BILL ANALYSIS                                                                                                                                                                                                    

                                                                      AB 68

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          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  


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            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  

          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  

          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).


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          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  


          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  


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            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  

          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  

          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  


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            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  

          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  


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            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  


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            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  


             a)   The drugs are related by their chemical structure;


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             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  


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            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  


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             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  


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               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  


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          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.



          Child Neurology Foundation


          California Healthcare Institute

          Sunovion Pharmaceuticals


          California Association of Health Plans

          Health Access California


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          Analysis Prepared by:Roger Dunstan / HEALTH / (916) 319-2097