BILL ANALYSIS Ó
AB 2115
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ASSEMBLY THIRD READING
AB
2115 (Wood)
As Amended May 11, 2016
Majority vote
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Health |19-0 |Wood, Maienschein, | |
| | |Bonilla, Burke, | |
| | |Campos, Chiu, | |
| | |Dababneh, Gomez, | |
| | | | |
| | | | |
| | |Roger Hernández, | |
| | |Lackey, Nazarian, | |
| | |Olsen, Patterson, | |
| | |Ridley-Thomas, | |
| | |Rodriguez, Santiago, | |
| | |Steinorth, Thurmond, | |
| | |Waldron | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Appropriations |14-0 |Gonzalez, Bloom, | |
| | |Bonilla, Bonta, | |
| | |Calderon, Daly, | |
| | |Eggman, Eduardo | |
| | |Garcia, Roger | |
AB 2115
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| | |Hernández, Holden, | |
| | |Quirk, Santiago, | |
| | |Weber, Wood | |
| | | | |
| | | | |
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SUMMARY: Requires health care service plans (health plans) and
health insurers, when notifying enrollees who cease to be
enrolled in health 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 Advocate.
FISCAL EFFECT: Any impact to the Department of Managed Health
Care and the California Department of Insurance is expected to
be minor and absorbable.
COMMENTS: This bill adds an additional disclosure to existing
requirements notifying individuals, upon termination of
coverage, of the availability of free or reduced prescription
medicines prescription medicines through a manufacturer's
patient assistance program (PAPs). The notice will also include
a statement clarifying that assistance through a manufacturer's
PAP does not constitute coverage under, and will not meet the
requirements of the individual mandate under, the federal
Patient Protection and Affordable Care Act.
The Centers for Medicare and Medicaid Services note that
pharmaceutical manufacturers may sponsor PAPs that provide
financial assistance or drug free product (through in-kind
product donations) to low income individuals to augment any
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existing prescription drug coverage. PAPs can provide
assistance to Part D enrollees and interface with Part D plans
by operating "outside the Part D benefit" to ensure separateness
of Part D benefits and PAP assistance. The PAP's assistance on
behalf of the PAP enrollee does not count towards a Part D
beneficiary's true-out-of-pocket cost (TrOOP). The calculation
of TrOOP is important for determining whether an individual has
reached the threshold for catastrophic coverage under the Part D
benefit.
A 2005 Publication of the Office of Inspector General (OIG)
Special Advisory Bulletin on PAPs for Medicare Part D (Bulletin)
noted that PAPs have long provided important safety net
assistance to patients of limited means who do not have
insurance coverage for drugs, typically serving patients with
chronic illnesses and high drug costs. The OIG Bulletin noted
that PAPs are structured and operated in many different ways,
such as cash subsidies, free or reduced price drugs, or
assistance directly to patients. Some PAPs replenish drugs
furnished by pharmacies, clinics, hospitals, and other entities
to eligible patients whose drugs are not covered by insurance
manufacturers. The OIG Bulletin also indicated that some PAPs
are affiliated with particular pharmaceutical manufacturers or
independent charitable organizations without regard to any
specific donor or industry interests.
According to the National Conference of State Legislatures,
prescription drug assistance has been a substantial and growing
state interest for a number of years, generally in response to
individuals who lack insurance coverage for medicines or who
were not eligible for other government programs. In 1975, the
first states began to authorize and fund direct subsidy
programs. By 2009, a total of at least 42 states had
established or authorized some type of program to provide
pharmaceutical coverage or assistance; several of those are not
currently operational. The subsidy programs, often termed
"SPAPs," utilize state funds to pay for a portion of the drug
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costs, usually for a defined population that meets enrollment
criteria. In addition, an increasing number of states use
discounts or bulk purchasing approaches that do not spend state
funds for the drug purchases, identified as "Discount Programs."
Since the passage of the Affordable Care Act, state
legislatures have been less active on SPAP issues.
This bill is supported by the biopharmaceutical industry, who
indicates PAPs 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.
Analysis Prepared by:
Kristene Mapile / HEALTH / (916) 319-2097 FN:
0003010