BILL ANALYSIS �
AB 1000
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Date of Hearing: May 3, 2011
ASSEMBLY COMMITTEE ON HEALTH
William W. Monning, Chair
AB 1000 (Perea) - As Introduced: February 18, 2011
SUBJECT : Health care coverage: cancer treatment.
SUMMARY : Requires a health care service plan (health plan)
contract or health insurance policy that provides coverage for
cancer chemotherapy treatment to establish limits on enrollee
out of pocket costs for prescribed, orally administered,
nongeneric cancer medication. Specifically, this bill :
1)Requires a health plan contract or health insurance policy
issued, amended, or renewed on or after January 1, 2011, that
provides coverage for cancer chemotherapy treatment, to
provide coverage for prescribed, orally administered,
nongeneric cancer medication, used to kill or slow the growth
of cancerous cells.
2)Requires the health plan contract or health insurance policy
referenced in 1) above, to review the percentage cost share
for oral nongeneric cancer medication and intravenous (IV) or
injected nongeneric cancer medications and apply the lower of
the two as the cost-sharing provision for oral nongeneric
cancer medications.
3)Prohibits a health plan contract or health insurance policy
from providing an increase in enrollee cost sharing for
nongeneric cancer medications to any greater extent than the
contract or policy provides for an increase in enrollee cost
sharing for other nongeneric covered medications.
4)Defines "cost share" as copayment, coinsurance, or deductible
provisions applicable to coverage for oral, IV, or injected
nongeneric cancer medications.
5)Prohibits the provisions of this bill from being construed to
require a health plan contract or health insurance policy to
provide coverage for any additional medication not otherwise
required by law.
6)Clarifies that provisions of this bill do not prohibit a
health plan contract or health insurance policy from removing
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a prescription drug from its formulary of covered prescription
drugs.
7)Prohibits the provisions of this bill from applying to a
health plan contract or health insurance policy that does not
provide coverage for prescription drugs.
8)Prohibits the provision of this bill from applying to a health
care benefit plan or contract entered into with the Board of
Administration of the Public Employees' Retirement System
(CalPERS) pursuant to the Public Employees' Medical and
Hospital Care Act.
9)Requires the provisions of this bill to remain in effect only
until January 1, 2016, and as of that date are repealed,
unless a later enacted statute deletes or extends that date.
EXISTING FEDERAL LAW :
1)Enacts, in federal law, the Patient Protection and Affordable
Care Act (PPACA) to, among other things, make statutory
changes affecting the regulation of, and payment for, certain
types of private health insurance. Includes the definition of
essential health benefits (EHBs) that all qualified health
plans must cover, at a minimum, with some exceptions.
2)Provides that the EHB package in 1) above will be determined
by the federal Department of Health and Human Services (HHS)
Secretary and must include, at a minimum, ambulatory patient
services; emergency services; hospitalizations; mental health
and substance abuse disorder services, including behavioral
health; prescription drugs; and, rehabilitative and
habilitative services and devices, among other things.
EXISTING STATE LAW :
1)Establishes the Knox-Keene Health Care Service Plan Act of
1975 to regulate and license health plans and specialized
health plans by the Department of Managed Health Care (DMHC)
and provides for the regulation of health insurers by the
California Department of Insurance (CDI).
2)Requires health plan contracts and health insurance policies
to provide coverage for all generally medically accepted
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cancer screening tests and requires those plans and policies
to also provide coverage for the treatment of breast cancer.
3)Imposes various requirements on health plan contracts and
health insurance policies that cover prescription drug
benefits, such as a requirement to cover "off-label" uses, as
specified, and a requirement to cover previously prescribed
drugs, as specified.
4)Authorizes DMHC to regulate the provision of medically
necessary prescription drug benefits by a health plan to the
extent that the plan provides coverage for those benefits.
Existing regulation requires health plans providing outpatient
prescription drugs to provide all medically necessary
prescription drugs, except as specified in that regulation.
FISCAL EFFECT : This bill has not yet been analyzed by a fiscal
committee.
COMMENTS :
1)PURPOSE OF THIS BILL . According to the author, the emergence
of safe, clinically effective, orally administered anticancer
medication has significantly increased the treatment options
for cancer patients; however, many barriers currently impede
the adoption of orally administered treatment as the main form
of cancer therapy. The author maintains that one of the most
significant barriers is reflected in the disparity between
medical and pharmacy benefit designs resulting in greater
patient out-of-pocket costs for oral therapies covered under
the pharmacy benefit than IV therapies covered under the
medical benefit. The author further maintains that, where IV
administered anticancer medications are typically covered
under a plan's medical benefit, most patients are only
responsible for an office co-payment for each episode of care
and are not required to pay a separate fee for the IV drug.
The author argues that, in contrast, orally administered
anticancer medications are typically covered under a plan's
pharmacy benefit, where many of these agents are placed on a
4th or specialty tier of a prescription plan's formulary. The
author points out that, according to the Kaiser Family
Foundation, the average coinsurance rate for 4th tier drugs is
28%, which, for a $3,000 per month oral anticancer medication,
could expose a patient to $900 in out-of-pocket spending.
Citing a study done by Prime Therapeutics, which concluded
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that 1-in-6 patients did not receive oral anticancer treatment
solely due to cost, the author maintains that out-of-pocket
costs for oral anticancer medications becomes a de facto
denial of access.
The author additionally points out that, in 2007, the Oregon
State Senate passed similar legislation �S.B. 8 (Courtney),
Chapter 566, 2007 Laws], and that, upon enactment of S.B. 8 in
January 2008, the top state plans eliminated their high
coinsurance rates. Most Oregon plans eliminated their high
coinsurance rates and established separate oral anticancer
therapy coverage under their pharmacy benefit, and patients
with no pharmacy benefits gained access to oral anticancer
agents through their medical benefit. The author further
notes that, Colorado, Hawaii, Indiana, Iowa, Kansas,
Minnesota, Vermont, Washington D.C., and Connecticut have all
passed similar legislation.
2)MEDICAL AND PHARMACY BENEFITS . According to the California
Health Benefits Review Program's (CHBRP's) analysis of SB 961
(Wright) of 2009, identical to this bill, coverage for
anticancer medications can differ in any of a number of ways,
depending on provisions of a person's health plan contract or
health insurance policy with a carrier. At a very broad
level, anticancer medications may be covered as pharmacy plan
benefits or as medical plan benefits, and most plans and
insurers depend on the dispensing site to determine which will
be the form of coverage. IV anticancer medication, which is
usually provided in a hospital or a physician's office, is
generally covered as a medical benefit. Oral anticancer
medications (usually pills) dispensed by a pharmacy are
usually covered as a pharmacy benefit. Some injected
anticancer medications are considered "self-injectable," and
so are regularly delivered through a pharmacy and covered as a
pharmacy benefit. In part, these variations are due to the
fact that pharmacy benefits are relatively new for carrier
contracts and policies, having been added in the 1970s and
1980s, long after hospitalization and physician visits had
become covered medical benefits.
CHBRP indicates for both medical and pharmacy benefits, payers
have devised strategies to promote appropriate utilization and
control of costs. A short list of these strategies includes:
creation of formularies; maximization of manufacturer rebates;
quantity restrictions; use of prior authorization; development
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of clinical guidelines; and, implementation of patient cost
sharing, such as deductibles, coinsurance, and copayments.
Cost sharing for medications is frequently complicated by
tiered pricing. A health plan and health insurer may assign
drugs to tiers (generic drugs in the lowest and very expensive
drugs in the highest) and apply varying copayments and
coinsurance rates to different tiers. As with cost sharing in
general, the impact of tiers (if any) depends on the specifics
of a person's health plan contract or health insurance policy.
According to CHBRP, the variety of cost sharing provisions
currently used in California makes it difficult to generalize
about the ways in which a cancer patient may be required to
pay out-of-pocket for any anticancer medication. Fixed
copayments are a common form of cost sharing for medications
delivered through a pharmacy. However, some carrier contracts
and polices specify coinsurance for one or more medications.
The terms of coverage may or may not include a deductible.
The coverage of medications delivered as medical benefits is
equally variable.
3)CHBRP . CHBRP was created in response to AB 1996 (Thomson),
Chapter 795, Statutes of 2002, which requests the University
of California to assess legislation proposing a mandated
benefit or service, and prepare a written analysis with
relevant data on the public health, medical, and economic
impact of proposed health plan and health insurance benefit
mandate legislation. CHBRP's analysis of this legislation
focuses on oral anticancer medications, specifically, oral
medications used to kill or slow the growth of cancerous
cells. This analysis assumes that this bill does not affect
cost sharing for other medications that a cancer patient might
use during the course of chemotherapy. Among CHBRP's findings
are the following:
a) Overview of Oral Anti-Cancer Medications . According to
CHBRP, anticancer medications may be administered through
an IV, by injection, or orally. CHBRP maintains that
although oral anticancer medications have been available
for many years, the number of oral anticancer medications
approved by the U.S. Food and Drug Administration (FDA) has
grown dramatically over the past decade and that growth is
likely to continue. To date, according to CHBRP, the FDA
has approved 42 oral anticancer medications that are used
to treat 57 different types of cancer. CHBRP cites the
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National Comprehensive Cancer Network report that estimates
400 anticancer medications are currently under development,
and approximately 25% of them are planned to be
administered orally. CHBRP notes that for many anticancer
medications there are no IV or injected substitutes.
Provisions of this bill only apply to cost sharing for
nongeneric oral anticancer medications. CHBRP reports that
most oral anticancer medications are available as
brand-name only (i.e., nongeneric) medications. Generic
equivalents are available for only 10 of the 42 oral
anticancer medications currently approved by the FDA.
CHBRP notes that many of the oral anticancer medications
are relatively new medications for which the pharmaceutical
company that developed the medication has exclusive
marketing rights and/or for which the patent has not
expired. Although generic equivalents are available for
less than one-quarter of oral anticancer medications, they
account for a large percentage of prescriptions filled for
these medications
CHBRP maintains that oral anticancer medications are used to
treat frequently diagnosed cancers, such as breast, lung,
prostate, and colorectal cancers. CHBRP notes that they
are also used for rare cancers, such as cancer of the
adrenal gland, cancer of the dermis layer of the skin and
eye cancer. Some oral anticancer medications are used
alone, whereas others are used in combination with IV
medication. Still others are used alone or in combination
with other anticancer medications depending on the cancer
they are being used to treat or the severity or stage of
the cancer.
When compared to IV and injectable anticancer medications,
oral anticancer medications have both advantages and
disadvantages. According to CHBRP, advantages include that
oral anticancer medications may allow administration of the
medication on a daily basis; may be more convenient for
patients; and, may reduce the risk of infection or other
infiltration complications. Disadvantages include less
certainty in patient adherence to treatment regimens and a
reduction in interaction between patients and their health
care providers to manage complications of treatment.
b) Benefit Coverage, Utilization, and Cost Impacts .
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According to CHBRP, this bill would affect the coverage of
approximately 20.1 million enrollees in DMHC-regulated
health plans and CDI-regulated health insurance policies in
California with outpatient prescription drug coverage.
This excludes the estimated 968,000 enrollees who do not
have outpatient prescription drug coverage and about
831,000 enrollees in plans purchased by CalPERS, which are
exempt from the provisions of this bill. CHBRP notes that
97.4% of the 20.1 million enrollees are estimated to have
coverage for nongeneric oral anticancer medications and
approximately 2.6% of these enrollees have no coverage for
outpatient oral nongeneric anticancer medications, because
they have generic-only coverage.
CHBRP estimates that 0.3% of enrollees with coverage subject
to this bill will use nongeneric oral anticancer
medications in a year. CHBRP does not estimate a
measurable increase in the number of oral anticancer
medications users nor a measurable increase in the number
of prescriptions.
According to CHBRP, this bill would shift some nongeneric
oral anticancer medication costs from users to health plans
and insurers through reduced cost sharing. CHBRP, states
that, in total, users would see a reduction in
out-of-pocket costs of an estimated $2,650,000 due to
lesser cost-sharing requirements. On average the amount of
the shift is estimated to be $100.28 per user per year.
This bill is expected to increase premiums by about
$3,137,000 (0.0036%).
c) Public Health Impacts . CHBRP does not project a
measurable increase in utilization of oral anticancer
medications as a result of this bill. Therefore, according
to CHBRP, the only potential public health impact of this
bill is the reduction in out-of-pocket costs for oral
anticancer medications. CHBRP maintains that this could
reduce the financial burden and related health consequences
face by cancer patients.
CHBRP reports that, nearly one in two Californians born today
will develop cancer at some point in their lifetime. There
are an estimated 144,000 cases of cancer diagnosed each
year, while approximately 1.2 million Californians alive
today have a history with the disease. According to CHBRP,
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breast cancer is the most prevalent cancer in California,
almost exclusively affecting women. CHBRP asserts that 70%
of the prescriptions and 31% of the total cost for
nongeneric oral anticancer medications are for drugs used
to treat breast cancer. Therefore, to the extent that this
bill reduces out-of-pocket costs for patients, there is the
potential to reduce the financial burden faced by women
undergoing treatment for breast cancer.
After breast cancer, according to CHBRP, the next three most
common cancers in California are colorectal, prostate, and
lung cancer. Non-Hispanic blacks in California have higher
rates of diagnoses of these three cancers compared to all
other racial and ethnic groups. These three cancers are
all treated using oral nongeneric anticancer medications;
therefore, to the extent that this bill reduces
out-of-pocket costs for oral anticancer medications, CHBRP
maintains, non-Hispanic black cancer patients could face a
reduced financial burden.
4)EHBs . The PPACA requires qualified health plans to cover
specified categories of EHBs, including behavioral health
treatment and rehabilitative services, by 2014. The HHS
Secretary is tasked with defining these benefit categories
through regulation so that they mirror those benefits offered
by a "typical" employer plan. Qualified plans are required to
cover EHBs by 2014. Federal guidance with respect to EHBs is
expected later this year and in 2012.
In a January 2011 issue brief by CHBRP focusing on the federal
requirement to cover EHBs, CHBRP notes that there is
considerable legal ambiguity over how state mandates requiring
the coverage of the treatment for a specific condition or
disease will interact with federal law. CHBRP states that
these mandates often extend across multiple benefit
categories. CHBRP cites, as an example, California's mandate
to cover breast cancer treatment, which implicitly requires
coverage for screening and testing, medically necessary
physician services, ambulatory services, prescription drugs,
hospitalization, and surgery. CHBRP writes that it is unclear
how California benefit mandates that overlap across several
EHB categories would be evaluated in relation to the EHB
package.
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5)SUPPORT . According to Carrie's TOUCH, Inc. (Carrie's TOUCH),
the sponsors of this bill, the emergence of clinically safe
and effective, orally administered anticancer medication has
significantly increased the treatment options for cancer
patients. Carrie's TOUCH maintains that there is a disparity
that exists between the medical and pharmacy benefit design
creating greater out-of-pocket responsibilities for oral
anticancer treatment covered under the pharmacy benefit than
the out of pocket costs for IV treatment covered under the
medical benefit. Carrie's TOUCH argues that the cost barriers
currently impede access to orally administered cancer
treatment. The American Cancer Society (ACS) states that
patients using oral chemotherapy generally experience milder
side effects and avoid the need for transportation back and
forth to chemotherapy appointments, which, depending on a
patient's circumstances can be onerous for the patient and the
caretakers. ACS further states that many oral chemotherapy
treatments do not have IV counterparts, making the need to
ensure access to them critical. AstraZeneca argues in support
that access to effective medicines, including oral and IV
therapies, should be determined by medical appropriateness -
as determined by a physician in consultation with a patient.
AstraZeneca asserts that ensuring oral chemotherapy agents are
covered in a similar manner as intravenous therapies helps to
ensure that a physician has all of the necessary tools
available to help patients and their family caregivers.
6)OPPOSITION . The California Association of Health Plans, the
California Chamber of Commerce, and America's Health Insurance
Plans all write in opposition that, while well intentioned,
this bill would further exacerbate the problem of rising
health care costs. The opposition maintains that this bill
may only minimally increase health insurance premiums, but
this increase cannot be viewed in isolation. The opposition
argues that this year alone the Legislature will be
considering at least a dozen new mandates along with the many
currently imposed benefit mandates. These mandates, according
to the opposition, have reduced flexibility in benefit design,
increased health care costs, and premium rates leading to
reduced employers' and individuals choice of benefit packages,
ultimately contributing to the need for health care reform
today. The opposition asserts that benefit mandates make
insurance less affordable, resulting in an increased number of
uninsured.
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7)PREVIOUS LEGISLATION .
a) SB 961 (Wright) of 2010, contained identical language as
this bill and was vetoed by Governor Arnold Schwarzenegger
stating his concern about adding costs to increasingly
expensive health insurance premiums. Governor
Schwarzenegger also stated that in light of federal health
reform this bill was unnecessary.
b) SB 161 (Wright) of 2009, was substantially similar to
this bill, and would have required a carrier contract or
policy that provides coverage for anticancer treatment to
provide coverage for a prescribed, orally administered
anticancer medication on a basis "no less favorable" than
IV or injected anticancer medications. SB 161 was vetoed
by Governor Arnold Schwarzenegger stating that SB 161
limits a carrier's ability to control both the
appropriateness of the care and the cost by requiring them
to immediately cover every medication as soon as it
receives federal approval, regardless of the provisions of
the carrier's formulary, placing carriers at a severe
disadvantage when negotiating prices with drug
manufacturers. The Governor further stated his belief that
oral anticancer medications were more cost-effective and
efficacious in some instances and encouraged the author,
for reconsideration this year, to collaborate with his
Administration, carriers, and the pharmaceutical
manufacturers to explore whether there were ways to provide
greater access without increasing costs.
8)POLICY COMMENT . This bill is one of several health mandates
introduced for legislative consideration this year. The
author may wish to address the extent to which the need for
this bill and others similar to it is premature, given that
federal regulations to define the parameters of the EHB
package have yet to be promulgated.
REGISTERED SUPPORT / OPPOSITION :
Support
Carrie's Touch, Inc. (sponsor)
American Cancer Society, California Division
Association of Northern California Oncologists
AstraZeneca
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BayBio
BIOCOM
California Affiliates of Susan G. Komen for the Cure
California Children's Hospital Association
California Healthcare Institute
California Medical Association
City of West Hollywood
International Myeloma Foundation
Leukemia & Lymphoma Society
Opposition
America's Health Insurance Plans
Association of California Life & Health Insurance Companies
California Association of Health Plans
California Chamber of Commerce
Analysis Prepared by : Tanya Robinson-Taylor / HEALTH / (916)
319-2097