Amended in Senate August 31, 2015

Amended in Senate August 17, 2015

Amended in Senate July 14, 2015

Amended in Senate July 8, 2015

Amended in Assembly June 1, 2015

Amended in Assembly April 14, 2015

California Legislature—2015–16 Regular Session

Assembly Bill No. 1124

Introduced by Assembly Member Perea

February 27, 2015

An act to amend Sections 4600.1, 4600.2, and 5307.27 of, and to add Sections 5307.28 and 5307.29 to, the Labor Code, relating to workers’ compensation.

LEGISLATIVE COUNSEL’S DIGEST

AB 1124, as amended, Perea. Workers’ compensation: prescription medication formulary.

Existing law establishes a workers’ compensation system, administered by the Administrative Director of the Division of Workers’ Compensation, to compensate an employee for injuries sustained in the course of employment. The administrative director is authorized to adopt, amend, or repeal, after public hearings, any rules and regulations that are reasonably necessary to enforce the state workers’ compensation provisions, except when that power is specifically reserved to the Workers’ Compensation Appeals Board. Existing law requires the administrative director to adopt a medical treatment utilization schedule that addresses the frequency, duration, intensity, and appropriateness of all common treatments performed in workers’ compensation cases.

This bill would require the administrative director to establish begin delete an outpatient prescription end delete begin insert a end insert drug formulary, on or before July 1, 2017, as part of the medical treatment utilization schedule, for medications prescribed in the workers’ compensation system. The bill would require the administrative director to make certain considerations, as specified, in establishing the formulary. The bill would require the administrative director to meet and consult with stakeholders, as specified, prior to the adoption of the formulary. The bill would require the administrative director to publish at least 2 interim reports on the Internet Web site of the Division of Workers’ Compensation describing the status of the establishment of the formulary, beginning July 1, 2016, until the formulary is effective. The bill would require the administrative director to update the formulary at least on a quarterly basis to allow for the availability of all appropriate medications, including medications newly approved for use. begin insert The bill would exempt an order updating the formulary from the Administrative Procedure Act and other provisions, as specified. end insert The bill would also make conforming changes to related code sections.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

It is the intent of the Legislature begin delete to establish an
outpatient prescription drug formulary for medications prescribed
in the workers’ compensation system, to be effective July 1, 2017.
In establishing the formulary, end delete begin insert that end insert the Administrative Director of
the Division of Workers’ Compensation begin delete shall consider, end delete begin insert create an
evidence-based drug formulary, end insert with the maximum transparency
possible, begin delete a medical evidence-based formulary, and, end delete begin insert for use in the
workers’ compensation system. The formulary shall go into effect
on or before July 1, 2017, and shall include, end insert in addition to the
provisions of this act, at least all of the following:

(a)  begin delete Medical evidence-based end delete begin insert Evidence-based end insert guidelines for
access to appropriate begin delete medication end delete begin insert medications end insert pursuant to pain
management prescription drug therapies.

begin delete

(b) Medical evidence-based guidelines for access to off-label
prescription drugs when evidence-based and medically necessary.

end delete

begin insert (b) end insert begin insert   end insert begin insert Guidance regarding the manner in which a physician may
present medical evidence to document an injured worker’s need
for off-label use of prescription drugs. end insert

(c) Guidance begin delete of end delete begin insert regarding the manner in which end insert utilization
begin delete review, pursuant to Section 4610 of the Labor Code, as applicable
to end delete begin insert review applies to formulary end insert medications begin delete within the established
formulary end delete and circumstances that may warrant begin insert the end insert use of
medications outside the established begin delete formulary. end delete begin insert formulary,
including, but not limited to, emergent and inpatient care. end insert

SEC. 2.  

Section 4600.1 of the Labor Code is amended to read:

4600.1.  

(a) Subject to subdivision (b), any person or entity
that dispenses medicines and medical supplies, as required by
Section 4600, shall dispense the generic drug equivalent.

(b) A person or entity is not required to dispense a generic drug
equivalent under either of the following circumstances:

(1) If a generic drug equivalent is unavailable.

(2) If the prescribing physician specifically provides in writing
that a nongeneric drug must be dispensed.

(c) For purposes of this section, “dispense” has the same
meaning as the definition contained in Section 4024 of the Business
and Professions Code.

(d) This section does not preclude a prescribing physician, who
is also the dispensing physician, from dispensing a generic drug
equivalent.

(e) This section applies only to medicines begin delete prescribed or end delete
dispensed prior to the effective date of the begin delete outpatient prescription end delete
drug formulary adopted pursuant to Section 5307.27.

SEC. 3.  

Section 4600.2 of the Labor Code is amended to read:

4600.2.  

(a) Notwithstanding Section 4600, if a self-insured
employer, group of self-insured employers, insurer of an employer,
or group of insurers contracts with a pharmacy, group of
pharmacies, or pharmacy benefit network to provide medicines
and medical supplies required by this article to be provided to
injured employees, those injured employees that are subject to the
contract shall be provided medicines and medical supplies in the
manner prescribed in the contract for as long as medicines or
medical supplies are reasonably required to cure or relieve the
injured employee from the effects of the injury. Medicines provided
pursuant to the contract begin delete are end delete begin insert shall be end insert subject to the begin delete outpatient
prescription end delete drug formulary adopted begin insert by the administrative director end insert
pursuant to Section 5307.27, and a contract shall not limit the
availability of medications otherwise begin delete indicated pursuant to the
formulary. end delete begin insert prescribed pursuant to the formulary based on whether
the pharmacy services are provided within or outside a medical
provider network. end insert

begin insert

(b) This section does not affect the ability of employee-selected
physicians to continue to prescribe and have the employer provide
medicines subject to the drug formulary and medical supplies that
the physicians deem reasonably required to cure or relieve the
injured employee from the effects of the injury.

end insert begin delete

(b)

end delete

begin insert (c) end insert  Each contract described in subdivision (a) shall comply with
standards adopted by the administrative director. In adopting those
standards, the administrative director shall seek to reduce
pharmaceutical costs and may consult any relevant studies or
practices in other states. The standards shall provide for access to
a pharmacy within a reasonable geographic distance from an
injured employee’s residence.

begin delete

(c) An employer or insurer that has established a medical
provider network pursuant to Section 4616 is in compliance with
this section if pharmacy network services are included within its
medical provider network plan filed with the administrative director
pursuant to paragraph (1) of subdivision (b) of Section 4616.

end delete

SEC. 4.  

Section 5307.27 of the Labor Code is amended to read:

5307.27.  

(a) The administrative director, in consultation with
the Commission on Health and Safety and Workers’ Compensation,
shall adopt, after public hearings, a medical treatment utilization
schedule, that shall incorporate the evidence-based, peer-reviewed,
nationally recognized standards of care recommended by the
commission pursuant to Section 77.5, and that shall address, at a
minimum, the frequency, duration, intensity, and appropriateness
of all treatment procedures and modalities commonly performed
in workers’ compensation cases.

(b) On or before July 1, 2017, the medical treatment utilization
schedule adopted by the administrative director shall include begin delete an
outpatient prescription drug formulary. end delete begin insert a drug formulary using
evidence-based medicine. end insert This section does not prohibit the
authorization of medications that are not in the formulary when
the variance is demonstrated, begin delete in accordance end delete begin insert consistent end insert with
subdivision (a) of Section begin delete 4604.5, to cure or relieve the injured
worker from the effects of his or her injury. end delete begin insert 4604.5. end insert

(c) The begin delete outpatient prescription end delete drug formulary shall include a
phased implementation for workers injured prior to July 1, 2017,
in order to ensure injured workers safely transition to medications
on the formulary. begin delete This section does not prohibit medically
necessary tapering or weaning of medications to treat workers
injured on or after July 1, 2017. end delete

begin delete

(d) On or before July 1, 2017, the medical treatment utilization
schedule shall include guidelines for the development of a
detoxification plan for an injured worker receiving potentially
addictive prescription drug treatment or drug treatment if a
detoxification plan is necessary for patient safety.

end delete

SEC. 5.  

Section 5307.28 is added to the Labor Code, to read:

5307.28.  

(a)  Prior to the adoption of begin delete an outpatient prescription end delete
begin insert a end insert drug formulary as required by Section 5307.27, the administrative
director shall meet and consult regarding the establishment of a
formulary with stakeholders, including, but not limited to,
employers, insurers, private sector employee representatives, public
sector employee representatives, treating physicians actively
practicing medicine, pharmacists, pharmacy benefit managers,
attorneys who represent applicants, and injured workers.

(b) The administrative director may begin delete meet and consult with end delete
begin insert include an independent research organization and end insert an ad hoc group
of physicians and pharmacists to begin insert meet, and consult with, to end insert address
proposed updates after the formulary is implemented.

(c) Beginning July 1, 2016, and concluding with the effective
date of the formulary, the administrative director shall publish at
least two interim reports on the Internet Web site of the Division
of Workers’ Compensation describing the status of the
establishment of the formulary.

SEC. 6.  

Section 5307.29 is added to the Labor Code, to read:

5307.29.  

The administrative director shall update the outpatient
prescription drug formulary at least on a quarterly basis to allow
for the availability of all appropriate medications, including
medications newly approved for use. begin insert Formulary updates shall be
made through an order exempt from Sections 5307.3, 5307.4, and
the rulemaking provisions of the Administrative Procedure Act
(Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code), informing the public
of changes and their effective date. All orders issued pursuant to
this section shall be published on the Internet Web site of the
Division of Workers’ Compensation. end insert