Massachusetts Legislation To Curb Use Of Step Therapy – A Health Insurers’ Drug Cost Containment Tool- Fails To Move Forward

When a patient is prescribed a drug, insurers play an important role in facilitating access. Here, access is multi-dimensional. First, payers decide whether to cover a drug. Subsequently, payers apply conditions of reimbursement, which include, among others, patient cost-sharing, prior authorization, indication restrictions, and quantity limits. But, of all the conditions of reimbursement imposed by payers, step therapy protocols are the most onerous. Drugs that are designated with a step therapy precondition are only reimbursed by insurers if a patient has failed on cheaper alternatives. This is why step therapy is often referred to as a “fail first” policy.

In late July, the Massachusetts House of Representatives passed H.4929, “An Act Relative to Step Therapy and Patient Safety.” Then, a week later, the Senate voted unanimously to pass the bill. Yet, the House and Senate couldn’t agree on a compromise concerning the time required for insurers to grant or deny a step therapy exception request. The Senate version of the bill stated “not more than 72 hours” (or 24 hours in the case of an emergency), while the House version said “three business days” (or the next business day in the case of an emergency). While it may seem like a trivial difference for a piece of legislation to fail on, patient advocates, such as the American Cancer Society Cancer Action Network of Massachusetts, feel strongly that the Senate version provides more protections for patients.

Despite failing to go through, given the unanimous votes in both chambers in favor of the legislation, patient advocates are still hopeful a bill can get done in the last four months of the session.

The legislation’s aim is to streamline the use of step therapy by MassHealth (Medicaid in Massachusetts) and commercial insurers. The bill would do so by providing a transparent process for patients and healthcare providers to request an exception to the use of step therapy.

The law would also establish a state commission on step therapy protocols, which is tasked with evaluating bi-annual reports on the implementation of step therapy process reforms.

Step edits are used extensively by state Medicaid agencies and Medicaid managed care to contain spending on the prescription drugs plans must cover under the Medicaid Prescription Drug Rebate Program. According to this program, a drug manufacturer who wants its drug covered under Medicaid must enter into a rebate agreement with the Secretary of Health and Human Services stating that it will rebate a specified portion of the Medicaid payment for the drug to the states, who in turn share the rebates with the federal government. At the same time, manufacturers must enter into agreements with other federal programs, such as 340B, that serve vulnerable populations. In exchange, Medicaid programs must place on formulary nearly all of the manufacturer’s FDA-approved drugs.

Because Medicaid can’t outright deny access to most FDA-approved drugs, it uses utilization management tools to reduce its financial exposure as much as possible. To illustrate, preferred drugs are assigned to a tier in which there are few if any conditions of reimbursement, while non-preferred medications are assigned to tiers in which there can be many such conditions, including prior authorization and step therapy.

While an effective tool to lower insurer costs, step therapy can severely limit access to certain medically necessary treatments. The Massachusetts bill would establish requirements that:

• MassHealth and commercial insurers adopt a “continuity of coverage” policy to ensure patients do not experience any delay in accessing a treatment when requesting a step therapy exemption;
• MassHealth and commercial insurers approve or deny a step therapy exemption request within three business days, or within one business day if a delay would cause harm to the patient;
• Commercial carriers annually report information related to step therapy exemption requests, appeals, and related coverage determinations to the Massachusetts Division of Insurance.

The bill stipulates that the patient and prescriber must have access to a clear, “readily accessible and convenient” process to request a step therapy override exception determination. Such an override exception shall be granted if:

• The prescription drug preferred by the insurer is contraindicated or will likely cause an adverse reaction in or physical or mental harm to the enrollee;
• The prescription drug preferred by the health plan is expected to be ineffective based on the “known clinical characteristics of the enrollee and the known characteristics of the prescription drug regimen;”
• The enrollee has already tried the preferred prescription drug, or another medicine in the same pharmacologic class (or with the same mechanism of action), and the therapeutic was discontinued owing to a lack of effectiveness or an adverse reaction;
• The enrollee is stable on a prescription drug selected by the enrollee’s healthcare provider for the medical condition under consideration.

In addition, clinical review criteria used to establish a step therapy protocol must be based on clinical practice guidelines drafted and approved by medical professional societies.

Currently, only seven states have step therapy protections for Medicaid beneficiaries. These measures safeguard less than 10% of patients, according to data published in Health Economics Policy and Law. However, none of the seven states have policies as far-reaching and detailed as the Act that passed the Massachusetts House and Senate.

Countering the bill, the Massachusetts Association of Health Plans president Lora Pellegrini declared that medical management tools like step therapy “ensure safety, provide value and help control growing healthcare costs.” She went on to say that “step therapy encourages prescribers to use prescription drugs that are safe, clinically appropriate, and cost effective before using drugs that could pose safety concerns or clinical concerns or have higher costs, and is used in limited circumstances.” Furthermore, Pellegrini supports a gradual transition rather than an abrupt change in policy.

Massachusetts lawmakers affirm that the legislation is intended to balance the need to manage prescription drug utilization, thereby controlling costs of certain expensive treatments, with protecting patients who, in their words, may “absolutely need” such medications. There are indeed instances in which delaying effective treatment by introducing step edits can lead to increased symptom severity and poor patient outcomes. As such, establishing guardrails through a bill like “An Act Relative to Step Therapy and Patient Safety” could help patients access necessary treatments.