BILL ANALYSIS Ó
-----------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 339|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
-----------------------------------------------------------------
THIRD READING
Bill No: AB 339
Author: Gordon (D), et al.
Amended: 9/4/15 in Senate
Vote: 21
SENATE HEALTH COMMITTEE: 7-2, 7/15/15
AYES: Hernandez, Hall, Mitchell, Monning, Pan, Roth, Wolk
NOES: Nguyen, Nielsen
SENATE APPROPRIATIONS COMMITTEE: 5-2, 8/27/15
AYES: Lara, Beall, Hill, Leyva, Mendoza
NOES: Bates, Nielsen
ASSEMBLY FLOOR: 48-30, 6/3/15 - See last page for vote
SUBJECT: Health care coverage: outpatient prescription drugs
SOURCE: Health Access California
DIGEST: This bill requires health plans and health insurers
that provide coverage for outpatient prescription drugs to have
formularies that do not discourage the enrollment of individuals
with health conditions, and requires combination antiretrovirals
drug treatment coverage of a single-tablet that is as effective
as a multitablet regimen for treatment of HIV/AIDS, as
specified. This bill places in state law, federal requirements
related to pharmacy and therapeutics committees, access to
in-network retail pharmacies, standardized formulary
requirements, formulary tier requirements similar to those
required of health plans and insurers participating in Covered
California and copayment caps of $250 and $500 for a supply of
up to 30 days for an individual prescription, as specified.
AB 339
Page 2
Senate Floor Amendments of 9/4/15 1) delete a requirement that
if a nonformulary drug is authorized consistent with this bill,
the cost sharing is the same as for a formulary drug, 2) limit
the formulary tier requirements to nongrandfathered individual
and small group products, 3) require the health plan or insurer
to take into account other provisions of the bill and existing
law in placing specific drugs on specific formulary tiers, or
choosing to place a drug on the formulary, and 4) delete a
provision that requires insurers to provide the reasons for a
disapproval for coverage of an outpatient prescription drug.
ANALYSIS:
Existing law:
1) Regulates health plans through the Department of Managed
Health Care (DMHC) under the Knox-Keene Act and health
insurance policies through the California Department of
Insurance (CDI) under the Insurance Code.
2) 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.
3) Requires health plans and insurers to update their posted
formularies with any change to those formularies on a monthly
basis.
This bill:
1) States legislative intent to build on existing state and
federal law to ensure that health coverage benefit designs do
not have an unreasonable discriminatory impact on chronically
ill individuals, to ensure affordability of outpatient
prescription drugs, and that assignment of all or most
prescription medications that treat a specific medical
condition to the highest cost tiers of a formulary may
effectively discourage enrollment by chronically ill
individuals.
2) Requires a non-grandfathered health plan or policy of health
AB 339
Page 3
insurance offered, amended, or renewed on or after January 1,
2017 to comply with the following, with respect to plans and
policies that cover outpatient prescription drugs:
a) Cover medically necessary prescription drugs, including
nonformulary drugs determined to be medically necessary
consistent with this bill;
b) Prohibit the formulary or formularies from discouraging
the enrollment of individuals with health conditions and do
not reduce the generosity of the benefit for enrollees or
insureds with a particular condition in a manner that is
not based on a clinical indication or reasonable medical
management practices, consistent with federal law, as
specified;
c) Cover combination antiretroviral drug treatments that
are medically necessary for the treatment of AIDS/HIV, that
is a single-tablet drug regimen that is as effective as a
multitablet regimen unless the health plan is able to
demonstrate to the DMHC director, or insurer is able to
demonstrate to the CDI Commissioner (Commissioner),
consistent with clinical guidelines and peer-reviewed
scientific and medical literature, that the multitablet
regimen is clinically equally or more effective and more
likely to result in adherence to a drug regimen;
d) Limit the copayment, coinsurance, or any other form of
cost sharing for a covered outpatient prescription drug for
an individual prescription for up to a 30 day supply to not
more than $250, as specified, except for a product with
actuarial value to bronze coverage, cost sharing for a
covered outpatient prescription drug for an individual
prescription for a supply of up to 30 days to not more than
$500. Requires for a federally defined high deductible
health plan the limit to apply only after the enrollee's
deductible has been satisfied for the year, and limits for
nongrandfathered individual and small group products the
annual outpatient drug deductible to not more than twice
these caps;
e) Use defined formulary tier groupings for
nongrandfathered individual and small group plans only, if
a plan contract or insurance policy maintains a drug
AB 339
Page 4
formulary with a fourth tier, but does not require the use
of a fourth tier, and prohibits this bill from being
construed to limit a health plan or insurer from placing
any drug in a lower tier; and,
f) Ensure placement of prescription drugs on formulary
tiers is clinically indicated, reasonable medical
management practices.
3) States that this bill does not require a health plan or
health insurance policy to impose cost sharing for
prescription drugs that state and federal law requires to be
provided without cost sharing.
4) States that this bill does not require or authorize a
Medi-Cal managed care plan to provide coverage for
prescription drugs that are not required pursuant to program
contracts, or to limit or exclude any prescription drugs that
are required by those programs or contracts.
5) States that health plan or health insurer may utilize
formulary, prior authorization, step therapy, or other
reasonable medical management practices in the provision of
outpatient prescription drug coverage, consistent with this
bill.
6) Requires, in placing specific drugs on specific tiers, or
choosing to place a drug on the formulary, the health plan or
insurer to take into account the other provisions of this
bill and existing law.
7) Sunset's the cost cap and tiering definitions on January 1,
2020.
8) Requires, commencing January 1, 2017, a plan or insurer to
maintain a pharmacy and therapeutics (P&T) committee
responsible for developing, maintaining, and overseeing any
drug formulary list, and establishes requirements associated
with the P&T committee that are substantially similar to
federal regulations.
9) Requires, commencing January 1, 2017, a plan or insurer that
provides essential health benefits to allow an enrollee or
insured to access prescription drug benefits at an in-network
AB 339
Page 5
retail pharmacy unless the prescription drug is subject to
restricted distribution by the Food and Drug Administration,
or requires special handling, as specified, or patient
education, as specified. Permits the plan or insurer to
charge an enrollee or insured different cost sharing but
requires all cost sharing to count toward the plan's or
policies' annual limitation on cost sharing.
10)Requires a health insurance policy that provides coverage
for outpatient prescription drugs to cover medically
necessary prescription drugs, and a medically necessary
prescription drug for which there is not a therapeutic
equivalent.
11)Requires copayments, coinsurance and other cost sharing for
prescription drugs to be reasonable so as to allow access to
medically necessary outpatient prescription drugs.
12)Authorizes a health insurer to impose prior authorization
requirements consistent with this bill. Prohibits an insurer
from requiring an insured to repeat step therapy when
changing policies.
13)Requires an insurer to provide coverage for the medically
necessary dosage and quantity of the drug prescribed
consistent with professionally recognized standards of
practice.
14)Requires the Commissioner as part of its market conduct
examination to review the performance of an insurer that
provides prescription drug benefits, in providing those
benefits, as described. Prohibits the Commissioner from
publicly disclosing any information reviewed.
15)Defines, for the purposes of the Insurance Code,
nonformulary prescription drugs to include any drugs for
which the insured's copayment or out-of-pocket costs are
different than the copayment for a formulary prescription
drug, except as otherwise provided by law or regulation.
Comments
1)Author's statement. According to the author, Californians
with cancer, HIV/AIDS, hepatitis, multiple sclerosis,
AB 339
Page 6
epilepsy, lupus, and other serious and chronic conditions need
high cost specialty drugs, which can cost thousands of
dollars. These Californians can often reach their
out-of-pocket limit in the first month of the plan year with
only one prescription drug. Many Californians would find it
difficult to pay over $6,000 out-of-pocket for a single
prescription drug, let alone in one month. Too many patients
are forced to choose between paying for their life-saving
drugs and paying for housing, child care, or food. In turn,
failure to access prescription drugs leads to suffering, and
even death, from illnesses that are treatable. AB 339 is
designed to ensure consumer access to vital medications and
builds on existing California law and recent federal guidance
to provide basic consumer protections that take the patient
out of the middle of the negotiations between health plans and
pharmaceutical manufacturers. This bill benefits patients by
reducing cost barriers to those who depend on life-saving
prescription drugs and implements and improves upon concepts
from federal guidance in order to ensure that the
anti-discrimination provisions of the Affordable Care Act
(ACA) remain intact.
2)Drug discrimination. Jacobs and Summer describe in a 2015 New
England Journal of Medicine perspectives piece that there is
evidence that insurers are resorting to tactics to dissuade
high-cost patients from enrolling. A formal complaint on this
point was submitted to the Department of Health and Human
Services in May 2014 that insurers in the federal exchange had
structured their drug formularies to discourage people with
HIV infection from selecting their plans. These insurers
categorized all HIV drugs, including generics, in the tier
with the highest cost sharing. Insurers have historically used
tiered formularies to encourage enrollees to select generic or
preferred brand-name drugs instead of higher-cost
alternatives. Jacobs and Summer write that "adverse tiering"
is not to influence enrollees' drug utilization but rather to
deter certain people from enrolling in the first place.
Findings of a recently published California HealthCare
Foundation study indicate products used to treat complex
chronic conditions, especially those for autoimmune disorders
like rheumatoid arthritis, were disproportionately placed on
the specialty tier in Covered California plans compared to the
selected employer plans. Additionally, the study found that
Covered California plans were more aggressive than selected
AB 339
Page 7
employer plans in managing drug use through administrative
controls, such as prior authorization and step therapy.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
According to the Senate Appropriations Committee,
1)One-time costs of about $750,000 and ongoing costs of about
$400,000 per year for CDI to adopt policies and regulations,
review plan filings, and enforce the requirements of this bill
(Insurance Fund).
2)One-time costs in the low millions and ongoing costs of about
$500,000 per year for DMHC to adopt policies and regulations,
review plan filings, and enforce the requirements of this bill
(Managed Care Fund).
3)No significant impact to the Medi-Cal program is anticipated.
The provisions of this bill dealing with cost sharing do not
apply to Medi-Cal managed care plans. The other provisions of
this bill are not expected to significantly increase costs to
Medi-Cal managed care plans.
SUPPORT: (Verified9/4/15)
Health Access California (source)
AIDS Healthcare Foundation
AIDS Project Los Angeles
American Federation of State, County and Municipal Employees,
AFL-CIO
Arthritis Foundation
Association of Northern California Oncologists
Berkeley Free Clinic
Biocom
California Academy of Physician Assistants
California Black Health Network
California Chapter of the National Association of Social
Workers
California Chronic Care Coalition
California Communities United Institute
California Labor Federation
AB 339
Page 8
California Lesbian, Gay, Bisexual, and Transgender Health and
Human Services Network
California Life Sciences Association
California Nurses Association
California Pan-Ethnic Health Network
California Teachers Association
CALPIRG
Community Clinic Association of Los Angeles
Consumers Union
CORE Medical Clinic, Inc.
Epilepsy California
Hemophilia Council of California
Los Angeles LGBT Center
Mental Health America of California
National Multiple Sclerosis Society - California Action Network
National Psoriasis Foundation
National Stroke Association
Orange County HIV/AIDS Advocacy Team
Project Inform
San Francisco AIDS Foundation
San Luis Obispo County AIDS Support Network
SLO Hep C Project
Western Center on Law and Poverty
OPPOSITION: (Verified9/4/15)
Aetna
America's Health Insurance Plans
Amgen
Association of California Life and Health Insurance Companies
Blue Shield of California
Boehringer-Ingelheim Pharmaceuticals
California Association of Health Plans
California Association of Health Underwriters
California Chamber of Commerce
California Department of Finance
California Farm Bureau Federation
California Retailers Association
CSAC Excess Insurance Authority
CVS Health
Express Scripts
Fullerton Chamber of Commerce
AB 339
Page 9
Health Net
Johnson & Johnson
Kaiser Permanente
Molina Healthcare of California
North Orange County Chamber
Northern California Carpenters Regional Council
Pharmaceutical Care Management Association
Rancho Cordova Chamber of Commerce
Simi Valley Chamber of Commerce
Southwest California Legislative Council
ARGUMENTS IN SUPPORT: Health Access California writes that
when people can't afford their prescription drugs they skip
doses, split pills in half and some just don't pick up their
prescriptions. Health Access indicates that this bill
implements and improves upon concepts from the federal rule and
regulations and California law and regulations 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. Health Access points out that this
bill improves federal law by imposing a per-30 day prescription
limit on cost sharing so it cannot exceed $250 for most coverage
and $500 for bronze, and finally aligns patient protections with
Covered California. The National Multiple Sclerosis (MS)
Society - California Action Network writes that people living
with MS make frequent health care visits and rely on expensive
medications to help manage their disease. There are 10
injectibles and three oral medications used to help manage MS.
There are no generic equivalents and these treatments are
typically placed on specialty tiers. Those with MS also take
four to six other drugs to ease symptoms, monthly out-of-pocket
medication costs can become exorbitant.
ARGUMENTS IN OPPOSITION: Aetna writes that while Covered
California has enacted a cost-sharing limitation for individuals
utilizing the health insurance exchange, the legislature is
encouraged to study the impact of those regulations before
expanding these coverage requirements to all insurance policies.
Blue Shield of California has a number of concerns with the
provisions of this bill that exacerbate the drug pricing
challenge by giving drug companies seeking to exploit patent
protections, preferential placement of expensive single dose
AB 339
Page 10
drugs over lower cost multitablet regimes that have the exact
same effectiveness. This bill handcuffs negotiations with
manufacturers which limit the discount drug companies will be
willing to grant. Amgen believes this bill may limit patient
access and is overly prescriptive. Amgen requests an amendment
so that biologics are not statutorily defined as tier four
products in four-tier formularies.
ASSEMBLY FLOOR: 48-30, 6/3/15
AYES: Alejo, Bloom, Bonilla, Bonta, Brown, Burke, Calderon,
Campos, Chau, Chiu, Chu, Cooley, Daly, Dodd, Eggman, Cristina
Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez,
Gordon, Gray, Roger Hernández, Holden, Irwin, Jones-Sawyer,
Levine, Lopez, Low, McCarty, Medina, Mullin, Nazarian,
O'Donnell, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez,
Salas, Santiago, Mark Stone, Ting, Weber, Williams, Wood,
Atkins
NOES: Achadjian, Travis Allen, Baker, Bigelow, Brough, Chang,
Chávez, Cooper, Dababneh, Dahle, Beth Gaines, Gallagher,
Grove, Hadley, Harper, Jones, Kim, Lackey, Linder,
Maienschein, Mathis, Mayes, Melendez, Obernolte, Olsen,
Patterson, Steinorth, Wagner, Waldron, Wilk
NO VOTE RECORDED: Frazier, Thurmond
Prepared by:Teri Boughton / HEALTH /
9/9/15 10:10:34
**** END ****