BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 219| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 219 Author: Perea (D), et al. Amended: 8/20/13 in Senate Vote: 21 SENATE HEALTH COMMITTEE : 7-2, 6/26/13 AYES: Hernandez, Beall, De León, DeSaulnier, Monning, Pavley, Wolk NOES: Anderson, Nielsen SENATE APPROPRIATIONS COMMITTEE : 4-2, 8/12/13 AYES: De León, Hill, Lara, Steinberg NOES: Walters, Gaines NO VOTE RECORDED: Padilla ASSEMBLY FLOOR : 64-9, 4/22/13 - See last page for vote SUBJECT : Health care coverage: cancer treatment SOURCE : Carries TOUCH, Inc Susan G. Komen For the Cure, California Affiliates DIGEST : This bill requires health plan contracts and health insurance policies issued on or after January 1, 2015, 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. ANALYSIS : Existing federal law establishes the Affordable Care Act (ACA) to make, among other provisions, statutory CONTINUED AB 219 Page 2 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 prescription drugs to provide all medically necessary prescription drugs, except as specified in that regulation. 5.Establishes the Kaiser Small Group Health Maintenance Organization plan as California's EHB 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; CONTINUED AB 219 Page 3 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, 2015, 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.Prohibits the cost-sharing limit of $100 per filled prescription from applying to high deductible health plans, as defined, unless the plan deductible is satisfied. Background 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% over the past decade. The FDA approved 28 new oral anti-cancer medications between 2003 and early 2013, which increased the total number 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% of them are planned to be administered orally. 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. CONTINUED AB 219 Page 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 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: 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 prescription. 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% of enrollees with privately purchased health insurance subject to this bill would use oral anti-cancer medications during the year following CONTINUED AB 219 Page 5 implementation. 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 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. Prior Legislation AB 1000 (Perea, 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 Brown, 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. SB 961 (Wright, 2010) which was virtually identical to AB 1000, was vetoed by Governor 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. SB 161 (Wright, 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 CONTINUED AB 219 Page 6 disadvantage when negotiating prices with drug manufacturers. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: Yes According to the Senate Appropriations Committee: One-time costs of $70,000 in 2013-14 and $90,000 in 2014-15 for review of health plan filings by DMHC. Ongoing enforcement costs are expected to be minor (Managed Care Fund). Minor ongoing enforcement cost by the CDI (Insurance Fund). No costs to state-run health care programs. The Medi-Cal, Healthy Families, and Access for Infants and Mothers programs have limited or no cost sharing. CalPERS health plans all have enrollee copayment amounts for prescription drugs that are less than $100 per prescription. No costs to provide subsidies for mandated benefits in the California Health Benefit Exchange (General Fund). See below. SUPPORT : (Verified 8/20/13) Carrie's TOUCH, Inc. (co-source) Susan G. Komen - For the Cure, California Affiliates (co-source) AiM at Melanoma Albie Aware Inc. American Cancer Society Cancer Action Network Association of Northern California Oncologists BAYBIO BIOCOM Breast Cancer Solutions California Children's Hospital Association California Communities United Institute California Healthcare Institute California Professional Firefighters Cancer Legal Resource Center Disability Rights Legal Center Hurtt Family Health Clinic International Myeloma Foundation Leukemia & Lymphoma Society Lung Cancer Alliance CONTINUED AB 219 Page 7 Medical Oncology Association of Southern California National Brain Tumor Society National Patient Advocate Foundation Ovarian Cancer Alliance Pacific Islander Health Partnership PADRES Contra El Cancer Parker & Friends Serve the People Community Health Center TechNet OPPOSITION : (Verified 8/20/13) America's Health Insurance Plans Association of California Life and Health Insurance Companies Blue Shield of California California Association of Health Plans California Chamber of Commerce ARGUMENTS IN 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 and oral chemotherapy medications are often classified in the highest tier of a plan's cost-sharing system. 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 CONTINUED AB 219 Page 8 patients have access to them. ARGUMENTS IN 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. ASSEMBLY FLOOR : 64-9, 4/22/13 AYES: Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom, Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian Calderon, Campos, Chau, Chesbro, Cooley, Daly, Dickinson, Eggman, Fong, Fox, Frazier, Garcia, Gatto, Gomez, Gordon, Gorell, Gray, Hall, Harkey, Roger Hernández, Holden, Jones-Sawyer, Levine, Linder, Maienschein, Medina, Mitchell, Morrell, Mullin, Muratsuchi, Nazarian, Nestande, Olsen, Pan, Patterson, Perea, V. Manuel Pérez, Quirk, Quirk-Silva, Rendon, Salas, Skinner, Stone, Ting, Torres, Waldron, Weber, Wieckowski, Williams, Yamada, John A. Pérez NOES: Conway, Dahle, Donnelly, Beth Gaines, Hagman, Jones, Melendez, Wagner, Wilk NO VOTE RECORDED: Achadjian, Chávez, Grove, Logue, Lowenthal, Mansoor, Vacancy CONTINUED AB 219 Page 9 JL:nl 8/21/13 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED