BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 369|
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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
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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,
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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
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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:
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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
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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
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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
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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
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