BILL ANALYSIS �
AB 1814
Page 1
Date of Hearing: April 29, 2014
ASSEMBLY COMMITTEE ON HEALTH
Richard Pan, Chair
AB 1814 (Waldron) - As Amended: April 23, 2014
SUBJECT : Prescriber Prevails Act.
SUMMARY : Establishes that a prescriber's reasonable
professional judgment prevails over the policies and utilization
controls of the Medi-Cal program, including the utilization
controls of a Medi-Cal managed care plan, in prescribing a
pharmaceutical from specified therapeutic drug classes.
Specifically, this bill :
1)Requires if any drug from a specified therapeutic drug class is
prescribed by a Medi-Cal beneficiary's provider the drug to be
covered in the Medi-Cal program.
2)Specifies the affected drug classes are antiretrovirals for
Aids/HIV, Hepatitis C drugs, Antipsychotics,
Immunosuppressants for anti-rejection, and
epilepsy/anti-convulsants.
3)Requires a Medi-Cal managed care plan to cover a drug in the
named drug classes if prescribed by a beneficiary's provider.
Requires the provider to demonstrate reasonable professional
judgment and that the drug is medically necessary and
consistent with the federal Food and Drug Administration (FDA)
labeling and use rules and regulations as described in at
least one of the official compendia named in federal law.
4)Provides that if a Medi-Cal managed care plan chooses not to
cover the specified drugs, the drugs are to be carved out of
the plan and covered on a fee-for-service basis and the plan's
contracted rate shall be reduced accordingly.
EXISTING LAW :
1)Establishes in federal law the federal Medicaid program to
provide comprehensive health benefits to low income persons.
2)Establishes the Medi-Cal program as California's Medicaid
program.
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3)Requires states, under the Federal Medicaid law, to have a
drug use review program for covered outpatient prescription
drugs, to ensure drugs are appropriate, medically necessary,
and not likely to result in adverse medical results. Federal
law requires the program to assess data on drug use against
predetermined standards, consistent with specified factors,
including compendia.
4)Provides a schedule of benefits provided in the Medi-Cal
program, including prescription drug benefits.
5)Authorizes the Department of Health Care Services (DHCS) to
establish utilization controls for any Medi-Cal services as
long as the controls are reasonably related to the purpose of
establishing them. Allows the utilization controls include
prior authorization, pre- and post-service audits, limitations
on the number of services and review pursuant to professional
standards.
6)Provides that any prescription drug approved by the FDA for
the treatment of AIDS or an AIDS-related condition is
automatically approved for placement on the contract list of
Medi-Cal drugs. Allows the DHCS to apply utilization controls
and conditions placement on the contract list on the
manufacturer signing a rebate agreement with the federal
Centers for Medicare and Medicaid Services (CMS).
7)Provides that any prescription drug approved by the FDA for
the treatment of cancer is automatically approved for
placement on the contract list of Medi-Cal drugs. Conditions
placement on the contract list on the manufacturer signing a
rebate agreement with CMS.
8)Excludes from managed care, by administrative guidance of
DHCS, specified prescription drugs including those for
HIV/AIDS and antipsychotics.
FISCAL EFFECT : This bill has not been analyzed yet by a fiscal
committee.
COMMENTS :
1)PURPOSE OF THIS BILL . According to the author, this bill
strengthens the doctor and patient relationship by legislating
that a doctor's professional and reasonable judgment prevails
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for specific and protected therapeutic drug classes within the
Medi-Cal program. The author argues that new pharmaceuticals
and treatments are emerging rapidly, while insurance
formularies don't have the capacity to keep up and in the
meantime, patient care is being affected and individuals are
losing access to receive the best pharmaceuticals that may
control their condition sooner rather than later. Current
formulary restrictions have multiple appeals processes
patients have to go through and step therapy correspondingly
delays the patient from obtaining the most suitable drug
combinations for their case, according to the author.
The author argues the Prescriber Prevails Act would avoid drug
resistance and reduce the spread of disease. The author
explains that Prescriber Prevails has been a precedent in
other states and allows managed care plans to still create
their own formularies and "carve out" certain drug classes,
the bill merely requires Medi-Cal managed care plans to
implement, "Prescriber Prevails" for medically necessary
prescription drugs within the 5 protected classes. The author
notes this bill creates a protected class structure for drugs
prescribed by a Medi-Cal beneficiary's treating physician that
would be covered under the Medi-Cal program based on the
action the Federal government took when it enacted Medicare
Part D, which included 6 protected classes of therapeutic
drugs. The author concludes these life threatening illnesses
can be controlled for these low-income individuals under
Medi-Cal, which would save overall costs by controlling these
illnesses from the start,
2)MEDICAID BACKGROUND . Medicaid is a federal-state program that
pays for medical assistance for low-income individuals and
families. Although pharmacy coverage is an optional benefit
under federal Medicaid law, all states currently cover
outpatient prescription drugs for all categorically eligible
individuals and most other enrollees in their Medicaid
programs.
Most state Medicaid programs have adopted preferred drug lists
(PDL, also called formularies), making any medication not
deemed preferred subject to prior authorization. States use
prior authorization, in conjunction with a PDL, to encourage
the prescribing of the most clinically appropriate and
cost-effective drug within a specific therapeutic drug
category. Under federal law, non-preferred products must be
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made available through a review process that must provide a
response within 24 hours and allow for a 72-hour supply of the
drug in emergency situations. The complexity of the prior
authorization process determines the extent to which it
encourages trials of preferred medications first (i.e., step
therapy).
Step therapy requirements under Medicaid programs vary by
state and by the prescribed drug or medical condition. Some
states have broad step therapy requirements for program
participants. For example, Pennsylvania has step therapy
requirements for a wide variety of drugs, including NSAIDS,
protein pump inhibitors, anticonvulsants, anti-depressants,
and others. Other states have narrower requirements. Georgia
requires insureds to fail on two older forms of antipsychotic
medications before receiving newer antipsychotic agents.
Indiana has a step therapy requirement for anti-hypertensives
(i.e., drugs used to address high blood pressure).
According to the federal CMS, a compendium is a listing of
FDA-approved drugs and biologics. A compendium includes a
summary of the pharmacologic characteristics of each drug or
biological, and may include information on dosage as well as
recommended or endorsed uses in specific diseases. A recent
change in federal law allows the Secretary of the federal
Department of Health and Human Services to revise the
statutory list of compendia as appropriate for identifying
medical accepted indications for drugs used in an anti-cancer
chemotherapeutic regimen in Medicare. Federal regulations
establish a process for listing compendia for determining
medically accepted uses of drugs in anti-cancer treatment,
including a formal written request for changes to the list of
compendia, publishing the list of the requests and soliciting
public comment, considering the compendium's attainment of the
Medicare coverage advisory committee's recommended desirable
characteristics of compendia, and considering the compendium's
grading of evidence.
Federal Medicaid law requires a drug use review program. The
program is required to assess data on drug use against
pre-determined standards, consistent with peer-reviewed
medical literature and three statutorily listed compendia:
3)PRESCRIPTION DRUGS IN MEDI-CAL . Medi-Cal is one of the
largest drug purchasers in the state. The program spends
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about $4 billion on prescription drugs, including indirect
expenditures through payment to managed care plans and direct
expenditures in fee for service and for prescription drugs
that are "carved out" of managed care. Carved out means that
the state pays directly for the drug rather than indirectly
through a capitated or fixed rate payment to a Medi-Cal
managed care plan.
Drug spending declined dramatically with the federal
government taking greater financial responsibility with the
advent of Medicare Part D drug coverage. California used to
pay the prescription drug costs of dual eligibles, those
individuals who were on Medi-Cal and Medicare. However, the
spending on the remainder of beneficiaries has continued to
rise at a rapid rate.
Facing significantly rising costs, the federal and state
governments have grappled with various cost control measures.
California, to help manage costs, has established a formulary
for the fee-for service program. The formulary is not binding
on Medi-Cal managed care plans, each of which creates their
own formulary. A variety of utilization tools also are used.
These include limiting prescriptions to six per month,
although many beneficiaries receive more but only after a
prior authorization has been approved. Frequent and high cost
prescription drug users can be identified and case management
interventions can be used if appropriate to reduce drug costs.
Another tool to help reign in the high costs of prescription
drugs are the rebate programs. The federal government
collects a rebate from prescription drug manufacturers.
Manufacturers must pay a rebate to the federal government or
Medicaid will not cover their prescription drug. California
has been a national leader in the drug rebate program, being
one of the first states to negotiate with manufacturers a
"supplemental rebate" program. The program is so named
because the rebate is a supplement to the federal rebate
program. Manufacturers must agree to pay the state to have
their prescription drug placed on a preferred drug list which
usually means the drugs are available without prior
authorization. At one time the state received over a billion
dollars annually in net revenues through supplemental rebates.
The implementation of Part D has led to significant
decreases. In addition, with the increase in managed care,
the state no longer bears the direct cost of paying for
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prescription drugs so supplemental rebates have declined more.
Because of the decline in supplemental rebates, the Governor's
budget proposed a statewide formulary be instituted which
would be mandatory for all managed care plans, replacing their
each plans individual formulary. This would allow the state
to collect rebates on the over $1 billion of prescription drug
spending by managed care plans with an estimated annual
general fund savings of approximately $70 million.
4)NEW YORK PROVIDER PREVAILS LAW. In 2011, New York changed the
process by which 4 million Medicaid recipients obtain
prescription drug coverage. The pharmacy benefit was "carved
in" to Manage Care instead of a fee for service program. This
change resulted in patients losing many protections and has
led to confusion, lack of uniformity in coverage and, in some
cases, denial of critical medications.
Patient advocates, health care providers and many members of
the New York State Legislature began fighting to restore
certain patient protections. Those protections including a
comprehensive drug formulary, standardization of drug
benefits, and maintaining the prescriber's authority to decide
what medicine a patient needs, frequently referred to as
"prescriber prevails" In 2012, the advocacy effort resulted
in restoration of "prescriber prevails" for atypical
antipsychotics in the 2012-2013 Executive Budget (effective
January 1, 2013). Later in 2013, the prescriber prevails
provision was restored for all drug classes.
5)SUPPORT . The California Medical Association (CMA) argues this
bill would help eliminate some of the barriers to medically
necessary treatment and services. CMA states for those
patients receiving drugs in the designated categories, this
bill will help ensure patients in the Medi-Cal program will be
able to access these products. The Pharmaceutical Research
and Manufacturers of America argues that the selection by a
patients physician cannot be overridden by the patients
managed care plan and reinforces the prescriber's autonomy in
the selection of a patient's drug regimen. The California
Psychiatric Association notes the treatment of psychosis and
bi-polar disorder is difficult at best even when all
appropriate medications are readily available. They point out
that Medicare Part D acknowledges the clinical reality that
there are significant differences among psychotropic
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medications.
6)RELATED LEGISLATION . AB 889 (Frazier) prohibits a health plan
from requiring an enrollee to try and fail on more than two
medications before allowing the enrollee access to the
medication, or generically equivalent drug, as specified.
7)PREVIOUS LEGISLATION .
a) AB 369 (Huffman) of 2012 would have prohibited carriers
that restrict medications for the treatment of pain,
pursuant to step therapy or fail-first protocol, from
requiring a patient to try and fail on more than two pain
medications before allowing the patient access to the pain
medication, or generically equivalent drug, as defined,
prescribed by the prescribing provider, as defined. AB 369
was vetoed by Governor Brown, who stated:
While I sympathize with the author's good
intentions, I am not convinced that this bill
strikes the right balance between physician
discretion and health plan or insurer oversight. A
doctor's judgment and a health plan's clinical
protocols both have a role in ensuring the prudent
prescribing of pain medications. Independent medical
reviews are available to resolve differences in
clinical judgment when they occur, even on an
expedited basis.
b) AB 1826 (Huffman) of 2010 would have required a carrier
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. AB 1826 died on the Senate
Appropriations Committee Suspense File.
REGISTERED SUPPORT / OPPOSITION :
Support
California Medical Association
California Psychiatric Association
Pharmaceutical Research and Manufacturers of America
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Opposition
None on file.
Analysis Prepared by : Roger Dunstan / HEALTH / (916) 319-2097