BILL ANALYSIS Ó
AB 73
Page 1
Date of Hearing: April 28, 2015
ASSEMBLY COMMITTEE ON HEALTH
Rob Bonta, Chair
AB 73
(Waldron) - As Amended March 16, 2015
SUBJECT: Prescriber Prevails Act.
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 from specified therapeutic drug classes.
Specifically, this bill:
1)Requires, if any drug from a specified therapeutic drug class is
prescribed by a Medi-Cal beneficiary's provider, the drug to
be covered in the Medi-Cal program.
2)Specifies the affected drug classes are antiretrovirals for
AIDS/HIV, Hepatitis C drugs, antipsychotics,
immunosuppressants for anti-rejection, and
epilepsy/anti-convulsants.
3)Requires a Medi-Cal managed care plan to cover a drug in the
named drug classes 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
AB 73
Page 2
least one of the official compendia named in federal law.
4)Provides that if a Medi-Cal managed care plan chooses not to
cover the specified drugs, the drugs are to be carved out of
the plan and covered on a fee-for-service basis and requires
the plan's contracted rate to 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
AB 73
Page 3
and conditions placement on the contract list on the
manufacturer signing a rebate agreement with the federal
Centers for Medicare and Medicaid Services (CMS).
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. The author explains that this bill, the
Prescriber Prevails Act, strengthens the doctor and patient
relationship by legislating that a doctor's reasonable,
professional judgment prevails for specific, protected
therapeutic drug classes within the Medi-Cal program.
According to the author, 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 notes that as more people move onto Medi-Cal managed
care plans, we are essentially growing a two-tier system of
healthcare, those who can afford private insurance plans have
doctors who may have more time to work through the existing
preauthorization 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,
AB 73
Page 4
where doctors are short on time and do not have the resources,
i.e. staff, time, etc. to follow up on pre-authorization
appeals. The author concludes that prescriber prevails 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-auth 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 73
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 73
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)NEW YORK PROVIDER PREVAILS LAW. In 2011, New York changed the
process by which 4 million Medicaid recipients obtain
AB 73
Page 7
prescription drug coverage. The pharmacy benefit was "carved
in" to Manage 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 and, in some
cases, denial of critical medications.
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 2012-13 Executive Budget (effective
January 1, 2013). Later in 2013, the prescriber prevails
provision was restored for all drug classes.
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;
b) The drugs work in the same way; or,
c) The drugs are used for the same purpose.
d) Drug class grouping then are fairly narrow. Drugs from
a variety of classes are used to treat these specific
diseases.
6)SUPPORT. Supporters states that this bill would provide that
drugs in specified therapeutic drug classes that are
prescribed by a Medi-Cal beneficiary's treating provider are
covered Medi-Cal benefits, given that the drug is medically
necessary and consistent with federal rules and regulations
AB 73
Page 8
for labeling and use. They note that all too often
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.
7)OPPOSITION. The California Association of Health Plans (CAHP)
opposes this bill because it does not consider the role of
health plans and pharmaceutical benefit manager's roles to
ensure that the medical needs of enrollees are met and only
considers the physician's explanation for the medication.
They argue this approach completely minimizes the role of care
coordination that plans employ to investigate safer
alternatives and to help identify appropriate and
inappropriate prescribing. CAHP also argues that the existing
framework of prior authorization, pharmacy benefit managers,
clinical protocols and independent medical review currently
all work together to assist Medi-Cal plans in managing the
quality and efficacy of services and medications.
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.
8)RELATED LEGISLATION. AB 68 (Waldron) 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
AB 73
Page 9
plan, in prescribing a pharmaceutical that is in the seizure
or epilepsy drug class. AB 68 was heard in this Committee on
April 21 and passed out on a 19-0 vote with amendments and is
in process before going to the Assembly Appropriations
Committee.
9)PREVIOUS LEGISLATION.
a) AB 1814 (Waldron) of 2014 was very similar to this bill.
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.
AB 889 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
AB 73
Page 10
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
died on the Senate Appropriations Committee Suspense File.
10)PROPOSED AMENDMENT.
a) AB 68, which was similar to this bill was amended by
this Committee to eliminate the strict provider prevails
provisions. The Committee's concerns were that bypassing
the utilization controls of the plan may result in
significant additional costs for the plan and perhaps for a
patient. The alternative approach the committee chose was
an expedited review by the plan, perhaps something along
the lines of an automatic urgent appeal to be resolved
within 48 hours. This time was in addition to any other
time frames allowed in current state and federal laws.
b) This bill should clarify that it refers to drugs used to
treat Medi-Cal beneficiaries that are diagnosed with these
specific diseases. Currently the bill refers to broad
groups of drug classes that are used to treat the specific
named disease but also encompasses many drugs and drug
classes, including pharmaceuticals which have uses beyond
the treatment of the named disease. 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
AB 73
Page 11
distort prescribing decisions.
REGISTERED SUPPORT / OPPOSITION:
Support
American Nurses Association\California
Biocom
California Chronic Care Coalition
California Healthcare Institute
Mental Health America of California
Opposition
California Association of Health Plans
Health Access California
Analysis Prepared by:Roger Dunstan / HEALTH / (916) 319-2097
AB 73
Page 12