BILL ANALYSIS                                                                                                                                                                                                    Ó






                                                                     AB 339


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          Date of Hearing:  April 28, 2015


                            ASSEMBLY COMMITTEE ON HEALTH


                                  Rob Bonta, Chair


          AB 339  
          (Gordon) - As Amended April 7, 2015


          SUBJECT:  Health care coverage:  outpatient prescription drugs.


          SUMMARY:  Expands coverage for outpatient prescriptions drugs by  
          a health care service plan or insurer and places specified  
          restrictions on copayments, coinsurance, and other cost sharing.  
           Specifically, this bill:  


          1)Requires a plan or policy that covers prescription drugs to  
            cover all medically necessary prescription drugs, including  
            those for which there is no other therapeutic equivalent. 


          2)Requires that copayments, coinsurance, and other cost sharing  
            for outpatient prescription drugs be reasonable.


          3)Requires the plan or insurer to demonstrate to the regulatory  
            agency that the proposed cost sharing will not discourage  
            medication adherence.  Requires the plan or insurer to  
            demonstrate that the formulary does not discourage the  
            enrollment of individuals with health conditions and does not  
            reduce the generosity of the benefit for enrollees with  
            specific conditions. 












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          4)Requires the plan or policy to cover of single-tablet and  
            extended release regimens if they are clinically as, or more,  
            effective than a multi-tablet drug regimen. 


          5)Prohibits a plan or policy from placing most or all of the  
            drugs to treat a single condition on the highest cost tier of  
            a formulary, unless there is a therapeutic equivalent drug  
            available in a lower cost tier. 


          6)Requires a plan or policy formulary to be the same or  
            comparable in the individual market as in the group market. 


          7)Limits, for plans and policies in both individual and group  
            market, the copayment, coinsurance, or other cost sharing for  
            an individual outpatient prescription drug to 1/24 of the  
            annual out-of-pocket limit for a 30 day supply. 


          8)Requires plans and insurers to use formulary tiers defined as:  



             a)   Tier one consists of preferred generic drugs or  
               comparably priced preferred branded drugs;
             b)   Tier two consists of nonpreferred generic drugs,  
               preferred branded drugs, and any other drugs recommend by  
               the pharmaceutical and therapeutics committee (P&T) based  
               on safety and efficacy and not solely based on the cost of  
               the drug;


             c)   Tier three consists of nonpreferred brand name drugs  
               that are recommended by the P&T based on safety and  
               efficacy and not solely based on the cost of the drug; and,












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             d)   Tier four consist of biologics, as defined, or drugs  
               that cost more than the Medicare Part D threshold, if  
               recommended by the P&T based on safety and efficacy.   
               Prohibits placement in this tier based solely on the cost  
               of the drug. 


          EXISTING LAW: 


           
          1)Regulates health plans through the Department of Managed  
            Health Care and health insurance policies through the  
            Department of Insurance.



          2)Mandates the 10 federally required Essential Health Benefits  
            (EHBs) and establishes Kaiser Small Group health plan as  
            California's EHB benchmark plan.



          3)Requires, on or after January 1, 2015, for non-grandfathered  
            health plan contracts or health insurance policies in the  
            individual and small group markets, to provide for a limit on  
            annual out-of-pocket expenses for all covered benefits that  
            meet the definition of EHB, including out-of-network emergency  
            care, as specified.  For large group, requires a  
            non-grandfathered health plan or health insurer to provide for  
            a limit on annual out-of-pocket expenses for covered benefits,  
            including out-of-network emergency care, as specified.   
            Requires this limit to only apply to EHBs that are covered  
            under the plan or policy to the extent that this provision  
            does not conflict with federal law or guidance on  
            out-of-pocket maximums.













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          4)Requires the maximum out-of-pocket limit to apply to any  
            copayment, coinsurance, deductible and any other form of cost  
            sharing for all covered benefits that meet the definition of  
            EHB.



          5)Limits the total maximum out-of-pocket limit for all EHBs to  
            the dollar amounts in effect under the Internal Revenue  
            Service, as specified, as adjusted by the Patient Protection  
            and Affordable Care Act (ACA), as specified.



          6)Limits, for an individual or group health care service plan  
            contract or health insurance policy issued, amended, or  
            renewed on or after January 1, 2015, that provides coverage  
            for prescribed, orally administered anticancer medications  
            used to kill or slow the growth of cancerous cells, the total  
            amount of copayments and coinsurance an enrollee or insured is  
            required to pay for orally administered anticancer medications  
            to $200 for an individual prescription of up to a 30-day  
            supply.



          7)Establishes Covered California as California's health benefit  
            exchange where individuals and small employers can purchase  
            standardized health insurance from selectively contracted  
            qualified health plans based on bronze, silver, gold and  
            platinum actuarial level categories.


          FISCAL EFFECT:  This bill has not been analyzed by a fiscal  
          committee. 


          COMMENTS:  











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          1)PURPOSE OF THIS BILL.  According to the author, the goal of  
            this bill is to implement and improve upon concepts from  
            federal guidance and Covered California in order to ensure  
            that Californians are better able to afford their prescription  
            drugs and that the anti-discrimination provisions of the ACA  
            remain intact.  The author asserts that this bill is needed to  
            address the devastating financial effects of high  
            out-of-pocket prescription expenses.  High cost drugs are  
            often on the highest cost tier of a drug formulary with  
            coinsurance of up to 20%.  As a result, a patient may exhaust  
            their annual out-of-pocket limit of $6,600 with a single  
            prescription in the first month.  Too many patients are forced  
            to choose between paying for their life-saving drugs and  
            paying for housing, child care, or food.  When patients cannot  
            afford their medication, research shows that they skip doses,  
            they cut pills in half, and they don't fill their  
            prescription.  The author argues that this bill benefits  
            Californians with chronic and serious health conditions by  
            implementing concepts from federal guidance, improving upon  
            them around the anti-discrimination provisions of the ACA, and  
            by increasing Californians' access to essential prescription  
            drugs

          2)BACKGROUND.  According to the California Health Benefits  
            Review Program (CHBRP), prescription drug benefits are a  
            specific type of covered benefit usually subject to cost  
            sharing as part of the medical benefit or a separate  
            outpatient prescription drug benefit.  The separate drug  
            benefit designs can be characterized by the number of tiers  
            (up to four) into which drug classes and specific medications  
            are assigned.  Each tier has a distinct cost sharing level  
            and/or form; the lower tiers are less costly to both the  
            enrollee and to the health plan or insurer.  Some payers use a  
            four-tier system which includes life-style drugs and specialty  
            drugs in the fourth tier; typically these are the most costly  
            drugs.  The four-tier design frequently results in greater  
            enrollee out-of-pocket expenses.  CHBRP notes that there is no  











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            standard industry definition of specialty prescription drugs,  
            but it is generally recognized by many payers as prescription  
            drugs with an average minimum monthly cost of $1,150.  Other  
            criteria may include prescription drugs that treat a rare  
            disease, require special handling, or have a limited  
            distribution network.  Most of the conditions targeted by  
            these specialty drugs tend to be chronic and progressive in  
            nature and can impact quality of life, along with morbidity  
            and mortality.  Examples include growth hormone disorders,  
            rheumatoid arthritis, asthma, multiple sclerosis, hepatitis C,  
            hemophilia, cancer, and lupus.



            In 2013, the annual California HealthCare Foundation employer  
            benefits survey found that 66% of covered California workers  
            had a three- or four-tier cost sharing formula for  
            prescription drugs.  Nationally, 82% of covered workers were  
            subject to three- or four-tier formulas. 



          3)Cost Sharing for Outpatient Prescription Drugs in California.   
            Payment for covered health insurance benefits is shared  
            between the payer (e.g., health plan/insurer or employer) and  
            the enrollee.  Specifically, the patient cost-share is the  
            portion that enrollees are responsible for paying  
            out-of-pocket directly to the provider for the health care  
            service or treatment (including prescription drugs) covered by  
            the plan or policy.  Noncovered services or treatments are  
            always paid in full by the enrollee.  Common cost-sharing  
            mechanisms include copayments, coinsurance, and/or deductibles  
            (but do not include premium payments), collectively  
            out-of-pocket expenses.  Health plans and insurers use many  
            different combinations of cost-sharing mechanisms to help  
            assure medically necessary treatment and control costs. 














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            The following steps describe a common interaction of a set of  
            cost-sharing mechanisms.  CHBRP notes that there are numerous  
            cost-sharing combinations, and this example will not apply to  
            all situations.



             a)   Deductibles.  Deductibles are a fixed dollar amount  
               (lump sum for one or more services) an enrollee is required  
               to pay out-of-pocket within a given time period (e.g., a  
               year) before the health plan or insurer begins to pay, in  
               part or in whole, for covered health care services.  A plan  
               or policy can have more than one deductible, for example, a  
               general deductible that applies to a specified set of  
               covered medical benefits and another deductible that  
               applies to prescription drugs or hospital admissions.   
               Deductibles can range from $200 for an outpatient pharmacy  
               benefit to $2,500 or more for a family medical benefit.   
               Not all plans and policies have deductibles.

             b)   Copayments and/or Coinsurance.  Copayments and  
               coinsurance are activated after the deductible has been  
               met, if a plan/policy has a deductible.  Copayment is a  
               form of cost sharing in which an enrollee pays a  
               predetermined, flat dollar amount out-of-pocket at the time  
               of receiving a health care service or when paying for a  
               prescription, such as a $5 copayment for a generic  
               prescription drug.  Copayments can vary across covered  
               benefits, and a plan or policy may not require any  
               copayments or may only require copayments for some covered  
               benefits.  Coinsurance is the percentage of covered health  
               care costs for which an enrollee is responsible, such as  
               25% of a hospitalization charge.  As with copayments,  
               coinsurance percentages can vary across covered benefits,  
               and a plan or policy may not require any coinsurance or may  
               only require coinsurance for some covered benefits.  It is  
               not unusual for a prescription drug benefit plan to use  
               copayments and coinsurance.  For example, many times,  
               generics are subject to a copayment, whereas specialty  











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               drugs are subject to a coinsurance. 



             c)   Annual out-of-pocket maximums.  Annual out-of-pocket  
               maximums are limits on the enrollee's cost-sharing  
               obligations in a 1-year period.  Health care services that  
               are not covered by the health plan or insurer would not be  
               included in the maximum; enrollees are responsible for the  
               full charges associated with noncovered services.





          4)SINGLE AND MULTIPLE TABLET REGIMENS.  Single-tablet regimens  
            typically refer to fixed-dose pills that combine multiple  
            drugs from the same or different drug classes into a single  
            tablet<1>. This is in contrast to multiple tablet regimens  
            where prescribed medications to treat a condition are taken as  
            separate tablets<2>. This is primarily seen in chronic  
            conditions requiring multiple pills each day. The advantages  
            of the single-tablet combination drug regimen are that taking  
            one single daily pill simplifies treatment, cuts down on  
            errors, and leads to better adherence with the treatment  
            regimen.

          5)PHARMACY AND THERAPEUTICS COMMITTEE.  The P&T committee is a  
            medical staff advisory group of a hospital, health or  
          ---------------------------


          <1> U.S. Food and Drug Administration (FDA). Combination  
          Products. Silver Spring, Maryland: FDA; 2011.  Accessed March  
          12, 2015.   
          http://www.fda.gov/CombinationProducts/AboutCombinationProducts/u 
          cm118332.htm. 
          <2> Sax PE, Meyers JL, Mugavero M, Davis KL (2012) Adherence to  
          Antiretroviral Treatment and Correlation with Risk of  
          Hospitalization among Commercially Insured HIV Patients in the  
          United States. PLoS ONE 7(2): e31591.  
          doi:10.1371/journal.pone.0031591








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            insurance plan, or pharmacy benefit manager (PBM) that decides  
            which drugs will appear on that entity's drug formulary.  The  
            P&T committee is responsible for managing the formulary  
            system.  It is composed of actively practicing physicians,  
            other prescribers, pharmacists, nurses, administrators,  
            quality improvement managers, and other health care  
            professionals and staff who participate in the medication-use  
            process.  The P&T committee serves in an evaluative,  
            educational, and advisory capacity to the medical staff and  
            organizational administration in all matters pertaining to the  
            use of medications.  The P&T committee's primary role is make  
            clinical decisions based on scientific evidence, such as  
            peer-reviewed medical literature, and standards of practice,  
            such as well-established clinical practice guidelines.   
            Depending on the size of the entity, the P&T committee may  
            weigh the costs and benefits of each drug and decide which  
            ones provide the most efficacy per dollar.



          6)RECENT FEDERAL REGULATIONS ON DRUG BENEFIT DESIGN.  On  
            November 26, 2014, the Federal Government released the HHS  
            Notice of Benefit and Payment Parameters for 2016 proposed  
            rule and reiterated the prohibition on discrimination found in  
            Section 1302(b(4) of the Affordable Care Act and 45 CFR  
            156.125.   In this notice, Centers for Medicare and Medicaid  
            Services (CMS) cautions issuers - meaning plans and insurers -  
             to avoid discouraging enrollment of individuals with chronic  
            health needs and cites different examples of practices that  
            effectively discriminate against or discourage enrollment by  
            individuals who have chronic medical conditions.  The final  
            rule, released on February 27, 2015, reaffirmed the guidance  
            provided in the proposed rule and cautioned health plans and  
            insurers that the examples cited appear discriminatory in  
            their application when looking at the totality of the  
            circumstances, and may be prohibited.  The examples cited are  
            as follows:













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             a)   Placing Most or All Drugs that Treat a Specific  
               Condition on the Highest Cost Tiers. The federal guidance  
               states that placing most or all drugs that treat a specific  
               condition on the highest cost tiers in effect discriminates  
               against or discourages enrollment based on health  
               condition.  A number of health plans and insurers have  
               placed on the fourth tier of the drug formulary a number of  
               high cost or "specialty" drugs that meet the criteria  
               enunciated by CMS as "most or all drugs that treat a  
               specific condition."  

             b)   Refusal to Cover a Single-Tablet Drug Regimen or  
               Extended-Release Product.  The federal rule also cites as  
               discriminatory the "refusal to cover a single-tablet drug  
               regimen or extended-release product that is customarily  
               prescribed and is just as effective as a multi-tablet drug  
               regimen, absent an appropriate reason for such refusal."   
               Without a valid, nondiscriminatory reason for not covering  
               these drug products, "such a plan design effectively  
               discriminates against, or discourages enrollment by,  
               individuals who would benefit from such innovative  
               therapeutic options." 





               Some products in the California individual market in 2014  
               failed to cover the HIV/AIDS drug cocktail, which is a  
               single-tablet drug regimen that is the standard of care for  
               persons with HIV/AIDS.  Advocates in the HIV/AIDS community  
               indicate that some individuals have stayed on the AIDS Drug  
               Assistance Program rather than transitioning to  
               comprehensive coverage in the individual market precisely  
               because some health plans appear not to cover the HIV/AIDS  
               drug cocktail.  Exclusion of the HIV/AIDS drug cocktail, a  
               customarily prescribed product that is just as effective as  
               other regimens, is pointed to as a benefit design that  
               effectively discriminates against, or discourages  











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               enrollment by, persons with HIV/AIDS, making it a  
               discriminatory benefit design.  In a report entitled  
               "Disease Matters: Comparing Prescription Drug Benefits in  
               Covered California Plans," the California Health Foundation  
               found that some consumers with chronic diseases or those  
               who rely on specialty drugs, including those with HIV/AIDS,  
               may have faced access and affordability challenges in 2014.  






             c)   Formulary Design Must be Based on Clinical Guidelines  
               and/or Medical Evidence.  In its final rule, CMS reiterates  
               the requirement that in designing formularies, "Issuers are  
               expected to impose limitations and exclusions based on  
               clinical guidelines and medical evidence, and are expected  
               to use reasonable medical management."  As previously  
               stated, health plans and insurers have put a number of  
               drugs to treat a specific condition, commonly known as  
               specialty drugs, on the highest cost tiers of the formulary  
               based solely on the cost of the drug to the health plan  
               without any regard for clinical guidelines, medical  
               evidence, or reasonable medical management.  



            The final rule also requires health plans to use a P&T  
            committee to develop drug formularies and specifies standards  
            for this process.  The standards require P&T committees to  
            "make clinical decisions based on scientific evidence, such as  
            peer-reviewed medical literature, and standards of practice,  
            such as well-established clinical practice guidelines."  In  
            addition, P&T committees are required to ensure that a  
            formulary drug list does not "discourage enrollment by any  
            group of enrollees." 













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            Health plans and insurers that base the fourth/specialty tier  
            of a formulary purely on the cost of the drug to the health  
            plan, without regard for whether the drug requires special  
            handling, special monitoring or specialty administration, is  
            problematic for consumers with serious or chronic health  
            conditions.  Such practices has led in some instances to all  
            HIV/AIDS drugs being placed on a specialty tier:  the average  
            cost of these drugs is $1,000 - $1,500 per monthly  
            prescription and the cost threshold most commonly used to  
            place drugs on the fourth/specialty tier is $600. This  
            formulary design has a discriminatory impact for those living  
            with HIV/AIDS.  Similarly, those with multiple sclerosis who  
            are commonly treated with two drugs, one a biologic and  
            another (a DMARD), will find that their drugs are on a  
            specialty tier.  These drugs can cost as much as $5,000 or  
            $10,000 for a monthly prescription.  Consumers with multiple  
            sclerosis describe going to the pharmacy never knowing how  
            much they will pay in any given month.


          7)Recent Covered California Actions on Specialty Drugs.  On  
            March 5, 2015, Covered California adopted guidelines for  
            formulary design in health plans sold through the Exchange.  
            The new guidelines: 
          
             a)   Standardize definitions of formulary tiers as: 

               i)     Tier 1:  most generic drugs and low cost preferred  
                 brands;

               ii)    Tier 2:  nonpreferred generic drugs, preferred  
                 branded drugs, drugs recommended by the plan's P&T  
                 committee based on safety, efficacy, and cost;

               iii)   Tier 3:  non-preferred branded drugs, drugs  
                 recommended by the plan's P&T committee based on safety,  











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                 efficacy, and cost, drugs that generally have a preferred  
                 or less costly therapeutic alternative at a lower cost;  
                 amd,

               iv)    Tier 4:  biologics, drugs with specialty handling  
                                                                                          limitations, drugs that are self-administered and require  
                 training and clinical management, or cost more than $600.  


             b)   State that if three or more treatment options are  
               available for a chronic condition that would otherwise be  
               in Tier 4 / specialty tier, then at least one drug for that  
               condition must be in a lower tier.  

             c)   Covered California is considering limiting consumers'  
               cost-sharing for drugs on Tier 4 / specialty tier.  Covered  
               California is gathering information on premium impacts of  
               implementing cost-sharing caps for these drugs for  
               consideration at the next board meeting in May 2015. 


          8)SUPPORT.  Health Access California, sponsor of this bill,  
            states that this bill is would prevent discrimination against  
            consumers with health conditions by setting standards for cost  
            sharing of prescription drugs.  This bill would put in place  
            consumer protections that are consistent with federal law and  
            regulations to offer important consumer protections to  
            Californians with chronic conditions.  Biocom states that this  
            bill sets realistic limits on out-of-pocket expenses for  
            patients, while maintaining a plan's ability to direct  
            patients to therapeutically equivalent lower cost drugs.  This  
            bill will help insure that patients have access to medications  
            deemed by their physician to be the best course of treatment  
            for the specific patient.  The California Academy of Physician  
            Assistants write that if patients have consistent, affordable  
            access to their medications they are more likely to adhere to  
            the medications regiment prescribed by their provider.   
            Medication adherence is essential to improving health and  
            outcomes for people with chronic conditions.  Pricing  











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            specialty medications far out of reach, due to excessively  
            high co-insurance, often results in an inability of the  
            patient to adhere to their treatment plan, further  
            jeopardizing their health.  


          9)OPPOSITION.  California Association of Health Plans states  
            that this bill does nothing to control the high underlying  
            cost of pharmaceuticals, nor does it do anything to encourage  
            the makers of drugs to be more efficient and lower costs.   
            Opponents argue that this bill would increase costs for all  
            consumers because health plans will be forced to absorb almost  
            all of the cost of expensive drugs and then spread that cost  
            across all enrollees.  California Association of Health  
            Underwriters states that this bill's real world impact, if  
            enacted, will be to ensure that costs for specialty drugs are  
            shifted from out of pocket costs to premiums increases for all  
            health care consumers.  The Pharmaceutical Care Management  
            Association states that annual out-of-pocket expense caps were  
            just implemented in 2013, and it is therefore too early to be  
            changing the metrics by which caps are determined.  They state  
            that administration of this proposal would be burdensome  
            because current computer and benefit management systems are  
            not configured to adjudicate monthly maximums and partial  
            transactions.  Opponents of this bill state that restrictions  
            on formulary design are burdensome and unnecessary, and will  
            not be consistent with Covered California's broader policies  
            emphasizing cost-savings and access.  Kaiser Permanente, with  
            an oppose unless amended position, states the need to wait  
            until Covered California's final action is determined before  
            having a clear sense of amendments that would be requested in  
            this bill. 


          10)RELATED LEGISLATION.  AB 463 (Chiu) requires a pharmaceutical  
            manufacturer that sells a prescription drug in California that  
            has a wholesale acquisition cost of $10,000 or more per year  
            to file an annual report with the Office of Statewide Health  
            Planning and Development regarding the pricing of prescription  











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            drugs.  AB 463 bill is pending in Assembly Health Committee.  


          11)PREVIOUS LEGISLATION.  


             a)   AB 1917 (Gordon) of 2014 would have established limits  
               on the copayment, coinsurance, or any other form of cost  
               sharing for a covered outpatient prescription drug for an  
               individual prescription of 1/12 (equivalent to $529 for  
               2014) of the annual out-of-pocket limit as specified under  
               the ACA.  


             b)   AB 219 (Perea), Chapter 661, Statutes of 2013, limits  
               the total amount of copayments and coinsurance an enrollee  
               or insured is required to pay for orally administered  
               anticancer medications to $200 for an individual  
               prescription of up to a 30-day supply. Governor Brown wrote  
               in a message approving AB 219 that this policy is not  
               without the potential for unintended consequences and that  
               placing a price cap on a specific class of drugs for a  
               specific class of diseases might not be a policy for the  
               ages.  A sunset on the bill allows for examination of  
               intended and unintended consequences before embracing the  
               policy long term.





             c)   SB 639 (Ed Hernández), Chapter 316, Statutes of 2013,  
               places in California law provisions of the ACA relating to  
               out-of-pocket limits on health plan enrollee and insured  
               cost-sharing, health plan and insurer actuarial value  
               coverage levels and catastrophic coverage requirements, and  
               requirements on health insurers with regard to coverage for  
               out-of-network emergency services.  Applies health plan  
               enrollee and insured out-of-pocket limits to specialized  











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               products that offer EHBs.  Allows carriers in the small  
               group market to establish an index rate no more frequently  
               than each calendar quarter.



             d)   AB 1000 (Perea) of 2011 would have required a health  
               plan contract or health insurance policy that provides  
               coverage for prescription drugs and cancer chemotherapy  
               treatment to limit enrollee out-of-pocket costs for  
               prescribed, orally administered anti-cancer medications. AB  
               1000 was vetoed by Governor Brown, stating that the bill  
               doesn't distinguish between health plans and insurers who  
               make these drugs available at a reasonable cost and those  
               who do not.



             e)   SB 961 (Wright, 2010) which was virtually identical to  
               AB 1000, was vetoed by Governor Schwarzenegger, who stated  
               in his veto message that the bill would have added costs to  
               increasingly expensive health insurance premiums and it was  
               unnecessary in light of federal health reform.


          12)POLICY COMMENTS. 


             a)   This bill will be reviewed by CHBRP.  The Committee  
               submitted a request to CHBRP, housed within the University  
               of California, to review this bill and perform an analysis  
               of the clinical efficacy, cost-effectiveness, and public  
               health impact of its provisions.  CHBRP is established in  
               state statute to assess legislation that proposes or  
               repeals a mandated benefit or service for public health,  
               medical, and financial impact.  Committee rules provide  
               that the Committee may not hear such bills until CHBRP's  
               assessment is received and has been reviewed by committee  
               staff.  Since this bill does not propose a new mandated  











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               benefit, but rather would require plans and insurers to  
               limit out-of-pocket expenses and cover different  
               formulations of already covered medication, this bill may  
               be heard by the Committee without the CHBRP analysis.   
               CHBRP provided background information for this analysis,  
               and will provide a full analysis on May 19, 2015.  The  
               CHBRP analysis will provide valuable information on the  
               fiscal impacts of tier design, tier restrictions, and  
               capping monthly out-of-pocket prescription expenditures. 


             b)   Covered California decision is pending.  Covered  
               California is considering action on the issue of benefit  
               design as it relates to drug formulary tiers and  
               cost-sharing.  Covered California is expected to make a  
               final decision for the 2016 plan year at the May 2015 board  
               meeting.  As such, the provisions of this bill that put a  
               cap on cost-sharing may be preliminary. 


             c)   Tiering based on cost.  In Medicare, any drug that costs  
               more than $600 is placed on the specialty tier.   
               Clarifications in the recent final CMS ruling seems to  
               indicate that placing expensive drugs in a high tier is not  
               itself a discriminatory practice if no other discriminatory  
               factors are present, but that plans should be careful to  
               ensure that the overall result for patients is not  
               discriminatory.  Covered California recently adopted  
               guidelines for formulary design in health plans sold  
               through the exchange and decided that drugs placed on the  
               fourth/specialty tier can be based solely on cost.   
               Consumer advocates opposed Covered California's definition  
               and requested that the definition of specialty drug be  
               based both on the need for special handling, monitoring or  
               administration as well as the cost to the health plan and  
               that it not be based solely on cost to the plan.  The  
               committee may wish to consider whether the statutory  
               requirements of the fourth tier should be consistent with,  
               or different from, the Covered California definition. 











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          13)SUGGESTED AMENDMENTS. 


             a)   In the provisions of this bill relating to multi-tablet  
               vs single tablet regimens, there is inconsistency in  
               whether a covered drug may be "as effective" or should be  
               "more effective" than another.  Proving that a multi-tablet  
               formula is more effective may be an unreasonable standard.   
               The author may wish to clarify this language.


             b)   Depending on the size of the plan, insurer, or Pharmacy  
               Benefit Manager, P&T committees sometimes serve purely in a  
               clinical role to provide drug recommendations while in  
               other entities they also consider cost as part of  
               recommendations.  The author may wish to amend the bill to  
               clarify that the P&T committee is not required to consider  
               cost as a factor.  


             c)   The bill requires that plans or insurers demonstrate to  
               the satisfaction of the regulator that they meet specific  
               requirements.  Plans and insurers regularly demonstrate to  
               the regulator, but the phrase "to the satisfaction of the  
               director / commissioner" seems to be redundant and should  
               be removed to avoid confusion. 


             d)   Recent Covered California guidelines require plans to  
               place one drug in a lower cost tier if three or more  
               treatment options are available to treat the same  
               condition.  This bill makes the same requirement when there  
               are two or more treatment options for the same condition.   
               The author may wish to amend this bill to three or more,  
               consistent with the Covered California guidelines. 


          REGISTERED SUPPORT / OPPOSITION:











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          Support


          Health Access (sponsor)


          AIDS Project Los Angeles


          American Federation of State, County, and Municipal Employees,  
          AFL-CIO


          Association of Northern California Oncologists


          Berkeley Free Clinic


          Biocom


          California Academy of Physician Assistants


          California Black Health Network


          California Chronic Care Coalition


          California Communities United Institute


          California Healthcare Institute











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          California LGBT Health and Human Services Network


          California Nurses Association


          California Pan-Ethnic Health Network


          California Teachers Association


          CALPIRG


          Community Clinic Association


          Comprehensive Opiate Recovery Experience Medical Clinic


          Consumers Union


          Epilepsy California


          Hemophilia Council of California


          Los Angeles LGBT Center


          National Association of Social Workers, California Chapter


          National Multiple Sclerosis Society - CA











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          National Psoriasis Foundation


          National Stroke Association


          Project Inform


          San Francisco AIDS Foundation


          San Luis Obispo County AIDS Support Network


          SLO Hep C Project


          Stroke Advocacy Network


          Western Center on Law and Poverty




          Opposition


          America's Health Insurance Plans


          Blue Shield of California


          CalChamber












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          California Association of Health Plans


          California Association of Health Underwriters 


          California Association Joint Powers Authorities 
          CSAC Excess Insurance Authority


          CVS Health


          Express Scripts


          Health Net


          Kaiser Permanente (unless amended) 


          Pharmaceutical Care Management Association


          Simi Valley Chamber of Commerce







          Analysis Prepared by:Dharia McGrew / HEALTH / (916) 319-2097















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