BILL ANALYSIS
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THIRD READING
Bill No: AB 2779
Author: Solorio (D)
Amended: 8/20/10 in Senate
Vote: 27 - Urgency
SENATE LAB. & INDUS. RELATIONS COMMITTEE : 4-0, 8/10/10
AYES: DeSaulnier, Ducheny, Leno, Yee
NO VOTE RECORDED: Wyland, Hollingsworth
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 74-0, 4/29/10 (Consent) - See last page
for vote
SUBJECT : Workers compensation: compounded drugs
SOURCE : Author
DIGEST : This bill requires that a compound drug may only
be reimbursed through the workers compensation system if:
(a)the physicians request for authorization for the
compounded drug has been submitted to the insurer or, if
there is no insurer, to the employer, for prospective
utilization review, (b) the physician's request explicitly
identifies the recommended drug as a compounded drug, and
(3) all active ingredients in the compound medication are
medication ingredients in drug products that have been
approved by the federal Food and Drug Administration or
listed by the United States Pharmacopeia.
CONTINUED
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This bill allows a non-physician to deny reimbursement for
a substantially identical compounded drug if the compounded
drug was denied through utilization review, the denial was
not overturned, and there has not been a documented
material change in the employee's medical condition. This
bill prohibits reimbursement for any ingredient in a
compound drug that does not have a valid National Drug Code
and a corresponding unit price in the Medi-Cal database.
This bill empowers the Division of Workers' Compensaiton to
adopt regulations to implement these requirements. This
bill makes the above-listed requirements applicable to any
compounded drug dispensed on or after November 1, 2010, and
defines "compounded drug" as having the same meaning
specified in regulations adopted by the California State
Board of Pharmacy.
Senate Floor Amendments of 8/20/10 clarify when a compound
drug can be dispensed, as well as define what a compound
drug is for the purposes of the workers' compensation
system.
ANALYSIS : 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 his or her employment.
This bill provides that under workers' compensation law, a
compounded drug, as defined, dispensed on or after November
1, 2010, shall be reimbursable only if certain conditions,
including the condition that all active ingredients in the
compounded drug are ingredients in drug products that have
been approved by the federal Food and Drug Administration
and all other ingredients are listed by the United States
Pharmacopeia, are satisfied.
Prior Legislation
SB 292 (Speier) of 2005, would have, among other things,
prescribed a formula for reimbursing drugs not by the
Medi-Cal payment system. This bill was held under suspense
by the Assembly Appropriations Committee. Passed the
Senate Floor with a vote of 40-0, on May 26 2005.
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FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 8/18/10)
Association of California Insurance Companies
California Association of Joint Powers Authorities
California Chamber of Commerce
California Coalition on Workers' Compensation
California Labor Federation, AFL-CIO
California Manufacturers and Technology Association
California Professional Firefighters
California Special Districts Association
CSAC Excess Insurance Authority
Employers Compensation Insurance Company
League of California Cities
Regional Council of Rural Counties
OPPOSITION : (Verified 8/18/10)
California Applicants' Attorneys Association
California Medical Association (unless amended)
California Retailers Association (unless amended)
California Society of Industrial Medicine and Surgery
(unless amended)
CA Society of Physical Medicine and Rehabilitation (unless
amended)
CompPharma (unless amended)
Walgreens
ARGUMENTS IN SUPPORT : Proponents argue that while
compound medicines are a necessity for certain injured
workers, there has been a sharp increase in the usage and
costs of compound drugs. Proponents believe that this bill
is a good start at establishing guidelines for the
compounding of drugs and under what circumstances the cost
of those drugs would be reimbursed. Proponents note in
particular that the cap on the maximum allowance on the sum
of the amounts allowed for the ingredient and dispensing
fee, and believe that these guidelines will rein in the
abuse of medical treatment and billing practices specific
to the compounding of drugs.
ARGUMENTS IN OPPOSITION : CompPharma, which represents
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pharmacy benefit management (PBMs) firms, has taken an
'oppose unless amended' position. CompPharma believes that
the issues surrounding the cost of pharmaceuticals in the
workers' compensation system are larger than compounding,
and suggests that this bill takes on a more global
perspective, similar to AB 2593 (Bradford), which was
sponsored by CompPharma, but was held in Assembly
Insurance. CompPharma suggests amendments that would
delink reimbursement rates for pharmacy products from the
Medi-Cal system due to the adverse impact of budget cuts
and reimbursement rates by a market-based formula, as well
as language clarifying the role of pharmacy benefit manager
contracts, the fee schedule, and reimbursements.
CompPharma believes that these amendments would result in
additional cost-savings within the workers' compensation
system.
The California Society of Industrial Medicine and Surgery
(CSIMS) and the California Society of Physical Medicine and
Rehabilitation (CSPMR) have also taken an 'oppose unless
amended' position. CSIMS and CSPMR are concerned that
requiring compound medication to go through the utilization
review process could create unnecessary delays or denial of
treatment if the claims adjuster refuses or neglects to
respond to the doctor's request for approval of compound
medicine. CSIMS and CSPMR report working with the author's
office on a possible amendment, and are optimistic on
hitting upon a solution to this issue.
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Beall, Bill
Berryhill, Tom Berryhill, Blakeslee, Block, Blumenfield,
Bradford, Brownley, Buchanan, Charles Calderon, Carter,
Chesbro, Conway, Cook, Coto, Davis, De La Torre, De Leon,
DeVore, Emmerson, Eng, Evans, Feuer, Fletcher, Fong,
Fuentes, Fuller, Furutani, Gaines, Galgiani, Garrick,
Gilmore, Hagman, Hall, Harkey, Hayashi, Hernandez, Hill,
Huber, Huffman, Jeffries, Knight, Lieu, Logue, Ma,
Mendoza, Miller, Monning, Nava, Nestande, Niello,
Nielsen, Norby, V. Manuel Perez, Portantino, Ruskin,
Salas, Saldana, Silva, Skinner, Smyth, Solorio, Audra
Strickland, Swanson, Torlakson, Torres, Tran, Villines,
Yamada, John A. Perez
NO VOTE RECORDED: Bass, Caballero, Jones, Bonnie Lowenthal,
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Torrico, Vacancy
PQ:do 8/23/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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