BILL ANALYSIS Ó AB 68 Page 1 Date of Hearing: April 21, 2015 ASSEMBLY COMMITTEE ON HEALTH Rob Bonta, Chair AB 68 (Waldron) - As Amended March 26, 2015 SUBJECT: Medi-Cal. SUMMARY: Establishes that a prescriber's reasonable professional judgment prevails over the policies and utilization controls of the Medi-Cal program, including the utilization controls of a Medi-Cal managed care plan, in prescribing a pharmaceutical that is in the seizure or epilepsy drug class. Specifically, this bill: 1)Requires any drug from the seizure or epilepsy drug class prescribed by a Medi-Cal beneficiary's provider, the drug is to be covered in the Medi-Cal program. 2)Requires a Medi-Cal managed care plan to cover a seizure or epilepsy drug class if prescribed by a beneficiary's provider. Requires the provider to demonstrate reasonable professional judgment and that the drug is medically necessary and consistent with the federal Food and Drug Administration (FDA) labeling and use rules and regulations as described in at least one of the official compendia named in federal law. 3)Provides that if a Medi-Cal managed care plan chooses not to cover the specified drugs, the drugs are to be excluded from the plan's financial responsibility and covered on a AB 68 Page 2 fee-for-service basis and the plan's contracted rate shall be reduced accordingly. EXISTING LAW: 1)Establishes in federal law the federal Medicaid program to provide comprehensive health benefits to low income persons. 2)Establishes the Medi-Cal program as California's Medicaid program. 3)Requires states, under the federal Medicaid law, to have a drug use review program for covered outpatient prescription drugs, to ensure drugs are appropriate, medically necessary, and not likely to result in adverse medical effects. Federal law requires the program to assess data on drug use against predetermined standards, consistent with specified factors, including compendia. 4)Provides a schedule of benefits provided in the Medi-Cal program, including prescription drug benefits. 5)Authorizes the Department of Health Care Services (DHCS) to establish utilization controls for any Medi-Cal services as long as the controls are reasonably related to the purpose of establishing them. Allows the utilization controls include prior authorization, pre- and post-service audits, limitations on the number of services and review pursuant to professional standards. 6)Provides that any prescription drug approved by the FDA for the treatment of AIDS or an AIDS-related condition is automatically approved for placement on the contract list of Medi-Cal drugs. Allows the DHCS to apply utilization controls and conditions placement on the contract list on the manufacturer signing a rebate agreement with the federal Centers for Medicare and Medicaid Services (CMS). AB 68 Page 3 7)Provides that any prescription drug approved by the FDA for the treatment of cancer is automatically approved for placement on the contract list of Medi-Cal drugs. Conditions placement on the contract list on the manufacturer signing a rebate agreement with CMS. 8)Excludes from managed care, by administrative guidance of DHCS, specified prescription drugs including those for HIV/AIDS and antipsychotics. FISCAL EFFECT: This bill has not been analyzed by a fiscal committee. COMMENTS: 1)PURPOSE OF THIS BILL. According to the author, this bill, the Patient Access to Prescribed Epilepsy Treatments Act, strengthens the doctor and patient relationship by legislating that a doctor's professional and reasonable judgment prevails exclusively for epilepsy and seizure medications, to ensure patient access to these treatments. This bill, would require, to the extent permitted by federal law, that any drug in the seizure or epilepsy therapeutic drug class would be a covered benefit under the Medi-Cal program, more people move onto Medi-Cal managed care plans, we are essentially growing a two-tier system of healthcare. The author notes that current formulary restrictions have multiple appeals processes patients have to go through and step therapy correspondingly delays the patient from obtaining the most suitable drug combinations for their case. The author argues this bill is a reasonable plan to stabilize those with life-threatening conditions by ensuring access to care and protecting the doctor/patient relationship for low income individuals. The author notes those who can afford private insurance plans have doctors who may have more time to work through the existing AB 68 Page 4 pre-authorization processes to attain a higher tier drug for their patients, however, those in vulnerable low-income situations are seeing their doctors most likely in clinics, where doctors are short on time and do not have the resources to follow-up on preauthorization appeals. The author concludes this bill levels the playing field for access to medically necessary drugs for low income patients with serious, chronic or life threatening conditions by shortening the pre-authorization process for Medi-Cal doctors. 2)MEDICAID BACKGROUND. Medicaid is a federal-state program that pays for medical assistance for low-income individuals and families. Although pharmacy coverage is an optional benefit under federal Medicaid law, all states currently cover outpatient prescription drugs for all categorically eligible individuals and most other enrollees in their Medicaid programs. Most state Medicaid programs have adopted preferred drug lists (PDL, also called formularies), making any medication not deemed preferred subject to prior authorization. States use prior authorization, in conjunction with a PDL, to encourage the prescribing of the most clinically appropriate and cost-effective drug within a specific therapeutic drug category. Under federal law, non-preferred products must be made available through a review process that must provide a response within 24 hours and allow for a 72-hour supply of the drug in emergency situations. The complexity of the prior authorization process determines the extent to which it encourages trials of preferred medications first (i.e., step therapy). Step therapy requirements under Medicaid programs vary by state and by the prescribed drug or medical condition. Some states have broad step therapy requirements for program participants. For example, Pennsylvania has step therapy requirements for a wide variety of drugs, including protein pump inhibitors, anticonvulsants, anti-depressants, and others. Other states have narrower requirements. Georgia requires insureds to fail AB 68 Page 5 on two older forms of antipsychotic medications before receiving newer antipsychotic agents. Indiana has a step therapy requirement for anti-hypertensives (i.e., drugs used to address high blood pressure). According to the federal CMS, a compendium is a listing of FDA-approved drugs and biologics. A compendium includes a summary of the pharmacologic characteristics of each drug or biological, and may include information on dosage as well as recommended or endorsed uses in specific diseases. A recent change in federal law allows the Secretary of the federal Department of Health and Human Services to revise the statutory list of compendia as appropriate for identifying medical accepted indications for drugs used in an anti-cancer chemotherapeutic regimen in Medicare. Federal regulations establish a process for listing compendia for determining medically accepted uses of drugs in anti-cancer treatment, including a formal written request for changes to the list of compendia, publishing the list of the requests and soliciting public comment, considering the compendium's attainment of the Medicare coverage advisory committee's recommended desirable characteristics of compendia, and considering the compendium's grading of evidence. Federal Medicaid law requires a drug use review program. The program is required to assess data on drug use against pre-determined standards, consistent with peer-reviewed medical literature and three statutorily listed compendia. 3)PRESCRIPTION DRUGS IN MEDI-CAL. Medi-Cal is one of the largest drug purchasers in the state. The program spends about $4 billion on prescription drugs, including indirect expenditures through payment to managed care plans and direct expenditures in fee for service and for prescription drugs that are "carved out" of managed care. Carved out means that the state pays directly for the drug rather than indirectly through a capitated or fixed rate payment to a Medi-Cal managed care plan. Drug spending has declined dramatically with the federal AB 68 Page 6 government taking greater financial responsibility with the advent of Medicare Part D drug coverage. California used to pay the prescription drug costs of dual eligibles, those individuals who were on Medi-Cal and Medicare. However, the spending on the remainder of beneficiaries has continued to rise at a rapid rate. Facing significantly rising costs, the federal and state governments have grappled with various cost control measures. California, to help manage costs, has established a formulary for the fee-for service program. The formulary is not binding on Medi-Cal managed care plans, each of which creates their own formulary. A variety of utilization tools also are used. These include limiting prescriptions to six per month, although many beneficiaries receive more but only after a prior authorization has been approved. Frequent and high cost prescription drug users can be identified and case management interventions can be used if appropriate to reduce drug costs. Another tool to help reign in the high costs of prescription drugs are the rebate programs. The federal government collects a rebate from prescription drug manufacturers. Manufacturers must pay a rebate to the federal government or Medicaid will not cover their prescription drug. California has been a national leader in the drug rebate program, being one of the first states to negotiate with manufacturers a "supplemental rebate" program. The program is so named because the rebate is a supplement to the federal rebate program. Manufacturers must agree to pay the state to have their prescription drug placed on a preferred drug list which usually means the drugs are available without prior authorization. At one time the state received over a billion dollars annually in net revenues through supplemental rebates. The implementation of Part D has led to significant decreases. In addition, with the increase in managed care, the state no longer bears the direct cost of paying for prescription drugs so supplemental rebates have declined more. 4)EPILEPSY AND SEIZURES. Epilepsy is a chronic disorder, the AB 68 Page 7 hallmark of which is recurrent, unprovoked seizures. Many people with epilepsy have more than one type of seizure and may have other symptoms of neurological problems as well. Although the symptoms of a seizure may affect any part of the body, the electrical events that produce the symptoms occur in the brain. The location of that event, how it spreads and how much of the brain is affected, and how long it lasts all have profound effects. These factors determine the character of a seizure and its impact on the individual. Having seizures and epilepsy can affect one's safety, relationships, work, driving and so much more. How epilepsy is perceived or how people are treated can become a bigger problem than the seizures. Anti-epileptic drugs (AEDs) are the main form of treatment for people with epilepsy. And up to 70% people with epilepsy could have their seizures completely controlled with AEDs. There are around 25 AEDs used to treat seizures, and different AEDs work for different seizures. Besides epilepsy there are a variety of conditions and substances can trigger seizures. Common causes include congenital abnormalities of the brain, illicit drug use, fever, brain tumors and metabolic imbalances, such as high levels of glucose or sodium. Although epilepsy is a common cause of seizures, most people who have a seizure have one that is caused by a reason other than epilepsy. 5)DRUG CLASSES. A drug class is a group of drugs that have something in common. They are similar in some way, but they are not identical. A drug also belongs to one or more drug classes. Drugs can be in a class with other drugs for several reasons: a) The drugs are related by their chemical structure; AB 68 Page 8 b) The drugs work in the same way; or, c) The drugs are used for the same purpose. Drug class grouping then are fairly narrow. Drugs from a variety of classes are used to treat epilepsy and seizures. 6)NEW YORK PROVIDER PREVAILS LAW. In 2011, New York changed the process by which 4 million Medicaid recipients obtain prescription drug coverage. The pharmacy benefit was "carved in" to managed care instead of a fee for service program. This change resulted in patients losing many protections and has led to confusion, lack of uniformity in coverage. Patient advocates, health care providers and many members of the New York State Legislature began fighting to restore certain patient protections. Those protections including a comprehensive drug formulary, standardization of drug benefits, and maintaining the prescriber's authority to decide what medicine a patient needs, frequently referred to as "prescriber prevails" In 2012, the advocacy effort resulted in restoration of "prescriber prevails" for atypical antipsychotics in the 2012-2013 Executive Budget (effective January 1, 2013). Later in 2013, the prescriber prevails provision was restored for all drug classes. 7)SUPPORT. Supporters note that epilepsy is a serious medical condition that produces seizures and one seizure can have significant consequences, including head injury limitations in driving or employment, hospitalization and sudden unexpected death. They argue that failure to effectively manage epilepsy and prevent breakthrough seizures results in higher costs to AB 68 Page 9 the Medi-Cal program and society through increased hospitalizations, relapses and deteriorating conditions which necessitate additional and expensive care. They conclude that the goal of treating an in individual with epilepsy is to have no seizures and no side effects and limiting availability of medications appears to be a simple way of controlling costs of patient care. Supporters conclude this approach potentially jeopardizes both efficacy and safety. 8)OPPOSITION. Health Access California opposes this bill because the approach in this bill eliminates the ability of the Medi-Cal program to bargain over drugs costs. They point out that since 1999 California has had a Medi-Cal formulary which has saved the state literally billions of dollars while providing consumers the drugs they need. Health Access also argues that the bill goes too far in its reliance on physician judgment as the sole determinant of what a patient needs, particularly in an environment in which Pharmaceutical manufacturers continue to engage in aggressive marketing of their products. Health Access also points out that under current law, the consumer has the right to medically necessary prescriptions. The California Association of Health Plans opposes AB 68 because it interferes with prior authorization. They argue that plans use prior authorization in conjunction with formulary management to encourage prescribing the most clinically appropriate and cost-effective drugs within specific therapeutic drug categories. 9)RELATED LEGISLATION. AB 73 (Waldron) of 2015, establishes that a prescriber's reasonable professional judgment prevails over the policies and utilization controls of the Medi-Cal program, including the utilization controls of a Medi-Cal managed care plan, in prescribing a pharmaceutical from specified therapeutic drug classes. AB 73 is pending in this Committee. AB 68 Page 10 10)PREVIOUS LEGISLATION. a) AB 1814 (Waldron) of 2014 was very similar to AB 73. AB 1814 was held on the Assembly Appropriations Suspense file. b) AB 889 (Frazier) of 2013 prohibits a health plan from requiring an enrollee to try and fail on more than two medications before allowing the enrollee access to the medication, or generically equivalent drug, as specified. This bill was held on the Senate Appropriations Committee suspense file. c) AB 369 (Huffman) of 2012 would have prohibited carriers that restrict medications for the treatment of pain, pursuant to step therapy or fail-first protocol, from requiring a patient to try and fail on more than two pain medications before allowing the patient access to the pain medication, or generically equivalent drug, as defined, prescribed by the prescribing provider, as defined. AB 369 was vetoed by Governor Brown, who stated: While I sympathize with the author's good intentions, I am not convinced that this bill strikes the right balance between physician discretion and health plan or insurer oversight. A doctor's judgment and a health plan's clinical protocols both have a role in ensuring the prudent prescribing of pain medications. Independent medical reviews are available to resolve differences in clinical judgment when they occur, even on an expedited basis. d) AB 1826 (Huffman) of 2010 would have required an insurer or health plan 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 AB 68 Page 11 died on the Senate Appropriations Committee Suspense File. 11)POLICY COMMENT. This bill is among several that institute a policy of provider prevails as a way of easing patient's access to medications they believe are preferred. Bypassing the utilization controls of the plan, they may result in significant additional costs for the plan and perhaps for a patient. Epilepsy is a very serious condition and the possible impacts from seizures are significant and potentially life-threatening. An alternative approach the committee may want to consider is an expedited review by the plan, perhaps something along the lines of an automatic urgent appeal to be resolved within 48 hours. 12)PROPOSED AMENDMENT. The bill uses the term, "epilepsy and seizure therapeutic drug class." This description encompasses many drugs and drug classes, including pharmaceuticals which have uses beyond the treatment of epilepsy and seizures. For example, anticonvulsants, or antiseizure medications, an important class of drugs for the treatment of epilepsy are increasingly used to treat bipolar disorder because of their effectiveness as a mood stabilizer. Given the language of the bill, a prescription to treat bipolar disorder with an anticonvulsant would be subject to the provisions of the prescriber prevailing over a plan's formulary or other utilization controls. A mood stabilizer from another class of drugs would not be, which could distort prescribing decisions. Similarly valium would be subject to the prescriber prevailing regardless of the reason prescription was written because it can be prescribed as an anticonvulsant for seizure therapy, even though it is frequently prescribed as an antianxiety drug. So a person being prescribed valium by their physician would not be a decision subject to utilization controls, regardless if the prescription was for epilepsy or anxiety, but a person prescribed an antidepressant for anxiety would be subject to the plan's utilization controls. If the author's intent is to ease access for those people being treated for epilepsy, the bill should be changed and wherever AB 68 Page 12 the term "if any drug in the seizure or epilepsy therapeutic drug class" should be replaced with "if any drug is used in the treatment of epilepsy. REGISTERED SUPPORT / OPPOSITION: Support Child Neurology Foundation Biocom California Healthcare Institute Sunovion Pharmaceuticals Opposition California Association of Health Plans Health Access California AB 68 Page 13 Analysis Prepared by:Roger Dunstan / HEALTH / (916) 319-2097