BILL ANALYSIS Ó AB 73 Page 1 Date of Hearing: April 28, 2015 ASSEMBLY COMMITTEE ON HEALTH Rob Bonta, Chair AB 73 (Waldron) - As Amended March 16, 2015 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 AB 73 Page 2 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 requires the plan's contracted rate to 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. 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 effects. 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 AB 73 Page 3 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 by a fiscal committee. COMMENTS: 1)PURPOSE OF THIS BILL. The author explains that this bill, the Prescriber Prevails Act, strengthens the doctor and patient relationship by legislating that a doctor's reasonable, professional judgment prevails for specific, protected therapeutic drug classes within the Medi-Cal program. According to the author, 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. The author notes that as more people move onto Medi-Cal managed care plans, we are essentially growing a two-tier system of healthcare, those who can afford private insurance plans have doctors who may have more time to work through the existing preauthorization processes to attain a higher tier drug for their patients. However, those in vulnerable low-income situations are seeing their doctors most likely in clinics, AB 73 Page 4 where doctors are short on time and do not have the resources, i.e. staff, time, etc. to follow up on pre-authorization appeals. The author concludes that prescriber prevails levels the playing field for access to medically necessary drugs for low income patients with serious, chronic or life threatening conditions by shortening the pre-auth process for Medi-Cal doctors. 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 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 protein pump inhibitors, anticonvulsants, anti-depressants, and others. Other states have narrower requirements. Georgia requires insureds to fail AB 73 Page 5 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 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 has declined dramatically with the federal AB 73 Page 6 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 prescription drugs so supplemental rebates have declined more. 4)NEW YORK PROVIDER PREVAILS LAW. In 2011, New York changed the process by which 4 million Medicaid recipients obtain AB 73 Page 7 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 2012-13 Executive Budget (effective January 1, 2013). Later in 2013, the prescriber prevails provision was restored for all drug classes. 5)DRUG CLASSES. A drug class is a group of drugs that have something in common. They are similar in some way, but they are not identical. A drug also belongs to one or more drug classes. Drugs can be in a class with other drugs for several reasons: a) The drugs are related by their chemical structure; b) The drugs work in the same way; or, c) The drugs are used for the same purpose. d) Drug class grouping then are fairly narrow. Drugs from a variety of classes are used to treat these specific diseases. 6)SUPPORT. Supporters states that this bill would provide that drugs in specified therapeutic drug classes that are prescribed by a Medi-Cal beneficiary's treating provider are covered Medi-Cal benefits, given that the drug is medically necessary and consistent with federal rules and regulations AB 73 Page 8 for labeling and use. They note that all too often individuals who require specific medications are forced to wait while they and their physicians are forced to wade through red tape and sometimes are forced to suffer with inadequate or contraindicated medications. 7)OPPOSITION. The California Association of Health Plans (CAHP) opposes this bill because it does not consider the role of health plans and pharmaceutical benefit manager's roles to ensure that the medical needs of enrollees are met and only considers the physician's explanation for the medication. They argue this approach completely minimizes the role of care coordination that plans employ to investigate safer alternatives and to help identify appropriate and inappropriate prescribing. CAHP also argues that the existing framework of prior authorization, pharmacy benefit managers, clinical protocols and independent medical review currently all work together to assist Medi-Cal plans in managing the quality and efficacy of services and medications. Health Access California opposes this bill because the approach in this bill eliminates the ability of the Medi-Cal program to bargain over drugs costs. They point out that since 1999 California has had a Medi-Cal formulary which has saved the state literally billions of dollars while providing consumers the drugs they need. Health Access also argues that the bill goes too far in its reliance on physician judgment as the sole determinant of what a patient needs, particularly in an environment in which Pharmaceutical manufacturers continue to engage in aggressive marketing of their products. Health Access also points out that under current law, the consumer has the right to medically necessary prescriptions. 8)RELATED LEGISLATION. AB 68 (Waldron) 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 AB 73 Page 9 plan, in prescribing a pharmaceutical that is in the seizure or epilepsy drug class. AB 68 was heard in this Committee on April 21 and passed out on a 19-0 vote with amendments and is in process before going to the Assembly Appropriations Committee. 9)PREVIOUS LEGISLATION. a) AB 1814 (Waldron) of 2014 was very similar to this bill. AB 1814 was held on the Assembly Appropriations Suspense file. b) AB 889 (Frazier) of 2013 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. AB 889 was held on the Senate Appropriations Committee suspense file. c) 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 AB 73 Page 10 reviews are available to resolve differences in clinical judgment when they occur, even on an expedited basis. d) AB 1826 (Huffman) of 2010 would have required an insurer or health plan 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. 10)PROPOSED AMENDMENT. a) AB 68, which was similar to this bill was amended by this Committee to eliminate the strict provider prevails provisions. The Committee's concerns were that bypassing the utilization controls of the plan may result in significant additional costs for the plan and perhaps for a patient. The alternative approach the committee chose was an expedited review by the plan, perhaps something along the lines of an automatic urgent appeal to be resolved within 48 hours. This time was in addition to any other time frames allowed in current state and federal laws. b) This bill should clarify that it refers to drugs used to treat Medi-Cal beneficiaries that are diagnosed with these specific diseases. Currently the bill refers to broad groups of drug classes that are used to treat the specific named disease but also encompasses many drugs and drug classes, including pharmaceuticals which have uses beyond the treatment of the named disease. For example, anticonvulsants, or antiseizure medications, an important class of drugs for the treatment of epilepsy are increasingly used to treat bipolar disorder because of their effectiveness as a mood stabilizer. Given the language of the bill, a prescription to treat bipolar disorder with an anticonvulsant would be subject to the provisions of the prescriber prevailing over a plan's formulary or other utilization controls. A mood stabilizer from another class of drugs would not be, which could AB 73 Page 11 distort prescribing decisions. REGISTERED SUPPORT / OPPOSITION: Support American Nurses Association\California Biocom California Chronic Care Coalition California Healthcare Institute Mental Health America of California Opposition California Association of Health Plans Health Access California Analysis Prepared by:Roger Dunstan / HEALTH / (916) 319-2097 AB 73 Page 12