BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 369| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: AB 369 Author: Huffman (D), et al. Amended: 8/24/12 in Senate Vote: 21 SENATE HEALTH COMMITTEE : 5-2, 6/27/12 AYES: Alquist, Anderson, De León, DeSaulnier, Wolk NOES: Harman, Blakeslee NO VOTE RECORDED: Hernandez, Rubio SENATE APPROPRIATIONS COMMITTEE : 5-2, 8/16/12 AYES: Kehoe, Alquist, Lieu, Price, Steinberg NOES: Walters, Dutton ASSEMBLY FLOOR : 48-22, 1/26/12 - See last page for vote SUBJECT : Health care coverage: prescription drugs SOURCE : For Grace DIGEST : This bill 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. Senate Floor Amendments of 8/24 12 create an exception to CONTINUED AB 369 Page 2 the prohibition on more than two steps for the purposes of pain medication step therapy. ANALYSIS : Existing law: 1. Provides for regulation of health insurers by the 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. 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, CONTINUED AB 369 Page 3 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 participating plan provider or prescribing contracted 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 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. 5. Specifies that the prohibition applies unless the FDA-approved label indication, or clinical research trials focusing on clinical outcomes support that more than two prior therapies should be used before using the requested pain medications. Background Oversight (CCIIO) issued a bulletin proposing that EHB be defined using a benchmark approach. Under the CCIIO intended approach, states would have the flexibility to CONTINUED AB 369 Page 4 select a benchmark plan that reflects the scope of services offered by a "typical employer plan." This approach would give states the flexibility to select a plan that would best meet the needs of their residents. In accordance with the guidance, the benchmark options include: One of the three largest small group plans in the state by enrollment. One of the three largest state employee health plans by enrollment. One of the three largest federal employee health plan options by enrollment. The largest HMO plan offered in the state's commercial market by enrollment. The benefits and services included in the benchmark plan selected by the state would be the EHB package. To meet the EHB coverage standard, a health plan or health insurer would offer benefits that are "substantially equal" to the benchmark plan selected by the state and modified as necessary to reflect the 10 coverage categories. The bulletin indicates that states must select their benchmark plan in the third quarter two years prior to the coverage year (by September 2012). The ACA requires states to defray the cost of any benefits required by state law to be covered by health plans and health insurers beyond the EHBs. The federal bulletin implies that existing state mandates could be incorporated in EHBs to the extent they are included in a benchmark plan existing in 2012. However, the federal rules are not final or entirely clear on this point. Comments on the federal bulletin are due by January 31, 2012. Further evaluation of individual state mandates pending this year will need to be considered in the context of a broader discussion about California's benchmark plan. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: Yes According to the Senate Appropriations Committee: CONTINUED AB 369 Page 5 One-time costs of about $40,000 (Managed Care Fund) to the DMHC to review compliance by health plans. Minor costs to the CDI to review compliance by health insurers. Negligible costs to CalPERS to provide pharmacy benefits to its subscribers. Unknown potential costs increases to Medi-Cal managed care plans (50 percent General Fund, 50 percent federal funds). The Department of Health Care Services indicates that it expects there to be some fiscal impact of the bill, but it is not able to quantify any potential cost increases at this time. The Department is concerned that limiting the use of step therapy will lead to greater use of more expensive pain medication, when, in some cases, less expensive medications may provide relief. SUPPORT : (Verified 8/27/12) For Grace (source) American Academy of Pain Medicine American Cancer Society American Chronic Pain Association American GI Forum of California 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 CONTINUED AB 369 Page 6 California Society of Industrial Medicine and Surgery California Society of Physical Medicine and 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 The Arc and United Cerebral Palsy US Pain Foundation OPPOSITION : (Verified 8/27/12) Association of California Life and Health Insurance Companies America's Health Insurance Plans Blue Shield of California California Association of Health Plans California Chamber of Commerce California Manufacturers and Technology Association Express Scripts, Inc. National Federation of Independent Business Southwest California Legislative Council ARGUMENTS IN SUPPORT : Chronic pain advocacy groups, health care professionals, and community organizations support this bill because it ensures that patients 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 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 CONTINUED AB 369 Page 7 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. ARGUMENTS IN 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 that a step therapy protocol can require because there are many abuses in this area. 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 CONTINUED AB 369 Page 8 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. ASSEMBLY FLOOR : 48-22, 1/26/12 AYES: Alejo, Allen, Ammiano, Atkins, Beall, Block, Blumenfield, Bonilla, Bradford, Brownley, Buchanan, Butler, Charles Calderon, Campos, Carter, Cedillo, Chesbro, Dickinson, Eng, Feuer, Fong, Fuentes, Gatto, Gordon, Hall, Hayashi, Roger Hernández, Hill, Huber, Hueso, Huffman, Lara, Bonnie Lowenthal, Ma, Mendoza, Mitchell, Pan, Perea, V. Manuel Pérez, Portantino, Skinner, Solorio, Swanson, Torres, Wieckowski, Williams, Yamada, John A. Pérez NOES: Achadjian, Bill Berryhill, Conway, Donnelly, Fletcher, Beth Gaines, Garrick, Grove, Hagman, Harkey, Jeffries, Jones, Logue, Mansoor, Miller, Morrell, Nestande, Nielsen, Olsen, Silva, Valadao, Wagner NO VOTE RECORDED: Cook, Davis, Furutani, Galgiani, Gorell, Halderman, Knight, Monning, Norby, Smyth CTW:d 8/27/12 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED