BILL ANALYSIS Ó
AB 219
Page 1
Date of Hearing: April 9, 2013
ASSEMBLY COMMITTEE ON HEALTH
Richard Pan, Chair
AB 219 (Perea) - As Introduced: February 4, 2013
SUBJECT : Health care coverage: cancer treatment.
SUMMARY : Requires health plan contracts and health insurance
policies that cover prescribed, orally administered anticancer
medications to limit an enrollee or insured's total cost share
to no more than $100 per filled prescription.
EXISTING FEDERAL LAW establishes the Affordable Care Act (ACA)
to make, among other provisions, statutory changes affecting the
regulation of, and payment for, certain types of private health
insurance and includes coverage for prescription drugs in the
categories of 10 essential health benefits (EHBs) that all
qualified health plans must cover.
EXISTING STATE LAW :
1)Establishes the Knox-Keene Health Care Service Plan Act of
1975 to regulate and license health plans and specialized
health plans by the Department of Managed Health Care (DMHC)
and provides for the regulation of health insurers 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 health plan contracts and
health insurance 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.
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5)Establishes as California's EHBs the Kaiser Small Group Health
Maintenance Organization plan along with the following 10 ACA
mandated benefits:
a) Ambulatory patient services;
b) Emergency services;
c) Hospitalization;
d) Maternity and newborn care;
e) Mental health and substance use disorder services,
including behavioral health treatment;
f) Prescription drugs;
g) Rehabilitative and habilitative services and devices;
h) Laboratory services;
i) Preventive and wellness services and chronic disease
management; and,
j) Pediatric services, including oral and vision care.
FISCAL EFFECT : This bill has not yet been analyzed by a fiscal
committee.
COMMENTS :
1)PURPOSE OF THIS BILL . The author states that this bill is
needed to ensure that cancer patients who are prescribed oral
anticancer medications to treat their cancer can afford these
treatments when covered by their health plan or insurance.
According to the author, innovations in the pharmaceutical
industry have resulted in the routine availability of new oral
pills that work better and have fewer side effects than older
intravenous or injectable medications. The author notes that
oral anticancer medications are covered as a pharmacy benefit
by health plans or insurance so the terms of coverage are
different and can include co-insurance instead of a flat rate
co-pay. The author maintains that since oral drugs are new
and currently often under patent, they can be much more
expensive than patients expect to pay for a pill, with prices
as high as $10,000 for a prescription, meaning a patient
responsible for a 30% co-insurance payment could need to pay
$3,000 for a single prescription of oral anticancer
medication. The author asserts that out-of-pocket costs for
oral anticancer medications are a de facto denial of access
and cites a 2010 study done by Prime Therapeutics, a pharmacy
benefit management company, which found one in six cancer
patients with high out-of-pocket costs abandons their
medication. Lastly, the author points out that 21 other
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states have already passed legislation to address high
out-of-pocket costs for these treatments.
2)BACKGROUND . According to an analysis by the California Health
Benefits Review Program (CHBRP), oral anticancer medications
(usually pills) are used to treat frequently diagnosed
cancers, such as breast, lung, prostate, and colorectal
cancers, and they are also used for rare cancers, such as
cancer of the adrenal gland, cancer of the dermis layer of
skin, and retinoblastoma (an eye cancer).
CHBRP indicates that the roles of oral anticancer medications in
cancer treatment vary. Some oral anticancer medications are
used to reduce the likelihood of recurrence of cancer in
patients with early stage cancers who were previously treated
with surgery, radiation, and/or intravenous anticancer
medications, while others are taken on an ongoing basis to
prevent the growth of cancer cells. Still others are used to
treat metastatic cancers, recurrent cancers, or cancers that
cannot be surgically removed. Oral anticancer medications may
be used as "first-line" treatments for persons newly diagnosed
with cancer or as "second-line" treatments for persons who do
not respond to first-line treatments.
Although oral anticancer medications have been available for
many years, CHBRP notes that the number of oral anticancer
medications approved by the federal Food and Drug
Administration (FDA) has grown dramatically over the past
decade. To date, the FDA has approved 54 oral anticancer
medications used to treat 50 different types of cancer.
According to CHBRP, approximately 100 oral anticancer
medications are currently under development, and only nine of
the 54 oral anticancer medications approved by the FDA have
intravenous or injected equivalents. Only 11 of the 54
approved by the FDA have generic equivalents.
3)BENEFIT COVERAGE . According to CHBRP, coverage for anticancer
medications can differ in a number of ways, depending on
provisions of a person's health plan contract or health
insurance policy. 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. For example, intravenous
anticancer medication, which is usually provided in a hospital
or a physician's office, is generally covered as a medical
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benefit, while oral anticancer pills dispensed by a pharmacy
are usually covered as a pharmacy benefit.
CHBRP notes that payers employ a host of strategies to promote
appropriate utilization and cost controls for both medical and
pharmacy benefits. These strategies include creation of
formularies; maximization of manufacturer rebates; quantity
restrictions; use of prior authorization; development of
clinical guidelines; and, implementation of patient cost
sharing, such as deductibles, coinsurance, and copayments.
Cost sharing for medications is frequently complicated by
tiered pricing in which plans and insurers assign drugs to
tiers (generic drugs in the lowest and very expensive drugs in
the highest) and apply varying copayments and coinsurance
rates to different tiers. As with cost sharing in general,
the impact of tiers (if any) depends on the specifics of a
person's plan contract or insurance policy.
Lastly, CHBRP states that the variety of cost sharing provisions
currently used in California makes it difficult to 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 carrier contracts
and policies require coinsurance for one or more medications
or the terms of coverage may or may not include a deductible.
Coverage of medications delivered as medical benefits also
varies.
4)CHBRP REPORT . 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. CHBRP's analysis of this bill assumes
that because this bill specifies prescribed, orally
administered anticancer medications, it would only affect
drugs specific to the treatment of cancer and not affect other
medications, such as anti-pain or anti-nausea medications,
that a cancer patient might use during the course of
chemotherapy. Among CHBRP's findings are the following:
a) Medical Effectiveness . Oral anticancer medications are
used alone or in combination with other oral, intravenously
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administered, or injected anticancer medications, depending
on the cancer they are being used to treat and the stage at
which the cancer is diagnosed. For some types of
early-stage cancers, use of oral anticancer agents and
other treatments may enable a person to live cancer-free
for many years. For advanced and metastatic cancers,
treatment often cannot reverse the disease and may only
prolong life for a few months.
When compared to intravenous and injectable anticancer
medications, oral anticancer medications have both
advantages and disadvantages. Advantages are that oral
anticancer medications may allow administration of the
medication on a daily basis, may be more convenient for
patients, and may reduce the risk of infection or other
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. There may
also be higher risks of drug-food and drug-drug
interactions relative to intravenous and injectable
anticancer medications.
CHBRP states that the preponderance of evidence from studies
of the effects of cost sharing on use of anticancer
medications suggests that cost sharing has at most a small
effect on use of specialty oral anticancer medications.
Cost sharing has a larger effect on adherence and
persistence with aromatase inhibitors for breast cancer,
perhaps because these medications are used primarily to
prevent recurrence of cancer and are taken over long
periods of time regardless of whether patients have
symptoms.
b) Coverage, Utilization, and Cost Impacts . CHBRP
estimates that almost all enrollees with health insurance
subject to this bill have at least some coverage for
anticancer medications. This bill would affect the health
insurance of about 26 million enrollees whose insurance
provides an outpatient prescription drug benefit. CHBRP
notes that outpatient prescription drug benefits cover oral
anticancer medications, though coverage of specific
anticancer medications may vary by health plan or insurer.
CHBRP estimates that 0.54% of enrollees with privately
purchased health insurance subject to this bill would use
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oral anticancer medications during the year following
implementation. CHBRP does not estimate a measurable
increase in the number of enrollees who will require oral
anticancer medications nor a measurable increase in the
number of prescriptions per enrollee.
Increases in insurance premiums as a result of this bill vary
by privately purchased market segment, ranging from
approximately 0.0025% (DMHC-regulated large-group plans) to
0.0047% (CDI regulated individual policies). Increases as
measured by per member per month payments are estimated to
be approximately $0.01 for both DMHC-regulated large-group
plans and CDI-regulated small-group policies. This bill
would also apply to Medi-Cal Managed Care. However, the
Department of Health Care Services, which administers
Medi-Cal, would not be expected to face measurable
expenditure or premium increases, as these plans currently
cover oral anticancer medication benefits with minimal or
no cost-sharing requirements. CHBRP states that the
estimated premium increases would not have a measurable
impact on the number of persons who are uninsured.
Importantly, CHBRP notes that changes to cost sharing
required by this bill do not fall under the ACA's, and
subsequent regulations', definition of "state-required
benefits." In other words, the state would not be required
to defray costs incurred as a result of this bill because
the mandate would not be considered a benefit expansion
that exceeds EHBs.
c) Public Health Impacts . CHBRP does not project a
measurable increase in utilization of oral anticancer
medications as a result of this bill. Therefore, according
to CHBRP, the only potential public health impact of this
bill is a reduction in out-of-pocket costs for oral
anticancer medications. CHBRP maintains that this could
reduce the financial burden and related health consequences
that cancer patients face.
CHBRP reports that, nearly one in two Californians born today
will develop cancer at some point in their lifetime. There
are an estimated 145,000 cases of cancer diagnosed each
year, while approximately one million Californians alive
today have a history with the disease. According to CHBRP,
breast cancer is the most prevalent cancer in California,
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almost exclusively affecting women. CHBRP notes that more
than 50% of oral anticancer medication prescriptions are
for three drugs used to treat breast cancer. Therefore, to
the extent that this bill reduces out-of-pocket costs for
patients, there is a potential to reduce the financial
burden faced by women undergoing treatment for breast
cancer.
After breast cancer, according to CHBRP, the next three most
common cancers in California are colorectal, prostate, and
lung cancer. Non-Hispanic blacks in California have higher
rates of diagnoses of all three of these cancers compared
to all other racial and ethnic groups. These three cancers
may all be treated using oral anticancer medications;
therefore, to the extent that this bill reduces
out-of-pocket costs for oral anticancer medications, CHBRP
asserts that non-Hispanic black cancer patients could
experience a greater reduction in financial burden compared
to other ethnic and racial groups.
5)SUPPORT . The sponsors of this bill, Susan B. Komen for the
Cure California Affiliates and Carrie's TOUCH, Inc., state
that this bill will make oral cancer chemotherapy treatments
more affordable and therefore more accessible to cancer
patients in California. Supporters, representing patient
advocacy groups, providers, and biomedical research companies,
among others, point to research showing that a $100 cap on
cost-sharing requirements for orally administered anticancer
medications per filled prescription increases patient
compliance with their doctor prescribed therapy and reduces
the likelihood of treatment abandonment that is associated
with higher cost-sharing amounts. The American Cancer Society
Cancer Action Network and the Leukemia and Lymphoma Society
note in support that, typically, orally administered
chemotherapy is covered under a health plan's pharmacy benefit
and oral chemotherapy medications are often classified in the
highest tier of a plan's cost-sharing system. They maintain
that this requires patients to pay a high percentage of the
drug's cost and potentially results in thousands of dollars in
out-of-pocket costs each month. The Association of Northern
California Oncologists writes in support that the emergence of
safe, effective, orally administered anticancer medications
has dramatically improved the quality of life for cancer
patients and this bill will make these medicines, which are
often more advanced therapies with fewer side effects than
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traditional chemotherapy, more affordable and accessible.
Lastly, biomedical research companies, such as the California
Healthcare Institute and BIOCOM, add that remarkable
breakthroughs in orally administered cancer treatments are
only effective when patients have access to them.
6)OPPOSITION . Health plans and health insurers object to this
bill because they argue that it threatens the efforts of all
health care stakeholders to provide consumers with meaningful
health care choices and affordable coverage options.
America's Health Insurance Plans notes in opposition that
cost sharing is a crucial part of controlling health care
costs and setting an arbitrary cost sharing limit for those
who are using oral chemotherapy medication means more of the
cost of these expensive medications will need to be borne by
other enrollees and insureds in the form of higher premiums.
The California Association of Health Plans (CAHP) contends
that this bill does nothing to control the high underlying
cost of pharmaceuticals, nor does it do anything to encourage
drug makers to be more efficient and lower costs. CAHP
further believes that the ACA provides a more comprehensive
solution to lowering consumer costs without favoring one drug
class over another and still allows for appropriate
utilization and benefit management by health plans. Blue
Shield of California adds in opposition that this bill
attempts to carve out special cost sharing rules for a
particular line of pharmaceutical company drugs and will only
exacerbate the affordability crisis by giving special
treatment to certain drug company products.
7)RELATED LEGISLATION . SB 639 (Ed Hernandez), pending in the
Senate Health Committee, would, among other things, prohibit
the deductible under a small employer health care service plan
contract or health insurance policy offered, sold, or renewed
on or after January 1, 2014, from exceeding $2,000 in the case
of a plan contract or policy covering a single individual, or
$4,000 in all other cases.
8)PRIOR LEGISLATION .
a) AB 1000 (Perea) of 2011 would have required a health
plan contract or health insurance policy that provides
coverage for prescription drugs and cancer chemotherapy
treatment to limit enrollee out-of-pocket costs for
prescribed, orally administered anticancer medications.
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b) SB 961 (Wright) of 2010, which was virtually identical
to AB 1000, was vetoed by Governor Arnold Schwarzenegger,
who stated in his veto message that the bill would have
added costs to increasingly expensive health insurance
premiums and it was unnecessary in light of federal health
reform.
c) SB 161 (Wright) of 2009 would have required a carrier
contract or policy that covers anticancer treatment to
provide coverage for a prescribed, orally administered
anticancer medication on a basis "no less favorable" than
intravenous or injected anticancer medications. SB 161 was
vetoed by Governor Schwarzenegger, citing his concerns that
the bill limited a carrier's ability to control both the
appropriateness and cost of the care by requiring immediate
coverage of every medication upon receipt of federal
approval, regardless of the provisions of the carrier's
formulary, and placed carriers at a severe disadvantage
when negotiating prices with drug manufacturers. The
Governor further stated his belief that oral anticancer
medications were more cost-effective and efficacious in
some instances and encouraged the author to collaborate
with his Administration, carriers, and the pharmaceutical
manufacturers to explore whether there were ways to provide
greater access without increasing costs.
9)POLICY COMMENT . In addition to cancer, there are a number of
other chronic conditions such as multiple sclerosis, rare
blood and genetic disorders, and Lou Gehrig's Disease, among
others, in which prescription medications are subject to
tiered pricing and their costs can create financial hardships
for affected patients. The author may wish to explain, from a
policy perspective, why patient cost sharing limits for oral
anticancer medications should be elevated above those for
other devastating and debilitating illnesses.
REGISTERED SUPPORT / OPPOSITION :
Support
Susan G. Komen for the Cure California Affiliates (sponsor)
Carrie's TOUCH, Inc. (sponsor)
AIM at Melanoma
American Cancer Society Cancer Action Network
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Association of Northern California Oncologists
BayBio
BIOCOM
California Healthcare Institute
California Professional Firefighters
Cancer Legal Resource Center
Disability Rights Legal Center
International Myeloma Foundation
Leukemia and Lymphoma Society
Medical Oncology Association of Southern California, Inc.
National Patient Advocate Foundation
Ovarian Cancer Alliance
Padres Contra El Cáncer
Parker and Friends Fund
Susan G. Komen for the Cure Central Valley Affiliate
Several individuals
Opposition
America's Health Insurance Plans
Blue Shield of California
California Association of Health Plans
Analysis Prepared by : Cassie Royce / HEALTH / (916) 319-2097