BILL ANALYSIS �
AB 889
Page 1
ASSEMBLY THIRD READING
AB 889 (Frazier)
As Amended May 2, 2013
Majority vote
HEALTH 15-4 APPROPRIATIONS 13-4
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|Ayes:|Pan, Ammiano, Atkins, |Ayes:|Gatto, Bocanegra, |
| |Bonilla, Bonta, Chesbro, | |Bradford, |
| |Gomez, | |Ian Calderon, Campos, |
| |Roger Hern�ndez, | |Eggman, Gomez, Hall, |
| |Lowenthal, Maienschein, | |Ammiano, Linder, Pan, |
| |Mitchell, Nazarian, | |Quirk, Weber |
| |Nestande, V. Manuel | | |
| |P�rez, Wieckowski | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Logue, Mansoor, Wagner, |Nays:|Harkey, Bigelow, |
| |Wilk | |Donnelly, Wagner |
| | | | |
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SUMMARY : Prohibits a health plan and health insurer that
provides coverage for medications pursuant to step therapy or a
fail first protocol from requiring an enrollee or insured to try
and fail more than two medications before allowing the enrollee
or insured access to the medication or a generically equivalent
drug, prescribed by their provider. Requires health plans and
health insurers to have an expeditious process in place for step
therapy exceptions and that the duration of step therapy be
consistent with up-to-date, evidence-based outcomes and current
published peer-reviewed medical and pharmaceutical literature.
Specifically, this bill :
1)Prohibits a health plan or health insurer from requiring a
patient to try and fail more than two medications before
allowing the patient access to the medication, or generically
equivalent drug, prescribed by the patient's provider unless
the federal Food and Drug Administration approved label
indication, peer-reviewed scientific, medical and
pharmaceutical evidence, or clinical research trials focusing
on clinical outcomes support that more than two prior
therapies should be used before the requested medication.
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2)Requires the duration of any step therapy or fail first
protocol to be consistent with up-to-date, peer-reviewed
scientific, medical, and pharmaceutical evidence.
3)Requires health plans and health insurers that require step
therapy to have an expeditious process in place to authorize
exceptions to step therapy, when medically necessary, and to
conform effectively and efficiently with the continuity of
care requirements of this chapter and corresponding
regulations.
4)Prohibits a new health plan or health insurer, in
circumstances where an enrollee is changing plans, from
requiring the enrollee or insured to repeat step therapy when
that enrollee or insured is already being treated for a
medical condition by a prescription drug, provided that the
drug is appropriately prescribed and is considered safe and
effective for the enrollee's condition.
5)Provides that nothing in this bill prohibits a health plan or
health insurer from imposing a prior authorization
requirement, as specified, for the continued coverage or
preclude the prescribing another drug covered by the new plan
that is medically appropriate, and this bill does not prohibit
a plan or insurer charging a subscriber or enrollee a
copayment, coinsurance, or a deductible for prescription drug
benefits or from setting forth, by contract, limitations on
maximum coverage of prescription drug benefits, as described.
6)Defines prescribing provider and generically equivalent drug.
7)Prohibits the provisions of this bill from being construed to
require coverage of prescription drugs not in a plan's or
insurer's drug formulary or to prohibit generically equivalent
drugs or generic drug substitutions, as authorized.
8)Excludes from the provisions of this bill, accident-only,
specified disease, hospital indemnity, Medicare supplement,
dental-only, or vision-only health care service plan contracts
or disability policies.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, across almost all sectors of the health insurance
market, insurance premiums would be expected to increase because
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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 California
Public Employees' Retirement System (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 : The author asserts that a troubling and dangerous
trend occurring with health care plans is their use of step
therapy or "fail first" protocols which require a patient to try
and fail on up to five other medications before the health plan
covers the medication originally prescribed by the patient's
health care provider. For example, though a doctor prescribed
drug A for a patient, a health plan requires the patient to
first try drugs B, C, D, etc., and only after the patient fails
to respond to these medications will the health plan approve the
use of the initial medication. The author points out that step
therapy or "fail first" protocols often take weeks to months to
implement. According to the author, health plans use step
therapy as a cost-saving measure but the research has shown that
this policy can actually increase health care costs due to
unnecessary delays in a patient getting the medication their
provider prescribed. This puts the patient's health at risk, as
well as, leads to increased health care utilization and time
lost from work. This bill would reduce the number of
medications a patient has to try and fail to no more than two
before the original prescribed medication is allowed by the
patient's health plan. This bill also requires health plans to
have an expeditious process in place for step therapy exceptions
and that the duration of step therapy be consistent with
up-to-date, evidence-based outcomes and current published
peer-reviewed medical and pharmaceutical literature.
According to the CHBRP, this bill does not require Department of
Health Care Services regulated plans and California Department
of Insurance regulated policies to provide benefit coverage for
prescription drugs. However, the federal Patient Protection and
Affordable Care Act (ACA) (through Essential Health Benefits)
require this expansion for nongrandfathered plans and policies
in the small group and individual markets. This bill,
therefore, would build on the ACA's expansion, and restrict all
nongrandfathered small group and individual market plans and
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policies from requiring enrollees from trying and failing more
than two medications. The requirement or restriction that this
bill imposes in the design of the plan, is not considered a
state-required mandate, according to regulations written by the
federal Department of Health and Human Services. Therefore,
this bill would not require the state to defray any costs for
Qualified Health Plans purchased through Covered California, the
state's health insurance exchange.
Chronic pain advocacy groups, health care professionals, and
community organizations support this bill. The sponsor of this
bill, For Grace, writes this bill addresses the terrible
shortcomings of step therapy and is of special interest to
patients in pain because they can tell immediately whether a
pain medication is working or not. Additionally, medical
organizations comment that research has shown that step therapy
can actually increase the direct cost of health care in the long
run due to excessive use of emergency rooms, unscheduled
hospital admissions, time off work, excessive temporary
indemnity benefits, and even job loss. The California Society
of Industrial Medicine and Surgery, the California Society of
Physical Medicine and Rehabilitation, and the California
Neurology Society add that seasoned and highly knowledgeable
physicians know that not all drugs are equivalent in terms of
onset of efficacy, dose required to achieve response, side
effects, and interactions with other drugs. They support
patient access to medications chosen by experienced clinicians
to give them the best and quickest chance of response, thus
shortening morbidity and disability. The Congress of California
Seniors states that this bill would change practices that have
resulted in higher long-term health care costs and the
unnecessary physical and emotional suffering caused by step
therapy.
America's Health Insurance Plans (AHIP) argues this bill could
increase access to potentially dangerous and addictive
pharmaceutical drugs by hindering the ability of heath plans to
promote alternative means of treatments and limit potentially
harmful or fatal drug prescriptions. AHIP also believes this
bill may increase health care costs. AHIP cites National Health
Expenditure Data which indicate spending on prescription drugs
in 2009 increased 5.9% to reach a total of nearly $250 billion.
AHIP requests several amendments which cross reference the
expeditious process in existing law; require duration of step
therapy to be consistent with peer-reviewed, scientific,
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medical, and pharmaceutical evidence, nationally recognized
professional standards, expert opinion, or generally accepted
standards of medical practice; and, apply this bill to
participating prescribing providers.
Health plans and health insurers object to this bill. The
California Association of Health Plans raises concerns that this
bill gives noncontracted providers the same privileges as they
give contracted participating providers and by doing so, this
impedes the effectiveness of medical protocols designed to
minimize harmful side effects, if necessary. Blue Shield of
California states that step therapy protocols act as a check and
balance to the cozy relationships that exist between many
physicians and drug companies. Protocols directed and overseen
by medical doctors and pharmacists at health plans act as an
additional review point to ensure that patients are receiving
the most effective pharmaceuticals, not just the best marketed.
The California Chamber of Commerce argues this bill cannot be
viewed in isolation. This bill reduces health plan flexibility
in benefit management, increases health care costs and premiums,
thereby reducing employers' ability to offer an affordable
choice of benefit packages to their employees.
Analysis Prepared by : Teri Boughton / HEALTH / (916) 319-2097
FN: 0000883