BILL ANALYSIS Ó
AB 299
Page 1
Date of Hearing: April 30, 2013
ASSEMBLY COMMITTEE ON HEALTH
Richard Pan, Chair
AB 299 (Holden) - As Amended: April 16, 2013
SUBJECT : Pharmacy.
SUMMARY : Prohibits a nonresident pharmacy or a pharmacy located
in this state that delivers prescriptions via mail, from
entering into, or being a party to, an agreement with a health
care service plan or disability insurer that requires a plan
enrollee or insured to utilize mail order services or that
requires a plan enrollee or insured to opt out of a mail order
process.
EXISTING LAW :
1)Establishes the California State Board of Pharmacy to regulate
pharmacists.
2)Requires health care service plans to be regulated by the
Department of Managed Health Care and health insurers to be
regulated by the California Department of Insurance.
3)Requires health care plans and health insurers that cover
prescription drug benefits to provide notice in the evidence
of coverage and disclosure form to enrollees/insureds
regarding whether the plan uses a formulary.
FISCAL EFFECT : This bill has not yet been analyzed by a fiscal
committee.
COMMENTS :
1)PURPOSE OF THIS BILL . The California Pharmacists Association
is the sponsor of this bill. According to the author, all
patients are different and what works for one patient may not
work for another. Many patients prefer to receive their
prescription drugs from their local pharmacy and others prefer
mail order. The Patient Protection and Affordable Care Act
has stated that prescription drug benefits are an essential
part of all health plans. This essential health benefit
should be safeguarded from policies that force patients to
abandon relationships with community pharmacists. The role of
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a pharmacist is vital to patient care, especially patients who
use maintenance medication. This bill will ensure that access
to medication and medication adherence is not deterred by
policies that claim to save the health plan money. In
actuality, there is evidence that mail order pharmacy policies
do not always save health plans money. This bill protects
patient choice by putting an end to prescription drug benefits
that require patients to use a mail order pharmacy for drugs
and that require patients to "opt out" of a requirement to use
mail order pharmacies.
2)BACKGROUND .
a) Anthem's Mail Order Pharmacy . According to articles
published in The Los Angeles Times, Anthem Blue Cross
(Anthem) required some policyholders to buy their
prescription drugs from a single mail-order pharmacy.
Anthem notified members with conditions such as HIV/AIDs
and cancer that they will be required to buy their
medications from the mail-order pharmacy CuraScript or pay
full price at a retail drugstore. Other Anthem members,
including those with chronic conditions such as diabetes,
faced no such requirement. The article points out that
Anthem was imposing the new requirement for specialty
medications used to treat major illnesses to help keep
costs down for patients and businesses. Subsequently, a
class action lawsuit was filed by the Consumer Watchdog on
behalf of residents who have been prescribed
HIV/AIDS-related maintenance medication drugs, alleging,
among other causes of action, discriminatory business
practice targeting consumers who suffer from HIV/AIDS. In
February 2013, Anthem again notified policyholders who use
specialty medications explaining they are reversing their
policy and members are not required to buy their drugs from
CuraScript.
b) Pharmacist Dispensing of 90-Day Supply of Drugs . SB
1301 (Ed Hernández), Chapter 455, Statutes of 2012,
authorizes a pharmacist to dispense no more than a 90-day
supply of a dangerous drug other than a controlled
substance pursuant to a valid prescription that specifies
an initial quantity of less than a 90-day supply followed
by periodic refills of that amount if the following
requirements are satisfied:
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i) The patient has completed an initial 30-day supply
of the dangerous drug;
ii) The total quantity of dosage units dispensed does
not exceed the total quantity of dosage units authorized
by the prescriber on the prescription, including refills;
iii) The prescriber has not specified on the prescription
that dispensing the prescription in an initial amount
followed by periodic refills is medically necessary; and,
iv) The pharmacist is exercising his or her professional
judgment.
c) Pharmacy Benefit Managers (PBMs) . According to the
Federal Trade Commission, many health plan sponsors offer
their members prescription drug insurance and hire PBMs to
manage these pharmacy benefits on their behalf. As part of
the management of these benefits, PBMs assemble networks of
retail and mail-order pharmacies so that the plan sponsors'
members can fill prescriptions easily and in multiple
locations. PBMs contract with employers, labor unions,
insurance companies, the state, Medicaid (Medi-Cal in
California) and Medicare managed care plans, and managed
care companies (collectively, "plan sponsors") to manage
pharmacy benefits. There are large PBMs (Express
Scripts/Medco, and Caremark), small and insurer-owned PBMs
(Aetna, Cigna Corporation, Wellpoint Health Networks),
retailer-owned (Eckerd Health Systems, PharmaCare
Management Services [a subsidiary of CVS Corp]), Walgreens
Health Initiative or stand-alone retail pharmacies (CVS
Corp, Rite Aid Corporation, Walgreen and Wal-Mart Stores,
Inc).
d) Medication Adherence . A study provided by the author to
the Committee entitled "Adherence to Medication Under
Mandatory and Voluntary Mail Benefit Designs," concluded
that mandatory mail-order policy appears to cause some
members to discontinue therapy prematurely, particularly
those without previous mail service pharmacy experience.
In reaching this conclusion, the study sampled employer
sponsored pharmacy insurance plans that offered either
mandatory or voluntary mail pharmacy benefits managed by
CVS Caremark between July 1, 2008 and March 31, 2010. The
final study cohort included 27,828 (13,914 mandatory and
13,914 voluntary) participants. The results are as
follows: persistence rates were similar through the first
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60 days of therapy. The mandatory mail cohort had a
notable drop in persistence by day 90, with a more
pronounced drop among those without previous mail-service
pharmacy use. Median medication possession ratio (the
percentage of time a patient has access to medication) and
optimal adherence were also lower. Mandatory mail
participants were less likely to achieve optimal adherence
overall. Participants with no prior use of mail-service
pharmacy had significantly lower odds of achieving optimal
adherence in all therapeutic classes.
e) Community Pharmacy and Mail Order . To investigate the
use trends and payment patterns for prescription drugs
between mail-order and community pharmacy channels of
distribution, a study published in the Journal of Managed
Care Pharmacy (2007) entitled, "Community Pharmacy and Mail
Order Cost Utilization for 90-Day Maintenance Medication,"
looked at the difference between mail-order and community
pharmacies in: i) payment (cost) per day for the plan
sponsor and for the member; ii) generic dispensing ratios
for all drugs; and, iii) cost per unit for the top 20
generic drugs dispensed through the mail-order channel.
The study analyzed paid pharmacy claims from two
state-financed pharmacy programs in Texas for fiscal year
2004 to investigate differences in drug use and expenditure
patterns between mail-order and community pharmacy channels
of drug distribution. When comparing the cost per day for
the top therapeutic categories, the authors found the plan
sponsor cost was higher for mail-order than the community
pharmacy channel for approximately half of the top
therapeutic categories. The member cost was lower for
mail-order than for community pharmacy for almost every
therapeutic category. For all claims, the generic
dispensing ratios were lower in the mail-order channel than
in the community pharmacy channel. The cost per unit for
the top 20 generic drug products dispensed by mail order
was 16.5% lower than community pharmacy for the plan
sponsor in Plan A, but 18% higher in Plan B; member costs
was 29.9% lower in Plan A for mail order and 34% lower in
Plan B. Comparing plan and member costs combined, nine of
20 of the generic prices were higher through mail order in
Plan A, and 10 of 20 were higher through mail order in Plan
B. The study concluded that overall, savings from lower
unit pricing through the mail-order channel benefitted the
member and did not translate into significant cost
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reductions for the plan sponsor.
f) Drug Utilization . A study entitled, "Drug Utilization
and Cost in a Medicaid Population: A Simulation Study of
Community vs. Mail Order Pharmacy," looked at the potential
effects on utilization and costs of the possible extension
of mail order services in Medicaid. Pharmacy claims data
from the Ohio Medicaid Program from January 2000-September
2004, including 93 million claims were used for the
analysis. The results of the study are as follows: the
baseline model revealed that the use of mail order vs.
community pharmacy would result in a 5.5% increase in drug
utilization and a 5.4% cost reduction required in
mail-order to become cost neutral. Results from Ohio
Medicaid drugs for chronic use revealed a 5.1% in
utilization and a 4.8% cost reduction required to become
cost neutral in comparison with community pharmacy. The
study concluded that mail-order pharmacy increases drug
utilization and can also increase drug product cost if the
cost per unit is not reduced accordingly. The study
pointed out that prior consideration should be given to the
patient population, day-supply, disease, therapy, and
insurance characteristics to ensure the appropriate use of
mail order pharmacy services.
g) Medicare Requirements . Medicare Part D, also called the
Medicare prescription drug benefit, is a federal program to
subsidize the costs of prescription drugs for Medicare
beneficiaries. It was enacted as part of the Medicare
Modernization Act of 2003 and went into effect on January
1, 2006. Regulations implementing Medicare Part D require
that Part D sponsors must have an accessible network of
retail pharmacies (specifically, within two miles in urban
areas, within five miles in suburban areas, and 15 miles in
rural areas). The contracted pharmacy network may be
supplemented by non-retail pharmacies, including pharmacies
offering home delivery via mail-order and institutional
pharmacies, provided certain requirements are met.
The regulations include "level playing field between
mail-order and network pharmacies" provisions which require
a sponsor to permit its plan enrollees to receive benefits,
which may include a 90-day supply of covered Part D drugs,
at any of its network pharmacies that are retail
pharmacies. A sponsor may require an enrollee obtaining a
covered drug at a network pharmacy that is a retail
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pharmacy to pay any higher cost-sharing applicable to that
covered Part D drug at the network pharmacy that is a
retail pharmacy instead of the cost-sharing applicable to
that covered Part D drug at the network pharmacy that is a
mail-order pharmacy.
3)SUPPORT . The California Pharmacists Association points out
that allowing patients to select the method of receiving their
prescription medications that best suit their needs improves
adherence to prescribed therapies. Mandatory mail order
policies often discriminate against HIV/AIDS patients, elderly
enrollees, women, cancer patients and the seriously ill.
The AIDS Healthcare Foundation (Foundation) understands the need
for cost-savings and is consistently looking for appropriate
ways to manage limited health care dollars but this should not
jeopardize the health of patients with a chronic
life-threatening condition like HIV/AIDS. The Foundation
included several reasons on why mail order is not an
acceptable alternative to patients with chronic conditions,
including interference with patient care because a shipment
does not arrive on time or the wrong drug or dosage is sent.
The National Association of Chain Drug Stores indicates that
some patients need or prefer access to a face-to-face
consultation with their local community pharmacist whom they
know and trust. This bill ensures that patients continue to
have that choice and are not required to utilize a mail order
pharmacy without first opting into that relationship.
The California Commission on Aging states that obtaining
medication through the mail can be complicated and confusing
for anyone, but with impaired hearing or vision, the elderly
can face greater risk of dangerous medication errors. The
City of West Hollywood indicates that many seniors do not have
access to the Internet and would not be able to participate in
any online ordering of their medications. Seniors also depend
on the advice and consultation of their pharmacists to help
them administer their medications according to both the
doctor's order and the manufacturer's protocol.
4)OPPOSITION . The California Association of Health Plans
indicates that this bill removes an essential tool in holding
down the escalating cost of medicine which in turn means
higher premiums and other expenses for plan enrollees. Mail
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order pharmacy programs are often requested by employers
because they save money. Mail order also offers many
conveniences for consumers including lower costs, longer
supply and saved time.
Express Scripts points out that its clients, the plan sponsors,
design their own pharmacy benefit to meet their needs. The
details as to how that benefit is structured, including the
pharmacy network, mail service options, and copayment
structure are governed by the plan sponsor. This bill
eliminates an important cost control tool for our plan
sponsors and creates access issues for drugs available only
through specialty pharmacies which primarily dispense via home
delivery.
Anthem Blue Cross states that this bill unnecessarily restricts
the freedom of health plans to determine the most effective
way of controlling rising prescription drug costs. This bill
will result in higher co-pays for enrollees.
5)PREVIOUS LEGISLATION . SB 1301 (Ed Hernández), Chapter 455,
Statutes of 2012, authorizes a pharmacist to dispense not more
than a 90-day supply of a dangerous drug other than a
controlled substance pursuant to a valid prescription, except
for psychotropic medication or drugs or controlled substances,
as specified. SB 1195 (Price), Chapter 706, Statutes of 2012,
requires a contract that is issued, amended, or renewed on or
after January 1, 2013, between a pharmacy and a carrier or a
PBM to provide pharmacy services to beneficiaries of a health
benefit plan to comply with standards and audit requirements.
6)DOUBLE REFERRAL . This bill is double referred, it was heard
on April 23, 2013, in the Business, Professions and Consumer
Protection Committee and passed out on 8-3 vote.
7)AUTHOR'S AMENDMENTS . The author would like to delete the
provisions of this bill and instead add the following
provisions in the Health and Safety and Insurance Codes:
a) Every health care service plan/health insurer that
provides prescription drug benefits shall permit plan
enrollees/insureds to receive prescription drug benefits,
which may include a 90-day supply of covered drugs, at any
in-network community pharmacy. This section shall not
apply to specific drugs that are not available in community
pharmacies in a sufficient amount to meet network adequacy
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requirements.
b) Every health care service plan/health insurer that
provides prescription drug benefits shall, prior to
enrollment in a mail order pharmacy program, permit its
enrollees/insured to opt in to obtain covered prescription
drugs through mail order.
c) A pharmacist that dispenses a 90-day supply of covered
drugs must comply with Section 4064.5 of the Business and
Professions Code.
REGISTERED SUPPORT / OPPOSITION :
Support
California Pharmacists Association (sponsor)
AARP
Access NOW
AIDS Healthcare Foundation
AIDS Services Foundation Orange County
BIOCOM
Black Women for Wellness
California Chronic Care Coalition
California Commission on Aging
California Healthcare Institute
California National Organization for Women
California Senior Legislature
City of West Hollywood
Common Ground
Disability Rights California
L.A. Gay & Lesbian Center
National Association of Chain Drug Stores
National Community Pharmacists Association
National Multiple Sclerosis Society
NCLR/CSULB Center for Latino Community Health
Orange County HIV/AIDS Advocacy Team
Pharmacy Choice
Project Inform
Rite Aid
Target
Walgreens
Opposition
America's Health Insurance Plans
Anthem
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Association of California Life & Health Insurance Companies
California Association of Health Plans
CVS Caremark
Express Scripts
Health Net
Molina Healthcare of California
Analysis Prepared by : Rosielyn Pulmano / HEALTH / (916)
319-2097