Pros and Cons of Step Therapy


For the third time in the past four years, the California Legislature considered a bill that would limit and regulate a prescription drug protocol known as "step therapy."

Also known as "step protocol," "fail first" and "prior authorization," step therapy is a tool used by insurers and providers to control rising costs and limit the risks of prescription drugs. The practice calls for patients to start with the most cost-effective, safest drug available and then to proceed to more costly, and sometimes more risky, drugs if the preceding step is not successful.


AB 889, by Assembly member Jim Frazier (D-Oakley), proposed a limit of two steps and would have required health plans to create a process for exceptions to the rule. The bill died in the Senate appropriations committee.


Four years ago, a similar bill died in committee. Last year, a similar bill was passed by both houses and made it to the governor's desk where it was vetoed by Gov. Jerry Brown (D).


We asked legislators and stakeholders to share their views on the pros and cons of step therapy, as well as the pros and cons of establishing laws to regulate the practice.


We got responses from:

  • Assembly member Jim Frazier (D-Oakley) | Author of AB 889

    'Troubling, Dangerous Trend'

    So even though a doctor might recommend drug A to treat a patient, a health plan requires the patient first try drugs B, C, D, etc., and only after the patient fails to respond to these medications -- or worse yet, the patient's health declines -- can the patient receive the medicine prescribed.

    Step therapy can mean days, weeks, or months without the proper treatment. For Californians living with a host of serious conditions -- including cancer, arthritis and multiple sclerosis -- or mental health conditions, this unnecessary delay in care is not only cruel, but also endangers patient health and well-being.

    Health plans argue that they use step therapy as a cost-saving measure. However, research has shown that this policy can actually increase the direct cost of health care because it prevents patients from immediately receiving the medications their doctors know will work, and often exacerbates health problems, allowing controllable conditions to spiral out of control. The result is excessive use of emergency rooms; unscheduled hospital admissions; missed work, and even job loss. In addition, when patients are denied medications prescribed by their doctors, they often have to unnecessarily return to their doctor, which means additional transportation and additional missed work. Step therapy not only drives up costs for businesses through lost productivity and increased health insurance premiums; in some cases, it can lead to permanent disability, placing additional strain on state and federal assistance programs.

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  • Patrick Johnston | President/CEO, California Association of Health Plans

    Protecting Patients and Managing Costs

    Unfortunately, too many people are not using these drugs appropriately. In fact, CDC reports that prescription drug abuse is the fastest growing drug problem in the United States, labeling it an epidemic. 

    Overdose deaths from prescription drugs have surpassed those caused by heroin or cocaine use.

    Health plans recognize that there are some patients who legitimately need these medications and do not become addicted to them.

    To balance the clinical benefits with patient safety, health plans work with doctors on step therapy programs. Step therapy refers to a progressive process that starts with low-risk pain medication and progresses to more risky therapies only if necessary. In essence, step therapy has a patient try non-addictive medications before moving to more serious drugs like OxyContin.

    Designed to minimize the harmful side effects of highly potent medications, manage health care costs, and prevent over-prescription, step therapy is a proven medical protocol -- most importantly, it puts the physician in the driver's seat. While the health plans establish the process and timelines for advancing patients through step therapy, doctors can obtain a faster schedule or skip steps or even use brand-name drugs if the circumstance warrants it.

    Yet, lawmakers once again are considering legislation that undermines this process even though a much-narrower version of this bill was vetoed by Gov. Brown last year. 

    Unfortunately, AB 889 impedes the effectiveness of step therapy protocols.  Right now doctors have options if they believe a patient's needs warrant acceleration through step therapy or the use of different medications.

    This bill will make health care more expensive.  A research arm of the University of California says that if this bill becomes law, consumers will pay more out of pocket because the bill encourages the use of expensive brand-name drugs. It could also cost the State's Medi-Cal program at least $11 million.

    It's counterintuitive to enact new laws that drive up health care costs right when this state and country are working hard to reform our health care system so it is more affordable. 

    AB 889 would undermine important patient safety and cost savings tools. Instead, we should leave step therapy intact.

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  • Wesley Mizutani | Chair, California Arthritis Foundation Council

    Legislature Could Help Reduce Pain, Suffering

    Current cost containment measures in California health plans force patients to try and fail on up to five different, cheaper and often ineffective medications before they agree to cover the treatment originally prescribed by the patient's doctor.

    This practice, known as "step therapy" or "fail first," is designed to force patients to try less-effective medications in the hope they'll respond favorably. For many Californians, this practice can severely impact a patient's health and well-being and unnecessarily prolong their treatment.

    According to the U.S. Institute of Medicine, more than 100 million people in the United States are affected by chronic pain every year, which is more than the number of Americans who are affected by cancer, heart disease and diabetes combined.

    When patients are denied access to treatment, every unnecessary trip to the doctor or pharmacist can mean additional missed work, which in turn drives up costs for California businesses through lost productivity and increased insurance premiums. Step therapy can also drive up the direct costs to the California health care system through unnecessary hospitalization or emergency department visits. Arthritis and other rheumatic conditions cost the state $7.8 billion in medical expenditures and $4.3 billion in lost earnings.

    Scientific breakthroughs are revolutionizing the treatment of arthritis and new therapies have the potential to minimize or prevent disease progression and even induce remissions. But Californians living with arthritis and other painful and chronic conditions will only benefit from those breakthroughs if the Legislature acts to ensure timely access to the course of treatment their doctor thinks most appropriate.

    Any potential solution to the dangerous step therapy problem must begin by addressing those patients who are forced to endure weeks, if not months, without treatment. The number of "steps" should be limited to only two before patients are allowed to access the treatment prescribed by their doctor. Any solution should also require health plans to have an expeditious process in place for step therapy exceptions.



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George Lauer
Editor's note: This article has been updated to reflect the demise of AB 889, which was active when the article first published.
Frank Apgar
As a physician, I am puzzled by the logic where one concludes that older medications are less effective than newer ones. Further, in my experience the Pharmacy and Therapeutic Committees are staffed by Physicians and Pharm-Ds. The logic used when crafting step therapy includes comparing the established clinical efficacy and risk profiles that are outlined in peer reviewed literature for the various medications under consideration. Finally, every mandated benefit has the effect of increasing the cost of healthcare. This results in higher premiums or increased costs being passed onto the consumer. While this should not be a primary determinant, it will be useful if our legislative leaders keep this in mind as they craft new legislation.
patrick gauthier
I applaud this effort to curtail unlawful, discriminatory and dangerous practices. In the process, I hope we can finally implement the 2008 Mental Health Parity and Addiction Equity Act (MHPAEA) whose interim final rule (IFR) in 2010 expressly forbid "Step Therapies" and "Fail First" practices. It's unlawful. The rule and law also require health plans (including Medi-Cal managed care!) to provide the same formulary design for mental health and addictions as is designed for all other prescription drugs. This effort has the RULE of LAW on its side and its high time we enforced it. We have to put the discrimination of peoples with mental health and substance use disorders behind us once and for all. This has always been a civil rights issue and will continue to be treated as such. Recent Class Action Lawsuits in NY, CT and VT and another this week in CA may be just what it takes to get everyone on the same page and behaving lawfully. Check out the decision in VT...we shall overcome.

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