Massachusetts Legislation to Restrict Use of Step-by-Step Therapy: A Drug Cost Containment Tool for Health Insurers

When a patient is prescribed a drug, insurers play an important role in facilitating access. Here access is multidimensional. First, payers decide whether to cover a drug. Thereafter, payers apply reimbursement conditions, which include, inter alia, patient cost sharing, prior authorization, indication limits and quantitative limits. But, of all the reimbursement conditions imposed by payers, step therapy protocols are the most onerous. Drugs designated with a precondition for phased therapy are reimbursed by insurers only if a patient has failed with cheaper alternatives. This is why phased 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. However, the House and Senate failed to agree on a compromise on the time it would take for insurers to grant or deny a request for a phased therapy exception. The Senate version of the bill called for “no more than 72 hours” (or 24 hours in an emergency), while the House version called for “three working days” (or the next working day in an emergency). While it may seem like an insignificant difference to the failure of a piece of legislation, patient advocates, such as the American Cancer Society Cancer Action Network of Massachusetts, are adamant that the Senate version offers more protections for patients.

Despite failing to pass, given unanimous votes in both chambers in favor of the legislation, patient advocates still hope a bill can be done in the final four months of the session.

The goal of the legislation is to simplify the use of gradual therapy by MassHealth (Medicaid in Massachusetts) and commercial insurers. The bill would do this by providing a transparent process for patients and healthcare professionals to request an exception to the use of gradual therapy.

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

The phased changes are used extensively by state Medicaid agencies and Medicaid-managed care to contain spending on prescription drug plans they must cover under the Medicaid Prescription Drug Discount Program. Under this program, a drug manufacturer who wants his drug to be covered by Medicaid must enter into a discount agreement with the Secretary of Health and Human Services stating that it will reimburse a specific portion of the Medicaid payment for the drug to states, which in in turn share the discounts 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 return, Medicaid programs must include nearly all of the manufacturer’s FDA-approved drugs on the form.

Because Medicaid cannot openly deny access to most FDA-approved drugs, it uses usage management tools to reduce its financial exposure as much as possible. To illustrate, preferred drugs are assigned to a tier where there are few or no reimbursement conditions, while non-preferred drugs are assigned to tiers where there can be many of these conditions, including prior authorization and step-by-step therapy.

Although it is an effective tool for reducing insurance costs, phased therapy can severely limit access to certain necessary medical treatments. The Massachusetts bill would establish requirements that:

  • MassHealth and commercial insurers have a “continuity of coverage” policy to ensure that patients do not experience any delays in accessing treatment when applying for a staged therapy exemption;
  • MassHealth and commercial insurers approve or deny a step-by-step therapy waiver request within three business days or within one business day if a delay could cause patient harm;
  • Commercial carriers report information about graded therapy waiver requests, appeals, and related coverage determinations annually to the Massachusetts Insurance Division.

The bill states that the patient and prescriber must have access to a clear, “easily accessible and affordable” process for requesting phased therapy regardless of exception determination. This exemption is granted if:

  • The insurer’s preferred prescription drug is contraindicated or likely will cause an adverse reaction or physical or mental harm to the member;
  • The preferred prescription drug from the health plan should be ineffective based on the “known clinical characteristics of the subscriber and known characteristics of the prescription drug regimen”;
  • The member has already tried the preferred prescribed drug, or another drug of the same drug class (or with the same mechanism of action), and the therapy was stopped due to lack of efficacy or adverse reaction;
  • The subscriber is stable on a prescription drug selected by the subscriber’s health care provider for the medical condition under consideration.

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

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

Opposing the bill, Massachusetts Association of Health Plans President Lora Pellegrini said medical management tools such as gradual therapy “provide safety, provide value, and help control rising healthcare costs.” She went on to say that “step-by-step therapy encourages prescribers to use prescription drugs that are safe, clinically appropriate and inexpensive before using drugs that could pose safety or clinical problems or have higher costs and are used in limited circumstances” . Pellegrini also advocates a gradual transition rather than an abrupt change of policy.

Massachusetts lawmakers say the legislation aims to balance the need to manage the use of prescription drugs, thereby controlling the costs of some expensive treatments, with the protection of patients who, in their words, may “absolutely need” such drugs. There are in fact cases where delaying effective treatment by introducing gradual changes can lead to greater symptom severity and poor patient outcomes. As such, the establishment of guardrails through a bill such as “A Step-by-Step Therapy and Patient Safety Act” could help patients access necessary treatments.

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