Amended in Senate September 4, 2015

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 a drug formulary, on or before July 1, 2017, as part of the medical treatment utilization schedule, for medications prescribed in the workers’ compensation system. begin delete The bill would require the administrative director to make certain considerations, as specified, in establishing the formulary. end delete 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 begin delete effective. end delete begin insert implemented. end insert The bill would require the administrative director to update the formulary at least on a quarterly basis to allow for the begin delete availability end delete begin insert provision end insert of all appropriate medications, including medications begin delete newly approved for use. end delete begin insert new to the market. end insert The bill would exempt an order updating the formulary from the Administrative Procedure Act and other provisions, as specified. begin insert The bill would require the administrative director to establish an independent pharmacy and therapeutics committee to review and consult with the administrative director in connection with updating the formulary, 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 that the
Administrative Director of the Division of Workers’ Compensation
create an evidence-based drug formulary, with the maximum
transparency possible, for use in the workers’ compensation begin delete system.
The formulary shall go into effect on or before July 1, 2017, and
shall include, in addition to the provisions of this act, at least all
of the following: end delete begin insert system, and that the formulary include the
following in addition to the provisions of this act: end insert

(a) Evidence-based guidelines for access to appropriate
medications pursuant to pain management prescription drug
therapies.

(b) Guidance regarding begin delete the manner in which a physician may
present medical evidence to document end delete begin insert how end insert an injured begin delete worker’s
need for end delete begin insert worker may access end insert off-label use of prescription begin delete drugs. end delete
begin insert drugs, when evidenced-based and medically necessary. end insert

begin delete

(c) Guidance regarding the manner in which utilization review
applies to formulary medications and circumstances that may
warrant the use of medications outside the established formulary,
including, but not limited to, emergent and inpatient care.

end delete begin insert

(c) Use of generic or generic-equivalent drugs in the formulary
pursuant to evidence-based practices, with consideration being
given to use of brand name medication when its use is
cost-effective, medically necessary, and evidence-based.

end insert begin insert

(d) The drug formulary shall not apply to care provided in an
emergency department or inpatient setting.

end insert begin insert

(e) Guidance on the use of the formulary to further the goal of
providing appropriate medications expeditiously while minimizing
administrative burden and associated administrative costs.

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)  begin delete If end delete begin insert When end insert a generic drug equivalent is unavailable.

(2)  begin delete If end delete begin insert When end insert 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)  begin delete This section does not end delete begin insert Nothing in this section shall be
construed to end insert preclude a prescribing physician, who is also the
dispensing physician, from dispensing a generic drug equivalent.

(e) This section begin delete applies end delete begin insert shall end insert only begin insert apply end insert to medicines dispensed
prior to the begin delete effective end delete begin insert operative end insert date of the 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 shall be subject to the drug formulary
adopted by the administrative director pursuant to Section 5307.27,
and begin delete a contract shall end delete begin insert such contracts may end insert not limit the availability
of medications otherwise prescribed pursuant to the formulary
based on whether the pharmacy services are provided within or
outside a medical provider network.

(b)  begin delete This section does not end delete begin insert Nothing in this section shall end insert 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.

(c) 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.

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 a
drug formulary using evidence-based medicine. begin delete This section does
not end delete begin insert Nothing in this section shall end insert prohibit the authorization of
medications that are not in the formulary when the variance is
demonstrated, consistent with subdivision (a) of Section 4604.5.

(c) The 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 begin delete on end delete begin insert pursuant to end insert the
formulary.

begin insert

(d) This section shall apply to all prescribers and dispensers of
medications serving injured workers under the workers’
compensation system.

end insert

SEC. 5.  

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

5307.28.  

(a)  Prior to the adoption of a 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.

begin delete

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

end delete begin delete

(c) Beginning

end delete

begin insert (b) end insert begin insert   end insert begin insert Commencing end insert July 1, 2016, and concluding with the begin delete effective
date end delete begin insert implementation end insert 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 begin delete establishment end delete begin insert creation end insert of the formulary.

SEC. 6.  

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

begin delete

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. 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 delete

begin insert

begin insert 5307.29. end insert   

end insert begin insert

(a) The administrative director shall make provision
for no less than quarterly updates to the drug formulary to allow
for the provision of all appropriate medications, including those
new to the market.

end insert begin insert

(b) Changes made to the list of drugs in the drug formulary
described in Section 5307.27 shall be made through an order
exempt from Sections 5307.3 and 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 the changes
and their effective date. All orders issued pursuant to this
subdivision shall be published on the Internet Web site of the
Division of Workers’ Compensation.

end insert begin insert

(c) The administrative director shall establish an independent
pharmacy and therapeutics committee to review and consult with
the administrative director on available evidence of the relative
safety, efficacy, and effectiveness of drugs within a class of drugs
in the updating of an evidence-based drug formulary, as required
by Section 5307.27.

end insert begin insert

(1) The committee shall consist of six members and the Executive
Medical Director of the Division of Workers’ Compensation. The
committee shall consist of medical doctors or doctors of osteopathy
holding a physician and surgeon license pursuant to Chapter 5
(commencing with Section 2000) of Division 2 of the Business and
Professions Code, and pharmacists licensed pursuant to Chapter
9 (commencing with Section 4000) of Division 2 of the Business
and Professions Code. A committee member shall have knowledge
or expertise in one or more of the following:

end insert begin insert

(A) Clinically appropriate prescribing of covered drugs.

end insert begin insert

(B) Clinically appropriate dispensing and monitoring of covered
drugs.

end insert begin insert

(C) Drug use review.

end insert begin insert

(D) Evidence-based medicine.

end insert begin insert

(2) Committee members shall not be employed by a
pharmaceutical manufacturer, a pharmacy benefits management
company, or a company engaged in the development of a
pharmaceutical formulary for commercial sale during his or her
term, and shall not have been so employed for 12 months prior to
his or her appointment.

end insert begin insert

(3) A committee member shall not have a substantial financial
conflict of interest pursuant to standards established by the
administrative director. The administrative director may, in his
or her sole discretion, disqualify a potential or current member
of the committee if the administrative director determines that a
substantial conflict of interest exists.

end insert begin insert

(4) A committee member shall agree to keep all proprietary
information confidential to the extent required by existing law.

end insert