BILL ANALYSIS Ó
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: AB 369
AUTHOR: Huffman
AMENDED: June 20, 2012
HEARING DATE: June 27, 2012
CONSULTANT: Moreno
SUBJECT : Health care coverage: prescription drugs.
SUMMARY : Prohibits health care service plans and insurers
(collectively, carriers) that restrict medications for the
treatment of pain, pursuant to step therapy or fail-first
protocol, from requiring a patient to try and fail on more than
two pain medications before allowing the patient access to the
pain medication or generically equivalent drug, as defined,
prescribed by the prescribing provider, as defined.
Existing law:
1.Provides for regulation of health insurers by the California
Department of Insurance (CDI) under the Insurance Code, and
provides for the regulation health plans by the Department of
Managed Health Care (DMHC), pursuant to the Knox-Keene Health
Care Service Plan Act of 1975 (Knox-Keene Act).
2.Requires carriers to provide certain benefits, but does not
require carriers to cover prescription drugs. Establishes
various requirements on carriers if they do offer prescription
drug coverage.
3.Prohibits carriers 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.
4.Establishes the Patient Protection and Affordable Care Act
(ACA), which imposes various requirements, some of which take
effect on January 1, 2014, on states, carriers, employers, and
individuals regarding health care coverage.
Continued---
AB 369 | Page 2
5.Requires, under the ACA, carriers that offer coverage in the
small group or individual market to ensure coverage includes
essential health benefits (EHB), as defined. Provides that the
EHB package 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.
This bill:
1.Prohibits carriers that restrict medications for the treatment
of pain, pursuant to step therapy or fail-first protocol, from
requiring a patient to try and fail on more than two pain
medications before allowing the patient access to the pain
medication, or generically equivalent drug, as defined,
prescribed by the prescribing provider, as defined.
2.Requires the duration of any step therapy or fail first
protocol to be determined by the prescribing provider, as
defined.
3.Prohibits the bill from prohibiting carriers from charging a
subscriber, enrollee, or insured a copayment or a deductible
for prescription drug benefits or from setting forth, by
contract, limitations on maximum coverage of prescription drug
benefits, provided that the copayments, deductibles, or
limitations are reported to, and held unobjectionable by, the
director and communicated to the subscriber or enrollee,
pursuant to the disclosure provisions in existing law.
4.Prohibits this section from being construed to require
coverage of prescription drugs not in a plan's drug formulary
or to prohibit generically equivalent drugs or generic drug
substitutions.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1.Negligible state fiscal effect associated with the mandate to
cover the prescribed medication after two fail-first trials.
According to the California Health Benefits Review Program
(CHBRP), there is insufficient information to estimate a
change in utilization or cost for enrollees whose prescribed
medications may be subject to a fail-first protocol not
compliant with this bill. Most medications are not subject to
fail-first protocols and, for those that are, the majority of
protocols appear to already be compliant with this bill.
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2.Likely minor, if any, state fiscal impact associated with
other provisions of the bill that allow physicians to control
the duration of trials and streamline the plan's authorization
process. CHBRP did not assess the fiscal impact of these
provisions.
3.Federal regulations implementing the ACA may impact the cost
of this bill. Under current law, beginning in 2014, states
will be liable for any additional cost related to state-level
benefit mandates on plans offered through new health insurance
exchanges that go beyond minimum federal requirements. At this
time, it is unknown whether this bill might impose future
state costs.
PRIOR VOTES :
Assembly Health: 13- 5
Assembly Appropriations:12- 5
Assembly Floor: 48- 22
COMMENTS :
1.Author's statement. As a matter of health policy, we cannot
afford to have health plans practicing medicine without a
license and deciding which drugs patients should be allowed to
receive in the management of their pain. Those decisions are
best left to the patient's doctor, who is in a better position
of knowing the patient's medical history and specific needs.
AB 369 will bring California one step closer to changing
practices that have resulted in higher long-term health care
costs and will ensure individuals in pain won't have to suffer
needlessly anymore.
2.Chronic pain. According to the National Institute of
Neurological Disorders and Stroke, while acute pain is a
normal sensation triggered in the nervous system to alert you
to possible injury and the need to take care of yourself,
chronic pain persists. Pain signals keep firing in the nervous
system for weeks, months, and even years. There may have been
a triggering event (such as a sprained back or a serious
infection) or there may be an ongoing cause of pain (such as
arthritis, cancer, or ear infection), but some people suffer
chronic pain in the absence of any past injury or evidence of
body damage. Many chronic pain conditions affect older adults.
Common chronic pain complaints include headache, low back
pain, cancer pain, arthritis pain, neurogenic pain (pain
resulting from damage to the peripheral nerves or to the
central nervous system itself), and psychogenic pain (pain not
AB 369 | Page 4
due to past disease or injury or any visible sign of damage
inside or outside the nervous system). A person may have two
or more co-existing chronic pain conditions. Such conditions
can include chronic fatigue syndrome, endometriosis,
fibromyalgia, inflammatory bowel disease, interstitial
cystitis, temporomandibular joint dysfunction, and vulvodynia.
t is not known whether these disorders share a common cause.
3.Fail-first protocols. According to CHBRP, step therapy, or
fail-first protocols, may be implemented as methods of
utilization management in a variety of ways and are known by a
number of terms. Step therapy, when implemented by carriers,
requires an enrollee to try a first-line medication (often a
generic alternative) prior to receiving coverage for a
second-line medication (often a brand-name medication). Step
edit is a process by which a prescription, submitted for
payment authorization, is electronically reviewed at
point-of-service for use of a prior, first-line medication.
For either step therapy or step edit, upon decline of coverage
for the prescription, a patient's health care provider may
reissue the prescription for a first-line agent covered by the
patient's health plan contract or policy or appeal the
decision. Alternatively, the patient may purchase the
prescription despite the lack of coverage. A fail-first
protocol may also be the basis for part or all of a
precertification or prior authorization protocol, which may
also require the prescribing provider to confirm to the plan
or insurer that an alternate medication or medications have
been unsuccessfully tried by the patient before the coverage
for the prescribed medication is approved. However, not all
prior authorization protocols have a fail-first component.
Some prior authorization protocols are based on other
criteria, such as intended use to treat a specific medical
problem or diagnosis, or confirmation that the patient meets
other criteria such as age or specified comorbidities.
4.Potential effects of the ACA. The ACA requires that,
beginning 2014, states "make payments?to defray the cost of
any additional benefits" required of qualified health plans
(QHPs) sold in the Exchange. According to CHBRP, this bill
does not require coverage of additional benefits as it
specifically states, "Nothing in this section shall be
construed to require coverage of prescription drugs not in a
Ýplan's/insurer's] drug formulary or to prohibit generically
equivalent drugs or generic drug substitutions as authorized
by Section 4073 of the Business and Professions Code." The ACA
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provisions related to the Exchange are silent on step therapy
and fail-first protocols. EHBs are directed to include
prescription drugs. To determine whether any additional state
fiscal liability, as it relates to the Exchange, would be
incurred under this bill, the following factors would need to
be examined:
a. Determination of whether this bill requires additional
benefits in the first place, since the bill does not
mandate coverage of prescription drugs;
b. The scope of prescription drug benefits in the final EHB
package and whether federal guidelines or regulations will
provide any guidance on the utilization management of the
prescription drug benefit for QHPs to be offered in the
Exchange;
c. The number of enrollees in QHPs; and
d. The methods used to define and calculate the cost of
additional benefits.
5.Essential health benefits and state benefit mandates.
Effective January 1, 2014, federal law requires Medicaid
benchmark and benchmark equivalent plans, plans sold through
the Exchange and the Basic Health Program (if enacted), and
carriers providing coverage to individuals and small employers
to ensure coverage of EHBs, as defined by the HHS Secretary.
HHS is required to ensure that the scope of EHBs is equal to
the scope of benefits provided under a typical employer plan,
as determined by the Secretary. Under federal law, EHBs must
include 10 general categories and the items and services
covered within the categories:
§ Ambulatory patient services;
§ Emergency services;
§ Hospitalization;
§ Maternity and newborn care;
§ Mental health and substance use disorder services,
including behavioral health treatment;
§ Prescription drugs;
§ Rehabilitative and habilitative services and devices;
§ Laboratory services;
§ Preventive and wellness services and chronic disease
management; and
§ Pediatric services, including oral and vision care.
On December 16, 2011, the HHS Center for Consumer Information
and Insurance Oversight released an EHB Bulletin outlining a
regulatory approach that HHS plans to propose to define EHBs.
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In the Bulletin, HHS proposed that EHBs be defined using a
benchmark approach. States would have the flexibility to
select a benchmark plan that reflects the scope of services
offered by a "typical employer plan." AB 1461 (Monning) and SB
951 (Hernandez) have selected the Kaiser Small Group health
plan to serve as California's EHB benchmark plan.
1.CHBRP analysis. AB 1996 (Thomson), Chapter 795, Statutes of
2002, requests the University of California to assess
legislation proposing a mandated benefit or service and
prepare a written analysis with relevant data on the
medical, economic, and public health impacts of proposed
health plan and health insurance benefit mandate
legislation. CHBRP was created in response to AB 1996, and
SB 1704 (Kuehl), Chapter 684, Statutes of 2006, extended
CHBRP for four additional years. CHBRP indicates that its
analysis of this bill focused on the effect of removing one
utilization management criterion used to make coverage
determinations for prescription drug benefits - the number
of alternate medication that must be tried before coverage
for a medication will be provided. Their analysis did not
attempt to evaluate the effect of removing the carrier role
in determining the duration of the medication trials
specified by a fail-first protocol, or the effect of
requiring carriers to accept chart notes as documentation of
a compliance with a fail-first protocol, or requiring plans
or policies to accept a note of such compliance on a
prescription eliminating the need for additional
communication with a pharmacist before a payment is
processed. The following is excerpted from CHBRP's analysis:
a. Medical effectiveness. The use of fail-first protocols
varies by carrier, as well as among enrollees who have
health insurance from one carrier. For some enrollees, no
pain medications are subject to fail-first protocols. Other
enrollees, depending on the provisions of their carrier
contracts or policies, have outpatient prescription drug
benefits that subject one or more pain medications to a
fail-first protocol. Furthermore, it is possible that two
enrollees with contracts or policies from the same carrier
might have outpatient prescription drug benefits for pain
medications that differ with respect to which pain
medications are subject to fail-first protocols.
Furthermore, not all enrollees have benefit coverage
subject to any fail-first protocols for pain medications
and no single pain medication appears on all fail-first
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protocol lists. Similarly, no particular class of drugs
appears on all fail-first protocol lists. There appears to
be no pattern among DMHC- and CDI-regulated carriers in the
use of fail-first protocols for coverage determinations
regarding pain medications. CHBRP found no medical
effectiveness literature addressing the direct effects of
fail-first protocols on resolving or controlling pain.
CHBRP finds insufficient evidence to characterize the
medical effectiveness of fail-first protocols (including
those protocols that would exceed two trials of
alternatives, as addressed by this bill) 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 such
protocols leads to either positive or negative health
outcomes.
b. Benefit coverage, utilization, and cost impacts.
i. Of the 21.9 million Californians enrolled in
DMHC-regulated plans and CDI-regulated policies,
approximately 20.9 million have outpatient prescription
drug benefit coverage.
ii. Approximately 45.5 percent of enrollees with an
outpatient pharmacy benefit have coverage for at least
one pain medication which is subject to a fail-first
protocol.
iii. Of more than 200 prescription medications used to
treat pain, 27 percent of medications are on at least one
fail-first protocol list. However, lists can vary between
carrier contracts and policies (even when offered by a
single carrier).
iv. Because fail-first protocols can vary by carrier
contract or policy, as well as by carrier, 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, as
mentioned most fail-first protocols appear to already
compliant with this bill in that they do not have
requirements to try and fail more than twice.
v. CHBRP projects no measurable impact on cost or
utilization of prescription drugs as a result of this
bill because the number of enrollees with outpatient
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pharmacy benefit coverage would not be changed by the
bill, because the bill is not expected to result in a
change in the diagnosis or treatment of pain, and because
CHBRP has insufficient information to project any change
in use of pain medications due to the restrictions this
bill would place on use of fail-first protocols.
a. Public health impacts.
i. Pain is a prevalent condition in the U.S. population,
with approximately 26 percent of adults experiencing
chronic pain (i.e., pain lasting 6 months or longer).
Pain varies widely in its presentation and duration and
is caused by a wide array of known and unknown origins.
ii. 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 unfilled
prescriptions, this research is not generalizable to
populations outside of those studied. Therefore, the
impact of this bill on patient satisfaction, delays in
receiving medication, or higher rates of unfilled
prescriptions is unknown.
iii. CHBRP did not identify any literature that examined the
relationship between fail-first protocols and gender or
race/ethnicity. Therefore, the impact of this bill on
gender and racial/ethnic disparities and the differential
impacts by subpopulation on pain management is unknown.
iv. 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. 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 associated with
conditions requiring the use of pain medications is
unknown.
1.Prior legislation. AB 1826 (Huffman) of 2010 would have
required a carrier 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.
2.Support. Chronic pain advocacy groups, health care
professionals, and community organizations support this bill
because it will ensure that patients have access to the right
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treatment at the right time. The sponsor of this bill, For
Grace, writes that this bill highlights the inadequacies of
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 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.
3.Opposition. Carriers 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 carriers 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
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that a step therapy protocol can require because there are
many abuses in this area. 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
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.
4.Technical amendments. Replace the term "prescribing provider"
with the term "prescribing participating plan provider" in the
Health and Safety Code and "prescribing contracted provider"
in the Insurance Code.
SUPPORT AND OPPOSITION :
Support: For Grace (sponsor)
American Academy of Pain Medicine
American Cancer Society
American Chronic Pain Association
American GI Forum of California
The Arc and United Cerebral Palsy
Association of Northern California Oncologists
California Academy of Pain Medicine
California Academy of Physician Assistants
California Alliance for Retired Americans
California Arthritis Foundation Council
California Chronic Care Coalition
California Hepatitis C Task Force
California Medical Association
California NeuroAlliance
California Neurology Society
California Nurses Association/National Nurses
Organizing Committee
California Orthopedic Association
California Podiatric Medical Association
California Professional Firefighters
California Psychological Association
California Society of Anesthesiologists
California Society of Industrial Medicine and Surgery
California Society of Physical Medicine and
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Rehabilitation
Congress of California Seniors
Disability Rights California
Global Healthy Living Foundation
Medical Oncology Association of Southern California,
Inc.
National Fibromyalgia & Chronic Pain Association
National Multiple Sclerosis Society - California
Action Network
Neuropathy Action Foundation
Pharmacists Planning Service, Inc.
Power of Pain Foundation
Reflex Sympathetic Dystrophy Syndrome Association
Southern California Cancer Pain Initiative
US Pain Foundation
Over 600 individuals
Oppose: Association of California Life and Health Insurance
Companies
America's Health Insurance Plans
Blue Shield of California
California Association of Health Plans
California Association of Joint Powers Authorities
California Advocates, Inc.
California Chamber of Commerce
California Manufacturers and Technology Association
Express Scripts, Inc.
Health Net
National Federation of Independent Business
Southwest California Legislative Council
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