing the fight against
breast cancer in the African American community, indicates that
oral anticancer treatments improve patients' quality of life,
provide a more convenient and less invasive method of therapy
and could potentially reduce resource utilization and health
care system costs, while improving patient satisfaction.
The California Medical Association and the Association of
Northern California Oncologists (ANCO) also support this bill.
ANCO states that it is the consensus opinion of the ANCO Board
of Directors based on their experience and expertise in treating
people with cancer, that prohibitive higher out-of-pocket costs
for people with cancer needing oral anticancer medications can
result in delayed cancer treatment or in their receiving IV
anticancer treatments that are less convenient for the patient
and more costly to the healthcare system (with their concomitant
administrative and support drug costs) in total than the
originally prescribed oral anticancer medication.
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Anthem Blue Cross (Anthem), the Association of California Life
and Health Insurance Companies, and Health Net are opposed to
this bill. Health insurers state that this bill sets a
dangerous precedent by requiring a more favorable coverage of a
specific type of medication. Anthem states that this bill would
require health plans to cover all oral anticancer drugs and
completely disregards the current process to place drugs onto a
formulary. According to Anthem, as a result, pharmaceutical
companies would have no incentive to negotiate in good faith
knowing that plans would be mandated by law to have these
specific drugs on their formulary. Health Net also states that
this bill inappropriately limits a health plan's and insurer's
flexibility to design their drug formularies to determine the
relative efficacy of covered drugs.
The California Department of Managed Health Care, The California
Association of Health Plans (CAHP) and the California Chamber of
Commerce are also opposed to the bill and state that they are
concerned that this bill could negatively impact California's
already struggling health care market and as a result, some
subscribers, particularly in the price-sensitive individual and
small group markets, could be forced to drop health coverage
altogether. CAHP also states that there have been a number of
benefit mandates that have worked there way through the
Legislature in recent years and new mandates increase the cost
of health care and hinder a plan's ability to offer a wider
range of affordable products. According to CAHP, this results
in higher premiums for individuals and employers.
Analysis Prepared by : Joyce Iseri / HEALTH / (916) 319-2097
FN: 0002789