BILL ANALYSIS Ó
AB 369
Page 1
Date of Hearing: April 26, 2011
ASSEMBLY COMMITTEE ON HEALTH
William W. Monning, Chair
AB 369 (Huffman) - As Introduced: February 14, 2011
SUBJECT : Health care coverage: prescription drugs.
SUMMARY : Prohibits health plans and health insurers that
restrict medications for the treatment of pain from requiring a
patient to try and fail on more than two pain medications before
allowing the patient access to the pain medication, or its
generic equivalent, prescribed by his or her physician.
Specifically, this bill :
1)Requires health plans and health insurers that restrict
medications for the treatment of pain pursuant to step therapy
or fail first protocol to be subject to the requirements of
this bill.
2)Requires the duration of any step therapy or fail first
protocol to be determined by a patient's prescribing
physician.
3)Prohibits health plans and health insurers from requiring a
patient to try and fail on more than two pain medications
before allowing the patient access to the pain medication, or
its generic equivalent, prescribed by his or her physician.
4)Specifies that prior authorization is no longer required once
a patient has tried and failed on two pain medications and
allows the physician to write the prescription for the
appropriate pain medication.
5)Requires a note in the patient's chart indicating that he or
she has tried and failed on the health plan's or health
insurer's step therapy or fail first protocol to suffice as
prior authorization from the health plan or health insurer.
6)Permits a pharmacist to process a patient's prescription
without additional communication with the health plan or
health insurer when the patient's physician notes on the
prescription that the plan's or insurer's step therapy or fail
first protocols have been met.
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7)Provides that nothing in this bill prohibits a health plan or
health insurer from charging co-payments or deductibles for
prescription drug benefits or imposing limitations on maximum
coverage of prescription drug benefits, as specified.
8)Prohibits this bill from being construed to require coverage
of prescription drugs not in a health plan's or health
insurer's drug formulary or to prohibit generically equivalent
drugs or generic drug substitutions.
EXISTING LAW :
1)Enacts, in federal law, the Patient Protection and Affordable
Care Act (PPACA) to, among other things, make statutory
changes affecting the regulation of, and payment for, certain
types of private health insurance. Includes the definition of
an essential health benefits (EHBs) package that all qualified
health plans must cover, at a minimum, with some exceptions.
2)Provides that the EHBs package in 1) above will be determined
by the federal Department of Health and Human Services (HHS)
Secretary and must include, at a minimum, ambulatory patient
services; emergency services; hospitalizations; and,
prescription drugs, among other things.
3)Provides for regulation of health plans by the Department of
Managed Health Care (DMHC) under the Knox-Keene Health Care
Service Plan Act of 1975 and regulation of health insurers by
the California Department of Insurance (CDI) under the
Insurance Code.
4)Prohibits health plans and health 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, 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.
5)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
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prescribing provider continues to provide the drug for the
medical condition, provided that it is safe and effective for
treatment.
6)Clarifies that the prohibition in 5) above 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.
7)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.
8)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.
9)Requires any health plan disapproval pursuant to 8) above 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; including any alternative
drug or treatment offered by the plan.
10)Requires the process for authorization of medically necessary
non-formulary drugs to be described in the health plan
disclosure form.
11)Requires, in regulations, health plans that cover outpatient
prescription drug benefits to cover all medically necessary
outpatient prescription drugs, as specified.
FISCAL EFFECT : This bill has not yet been analyzed by a fiscal
committee.
COMMENTS :
1)PURPOSE OF THIS BILL . The author states that p ain is a
growing national public health crisis that affects an
estimated 76 million people and has serious economic
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ramifications. Chronic pain affects more Americans than
diabetes, heart disease, and cancer combined. A ccording to
the author, a troubling and dangerous trend among health plans
is frequent denial of coverage to patients for proven and
effective pain medications. According to the author, in order
to reduce their costs and improve their profit margins, many
health plans utilize step therapy or "fail first" policies
which forces patients to try several alternative medications,
which in some cases include over-the-counter medicines, before
they are permitted to get the medication that their physician
ordered. The author contends that the duration of these step
therapy protocols is left up to the insurance company and can
last longer than 90 days. The author asserts that not only
does this policy deny patients the medications they need when
they need them, step therapy can actually increase the direct
cost of health care in the long run due to excessive use of
emergency rooms; unscheduled hospital admissions; permanent
damage as a result of being on the wrong medication; loss of
employment; and, loss of life itself when a person with
chronic pain commits suicide. Indirect costs include lost
wages and productivity of both people with pain and their
caregivers. The author believes that this bill will move the
state closer to changing practices that have resulted in
higher long-term health care costs and forced chronic pain
patients to endure unnecessary physical and emotional
suffering.
2)CHRONIC PAIN . According to the National Institutes of Health
(NIH), acute pain after surgery or trauma comes on suddenly
and lasts for a limited time, whereas chronic pain persists
for months or years. Common types of chronic pain include
back pain, headaches, arthritis, cancer pain, and neuropathic
pain, which results from injury to nerves. The NIH indicates
that common treatments include medication, acupuncture, local
electrical stimulation, brain stimulation, surgery,
psychotherapy, relaxation therapy, biofeedback, and behavior
modification. A 2006 survey by the National Center for Health
Statistics (NCHS), found that back pain is the leading cause
of disability in Americans under 45 years old, and more than
26 million Americans between the ages of 20-64 experience it
frequently. The NCHS survey also indicated that 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
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chronic pain in the U.S., including health care expenses, lost
income, and lost productivity, is about $100 billion.
3)STEP THERAPY . 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.
4)RECENT STUDY . Findings from a recent study sponsored by
Pfizer, Inc. and published in the February 2009 issue of the
American Journal of Managed Care suggest 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. They found
that the patients treated for hypertension under step therapy
filled prescriptions for less anti-hypertensive medication, by
7.9%, than the comparison group with no step therapy
requirement. As drug utilization declined for the step
therapy patients, their hospital admissions and emergency room
visits increased. Two years after the step therapy protocol
was implemented, the step therapy patients incurred $99 more
in health care costs per quarter, on average, than the
comparison group. The researchers suggested the increase was
caused by patients not filling their prescriptions for
non-generic drugs when they learned that the drug was not
covered and more expensive than they expected. Conclusions
from the study indicated that step therapy patients who are
unwilling to switch or unable to overcome administrative
hurdles may go without medication, which, in turn, may cause
their medical condition to deteriorate and increase their need
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for medical interventions in the future.
5)EHBs . The PPACA requires, among other things, qualified health
plans to cover specified categories of EHBs, including
prescription drugs, by 2014. The HHS Secretary is tasked with
defining these benefit categories through regulation so that
they mirror those benefits offered by a "typical" employer
plan. Federal guidance with respect to EHBs is expected later
this year and in 2012.
In a January 2011 issue brief by the University of California's
Health Benefits Review Program (CHBRP) focusing on the federal
requirement to cover EHBs, CHBRP notes that
there is considerable legal ambiguity over how state mandates
requiring the coverage of the treatment for a specific
condition or disease will interact with federal law. CHBRP
states that these mandates often extend across multiple
benefit categories. CHBRP cites, as an example, California's
mandate to cover breast cancer treatment, which implicitly
requires coverage for screening and testing, medically
necessary physician services, ambulatory services,
prescription drugs, hospitalization, and surgery. CHBRP
writes that it is unclear how California benefit mandates that
overlap across several EHB categories would be evaluated in
relation to the EHB package.
6)CHBRP . CHBRP was created in response to AB 1996 (Thomson),
Chapter 795, Statutes of 2002, which requests the University
of California to assess legislation proposing a mandated
benefit or service, and prepare a written analysis with
relevant data on the public health, medical, and economic
impact of proposed health plan and health insurance benefit
mandate legislation. In its analysis of this bill, CHBRP
notes that the analysis focuses on the specific requirement in
this bill for health plans and health insurers that apply step
therapy protocols to pain medications to cover the initially
prescribed medication, or its generic equivalent, after a
trial of no more than two alternate medications.
Specifically, CHBRP reports:
a) 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,
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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 points out that because there appears to be no
pattern among DMHC-regulated health plans and CDI-regulated
health insurers in the use of fail-first protocols for
coverage determinations regarding pain medications, the
medical effectiveness portion of the analysis considers
whether or not, as methods of utilization management,
fail-first protocols for pain medications affect health
outcomes.
CHBRP found no medical effectiveness literature addressing
the direct effects of fail-first protocols on resolving or
controlling pain. Additionally, CHBRP found insufficient
evidence to characterize the medical effectiveness of
fail-first protocols for pain medications. Therefore,
CHBRP concludes that the impact of this bill on the medical
effectiveness of pain treatment is unknown. The lack of
evidence for the effectiveness of fail-first protocols does
not prove that use of these protocols leads to either
positive or negative health outcomes.
b) Utilization, Cost, and Coverage Impacts . About 20.9
million Californians enrolled in DMHC-regulated health
plans or CDI-regulated policies have outpatient
prescription drug benefit coverage subject to this bill.
About 50% of enrollees with an outpatient pharmacy benefit
have coverage for at least one pain medication subject to a
fail-first protocol. CHBRP states that, because fail-first
protocols can vary by plan contract or policy, as well as
by health plan or insurer, and because the clinical
considerations that would cause a patient to fail trials of
more than two alternate medications are so complex, CHBRP
lacks sufficient information to estimate the change in
utilization or cost for enrollees whose prescribed
medications may be subject to a fail-first protocol not
compliant with this bill. In addition, CHBRP notes that
most fail-first protocols appear to already be compliant
with this bill in that they do not have requirements to try
and fail more than twice.
According to CHBRP, the total number of prescriptions for
pain (regardless of whether those medications are subject
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to a fail-first protocol) is estimated to be 610 per 1,000
enrollees per year. CHBRP projects no measurable impact on
cost or utilization of prescription drugs as a result of
this bill due to the following reasons: the number of
enrollees with outpatient pharmacy benefit coverage would
not be changed by this bill; this bill is not expected to
result in a change in the diagnosis or treatment of pain;
and, CHBRP has insufficient information to project any
change in filled prescriptions due to the restrictions this
bill would place on use of fail-first protocols.
Consequently, CHBRP writes that this bill would not be
expected to impact total health care costs for enrollees in
DMHC-regulated health plans and CDI-regulated health
policies.
c) Public Health Impact . CHBRP reports that, although
there is some evidence that fail-first protocols studied
for conditions other than pain can lead to lower levels of
patient satisfaction, delays in receiving medications, and
higher rates of unfulfilled prescriptions, this research is
not generalizable to populations outside of those studied.
Therefore, the public health impact of this bill on patient
satisfaction, delays in receiving medications, and higher
rates of unfulfilled prescriptions is unknown.
Additionally, CHBRP did not identify any literature that
examined the relationship between fail-first protocols and
gender or race/ethnicity. 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.
7)RELATED LEGISLATION . SB 866 (Ed Hernández) directs DMHC and
CDI to jointly develop a standardized prior authorization form
for prescription drug benefits by July 1, 2012, and requires
health plans and health insurers that provide prescription
drug benefits to accept the standardized form when requiring
prior authorization for prescription drug benefits. SB 866 is
pending in the Senate Appropriations Committee.
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8)PRIOR LEGISLATION .
a) AB 1826 (Huffman) of 2010 would have required a health
plan or health insurer that covers prescription drug
benefits to provide coverage for a drug that has been
prescribed for the treatment of pain without first
requiring the enrollee or insured to use an alternative
drug or product. AB 1826 died on the Senate Appropriations
Committee Suspense File.
b) AB 1144 (Price) of 2009 would have required health plans
and health insurers to report specified information
relating to chronic pain medication management requirements
for their enrollees or insureds to DMHC and CDI,
respectively. AB 1144 died on the Assembly Appropriations
Committee Suspense File.
c) 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.
d) 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.
e) AB 1985 (Speier), Chapter 1268, Statutes of 1992,
prohibits health plans and health insurers that provide
coverage for prescription drugs from limiting or excluding
coverage for a drug on the basis that the drug is
prescribed for an off-label use, if specified criteria are
met.
9)SUPPORT . Chronic pain advocacy groups, health care
professionals, and community organizations support this bill
because it will ensure that patient have access to the right
treatment at the right time. The sponsor of this bill, For
Grace, writes that this bill highlights the inadequacies of
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step therapy because a pain patient 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.
The American Chronic Pain Association asserts in support that
step therapy policies move medicine in the wrong direction by
putting patients through undue pain and suffering and forcing
health care providers to write prescriptions that they know
may not help reduce a patient's pain. The Power of Pain
Foundation supports this bill to shed light on the unethical
treatment of pain patients, especially women, minorities, and
economically disadvantaged patients, whom studies have shown
are either disproportionately undertreated or go untreated for
pain. The California Nurses Association writes in support
that the only factor that should drive prescribing methods or
mandate a particular method of treatment should be between the
professional judgment of a licensed health care professional
in consultation with the individual needs of each patient.
The Association of Northern California Oncologists and
California Medical Association support this bill because it
will remove roadblocks and obstacles that prevent pain
patients 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.
10)OPPOSITION . Health plans, health insurers, and pharmacy
benefit managers (PBMs) object to this bill. America's Health
Insurance Plans argues that consumers select coverage based
upon the elements they consider desirable and benefit mandates
eliminate the ability of health insurers and health plans to
provide unique benefit packages aimed at the needs of the
consumers by requiring individuals and employers to purchase
benefits prescribed by the Legislature, not driven by consumer
choice. The Association of California Life & Health Insurance
Companies opposes all mandate bills because they would prove
counterproductive to industry efforts to make health insurance
more affordable and available and could have real impacts both
on individuals struggling to maintain coverage and on the
State budget. The California Association of Health Plans
contends that this bill creates a legislatively designed step
therapy program that would result in California having
innumerable physician-determined protocols that may or may not
have any basis in evidence and argues that it is dangerous to
limit the number of medications that a step therapy protocol
can require because there are many abuses in this area.
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Molina Healthcare of California writes in opposition that
following a process designed to use less expensive drugs that
can be safer and just as effective as the prescribed drug
saves the enrollee money and saves the state money in public
programs. Lastly, PBMs, including CVS/Caremark 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 process for pain medications will make it more
difficult to manage the costs of prescription drugs and
increase premium and co-payment costs for all patients.
11)POLICY COMMENT . This bill is one of several health mandates
introduced for legislative consideration this year. The
author may wish to address the extent to which the need for
this bill and others similar to it is premature, given that
federal regulations to define the parameters of the EHB
package have yet to be promulgated.
REGISTERED SUPPORT / OPPOSITION :
Support
For Grace (sponsor)
American Academy of Pain Medicine
American Chronic Pain Association
Association of Northern California Oncologists
California Academy of Pain Medicine
California Academy of Physician Assistants
California Alliance of Retired Americans
California Medical Association
California Nurses Association
California Orthopedic Association
California Professional Firefighters
California Society of Anesthesiologists
Congress of California Seniors
Global Healthy Living Foundation
Medical Oncology Association of Southern California, Inc.
National Multiple Sclerosis Society - California Action Network
Power of Pain Foundation
Southern California Cancer Pain Initiative
Opposition
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America's Health Insurance Plans
Association of California Life & Health Insurance Companies
Blue Shield of California
California Association of Health Plans
California Chamber of Commerce
CVS/Caremark
Express Scripts, Inc.
Health Net
Medco Health Solutions
Molina Healthcare of California
Analysis Prepared by : Cassie Royce / HEALTH / (916) 319-2097