BILL ANALYSIS Ó
AB 339
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB
339 (Gordon)
As Amended September 4, 2015
Majority vote
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|ASSEMBLY: |48-30 |(June 3, 2015) |SENATE: |25-13 | (September 10, |
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Original Committee Reference: HEALTH
SUMMARY: 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 Human immunodeficiency
virus infection and acquired immune deficiency syndrome
(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.
The Senate amendments:
AB 339
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1)Require plans and insurers to cover all medically necessary
prescription drugs.
2)Limit the requirement to cover single-tablet regimens of a
drug to only combination antiretroviral drug treatments that
are medically necessary for the treatment of AIDS/HIV.
3)Delete a provision that required all drug formularies to
include at least one drug in the lower cost tiers if all
approved drugs would otherwise be in the highest cost tiers
and at least three drugs are available in the drug class.
4)Cap the copay or coinsurance for a 30-day supply of outpatient
prescriptions drugs at $250, or $500 for bronze-level plans,
consistent with recently adopted Covered California
regulations.
5)Make changes to the definitions of tiers in the insurer or
plans drug formulary.
6)Limit some provisions of the bill to the individual and small
group markets.
7)Sunset some provisions of the bill (copay/coinsurance cap and
formulary definitions) on January 1, 2020.
8)Exempt Medi-Cal plans from the provisions of this bill.
9)Require, after January 1, 2017, that plans and insurers to
maintain a pharmacy and therapeutics (P&T) committee that is
responsible for developing, maintaining, and overseeing any
drug formulary list.
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FISCAL EFFECT: According to the Senate Appropriations
Committee, one-time costs of about $750,000 and ongoing costs of
about $400,000 per year for the Department of Insurance to adopt
policies and regulations, review plan filings, and enforce the
requirements of the bill (Insurance Fund). One-time costs in
the low millions and ongoing costs of about $500,000 per year
for the Department of Managed Health Care to adopt policies and
regulations, review plan filings, and enforce the requirements
of the bill (Managed Care Fund). No significant impact to the
Medi-Cal program is anticipated. The provisions of the bill
dealing with cost sharing do not apply to Medi-Cal managed care
plans. The other provisions of the bill are not expected to
significantly increase costs to Medi-Cal managed care plans.
COMMENTS: In general, health insurers and health plans are
required to provide coverage for medically necessary
prescription drugs. Current law required most health insurers
and health plans to limit enrollee out-of-pocket expenses for
essential health benefits, including prescription drugs. Health
insurers and health plans often use prescription drug
formularies with tiers. Drug formularies typically have one to
four tiers, with the first tier including generic and low cost
drugs and the fourth tier including specialty and high-cost
drugs. Typically, enrollee cost sharing increases for drugs in
the upper tiers.
Covered California, the state's health benefit exchange,
recently adopted regulations that require qualifying health
plans sold through Covered California to meet certain
requirements relating to prescription drug coverage. Beginning
in 2016, Covered California plans will be required to limit
enrollee deductibles for prescription drugs to $250 for a 30-day
supply of drugs in tier 4 ($500 for enrollees in a bronze plan).
Covered California will also require formularies to include at
least one drug in tiers 1, 2, or 3 if all Food and Drug
Administration approved drugs in the same class would otherwise
be included in the plan's tier 4 and at least three drugs in
that class are available.
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Payment for covered health benefits is shared between the payer
(e.g., health plan/insurer or employer) and the enrollee. The
patient cost-share is the portion that must be paid
out-of-pocket directly to the provider, generally at the time of
treatment. Common cost-sharing mechanisms include copayments (a
fixed dollar amount), coinsurance (a percentage of actual cost),
and/or deductibles (an amount, generally $500 or more, which the
patient must pay for health care before the plan pays anything,
subject to certain exclusions). Health plans and insurers use
cost-sharing to direct patients toward high-value services.
The P&T committee is a medical staff advisory group of a
hospital, health or insurance plan, or pharmacy benefit manager
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 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. 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 best efficacy per dollar.
Recent state and federal action has been taken on the issue of
formulary design and cost-sharing. A proposed federal rule
released on November 26, 2014, and the final rule, released on
February 27, 2015, cautioned health plans and insurers that
certain examples cited appear discriminatory in their
application when looking at the totality of the circumstances,
and may be prohibited. Examples included placing most or all
drugs that treat a specific condition on the highest cost tiers,
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or refusal to cover a single-tablet drug regimen or
extended-release product, absent an appropriate reason for such
refusal. Potential discrimination in plan design is of
heightened interest now. Since health insurers can no longer
deny coverage for a preexisting condition, discouraging less
healthy individuals by strategically charging high cost-sharing
is seen as a way that insurers can avoid enrolling individuals
with higher health care needs.
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 Patient Protection and
Affordable Care Act 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 injectable 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.
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 drugs over lower cost
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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.
Analysis Prepared by:
Dharia McGrew / HEALTH / (916) 319-2097 FN:
0002303