BILL ANALYSIS Ó
AB 68
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Date of Hearing: May 20, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB
68 (Waldron) - As Amended April 30, 2015
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill specifies access requirements for drugs used in the
treatment of seizures and epilepsy. Specifically, this bill:
AB 68
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1) Requires if any drug used in the treatment of seizures and
epilepsy prescribed by a Medi-Cal beneficiary's provider to
be covered in the Medi-Cal program.
2) Requires coverage of such drugs if a provider demonstrates in
his or her reasonable professional judgment, the drug is
medically necessary, and it is 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) Creates an automatic urgent appeal process.
FISCAL EFFECT:
1)Unknown costs and potential lost revenues, ranging from zero
cost if this bill had no impact on the provision of
pharmaceuticals in Medi-Cal, to hundreds of thousands of
dollars annually (GF/federal) if the policy was implemented
more liberally to allow greater prescriber control. Cost
could vary dramatically depending on how this policy was
operationalized.
For example, if stricter limits were placed on a managed care
plan's ability to conduct utilization review, there could be
significant cost pressure on Medi-Cal managed care rates for
pharmaceutical benefits. This bill could lead to increased
Medi-Cal costs in several ways: higher prices for drugs,
reduced revenue from federal and state-negotiated rebates, and
reduced revenue from the state's managed care tax if drugs
were carved out of managed care.
Finally, the marketplace dynamics for various drug classes,
prescriber behavior, and how pharmaceutical manufacturers
respond to the market conditions created by this bill would
also influence long-term costs.
2)Unknown, likely minor, potential increased administrative
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costs for the fee-for-service (FFS) Medi-Cal, and cost
pressure to managed care, for an additional number of appeals.
3)Unknown offsetting cost savings, to the extent the bill is
implemented robustly, in individual cases where prescribers'
chosen medication prevents other medical complications. Such
offsets, if any, would likely be a small percentage of
increased costs.
COMMENTS:
1)Purpose. According to the author, this bill strengthens the
doctor and patient relationship by legislating that a doctor's
professional and reasonable judgment prevails, for purposes of
epilepsy drugs within the Medi-Cal program.
2)Background. Drug benefits are provided through the FFS
Medi-Cal delivery system, and through managed care. Managed
care enrollees generally get their drugs through their managed
care plan, which often subcontracts with a pharmaceutical
benefits manager for provision of the drug benefit. Some
drugs are carved out of managed care and only offered through
the FFS system. Both managed care plans and the state
maintain separate lists of preferred drugs, or formularies,
and impose utilization controls on drugs not contained on the
formulary. The most common controls include prior
authorization (a request to a plan for coverage of a drug,
which must be approved in order to fill a prescription) and
step therapy (where the patient must try a different, often
less expensive or more proven, drug before being prescribed
the drug of choice). Utilization controls function in a
variety of ways but are generally designed to impose friction
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between the prescribing of a drug and the filling of a
prescription, offering the health plan the ability to examine
cost-effectiveness and clinical appropriateness.
This bill would require FFS Medi-Cal and managed care plans to
cover epilepsy drugs (anticonvulsants) for which a prescriber
prescribes a drug in a manner consisted with FDA guidelines
for use of the drug, and for which the prescriber demonstrates
reasonable professional judgment that the drug is medically
necessary.
3)Current Protections. Plans, and FFS Medi-Cal, are required to
pay for all drugs deemed medically necessary, regardless of
the formulary. Patients can contest denials of service
through various means, including the state fair
hearing/grievance process and through independent medical
review. 2013 data indicates there were an estimated 550
annual state fair hearings held specific to prescription drug
issues, out of a total of 5.8 million managed care enrollees,
a rate of about one in 10,500 enrollees.
4)Clinical and Cost Concerns for Anticonvulsants. The fact this
bill only applies to drugs listed on a compendia offers some
protection against clinically inappropriate prescribing, but
compendia also include various grades of evidence. Off-label
use may be supported by compendia. According to individuals
with expertise in managing pharmacy benefits, anticonvulsants
are marketed and often used for conditions other than epilepsy
and seizure disorders. The bulk of utilization review for
anticonvulsants is directed to off-label use. In addition, a
number of new drugs are in the development pipeline at this
time, meaning costs for this category are projected to grow.
5)Support. Biotechnology firms and the California Chronic Care
Coalition support this bill, noting individuals who require
specific medications are forced to wait while they and their
physicians are forced to wade through red tape and sometimes
are forced to suffer with inadequate or contraindicated
medications.
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6)Opposition. The California Association of Health Plans (CAHP)
opposes this bill, arguing it minimizes the role of care
coordination plans employ to investigate safer alternatives
and to help identify appropriate and inappropriate
prescribing.
7)Staff Comments. This bill addresses an inherent tension
between the state's interest in cost-effective provision of
health care services and clinical oversight, and a
prescriber's professional judgment on what will be optimal for
each of his or her patients. The essential questions are
whether these opposing concerns are appropriately balanced,
and whether current policies and practices result in patient
harm and the denial of needed care in a timely way.
Under current law, the state, health plans, and pharmaceutical
benefit managers attempt to balance the medical needs of the
patient and prescriber preferences with the provision of
affordable benefits that meet clinical standards of
appropriate care. In so doing, utilization review controls,
such as prior authorization and step therapy, are employed.
Prior authorization, for example, is not only employed to
contain costs, but to allow a clinical review to ensure
medication is prescribed appropriately and to allow
consideration of safer alternatives. In some instances,
inappropriate prescribing can be identified. Staff notes a
policy favoring a prescriber's judgment may help certain
patients in individual cases, but also has a potential for
unintended consequences that could increase costs without
providing a benefit to patients. For example, it may remove
safeguards that prevent overprescribing or inappropriate
prescribing.
Under this bill, the ease and convenience of the process to
document medical necessity, and how much it deviates from the
state's current process, would have a direct impact on drug
utilization and costs. For example, if the very act of
prescribing a drug that meets the FDA's labeling and use
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requirements is deemed adequate to meet medical necessity,
there would likely be large utilization and cost impacts. To
the extent additional controls are put in, it would have a
lesser effect on utilization and cost.
8)Suggested Amendments. This bill was amended in Health
committee to specify it applies to anticonvulsants only when
used for treating seizure disorders. However, it does so by
reference to intent language and should be clarified.
Additionally, the author indicates the bill is simply intended
to speed up the prior authorization review process to allow
more prompt access to prescribed medications. If this is the
case, and if the turnaround time is indeed unacceptable, staff
suggests removing provisions related to coverage, medical
necessity, and provider judgment altogether, and instead amend
the bill to address the state FFS program and managed care
contractual requirements related to timeline for prior
authorization. Since medically necessary drugs are already
covered pursuant to existing law and regulations, provided the
prescriber demonstrates medical necessity in the required
manner, addressing the timeline should be adequate to
accomplish the intent.
9)Related Legislation.
a) AB 73 (Waldron), also being heard today, is similar to
this bill and applies to four drug classes, including
anticonvulsants.
b) AB 374 (Nazarian), pending on the Suspense File of this
committee, specifies requirements with which health plan
step therapy regimens must comply.
1)Prior Legislation.
a) AB 1814 (Waldron) of 2014 was similar to AB 73 and was
held on this committee's Suspense File.
b) AB 889 (Frazier) of 2013 prohibited a health plan from
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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 it did not strike
the right balance between physician discretion and health
plan or insurer oversight.
Analysis Prepared by:Lisa Murawski / APPR. / (916)
319-2081