BILL ANALYSIS �
AB 889
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Date of Hearing: May 15, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 889 (Frazier) - As Amended: May 2, 2013
Policy Committee: HealthVote:15-4
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill prohibits health insurers and plans that require step
therapy in their prescription drug coverage, from requiring an
enrollee to try and fail on more than two medications before
allowing access to the originally prescribed drug, with an
exception when scientific evidence, as specified, supports more
than two required therapies. Requires insurers and plans to
have an expeditious process to authorize exceptions to step
therapy.
FISCAL EFFECT
Across almost all sectors of the health insurance market,
insurance premiums would be expected to increase because step
therapy is used to control costs and this bill limits its use.
According to the California Health Benefits Review Program
(CHBRP), the increase to Medi-Cal Managed Care plan expenditures
would be approximately $11 million.
At least one CalPERS health plan uses step therapy, for
significant savings, so this bill could also lead to higher
costs, potentially greater than $1 million, for CalPERS.
COMMENTS
1)Rationale . This bill seeks to address what supporters view as
a troubling and dangerous trend in health coverage, which is
the use of step therapy or fail-first protocols. Health plans
may require a patient to try up to five other medications
before the health plan covers the medication originally
prescribed by the patient's health care provider. For
example, a physician may prescribe Drug A but the health plan
AB 889
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requires the patient to first try drugs B, C, and D. Only
after the patient fails to respond to these medications will
the health plan approve the use of the initially prescribed
Drug A.
For Grace is sponsoring this bill because patients in pain can
tell immediately whether a pain medication is working. For
Grace regards step therapy protocols as draconian and asserts
an acute problem can become a lifetime of pain and disability.
The author points out step therapy or fail-first protocols
often take weeks to months to implement. Health plans use
step therapy as a cost-saving measure but research has shown
this policy may increase costs due to unnecessary delays in a
patient getting the medication originally prescribed.
2)Step therapy . According to a 2001 report by the California
HealthCare Foundation (CHCF) relating to prescription drug
coverage and formulary use in California, step therapy
requires patients and physicians to follow a particular
sequence of drug treatment. In general, a patient must fail
to respond to a recommended first-line therapy before a
second- or third-line medication is prescribed. Typically,
this means patients will be required to try medications that
have been on the market for a longer period of time and are
usually less expensive than newer medications available to
treat a specific condition.
3)Previous legislation . Prior bills in this area focused on
pain medication, whereas the current measures do not contain
that limitation. AB 369 (Huffman) of 2012 would have
prohibited health plans and health from requiring a patient to
try and fail on more than two pain medications before allowing
access to the medication, or a generically equivalent
prescribed drug. AB 369 was vetoed and the governor's message
questioned whether the bill struck "the right balance between
physician discretion and health plan or insurer oversight."
AB 1826 (Huffman) of 2010 would have required a health plan or
health insurer that covers prescription drug benefits to
provide coverage for a drug that has been prescribed for the
treatment of pain without first requiring the enrollee or
insured to use an alternative drug or product. AB 1826 was
held on the Senate Appropriations Committee Suspense File.
AB 889
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Analysis Prepared by : Debra Roth / APPR. / (916) 319-2081