BILL ANALYSIS Ó
AB 2115
Page 1
Date of Hearing: May 18, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
2115 (Wood) - As Amended May 11, 2016
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|Policy |Health |Vote:|19 - 0 |
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Urgency: No State Mandated Local Program: YesReimbursable:
No
SUMMARY:
This bill requires health care service plans (health plans) and
health insurers, when notifying enrollees who cease to be
enrolled in plans or insurance products about other health care
coverage options, to also provide information about reduced-cost
prescription drugs available through manufacturer patient
assistance programs.
It also requires information on locating free or reduced-cost
programs for health care and prescription medications, such as
through the Internet Web Site of the Office of the Patient
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Advocate.
FISCAL EFFECT:
Any impact to the Department of Managed Health Care (DMHC/
Managed Care Fund) and the California Department of Insurance
(CDI/Insurance Fund) is expected to be minor and absorbable.
COMMENTS:
1)Purpose. Existing law requires health plans and insurers to
notify individuals terminating coverage of their options to
continue receiving coverage. This would add information about
manufacturer drug assistance programs. The author states this
additional information would assist patients who can't afford
necessary prescription drugs.
2)Background. The Centers for Medicare and Medicaid Services
notes many pharmaceutical manufacturers sponsor programs that
provide financial assistance or donation of free product.
Patients must generally meet some eligibility criteria,
including income and insurance status. Some programs will
assist with copayments for insured patients. For instance,
the Sovaldi Co-pay Coupon Program is run by Gilead, the maker
of Sovaldi, a breakthrough Hepatitis C medication. This
program assists patients who are "cash-pay" patients who do
not have coverage, as well as patients with commercial
insurance, with their share of cost for the drug. This
program, for example, states it covers the out-of-pocket costs
of prescriptions after the patient pays the first $5 per
prescription fill, up to a maximum of 25% of the catalog price
of a 12-week regimen.
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Such programs are not without controversy. For instance, a
2014 "Perspective" in the New England Journal of Medicine
entitled "Drug Companies' Patient-Assistance Programs -
Helping Patients or Profits?" notes, "Assistance programs are
a triple boon for manufacturers. They increase demand, allow
companies to charge higher prices, and provide
public-relations benefits. Assistance programs are an
especially attractive proposition for firms that sell
particularly costly drugs. Faced with high out-of-pocket
costs, some patients may decide against taking an expensive
medication. Patient-assistance programs can convert such
patients from nonusers to users. Programs must incur costs for
patients who would have used the drug even in the absence of a
program, but manufacturers can afford to pay a lot of $25 or
$50 copayments in return for even a small increase in the
sales of a $50,000 drug."
For those who are uninsured, patient assistance programs can
provide help to afford medication that would otherwise be
unaffordable. For insured patients, patient assistance
programs change the economics of utilization management for
plans and insurers, which can increase patient demand for more
expensive drugs. For example, if there are two equally
effective drugs available, a cheap generic with a $20
co-payment and a pricey brand-name drug with a $100
co-payment, a plan can encourage utilization of the cheaper
drug through offering the lower co-payment. But if a patient
assistance program brings the co-payment for the brand-name
drug to $10, utilization of the brand-name drug, which is far
more costly to the plan, could go up. Under this scenario of
two equally effective drugs, the plan might pay far more than
the patient would save, for the same therapeutic benefit to
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the patient.
3)Prior legislation. AB 792 (Bonilla), Chapter 851, Statutes of
2012, requires health plans and health insurers to provide a
notice informing individuals that they may be eligible for
reduced-cost coverage through the Exchange or no-cost coverage
through Medi-Cal when an enrollee or subscriber ceases to be
enrolled in coverage.
4)Support and Opposition. This bill is supported by the
biopharmaceutical industry, who indicates these programs
provide financial assistance for lifesaving drugs that
otherwise may be inaccessible due to cost. Health plans and
insurers oppose this bill, citing; 1) a lack of data on the
effectiveness, purpose, and effect on overall drug costs; 2)
concern about requiring one industry to promote the activities
of another; 3) concern that promoting these programs can have
the effect of driving up costs for individuals and employers
purchasing health coverage; and 4) current law signed last
year that already establishes strict out-of-pocket limitations
on prescription drugs and shields individuals from the drugs'
astronomical costs.
5)Staff Comment. Concerns have been raised about patient
assistance programs. Health policy experts have noted they can
increase utilization of expensive drugs even when cheaper
therapeutic alternatives are available, which does not appear
consistent with principles of cost-effectiveness in health
care delivery. Although, in theory, increased utilization of
these programs among the insured population could raise health
care costs by increasing demand for more costly medications,
the effect of the specific notification required by the bill
on health care costs is unknown. Many programs exclude
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individuals with Medicaid (Medi-Cal) coverage.
Analysis Prepared by:Lisa Murawski / APPR. / (916)
319-2081