BILL ANALYSIS                                                                                                                                                                                                    Ó



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          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  








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            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  








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            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,  








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            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  








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            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  








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            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  








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            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  








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            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  








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            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  








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                 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  








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               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








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