BILL ANALYSIS Ó
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: AB 2115
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|AUTHOR: |Wood |
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|VERSION: |May 11, 2016 |
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|HEARING DATE: |June 29, 2016 | | |
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|CONSULTANT: |Teri Boughton |
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SUBJECT : Health care coverage: disclosures
SUMMARY : Requires health plans and health insurers to inform an
individual who ceases to be enrolled in coverage that he or she
may be eligible for free or reduced cost prescription medicines
through a manufacturer's patient assistance program.
Existing law:
1)Provides for the regulation of health plans by the Department
of Managed Health Care (DMHC), regulation of health insurers
by the California Department of Insurance (CDI), and the
administration of the Medi-Cal program by the Department of
Health Care Services, which provides health coverage for
qualified low income individuals, children, families and
individuals who are aged and disabled.
2)Establishes federal and state-based market places or health
benefit exchanges, under the federal Patient Protection and
Affordable Care Act (ACA), such as Covered California, which
make individual and small group health insurance products
available for purchase. Exchanges also administer federal
premium subsidies and cost-sharing reductions to help
qualified purchasers afford health insurance purchased through
an exchange.
3)Requires most Americans to have health insurance coverage or
pay a tax penalty. Provides for open enrollment periods when
individuals can purchase health insurance, and special
enrollment periods which allow for the purchase of insurance
within 60 days of certain life events including but not
limited to marriage, divorce, and loss of group coverage.
4)Requires on and after January 1, 2014, a health plan or health
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insurer providing individual or group health care coverage to
provide to enrollees, subscribers, policyholders or
certificate holders, who cease to be enrolled in coverage, a
notice informing them that they may be eligible for
reduced-cost coverage through Covered California or no-cost
coverage through Medi-Cal.
5)Requires the notice to include information on obtaining
coverage pursuant to those programs, and to be in no less than
12-point type, and developed by DMHC and CDI, no later than
July 1, 2013, in consultation with Covered California.
6)Permits the notice to be incorporated into or sent
simultaneously with and in the same manner as any other
notices sent by the health plan or health insurer.
7)Exempts a specialized health plan contract, specialized health
insurance policy, or a health insurance policy consisting
solely of coverage of excepted health benefits, as specified,
or a Medicare supplemental plan contract from the provisions
described in 4)-6) above.
This bill:
1)Adds to notice requirements of health plans and health
insurers when an individual ceases to be enrolled in coverage
that he or she may be eligible for free or reduced cost
prescription medicines through a manufacturer's patient
assistance program, and that the Office of the Patient
Advocate also be consulted in the development of the notice.
2)Requires the notice to include a statement clarifying that
assistance through a manufacturer's patient assistance program
does not constitute coverage under, and will not meet the
requirements of the individual mandate under, the ACA.
3)Requires the DMHC and CDI to include information in the notice
on locating free or reduced cost programs for health care and
prescription medicines, such as through the Internet Web site
of the Office of the Patient Advocate.
4)Requires this notice to be provided on and after January 1,
2017.
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FISCAL
EFFECT : According to the Assembly Appropriations Committee, any
impact to DMHC (Managed Care Fund) and CDI (Insurance Fund) is
expected to be minor and absorbable.
PRIOR
VOTES :
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|Assembly Floor: |71 - 0 |
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|Assembly Appropriations Committee: |14 - 0 |
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|Assembly Health Committee: |19 - 0 |
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COMMENTS :
1)Author's statement. According to the author, despite
California's implementation of the ACA, which created or
expanded coverage options for many Californians, gaps remain -
with an estimated 3.8 million Californians under age 65
remaining without coverage. Compared to their insured
counterparts, California's uninsured have reported having a
significantly lower health status and a substantially higher
rate of not seeking care due to cost concerns. Nationwide, an
estimated 125,000 deaths per year and between 33 and 69% of
medication-related hospital admissions are a result of
patients not getting or taking a prescribed medicine in a
timely manner. Washington State established a program using
navigators and online resources to assist consumers in finding
appropriate patient assistance programs for their respective
situations and medication needs, handling over 41 million
prescriptions since 2009. A recent study of the Washington
program found that patients receiving assistance in finding
appropriate programs had nearly half the number of emergency
department and hospital encounters as those not receiving such
assistance. In helping to ensure Californians leaving
coverage understand the programs available to them for free
and reduced cost medicines, AB 2115 will help to reduce the
potential negative health impact that delays in access to
prescribed medicines can cause.
2)Prescription Assistance Programs. According to an April 2016
article in the Journal of Managed Care and Specialty Pharmacy,
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there are over 200 Prescription Assistance Programs available
from pharmaceutical companies. Use of these programs is
hindered by inconsistent eligibility requirements and reported
difficulties in identifying and applying for appropriate
programs. These programs typically provide brand-name drugs
at little or no cost to income-eligible patients. These
programs remain underutilized by target populations. In a
survey of 215 safety-net facilities in California, Florida,
Illinois, and Texas, 22% of the clinics reported not using the
programs at all because the enrollment process was too complex
and time consuming. A nationwide effort sponsored by
America's biopharmaceutical research companies called the
Partnership for Prescription Assistance (PPA) has helped
nearly 10 million uninsured and underinsured Americans get
information about programs that provide prescription medicines
for free or nearly free. PPA provides a single point of access
to more than 475 patient assistance programs, including nearly
200 offered by biopharmaceutical companies. From April 2009 to
May 2016, 320,830 California residents have been helped by
PPA, according to its website.
3)Washington State. According to an April 2016 article in the
Journal of Managed Care and Specialty Pharmacy in 2008, the
Spokane Prescription Assistance Network (SPAN) was started as
a pilot project to assist low-income adults with accessing
affordable prescription medications. A SPAN patient
prescription coordinator accepted referrals from area health
clinics, social service organizations, pharmacies, hospitals,
etc. The coordinator matched patients with appropriate
prescription assistance programs and helped the patients apply
for the programs. The coordinator followed-up with the
patient and their providers regularly. The aim was to reduce
unnecessary and avoidable health care encounters for patients
having difficulty accessing prescription medications. Among
310 SPAN participants, emergency department and hospital
encounters declined from .38 per participant the year before
enrollment to .20 encounters in the year following program
entry. SPAN was associated with a 51% decline in the rate of
emergency department and hospital utilization. The study
concluded a formalized patient prescription coordinator can
help patients access prescribed medications at low cost and
remain compliant with treatment plans.
4)Other studies. A 2009 study published in Health Affairs
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concluded the benefits of patient assistance programs remain
unclear. Little is known about these programs. A survey
found much variability in their structures and application
processes. Most of these programs cover only one or two
drugs. Only 4% disclosed how many patients they had directly
helped, and half would not disclose their income eligibility
criteria. A 2014 perspective in the New England Journal of
Medicine indicates that more than 300 drugs have associated
patient-assistance programs, and manufacturers spend about $4
billion per year on these programs. The article says these
programs increase demand, allow companies to charge higher
prices, and provide public-relations benefits. In addition,
patient-assistance programs may lead to higher drug prices as
a result of the interplay between patent demand and prices.
If patient demand is less sensitive to prices, manufacturers
of on-patent drugs respond by setting higher prices. The
author also points out that the federal Department of Health
and Human Services (DHHS) has sent mixed signals about these
programs and has discouraged hospitals and other providers
from paying premiums or other cost-sharing liabilities for
exchange enrollees. The author of the study believes DHHS is
right to limit the scope of these programs and that these
programs can help individual patients but are associated with
hidden costs for insurers and taxpayers.
5)Medicare. Medicare.gov has links to information about patient
assistance programs. The following information is on the
Medicare.gov website. "Some pharmaceutical companies offer
assistance programs for the drugs they manufacture. Click on
the first letter of your drug name to see if any programs are
available for the drugs you are taking. If your drug is on the
list, click on "details" for detailed information about the
program." The details provide information about eligibility
criteria and benefits assistance as well as contact
information for the program.
6)Office of Inspector General Report. The federal Office of
Inspector General (OIG) published a report in September of
2014 on pharmaceutical manufacturers that offer copayment
coupons to reduce or eliminate the cost of patients'
out-of-pocket copayments for specific brand-name drugs. The
federal anti-kickback statute prohibits the knowing and
willful offer or payment of remuneration to a person to induce
the purchase of any item or service for which payment may be
made by a federal health care program. Manufacturers may be
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liable under the anti-kickback statute if they offer coupons
to induce the purchase of drugs paid for by federal health
care programs, including Medicare Part D. The use of coupons
by Medicare beneficiaries could impose significant costs on
the Part D program because many coupons encourage
beneficiaries to choose more expensive brand-name drugs over
less expensive alternative drugs. In two surveys by outside
groups, approximately 6-7% of seniors surveyed reported using
coupons to purchase prescription drugs. The OIG concluded
pharmaceutical manufacturers' current safeguards may not
prevent all copayment coupons from being used for drugs paid
for by Part D.
7)Related legislation. SB 1010 (Hernandez), would require health
plans and health insurers that report health insurance rate
information to also include information regarding covered
prescription drugs. Requires DMHC and CDI to compile and
report this data in an aggregated report to demonstrate the
overall impact of drug costs on health care premiums.
Requires any manufacturer of a prescription drug, who sells to
or is reimbursed by a state purchaser, health plan, health
insurer, or pharmacy benefit manager, to provide notice
describing a price increase. Requires the Legislature to
conduct an annual public hearing on aggregate trends in
prescription drug pricing. SB 1010 is set to be heard in the
Assembly Health Committee on June 28, 2016,
AB 463 (Chiu of 2015), would have required pharmaceutical
companies to file an annual report with OSHPD containing
specified information regarding the development and pricing of
prescription drugs. AB 463 was referred to the Assembly
Health Committee but was never heard.
8)Prior legislation. AB 339 (Gordon, Chapter 619, Statutes of
2015), requires health plans and health insurers that provide
coverage for outpatient prescription drugs to have formularies
that do not discourage the enrollment of individuals with
health conditions, and requires combination antiretrovirals
drug treatment coverage of a single-tablet that is as
effective as a multitablet regimen for treatment of HIV/AIDS,
as specified. Places in state law, federal requirements
related to pharmacy and therapeutics committees, access to
in-network retail pharmacies, standardized formulary
requirements, formulary tier requirements similar to those
required of health plans and insurers participating in Covered
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California and copayment caps of $250 and $500 for a supply of
up to 30 days for an individual prescription, as specified.
AB 792 (Bonilla, Chapter 851, Statutes of 2012), establishes
notification requirements about the availability of
reduced-cost coverage in Covered California and no-cost
coverage available in Medi-Cal to an individual filing a
dissolution or nullity of marriage, divorce or separation, or
petitioning for adoption or for an individual who ceases to be
enrolled in health coverage through a health plan or health
insurer.
9)Support. The California Life Sciences Association (CLSA)
writes that this bill is simply adding a new item to a list in
an existing notice requirement for health plans and insurers,
its costs should be minimal, especially in light of the
significant potential for healthcare costs avoided and
improvements in patients' health. Greater awareness of
patient assistance programs among individuals who are at-risk
of becoming uninsured could bring benefits similar to those
seen in Washington. In response to concerns raised by health
plans, the bill has been amended to delete sections applicable
to Cal-COBRA and all specific language requirements for the
notices, including website citations. CLSA believes this bill
achieves, at a modest cost, a greater awareness of patient
assistance programs, helping patients stay on their
medications during coverage interruptions and consequently
reducing preventable emergency room visits and other care as a
result of medication non-adherence.
10)Opposition. The California Association of Health Plans
(CAHP) writes that drug company-sponsored assistance programs
provide a major advantage for manufacturers of brand name or
otherwise costly drugs. These programs increase demand for
brand name and costly products over lower cost and equally
effective generics, which is why this bill is supported by the
pharmaceutical industry. Researchers, government agencies, and
payers have expressed a fair amount of skepticism about the
intent and utility of these programs. These programs are
banned or discouraged in certain public programs. CAHP states
that due to a lack of transparency, very little is known about
these programs or how they impact the health system. Before
California starts promoting these programs, which provide a
huge public relations benefit for drug companies, a better
understanding of their purpose and impact on cost-effective
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drug use should be obtained. The Association of California
Life and Health Insurance Companies (ACLHIC) writes that it is
unclear to us what problem this bill is intending to solve,
and while the increased cost and administrative burden of
updating current notices is an issue, even more concerning to
ACLHIC's members is the decision to require one industry to
promote the activities of another. Especially when taking
into consideration that these programs can have a direct
impact on driving up the cost of healthcare by steering
patients toward higher cost brand name drugs when equally
effective generic alternatives are available. Kaiser
Permanente writes that federal law prohibits the use of these
discount coupons (also known as third party payments in public
programs) and discourages their use by health plans
participating in ACA exchanges due to their effect of
increasing drug spending.
11)Policy Comment. While connecting an uninsured patient with
needed medications is clearly in the interest of the patient's
health and, as demonstrated in the SCAN pilot, can lead to
declines in emergency department use and hospitalizations, it
is not clear how a notice about patient assistance programs
provided to all enrollees and insured who cease their health
coverage would result in these outcomes. Furthermore, if an
individual who ceases coverage thinks he or she can get access
to free or reduced cost medications, he or she might forgo
pursuit of replacement coverage. Lack of health insurance
coverage, especially for someone with a chronic condition,
will be detrimental to his or her health.
A study provided by this bill's sponsor points out that over the
next 10 years, per-capita out-of-pocket spending on
prescription medication is projected to rise by 34%. A 2015
poll conducted by the Kaiser Family Foundation indicates the
top two health care concerns of respondents relate to the
price of prescription drugs. Seventy-six percent listed
"making sure that high-cost drugs for chronic conditions are
affordable to those who need them" and 60% expressed a need
for "government action to lower prescription drug prices."
There are more meaningful actions pharmaceutical companies can
take in order to expand access to their medications for people
with chronic conditions, such as lowering their prices.
SUPPORT AND OPPOSITION :
Support: California Life Science Association (sponsor)
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National Multiple Sclerosis Society
Oppose: Association of California Life and Health Insurance
Companies
Blue Shield of California
California Association of Health Plans
Kaiser Permanente
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