BILL ANALYSIS
AB 1826
Page 1
Date of Hearing: April 20, 2010
ASSEMBLY COMMITTEE ON HEALTH
William W. Monning, Chair
AB 1826 (Huffman) - As Amended: March 15, 2010
SUBJECT : Health care coverage: prescriptions.
SUMMARY : Requires a health plan or health insurer that covers
prescription drug benefits to provide coverage for a drug that
has been prescribed for the treatment of pain without first
requiring the enrollee or insured to use an alternative drug or
product. Specifically, this bill :
1)Requires a health plan or health insurer that covers
prescription drug benefits to provide coverage for a drug that
has been prescribed by a participating licensed health care
provider for the treatment of pain without first requiring the
enrollee or insured to use an alternative prescription drug or
over-the-counter product.
2)Provides that nothing in this bill prohibits a health plan or
health insurer from charging co-payments or deductibles for
prescription drug benefits or imposing limitations on maximum
coverage of prescription drug benefits, as specified.
3)Exempts a health plan or health insurance policy purchased by
the California Public Employees' Retirement System (CalPERS)
from the requirements of this bill.
EXISTING LAW :
1)Provides for regulation of health plans by the Department of
Managed Health Care (DMHC) under the Knox-Keene Health Care
Service Plan Act of 1975 and regulation of health insurers by
the California Department of Insurance (CDI) under the
Insurance Code.
2)Prohibits health plans and health insurers that cover
prescription drugs from limiting or excluding coverage for a
drug on the basis that the drug is prescribed for a use
different from the use for which the drug has been approved by
the federal Food and Drug Administration (FDA), provided that
specified conditions have been met, including that the drug is
prescribed by a participating licensed health care
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professional for the treatment of a chronic and seriously
debilitating condition, the drug is medically necessary to
treat that condition, and the drug is on the plan formulary.
3)Prohibits health plans covering prescription drug benefits
from limiting or excluding coverage for a drug for an enrollee
if the drug was previously approved for coverage by the plan
for a medical condition of the enrollee and the plan's
prescribing provider continues to provide the drug for the
medical condition, provided that it is safe and effective for
treatment.
4)Clarifies that the prohibition in 3) above does not preclude
the prescribing provider from prescribing another drug that is
covered by the plan and is medically appropriate, nor does it
prohibit generic drug alternatives.
5)Requires health plans that provide prescription drug benefits
and maintain one or more drug formularies to provide to the
public, upon request, a copy of the most current list of
prescription drugs by major therapeutic category, with an
indication of whether any drugs on the list are preferred over
other listed drugs. Requires plans that maintain more than
one formulary to notify the requester that a choice of
formulary lists is available.
6)Requires health plans that provide prescription drug benefits
to maintain an expedited process by which prescribing
providers may obtain authorization for a medically necessary
non-formulary drug.
7)Requires any health plan disapproval pursuant to 6) above to
provide the enrollee with the reasons for the disapproval and
notify the enrollee of the right to file a grievance if the
enrollee objects to the disapproval; including any alternative
drug or treatment offered by the plan.
8)Requires the process for authorization of medically necessary
non-formulary drugs to be described in the health plan
disclosure form.
9)Requires, in regulations, health plans that cover outpatient
prescription drug benefits to cover all medically necessary
outpatient prescription drugs, as specified.
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FISCAL EFFECT : This bill has not yet been analyzed by a fiscal
committee.
COMMENTS :
1)PURPOSE OF THIS BILL . The author states that p ain is a
growing national public health crisis that affects an
estimated 76 million people and has serious economic
ramifications. Chronic pain affects more Americans than
diabetes, heart disease, and cancer combined. A ccording to
the author, a troubling and dangerous trend occurring with
health plans is frequent denial of coverage to policyholders
for proven and effective pain treatments. Used as a
cost-saving measure, many health plans utilize step therapy or
"fail first" policies which require a pain patient to try an
alternative medication, which in some cases include
over-the-counter medications, before the medication
recommended by the physician is approved. The author points
out that s ome patients are required to try up to five
different medicines before receiving the one prescribed by
their physician, and , more often than not, the alternative
drugs have a completely different molecular structure that can
harm patients. The author asserts that n ot only is this
policy extremely dangerous to patient health, step therapy can
actually increase the direct cost of healthcare in the long
run due to increased emergency room visits, unplanned doctor's
visits, and other health complications. Indirect costs
include lost wages and productivity of both people with pain
and their caregivers. The author believes that it is
essential that pain patients receive the drug treatment
prescribed by their physicians and do not suffer the needless
consequences caused by step therapy.
2)CHRONIC PAIN . According to the National Institutes of Health
(NIH), acute pain after surgery or trauma comes on suddenly
and lasts for a limited time, whereas chronic pain persists
for months or years. Common types of chronic pain include
back pain, headaches, arthritis, cancer pain, and neuropathic
pain, which results from injury to nerves. The NIH indicates
that common treatments include medication, acupuncture, local
electrical stimulation, brain stimulation, surgery,
psychotherapy, relaxation therapy, biofeedback, and behavior
modification. According to a 2006 survey by the National
Center for Health Statistics (NCHS), back pain is the leading
cause of disability in Americans under 45 years old, and more
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than 26 million Americans between the ages of 20-64 experience
frequent back pain. The NCHS survey also indicated that
adults who reported low back pain were three times as likely
to be in poorer health and more than four times as likely to
experience serious psychological distress as people without
low back pain problems. The survey estimated that the annual
cost of chronic pain in the U.S., including health care
expenses, lost income, and lost productivity, is about $100
billion.
3)STEP THERAPY . According to a 2001 report by the California
HealthCare Foundation (CHCF) relating to prescription drug
coverage and formulary use in California, step therapy
requires patients and physicians to follow a particular
sequence of drug treatment. In general, a patient must fail
to respond to a recommended first-line therapy before a
second- or third-line medication is prescribed. Typically,
this means that patients will be required to try medications
that have been on the market for a longer period of time and
are usually less expensive than the newer medications
available to treat a specific condition. For example, the
CHCF report suggests that newer inhibitors for the relief of
arthritic pain, such as Celebrex, which are part of a large
class of anti-inflammatory drugs, may be subject to step
therapy requirements.
4)CALIFORNIA HEALTH BENEFITS REVIEW PROGRAM (CHBRP) . AB 1996
(Thomson), Chapter 795, Statutes of 2002, requests the
University of California to assess legislation proposing a
mandated benefit or service, and prepare a written analysis
with relevant data on the medical, economic, and public health
impacts of proposed health plan and health insurance benefit
mandate legislation. CHBRP was created in response to AB 1996
and extended for four additional years in SB 1704 (Kuehl),
Chapter 684, Statutes of 2006. In its analysis of AB 1826,
CHBRP notes that, throughout its report, it uses the phrase
"fail-first protocols" to reference the group of utilization
management techniques that would be prohibited by this bill
for pain medications. CHBRP reported:
a) Medical Effectiveness . Due to the variety of causal
conditions and types of pain (acute and chronic), there is
no standard treatment for pain. Pain treatment varies
according to type, severity, and duration of pain, as well
as the causal condition (if known), patient co-morbidities,
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and other factors (e.g., medication intolerance or patient
compliance). Health care providers use clinical judgment
to select among various pain medications and treatments in
efforts to resolve or control pain for individual patients.
CHBRP points out that in the use of fail-first protocols
as methods of utilization management for coverage of pain
medications through outpatient pharmacy benefits, there
appears to be no pattern among DMHC-regulated plans and
CDI-regulated insurers. For some enrollees, no pain
medications are subject to fail-first protocols. Other
enrollees, depending on the provisions of their plan
contracts or insurance policies, have outpatient pharmacy
benefits that make coverage for between one and 38 pain
medications subject to fail-first protocols. According to
CHBRP, it is possible that two enrollees with plan
contracts from a single health plan (or policies from a
single insurer) might not have outpatient pharmacy benefits
for pain medications that are subject to the same list of
fail-first protocols - or one of them might not be subject
to any list at all. Of more than 200 prescription
medications used to treat pain, 54 are subject to
fail-first protocols for at least some portion of enrollees
with health insurance subject to this bill whose health
insurance includes an outpatient pharmacy benefit.
However, among the 54 medications identified, there is
variation in frequency of medications subject to fail-first
protocols.
CHBRP found no medical effectiveness literature addressing
the direct effects of fail-first protocols on resolving or
controlling pain. Additionally, CHBRP found insufficient
evidence to characterize the medical effectiveness of
fail-first protocols for pain medications. Therefore,
CHBRP concludes that the impact of this bill on the medical
effectiveness of pain treatment is unknown. The lack of
evidence for the effectiveness of fail-first protocols is
not evidence that these protocols produce either positive
or negative health outcomes.
b) Utilization, Cost, and Coverage Impacts . About 18.7
million enrollees in DMHC-regulated health plans or
CDI-regulated policies have health insurance subject to
this bill.
CHBRP assumed that this bill would not increase the number of
enrollees with an outpatient pharmacy benefit. Of the
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97.2% who have outpatient pharmacy benefit coverage, about
8.3 million enrollees (45.5%) have benefit coverage subject
to fail-first protocols for one or more pain medications;
about nine million enrollees (49.3%) have benefit coverage
that is not subject to fail-first protocols and not
affected by this bill; 417,000 enrollees (2.2%) have
generic-only outpatient pharmacy benefit coverage and would
not be affected by this bill since generic medications are
not generally present on fail-first protocol lists; and,
521,000 enrollees (2.8%) do not have outpatient pharmacy
benefit coverage and would not be affected by this bill.
Beneficiaries of public programs enrolled in DMHC-regulated
health plans may also have coverage for pain medications
subject to fail-first protocols. However, CHBRP's survey
of several DMHC-regulated plans into which they might be
enrolled revealed variation. CHBRP confirmed that a
portion of beneficiaries of Medi-Cal, the Healthy Families
Program, Access for Infants and Mothers (AIM) Program, and
the Major Risk Medical Insurance Program (MRMIP) have
outpatient pharmacy benefits for pain medication subject to
some fail-first protocols. However, as was found to be the
case for privately funded health insurance, the presence of
fail-first protocols and the lists varied by plan.
According to CHBRP, prescriptions for identified medications
approved by the FDA commonly used for pain, both generic
and brand-name, are estimated to be 610 per 1,000 enrollees
per year. This bill is not expected to measurably affect
this number because outpatient pharmacy benefit coverage is
not expanded by this bill and this bill is not expected to
result in an increase in diagnosis or treatment of pain.
This bill is expected to affect the percentage make up of
filled pain prescriptions in terms of generic versus brand
name medications.
CHBRP estimates total net expenditures (including premiums
and out-of-pocket expenses) for prescriptions for pain
medications would increase by about $28 million or .04% due
to this bill. Total premiums for private employers are
expected to increase by about $9.3 million or .02%.
Premiums for individually purchased insurance are expected
to increase by about $2 million or .03%. Enrollee
out-of-pocket expenses are also estimated to increase by
approximately $3 million or .05%. Medi-Cal expenditures
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are estimated to increase by about $8 million, or .2%, and
state expenditures for Healthy Families, AIM, and MRMIP are
estimated to increase by about $2 million or .2%. This is
an increase of $.24 per member per month (PMPM) for
Medi-Cal, Healthy Families, AIM, and MRMIP. Expected PMPM
increases in other market segments are as follows: $.08
PMPM in the large-group market DMHC-regulated plans; $.11
PMPM in the large-group marked CDI-regulated policies; $.11
PMPM in the small-group market DMHC-regulated plans; $.17
PMPM in the small-group market CDI-regulated policies; $.10
PMPM in the individual market DMHC-regulated plans; and,
$0.10 PMPM in the individual market CDI-regulated policies.
c) Public Health Impact . CHBRP reports that, although
there is some evidence that fail-first protocols can lead
to lower levels of patient satisfaction, delays in
receiving medications, and higher rates of unfulfilled
prescriptions, this research is not generalizable to
populations outside of those studied . Therefore, the
public health impact of this bill is unknown.
Additionally, CHBRP did not identify any literature that
examined the relationship between fail-first protocols and
gender or race/ethnicity. CHBRP also does not know the
extent to which this bill would impact people of different
genders or racial/ethnic groups differentially. Therefore,
the impact of this bill on gender and racial/ethnic
disparities in pain management is undetermined. Lastly,
CHBRP states that pain conditions are known to be relevant
factors in terms of lost productivity and associated
economic loss through days missed from work as well as
reduced ability to perform tasks at work. However, no
research was identified that assessed the impact of
fail-first protocols for pain medications on measures of
productivity. Therefore, the impact of this bill on lost
productivity and economic loss associated with conditions
requiring the use of pain medications is unknown.
5)PRIOR LEGISLATION .
a) AB 1144 (Price) of 2009 would have required health plans
and health insurers to report specified information
relating to chronic pain medication management requirements
for their enrollees or insureds to DMHC and CDI,
respectively. AB 1144 died on the Assembly Appropriations
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Committee Suspense File.
b) AB 974 (Gallegos), Chapter 68, Statutes of 1998,
prohibits health plans that cover prescription drugs from
limiting or excluding coverage for a drug that had
previously been approved by the plan.
c) SB 625 (Rosenthal), Chapter 69, Statutes of 1998,
requires health plans that cover prescription drugs and
that have one or more formularies to publicly disclose,
upon request, a copy of the current list of prescription
drugs that includes specified information and to maintain
an expedited prior authorization process for medically
necessary non-formulary prescription drugs, and clarifies
the content of the notice, including grievance information,
that is required to be sent to an enrollee when a prior
authorization request is denied by the plan.
d) AB 1985 (Speier), Chapter 1268, Statutes of 1992,
prohibits health plans and health insurers that provide
coverage for prescription drugs from limiting or excluding
coverage for a drug on the basis that the drug is
prescribed for an off-label use, if specified criteria are
met.
6)SUPPORT . Chronic pain advocacy groups, health care
professionals, community and labor organizations support this
bill because it will ensure that patient have access to the
right treatment at the right time. The sponsor of this bill,
For Grace, writes that this bill highlights the inadequacies
of step therapy because a pain patient can tell immediately
whether or not a pain medication is working and should not be
forced to stay on medicine that does not relieve their pain.
The American Chronic Pain Association asserts that treatment
decisions should rely on the physician's clinical expertise,
patient's health history, and the best scientific evidence
available, rather than driven by cost. The Community Life
Improvement Program adds that applying step therapy protocols
rigidly to a pain patient is not in the patient's best
interest especially when women are more likely than men to be
undertreated for their pain and minorities receive even less
quality of care. The Association of Northern California
Oncologists and California Medical Association support this
bill because it will remove roadblocks and obstacles that
prevent patients with pain from receiving the medically
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necessary, reasonable, and most appropriate pain management
and treatment options prescribed by their physicians, who best
understand their patients' health needs. Labor groups point
out in support that it is fundamentally unfair to permit
patients to suffer unnecessary pain in the hopes that a
cheaper drug will be as effective as the medication their
physicians actually prescribe and they argue that, in the long
run, there is no convincing evidence that step therapy
actually even saves money.
7)OPPOSITION . Health plans, health insurers, and pharmacy
benefit managers (PBMs) object to this bill. America's Health
Insurance Plans argues that this bill not only fails to
further advance the goals of patient safety and quality of
care, but threatens the ability of health plans to ensure
their enrollees are prescribed the correct course of treatment
in clinically appropriate amounts. The California Association
of Health Plans writes in opposition that requiring coverage
for any prescribed pill or other medication for pain is highly
questionable, particularly when the ability of a plan to
encourage safe alternatives is also eliminated. Molina
Healthcare of California, a managed care plan serving
beneficiaries in Medi-Cal and Healthy Families, notes in
opposition that by requiring coverage of any prescribed pain
drug despite cheaper alternatives, this bill would increase
costs to health plans that serve government programs without
any evidence that care would be improved. PBMs, including
Medco Health Solutions, Inc., and Express Scripts, Inc.,
maintain that implementation of a well-designed step therapy
program ensures that patients receive appropriate medications
in a cost effective manner, while reducing waste, error and
unnecessary drug use. PBMs contend that prohibiting the use
of this key drug management tool for pain medications will
make it more difficult to manage the costs of prescription
drugs and increase premium and co-payment costs for all
patients. The California Association of Joint Powers
Authorities objects to the exemption provided to CalPERS from
complying with this bill because it ignores that all local
public entities will be forced to absorb the prescription
coverage cost increases resulting from this bill.
REGISTERED SUPPORT / OPPOSITION :
Support
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For Grace (sponsor)
American Chronic Pain Association
American Federation of State, County and Municipal Employees,
AFL-CIO
American Pain Foundation
Arthritis Care Center, Inc.
Association of Northern California Oncologists
Bay Area Women's Health Advocacy Council
California Academy of Physician Assistants
California Conference Board of the Amalgamated Transit Union
California Conference of Machinists
California Healthcare Institute
California Medical Association
California Nurses Association
California Professional Firefighters
Community Life Improvement Plan
Engineers and Scientists of California, IFPTE Local 20
Familia Unida Living with Multiple Sclerosis
Foundation for Peripheral Neuropathy
Healthy African American Families
International Longshore and Warehouse Union
Jockeys' Guild
Latina Breast Cancer Agency
Power of Pain Foundation
Professional and Technical Engineers, IFPTE Local 21
United Food and Commercial Workers Region 8 States Council
UNITE-HERE!
Opposition
America's Health Insurance Plans
Anthem Blue Cross
Association of California Life and Health Insurance Companies
Blue Shield of California
California Association of Health Plans
California Association of Joint Powers Authorities
Express Scripts, Inc.
Health Net
Medco Health Solutions, Inc.
Molina Healthcare of California
Analysis Prepared by : Cassie Rafanan / HEALTH / (916)
319-2097