BILL ANALYSIS                                                                                                                                                                                                    



                                                                      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:










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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