BILL ANALYSIS �
AB 670
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Date of Hearing: April 23, 2013
ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Richard S. Gordon, Chair
AB 670 (Atkins) - As Amended: April 16, 2013
SUBJECT : Pharmacy Law: incentive payments.
SUMMARY : Prohibits a pharmacist or pharmacy employer from
receiving compensation for recommending or replacing a patient's
originally prescribed drug with a therapeutic alternative,
unless the recommendation is part of a comprehensive medication
review. Specifically, this bill :
1)Prohibits a pharmacist or pharmacy employer from receiving any
payment or other compensation, in the form of money or
otherwise, to specifically recommend or replace a patient's
originally prescribed drug product with a drug product that
does not have the same active ingredient as the originally
prescribed drug product, unless the recommendation is the
result of, and the payment is included in the reimbursement
for, the pharmacist performing a comprehensive medication
review (CMR), which includes a consultation with the patient.
2)States that this bill shall not be construed to prohibit
contracts that contain incentive plans that involve general
payments for consultation services that are not directly tied
to payments for recommending or replacing a specific drug
product.
EXISTING STATE LAW :
1)Creates the California Board of Pharmacy (BOP), which
regulates the practice of pharmacy. (Business and Professions
Code (BPC) Sections 4000 et seq.)
2)Prohibits any healing arts licensee from offering, delivering,
receiving, or accepting any rebate, refund, commission,
preference, patronage dividend, discount, or other
consideration, as compensation or inducement for referring
patients, clients, or customers to any person, as specified.
(BPC 650)
3)Prohibits a healing arts licensee from referring a person for
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laboratory diagnostic nuclear medicine, radiation oncology,
physical therapy, physical rehabilitation, psychometric
testing, home infusion therapy, or diagnostic imaging goods or
services if the licensee or his or her immediate family has a
financial interest with the person or in the entity that
receives the referral. (BPC 650.01)
4)Permits a pharmacist filling a prescription order for a drug
prescribed by its brand name to substitute a generic version
or a different form of medication with the same active
chemical ingredient, unless the prescriber personally
indicates, either orally or in his or her own handwriting, not
to substitute. (BPC 4052.5, 4073)
5)Absolves the prescriber from any liability for an act or
omission by a pharmacist in selecting, preparing, or
dispensing an alternate generic drug or a different form of
medication with the same active chemical ingredient. (BPC
4073)
6)Prohibits a pharmacist from substituting a generic drug or a
drug with the same active chemical ingredient unless the drug
costs the patient less than the prescribed drug. (BPC 4073)
7)Declares that unprofessional conduct for a pharmacist includes
the following:
a) Acts or omissions that involve, in whole or in part, the
inappropriate exercise of his or her education, training,
or experience as a pharmacist, whether or not the act or
omission arises in the course of the practice of pharmacy
or the ownership, management, administration, or operation
of a pharmacy or other entity licensed by BOP;
b) Acts or omissions that involve, in whole or in part, the
failure to exercise or implement his or her best
professional judgment or corresponding responsibility with
regard to the dispensing or furnishing of controlled
substances, dangerous drugs, or dangerous devices, or with
regard to the provision of services; and,
c) Acts or omissions that involve, in whole or in part, the
failure to consult appropriate patient, prescription, and
other records pertaining to the performance of any pharmacy
function. (BPC 4306.5)
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EXISTING FEDERAL LAW:
1)Requires Medicare Part D sponsors to provide Medication
Therapy Management (MTM) programs, which:
a) Shall ensure optimum therapeutic outcomes for targeted
beneficiaries through improved medication use;
b) Shall reduce the risk of adverse events;
c) Shall be developed in cooperation with licensed and
practicing pharmacists and physicians; and,
d) May be furnished by pharmacists or other qualified
providers. (42 Code of Federal Regulations (CFR) Section
423.153 (d))
2)Requires an annual comprehensive medication review (CMR) and
quarterly targeted medication reviews (TMR) as part of an
approved MTM program. (42 CFR 423.153 (d), 2013 Call Letter,
and Chapter 7 of the Prescription Drug Benefit Manual)
FISCAL EFFECT : Unknown
COMMENTS :
1)Purpose of this bill . This bill requires that a pharmacist
participating in an incentive program to promote therapeutic
drug replacements be paid only if the pharmacist conducts a
CMR, which is an extensive, documented review of all of the
patient's prescription and over-the-counter medication, with
an emphasis on patient education and self-management. This
bill exempts payments for general consultative services that
are not tied to payments for recommending or replacing drugs.
Opponents contend that current law already contains patient
safeguards that allow a physician to prohibit drug
replacements and subject a pharmacist to a charge of
unprofessional conduct if he or she fails to use best
professional judgment in recommending a drug replacement.
This bill is sponsored by the California Medical Association.
2)Author's statement . According to the author, "Pharmacists are
highly regarded and valuable healthcare providers. As part of
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their responsibilities, pharmacists provide patients with
valuable consultation services to promote medication adherence
and help avoid drug contraindications. Medicare and other
entities pay pharmacists for their consulting services.
During these consultations, pharmacists are allowed to suggest
or make, with prescriber approval, therapeutic substitutions
where they switch the prescribed drug for another drug that is
therapeutically similar but chemically different. Prescribing
physicians routinely take alternative medication therapy
advice from pharmacists, often without question, for a number
of reasons, i.e. the pharmacist identified a patient's
possible interactions with other medications, or [the] plan
doesn't cover the medicine.
"Unfortunately, while such substitutions are intended to be in
the best interest of the patient, the motivation of this
practice is compromised by the existence of financial
incentives, which are carved out fees specifically directed to
reward pharmacists for making therapeutic switches. Over the
past several years, physicians have seen an increase in the
number of requests from pharmacists to authorize a therapeutic
switch. Prescribers truly have no way of knowing if the
pharmacist is recommending the switch because it is best for
the patient, or because the pharmacist is being financially
induced?.
"AB 670 reassures patients that any change made by a pharmacy
to their prescription medication is based on medical necessity
and professional judgment, and not because such a change is
rewarded with a financial incentive."
3)Generic v therapeutic drug substitutions .
a) Generic substitutions . Current law permits a pharmacist
to substitute a generic drug for a prescribed brand name
drug without consulting the prescriber, but the pharmacist
must notify the patient. A generic drug is approved by the
Food and Drug Administration (FDA) as identical to a
brand-name drug in active chemical ingredients, dosage
form, safety, strength, route of administration, quality,
performance characteristics, and intended use. This is
considered a "therapeutically equivalent" substitution, and
is typically done to reduce costs. Pharmacists cannot make
a generic substitution if the prescriber indicates verbally
or in writing not to substitute.
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b) Therapeutic substitutions . A "therapeutic substitution"
is one in which a different product is dispensed than the
one originally prescribed. A pharmacist must consult with
the prescriber, and the prescriber must approve the
alternative and issue a new prescription. The substituted
product is considered a "therapeutic alternative," which
means the drug contains a different active chemical
ingredient but is in the same pharmacological or
therapeutic class and has a similar therapeutic effect. A
therapeutic substitution can occur between branded
products, between generic products, or between branded and
generic products. A pharmacist may recommend a therapeutic
substitution to lower costs, to prevent adverse effects, or
to achieve more effective treatment. Pharmacists cannot
suggest a therapeutic substitution if the prescriber
indicates verbally or in writing not to substitute.
Prescription forms often contain a "do not substitute" or
"dispense as written" checkbox for the use of the
physician.
4)Prescription management and incentive programs . Rising costs
have arguably priced some healthcare services outside the
reach of many Americans. The Patient Protection and
Affordable Care Act (ACA) and Medicare are driving innovations
to reduce costs across the healthcare spectrum, allowing more
individuals to access services and maintain healthier
lifestyles. The ACA and Medicare use incentives and penalties
to encourage meaningful use of electronic health records;
reduce emergency room visits, hospital readmissions, and
hospital infections; and link payment for services to better
quality outcomes. Private insurers, pharmacies, and benefit
managers are also devising their own systems to optimize cost
savings and health, which may also include incentive programs.
The key question, then, is determining when an incentive has
unintended - and unacceptable - consequences.
a) Medication Therapy Management (MTM) . The Medicare
Modernization Act of 2003 required that Medicare Part D
insurers provide MTM services to selected beneficiaries
with the goals of providing education, improving adherence,
or detecting adverse drug events and medication misuse.
MTM programs are approved by the Centers for Medicare and
Medicaid Services (CMS).
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High risk individuals are targeted for MTM programs. These
are individuals who:
i) Have at least two or more of the following chronic
conditions-osteoporosis, chronic obstructive pulmonary
disease, chronic heart failure, diabetes or depression;
ii) Are taking at least five Part D maintenance
prescription medications; and
iii) Will most likely incur high annual drug costs
(anticipated to be approximately $3,144 per year or
more).
These targeted beneficiaries may decline enrollment in MTM
programs or decline individual services within the program.
MTM consultations are covered under Medicare, and private
firms have surfaced to manage these programs. These
providers work with pharmacies and healthcare payers to
identify potential medication-related concerns and suggest
improvements. These firms input clinical and eligibility
information and mine patient data to recommend alternate
therapies based on clinical guidelines, detect patterns of
non-adherence, recommend alternatives to high-risk
medications, and identify areas for cost-efficacy
management. Certain MTM programs have tied pharmacist
incentive payments to suggested medication changes as well.
MTM programs are required to provide the following: 1)
interventions for beneficiaries and prescribers, 2) CMRs,
and 3) TMRs.
i) Interventions . An intervention with a prescriber is
any action to change a prescription (e.g., changing the
dosage, frequency, duration of a drug, discontinuing a
drug, or switching a drug with another). An interaction
with a beneficiary is a discussion with the beneficiary
to evaluate medication effects or the beneficiary's
behaviors that may affect adherence (i.e., OTC meds, diet
for interacting foods, etc.).
ii) Comprehensive medication review : MTMs are required
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to provide an annual CMR with written summaries in CMS'
standardized format. A CMR is a systematic process of
collecting patient-specific information on an annual
basis, assessing medication therapies to identify
medication-related problems, developing a prioritized
list of medication-related problems, and creating a plan
to resolve them with the patient, caregiver and/or
prescriber. It is an interactive person-to-person
consultation conducted between the patient and/or
caregiver and the pharmacist, and is designed to improve
patients' knowledge of their prescription,
over-the-counter medications, herbal therapies and
dietary supplements. CMR consultations also identify and
address problems or concerns that patients may have, and
empower patients to self-manage their medications and
their health conditions. Pharmacists frequently search
for cost-saving solutions during these reviews.
iii) Targeted medication review . MTMs are also required
to conduct quarterly TMRs and follow-up interventions
when necessary. A TMR is a less extensive evaluation than
a CMR, used for ongoing monitoring to address specific or
potential medication-related problems and assess
medication use, monitor whether any unresolved issues
need attention, determine if new drug therapy problems
have arisen, or assess if the beneficiary has experienced
a transition in care. These assessments may be
person-to-person or system generated.
This bill does not prohibit the compensation of pharmacists
pursuant to a MTM program, but requires that if the pharmacist
is to receive compensation, a CMR must be completed pursuant
to each suggestion for a therapeutic substitution. This bill
also does not prohibit incentive plans that provide
compensation for consulting services, as long as those
payments are not tied to specific drug recommendations or
replacements.
5)Existing safeguards . There are already a number of safeguards
in place to prevent pharmacists from recommending an
inappropriate therapeutic substitution:
a) A doctor must review a pharmacist's request for a
therapeutic substitution and, if there is agreement, the
doctor must write a new prescription.
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b) A doctor may instruct a pharmacist not to make any
substitutions to a prescription. (BPC 4052.5, BPC 4073)
c) A pharmacist's license would be in jeopardy if he or she
failed to exercise his or her best professional judgment in
dispensing a drug or suggesting a substitution, which would
include failing to consult with a patient, the patient's
records, prescription records, or other relevant
information pertaining to the performance of any pharmacy
function. (BPC 4306.5)
According to the BOP, it has not received any complaints about
pharmacists making inappropriate substitution recommendations
in the past three years. Additionally, no evidence has been
provided to the Committee to show that inappropriate
substitutions have been occurring in significant numbers or
that existing safeguards are insufficient.
6)Questions for the Committee . The Committee may wish to
consider whether or not current safeguards against undue
influence are sufficient, and if additional restrictions are
warranted.
Furthermore, the Committee may also wish to consider whether or
not the CMR process required by this bill is the best format.
CMRs are designed as an annual review for a high risk segment
of the population, and as such they may not be the most
efficient tool for working with the majority of pharmacy
customers. The Committee may wish to inquire of the author
whether or not a TMR would be a more appropriate format for
consultation.
The Committee may also wish to consider whether or not it
would be useful to require that a pharmacist disclose to a
patient and prescriber that the pharmacist is recommending a
substitution which may result in financial compensation to the
pharmacist. This "disclosure" approach would sidestep
concerns about further interfering with MTMs under Medicare
and avoid the problem of trying to determine the motivation
behind a pharmacist's recommendations.
7)Technical amendment . On page 2, line 9, add "or replacement"
after "recommendation."
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8)Arguments in support . The Medical Oncology Association of
Southern California writes, "While therapeutic substitution
and medication management may be appropriate in some
circumstances, allowing a health care professional to be
compensated for choosing one drug over another does not.
These payments introduce a financial conflict into a process
that should be solely focused on the needs of the patient."
9)Arguments in opposition . The California Pharmacists
Association writes, "It is important to note that pharmacists
- the individuals who act on potential or observed medication
problems based on their professional judgment - do not
actually receive payment for MTM services. Payments are made
to pharmacies. The 'incentive' for the pharmacist to
recommend one drug be replaced with another in order to
receive a reimbursement does not exist. Additionally, with
the exception of generic substitutions, pharmacists cannot
adjust, interchange, or discontinue a prescription unless the
prescriber approves the action or the pharmacist has standing
protocols with a physician or health facility."
10)Previous legislation . AB 1960 (Pavley) of 2004 would have
required pharmacy benefit managers (PBMs) to make various
disclosures to purchasers and prospective purchasers of PBM
services. It would have also required PBM contracts to
include certain provisions and prohibit PBMs from substituting
medications unless certain conditions are met. AB 1960 was
vetoed by the Governor.
SB 1504 (Ridley-Thomas) of 2008 would have prohibited a
pharmacist filling certain prescription orders for an
antiepileptic drug or formulation of an antiepileptic drug,
prescribed by its trade, brand, or generic name for the
treatment or prevention of epileptic seizures, from
substituting a drug product without prior notification of the
prescriber and the signed consent of the patient or the
patient's parent, legal guardian, or spouse. SB 1504 was held
in the Senate Business, Professions, and Economic Development
Committee.
REGISTERED SUPPORT / OPPOSITION :
Support
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California Medical Association (sponsor)
American Academy of Private Physicians
American Russian Medical Association
BayBio
BIOCOM
California Academy of Physician Assistants
California Healthcare Institute
Immune Deficiency Foundation
Los Angeles County Medical Association
Lupus Foundation of Southern California
Medical Oncology Association of Southern California
Myositis Association
National Council of Asian Pacific Islander Physicians
Neuropathy Action Foundation
Osteopathic Physicians and Surgeons of California
Opposition
Blue Shield of California
California Hospital Association
California Pharmacists Association
California Retailers Association
Engineers and Scientists of California, IFPTE Local 20, IFL-CIO
National Association of Chain Drug Stores
United Food and Commercial Workers Western States Council
Analysis Prepared by : Sarah Huchel / B.,P. & C.P. / (916)
319-3301