BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 374|
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THIRD READING
Bill No: AB 374
Author: Nazarian (D)
Amended: 9/1/15 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: 63-14, 6/2/15 - See last page for vote
SUBJECT: Health care coverage: prescription drugs
SOURCE: Arthritis Foundation
California Rheumatology Alliance
Union of American Physician and Dentists/AFSCME Local
206
DIGEST: This bill permits an exception to a health plan or
insurer's step therapy process to be submitted in the same
manner as a request for prior authorization for prescription
drugs. This bill requires those requests to be treated in the
same manner, and responded to by the plan or insurer in the same
manner, as a prior authorization request, including utilization
of any grievance process applicable, as specified.
ANALYSIS:
AB 374
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Existing law:
1)Provides for regulation of health insurers by the California
Department of Insurance (CDI) under the Insurance Code, and
provides for the regulation of health plans by the Department
of Managed Health Care (DMHC), pursuant to the Knox-Keene
Health Care Service Plan Act of 1975 (Knox-Keene Act).
2)Requires carriers to provide certain benefits, but does not
require carriers to cover prescription drugs. Establishes
various requirements on carriers if they do offer prescription
drug coverage.
3)Prohibits carriers that cover prescription drugs from limiting
or excluding coverage for a drug on the basis that the drug is
prescribed for a use different from the use for which the drug
has been approved by the federal Food and Drug Administration,
provided that specified conditions have been met, including
that the drug is prescribed by a participating licensed health
care professional for the treatment of a chronic and seriously
debilitating condition, the drug is medically necessary to
treat that condition, and the drug is on the plan formulary.
4)Requires DMHC-regulated plans to respond issue authorization
determinations within two business days. Requires
CDI-regulated insurers to issue nonurgent authorization
determinations within five business days and urgent
determinations to be made within 72 hours.
5)Requires DMHC and CDI to jointly develop a uniform prior
authorization form that health plans and insurers must accept
when prescribing providers seek authorization for prescription
drug benefits.
This bill:
1)Permits an exception to a health plan or insurer's step
therapy process to be submitted in the same manner as a
request for prior authorization for prescription drugs.
Requires those requests to be treated in the same manner, and
responded to by the plan or insurer in the same manner, as a
prior authorization request, including utilization of any
grievance process applicable, as specified.
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2)Requires DMHC and CDI to include a provision for step therapy
exception request in the uniform prior authorization form
developed pursuant to #5 in existing law above.
Comments
1)Author's statement. According to the author, AB 374 does not
prohibit step therapy protocols. Rather, this bill establishes
an exception process that creates a balance between a
provider's professional judgment and health plan and insurer's
business practice. This bill recognizes that the health
plan/insurer must not have complete and ultimate control on
the medications a patient is permitted to try. Plans utilize
step therapy to reduce their costs. This process forces
patients to "fail first" on several alternative medications,
before they are permitted to obtain the appropriate
medication. Anecdotal data shows that plans may require a
patient to try up to five different medications before
receiving the one prescribed by their physician. Also, the
duration of this protocol is left up to the health plan and
has been known to last up to 90 days. Step therapy is based
solely on cost and does not take into consideration patients'
unique needs. The use of step therapy can exacerbate patient's
condition, causing irreversible deterioration or damage to
patients, such as limiting their daily functions and ability
to remain a productive member of the workforce and society.
2)Step therapy. According to the California Health Benefits
Review Program (CHBRP), step therapy, or fail-first protocols,
may be implemented as methods of utilization management in a
variety of ways and are known by a number of terms. Step
therapy, when implemented by carriers, requires an enrollee to
try a first-line medication (often a generic alternative)
prior to receiving coverage for a second-line medication
(often a brand-name medication). Step edit is a process by
which a prescription, submitted for payment authorization, is
electronically reviewed at point-of-service for use of a
prior, first-line medication. For either step therapy or step
edit, upon decline of coverage for the prescription, a
patient's health care provider may reissue the prescription
for a first-line agent covered by the patient's health plan
contract or policy or appeal the decision. Alternatively, the
patient may purchase the prescription despite the lack of
coverage. A fail-first protocol may also be the basis for part
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or all of a precertification or prior authorization protocol,
which may also require the prescribing provider to confirm to
the plan or insurer that an alternate medication or
medications have been unsuccessfully tried by the patient
before the coverage for the prescribed medication is approved.
However, not all prior authorization protocols have a
fail-first component. Some prior authorization protocols are
based on other criteria, such as intended use to treat a
specific medical problem or diagnosis, or confirmation that
the patient meets other criteria such as age or specified
comorbidities.
For its review of this bill, CHBRP identified 15 studies of
the impact of step therapy protocols on varying drugs. The
studies CHBRP identified addressed step therapy protocols
(STPs) for: antidepressants, antihypertensives, antipsychotics
and anticonvulsants, nonsteroidal anti-inflammatory drugs (to
reduce inflation or pain, and proton pump inhibitors to reduce
stomach acidity. No studies were found that addressed STP or
override procedures across all drug classes. According to
CHBRP, there is no pattern as to particular drugs being more
likely to be subject to step therapy protocols amongst
California plans/insurers. Among enrollees with an outpatient
prescription drug (OPD) benefit, there is not even a pattern
in the presence or number-of protocols. For example, 34.4% of
enrollees with an OPD benefit are not subject to step therapy
protocols. Among the remaining 62.6% of enrollees with an OPD
benefit, the number of drugs subject to step therapy varies
widely, from two to more than 100.
3)Existing policy on step therapy exceptions. Under regulation,
Knox-Keene plans are permitted to require step therapy, but
must have an expeditious process in place to authorize
exceptions when medically necessary and to conform effectively
and efficiently with continuity of care requirements. In
circumstances where an enrollee is changing plans, the new
plan may not require the enrollee to repeat step therapy when
he or she is already being treated for a medical condition by
a prescription drug, provided that the drug is appropriately
prescribed and is considered safe and effective for the
enrollee's condition. Under these circumstances, the
regulation permits the new plan to impose a prior
authorization requirement for the continued coverage. This
Knox-Keene regulation is referenced in regulations related CDI
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insurers, but there is some question as to whether it applies
to those products. Nevertheless, it appears that, in
practice, insurers apply the same protocol for step therapy
exceptions across all lines of business regardless of the
regulator. According to CHBRP, to obtain a step therapy
override a prescriber first submits clinical documentation to
the health plan or insurer documenting why an enrollee should
be allowed should skip one or more step. Reasons prescribers
use to justify such an override include the enrollee has
already tried a drug unsuccessfully or the drug is
contraindicated for that enrollee due to drug-drug
interactions, drug-disease interactions, or drug allergy or
intolerance. According to CHRBP, step therapy override
requests may take several days to be reviewed by the health
plan or insurer.
4)Opposition. The opposition listed below is based upon the
previous version. Amendments taken on 9/1/2015 may have
addressed many of the oppositions concerns.
Prior Legislation
AB 889 (Huffman, 2014) would have permitted health plans and
insurers, when there is more than one drug that is appropriate
for the treatment of a medical condition, to require step
therapy, but would have prohibited them 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 died on the Senate
Appropriations Committee suspense file.
AB 1814 (Waldron, 2014) was substantially similar to AB 73. AB
889 died on the Assembly Appropriations Committee suspense file.
AB 369 (Huffman, 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
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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 reviews are available to
resolve differences in clinical judgment when they occur, even
on an expedited basis.
If current law does not suffice, and I am not certain that it
doesn't, any limitations on the practice of "step-therapy"
should better reflect a health plan or insurer's legitimate
role in determining the allowable steps.
AB 1826 (Huffman, 2010) would have required a carrier 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.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
According to the Senate Appropriations Committee, minor costs to
CDI and DMHC to revise the existing prior authorization form to
allow it to be used for step therapy override requests.
SUPPORT: (Verified 9/2/15)
Arthritis Foundation (co-source)
California Rheumatology Alliance (co-source)
Union of American Physician and Dentists/AFSCME Local 206
(co-source)
ALS Association Golden West Chapter
American Cancer Society Cancer Action Network
American GI Forum
Association of Northern California Oncologists
Bay Area Women's Health Advocacy Council
Biocom
California Academy of Physician Assistants
California Association of Area Agencies on Aging
California Chapter of the National Association of Social Workers
California Chronic Care Coalition
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California Council for the Advancement of Pharmacy
California Healthcare Institute
California Hepatitis C Task Force
California Life Sciences Association
California Pharmacists Association
California Primary Care Association
California School Employees Association
California State Retirees
Congress of California Seniors
Epilepsy California
International Foundation for Autoimmune Arthritis
Latina Breast Cancer Agency
Leukemia and Lymphoma Society
Lupus Foundation of Northern California
Lupus Foundation of Southern California
Medical Oncology Association of Southern California
Mental Health America of California
NAMI California
National Multiple Sclerosis Society California
Neuropathy Action Foundation
Osteopathic Physicians and Surgeons of California
Pharmaceutical Research and Manufacturers of America
Power of Pain Foundation
Susan G. Komen Central Valley Affiliate
Susan G. Komen Inland Empire Affiliate
Susan G. Komen Los Angeles County Affiliate
Susan G. Komen Orange County Affiliate
Susan G. Komen Sacramento Valley Affiliate
Susan G. Komen San Diego Affiliate
Susan G. Komen San Francisco Bay Area Affiliate
Western Center on Law and Poverty
Western Neuropathy Association
OPPOSITION: (Verified9/2/15)
California Association of Health Plans
California Association of Health Underwriters
California Association of Joint Powers Authorities
California Chamber of Commerce
California Department of Managed Health Care
CSAC Excess Insurance Authority
CVS Health
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Express Scripts
For Grace
Molina Healthcare of California
Pharmaceutical Care Management Association
ASSEMBLY FLOOR: 63-14, 6/2/15
AYES: Achadjian, Alejo, Baker, Bloom, Bonilla, Bonta, Brough,
Brown, Burke, Calderon, Campos, Chau, Chiu, Chu, Cooley,
Cooper, Dababneh, Daly, Dodd, Eggman, Frazier, Gallagher,
Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez,
Gonzalez, Gordon, Gray, Hadley, Roger Hernández, Holden,
Irwin, Jones, Jones-Sawyer, Levine, Linder, Lopez, Low, Mayes,
McCarty, Medina, Mullin, Nazarian, O'Donnell, Olsen, Perea,
Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Mark
Stone, Thurmond, Ting, Waldron, Weber, Wilk, Williams, Wood,
Atkins
NOES: Travis Allen, Bigelow, Dahle, Beth Gaines, Harper, Kim,
Lackey, Maienschein, Mathis, Melendez, Obernolte, Patterson,
Steinorth, Wagner
NO VOTE RECORDED: Chang, Chávez, Grove
Prepared by:Melanie Moreno / HEALTH /
9/2/15 19:04:46
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