BILL ANALYSIS �
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: AB 219
AUTHOR: Perea
AMENDED: June 19, 2013
HEARING DATE: June 26, 2013
CONSULTANT: Robinson-Taylor
SUBJECT : Health care coverage: cancer treatment
SUMMARY : Requires health plan contracts and health insurance
policies that cover prescribed, orally administered anti-cancer
medications to limit an enrollee or insured's total cost share
to no more than $100 per filled prescription.
Existing federal law
1.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.Under the Knox-Keene Health Care Service Plan Act of 1975,
regulates and licenses health plans and specialized health
plans by the Department of Managed Health Care (DMHC),
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 the 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
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prescription drugs to provide all medically necessary
prescription drugs, except as specified in that regulation.
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.
This bill:
1.Requires, effective January 1, 2014, large group health plan
contracts and insurance policies that cover prescribed, orally
administered anti-cancer medications to limit an enrollee or
insured's total cost share for these medications to no more
than $100 per filled prescription.
2.Requires, effective January 1, 2015, individual or small group
health plan contracts and insurance policies that cover
prescribed, orally administered anti-cancer medications to
limit an enrollee or insured's total cost share for these
medications to no more than $100 per filled prescription.
3.Prohibits the cost sharing limit of $100 per filled
prescription from applying to high deductible health plans, as
defined, that are eligible for health savings accounts unless
the plan deductible is satisfied.
FISCAL EFFECT : According to the Assembly Appropriations
Committee analysis, this bill will have a negligible impact on
the state because the programs affected CalPERS and Medi-Cal,
already provide coverage with cost-sharing below the amounts in
this bill. The Assembly Appropriations analysis also states
that there will be minor costs to DMHC and CDI for plan filings.
PRIOR VOTES :
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Assembly Health: 15- 2
Assembly Appropriations:15-0
Assembly Floor: 64- 9
COMMENTS :
1.Author's statement. Cancer is the leading cause of death in
California, with nearly half of the population battling cancer
at some point in their lives and almost one in four dying of
cancer. The emergence of safe, clinically-effective,
orally-administered anti-cancer medications has dramatically
improved quality of life for cancer patients who take these
drugs instead of traditional intravenous (IV) chemotherapy,
but patients are routinely charged significantly more
out-of-pocket for oral anti-cancer therapies. This disparity
in patient costs between oral and IV anti-cancer treatments
comes from health insurance design, not drug price. IV
treatments are covered as medical benefits, where most
patients are only responsible for a co-pay for each episode of
care and are not required to pay for the IV drug. For a
$10,000 per month oral anti-cancer medication, a patient with
a 30 percent coinsurance rate must pay $3,000 per month
out-of-pocket. Studies have shown that high out-of-pocket
costs cause patients to abandon oral treatment. Most oral
anti-cancer drugs do not have an equivalent IV drug, so
patients that abandon oral treatment are often giving up their
best chance to beat their cancer. Seventy percent of
prescriptions for brand name oral anti-cancer medications are
for women with breast cancer. Twenty-three other states have
already enacted legislation to make oral anti-cancer
treatments more affordable without any significant impact on
health insurance premiums. The author argues that this bill
is needed to ensure that cancer patients that are prescribed
oral anti-cancer medications to treat their cancer can afford
these treatments when they are covered by their health plan or
insurance.
2.Oral anti-cancer medications. According to the California
Health Benefits Review Program (CHBRP), anti-cancer
medications may be administered through an IV, by injection,
or orally. Although oral anti-cancer medications have been
available for many years, the number of oral anti-cancer
medications approved by the federal Food and Drug
Administration (FDA) has grown by 108 percent over the past
decade. The FDA approved 28 new oral anti-cancer medications
between 2003 and early 2013, which increased the total number
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of oral anti-cancer medications on the market from 26 to 54
medications. According to CHBRP, this trend is likely to
continue. The National Comprehensive Cancer Network estimates
that 400 anti-cancer medications are currently under
development, and approximately 25 percent of them are planned
to be administered orally.
Oral anti-cancer medications are used to treat frequently
diagnosed cancers, such as breast, lung, prostate, and
colorectal cancers. They are also used for rare cancers, such
as cancer of the adrenal gland, skin, and eye. Oral
anti-cancer 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. According to CHBRP, most oral anti-cancer
medications are available only as brand-name (i.e.,
non-generic) medications. Generic equivalents are available
for 20 percent of oral anti-cancer medications approved by the
FDA (11 of the 54 medications on the market) and account for a
large percentage of prescriptions filled for these
medications. CHBRP estimates that tamoxifen, a generic oral
anti-cancer medication used to treat breast, endometrial,
ovarian, and uterine cancers, accounted for 24.3 percent of
prescriptions filled for oral anti-cancer medications and
three newer generic oral medications used to treat breast,
endometrial, ovarian and uterine cancers accounted for an
estimated 26.6 percent of prescriptions filled for oral
anti-cancer medications in California in 2012.
3.Medical and pharmacy benefit coverage. According to CHBRP,
coverage for anti-cancer medications can differ in a number of
ways, depending on provisions of a person's health plan
contract or health insurance policy. Anti-cancer 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, IV anti-cancer medication, which is usually provided
in a hospital or a physician's office, is generally covered as
a medical benefit, while oral anti-cancer 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
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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 anti-cancer 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.EHBs. Effective 2014, the ACA requires non-grandfathered
small-group and individual market health insurance, including
those qualified health plans (QHPs) that will be sold in
Covered California, to cover 10 specified categories of EHBs.
The federal Department of Health and Human Services (HHS) has
allowed each state to define its own EHBs for 2014 and 2015 by
selecting one of a set of specified benchmark plan options.
SBX1 2 (Hernandez), Chapter 2, Statutes of 2013-14, first
extraordinary session, and ABX1 2 (Pan), Chapter 1, Statutes
of 2013-14 , first extraordinary session selected the Kaiser
Foundation Health Plan Small Group Health Maintenance
Organization 30 Plan (Kaiser HMO 30 plan) as its benchmark
plan. According to CHBRP, the ACA allows a state to "require
that a qualified health plan offered in an exchange to offer
benefits in addition to the EHBs." If the state does so, the
state must make payments to defray the cost of those
additionally mandated benefits. According to CHBRP, the ACA
and California's EHBs, as defined by the Kaiser HMO 30 plan,
required coverage for outpatient prescription drugs which
means that QHPs offered through Covered California, as well as
non-grandfathered small-group and individual market plans and
policies, will also cover prescription drugs. Therefore,
CHBRP maintains, the state would not be required to defray the
costs incurred as a result of this bill because the mandate
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would not be considered a benefit expansion that exceeds EHBs.
5.High deductible health plans. High deductible health plans
associated with a health savings account are entitled to
certain Internal Revenue Service (IRS) tax advantages that
allow health expenses to be paid with pre-tax dollars.
According to IRS Publication 969, an individual is eligible
for these tax advantages as long as his prescription drug plan
does not provide benefits until the minimum annual deductible
is met. This bill prohibits the cost sharing limit of $100
per filled prescription from applying to high deductible
health plans that are eligible for health savings accounts
unless the plan deductible is satisfied in order to avoid
conflict with these IRS provisions.
6.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 anti-cancer 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 - CHBRP finds that the
preponderance of evidence from studies of the effect of
cost sharing on the use of anti-cancer medications
suggest that cost sharing has a small effect on the use
of oral anti-cancer medications . Studies found that
cost sharing has a larger effect on abandonment of and
adherence to oral anti-cancer prescriptions. Abandonment
occurs when a patient submits a prescription to a
pharmacy but later reverses the claim. In one study
reviewed, the authors compared persons with seven levels
of cost sharing and found that persons who had cost
sharing greater than $250 per prescription were more
likely to abandon their prescriptions than persons who
had cost sharing of $100 or less. Studies that examined
the impact of cost sharing on adherence concluded that
patients who had higher cost sharing were less likely to
be adherent to the oral anti-cancer medication
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prescription.
b. Benefit Coverage, Utilization, and Cost Impacts -
CHBRP estimates that almost all enrollees with health
insurance subject to this bill have at least some
coverage for anti-cancer 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 anti-cancer medications, though
coverage of specific anti-cancer medications may vary by
health plan or insurer. CHBRP estimates that 0.54
percent of enrollees with privately purchased health
insurance subject to this bill would use oral anti-cancer
medications during the year following implementation.
CHBRP does not estimate a measurable increase in the
number of enrollees who will require oral anti-cancer
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 percent (DMHC-regulated large-group
plans) to 0.0047 percent (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
anti-cancer 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.
c. Public Health Impact - CHBRP does not project a
measurable increase in utilization of oral anti-cancer
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 anti-cancer medications. CHBRP maintains that
this could reduce the financial burden and related health
consequences that cancer patients face.
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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, almost exclusively affecting women.
CHBRP notes that more than 50% of oral anti-cancer
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. `-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 anti-cancer medications; therefore, to the extent
that this bill reduces out-of-pocket costs for oral
anti-cancer medications, CHBRP asserts that non-Hispanic
black cancer patients could experience a greater
reduction in financial burden
7.Related legislation. SB 639 (Hernandez), implements
provisions of the ACA by requiring health plans and carriers
to provide for maximum out-of-pocket limits, establishes small
group deductibles, and defines the precious metal tiers level
of coverage required. Prohibits any product from being
offered other than those with a standardized product design in
the individual market.
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 anti-cancer medications.
AB 1000 was vetoed by Governor Edmund Brown, Jr. stating
that the bill doesn't distinguish between health plans
and insurers who make these drugs available at a
reasonable cost and those who do not. The governor
directed the department of managed Health care to work
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with the author and stakeholders to find alternative
approaches to solve this problem.
b. SB 961 (Wright) of 2010, which was virtually
identical to AB 1000. SB 961 (Wright) 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 anti-cancer
treatment to provide coverage for a prescribed, orally
administered anti-cancer medication on a basis "no less
favorable" than intravenous or injected anti-cancer
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 anti-cancer
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.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 anti-cancer
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
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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 anti-cancer 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
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.
10.Opposition. The California Chamber of Commerce, 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 the
insured 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.
11.Amendments. The author wishes to take the following
clarifying amendment during Committee to properly describe the
relationship between a high deductible health plan and a
health savings account and avoid compliance concerns:
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a. On page two delete line 17, on page three delete
lines one and two and insert:
The cost sharing limit in this subsection does not
apply to a health care service plan contract if the
plan is a high deductible plan, as defined in 26
U.S.C Section 223 (c)(2), and the plan deductible
has not been satisfied.
SUPPORT AND OPPOSITION :
Support: Susan G. Komen- For the Cure (sponsor)
AiM at Melanoma
American Cancer Society Cancer Action Network
Association of Northern California Oncologists
BAYBIO
BIOCOM
California Affiliates of Susan G. Komen for the Cure
California Healthcare Institute
Carrie's Touch- African American Breast Cancer
Cancer Legal Resource Center
Disability Rights Legal Center
Leukemia & Lymphoma Society
Medical Oncology Association of Southern California
National Brain Tumor Society
National Patient Advocate Foundation
PADRES Contra El Cancer
Parker & Friends
Oppose: America's Health Insurance Plans
Association of California Life and Health Insurance
Companies
Blue Shield of California
California Association of Health Plans
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