this 7^ day of September 2014 by Randall S. Gregg Special Deputy Director

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1 r STATE OF MICHIGAN DEPARTMENT OF INSURANCE AND FINANCIAL SERVICES Before the Director of Insurance and Financial Services In the matter of: Petitioner, v File No Health Alliance Plan of Michigan, Respondent. Issued and entered this 7^ day of September 2014 by Randall S. Gregg Special Deputy Director ORDER I. Background On August 25, 2014, (Petitioner) filed a request with the Director of Insurance and Financial Services for an external review under the Patient's Right to Independent Review Act (PRIRA), MCL et seq. The Petitioner receives health care benefits and prescription drug coverage through Health Alliance Plan of Michigan (HAP), a health maintenance organization. The Director notified HAP ofthe external review request and asked for the information it used to make its final adverse determination. HAP provided its response on August 26, 2014, and, after a preliminary review ofthe material submitted, the Director accepted the Petitioner's request on September 2, Because the case involves medical issues, it was assigned to an independent medical review organization, which provided its analysis and recommendation to the Director on September 16, II. Factual Background The Petitioner was diagnosed with a relapsing form ofmultiple sclerosis (MS) in February 2014 and she began taking the medication Aubagio on a trial basis to control her symptoms. Aubagio is not on HAP's drug formulary and when her physician asked HAP to cover it, HAP denied the request.

2 -^f^5j\ File No Page 2 The Petitioner appealed the denial through HAP's internal grievance process. Atthe conclusion of that process, HAP issued a final adverse determination dated July 24, 2014, upholding its denial. The Petitioner now seeks a review ofthat adverse determination from the Director. III. Issue Did HAP properly deny coverage for Aubagio? IV. Analysis Petitioner's Argument Although HAP has other MS drugs on its formulary, the Petitioner chose Aubagio because it is taken orally and she has a fear ofneedles; she was also concerned about possible side effects from the formulary drugs. In her request for an external review, the Petitioner wrote: I am requesting that... Health Alliance Plan (HAP)... add the MS medicine Aubagio to their drug formulary. I am 63 and was diagnosed with MS in February HAP wants me to use injectable Gilenya (requiring refrigeration, syringes, liquid medicine and nurse visits.) I am presently taking one Aubagio pill (provided for a limited time from the manufacturer) per day - a pill no bigger than a baby aspirin. The comparisons between Aubagio and Gilenya lean favorably, overall, to Aubagio. I would request that you agree with my request to include Aubagio in the HAP formulary. The Petitioner also included with her external review request a July 7, 2014, letter to HAP written by her physician: This is a request for re-consideration ofyour denial ofcoverage for Aubagio (teriflunomide) for my patient [the Petitioner], who has been diagnosed with a relapsing form of multiple sclerosis. My prescription for Aubagio for this patient was based on my knowledge of her diagnosis, disease course and symptoms, and results ofthe recommended baseline liver function test that revealed no abnormalities. Aubagio was approved by the U.S. Food and Drug Administration in September, 2012 as a once-a-day oral tablet for adult patients with relapsing forms of multiple sclerosis. Aubagio is a pyrimidine synthesis inhibitorthat impedes the function ofspecific immune cells that have been implicated in MS.

3 File No Page 3 You state in your denial letter, that you deny a medication when there is a similar medication on formulary. The only similarity between Aubagio and, the formulary drug Gilenya, is that they are both FDA approved oral MS disease modifying drugs. Any similarity stops there. They have completely different modes ofaction and side effects. The side effects ofsignificant immunosuppression, and the risk ofcardiac events are simply NOT acceptable in a woman approaching her senior years. A randomized trial ofteriflunomide (TEMSO) involving 1088 people with relapsing MS reduced disease relapses compared with placebo over at least 108 weeks. Oftwo different doses tested (7 mg and 14 mg) the higher dose also slowed progression ofdisability. Both doses also had a favorable effect on several MRI measures, including a smaller increase in total lesion volume and fewer new and actives lesions compared with placebo. Additional details about this study, its endpoints and other information useful to healthcare professionals and payers is compiled for easy online access by The Multiple Sclerosis Emerging Therapies Collaborative... Recently, a second study (TOWER) confirmed the results seen in TEMSO, further supporting the value ofthis agent for treating relapsing forms of multiple sclerosis. Respondent's Argument In its final adverse determination, HAP explained its denial ofcoverage to the Petitioner:... HAP's Pharmacy and Therapeutics Committee (P&T Committee) recommended that Aubagio not be included on HAP's Formulary as it did not offer significant advantages over available formulary therapies, which include injectable therapies as well as oral capsule Gilenya. Fortreatment of relapsing forms ofmultiple Sclerosis, HAP's P& T Committee advocates that the platform of injectable product - interferon beta (Rebif, Avonex, and Extavia) and Copaxone be used. After careful consideration and a thorough discussion, the Committee has decided to uphold the original denial. We would like to offer the following suggestions to assist you with techniques to potentially ease your concern with self-administration. Self-administration concerns can be reduced with education and the use ofauto injector devices, which was also discussed during the Appeals Hearing. There are also topical medications that can numb the skin prior to an injection, as well as, oral medications such as Benzodiazepines, which can be helpful in relaxation prior to injections.

4 /S5gy File No Page 4 Director's Review A health maintenance organization like HAP that offers prescription drug coverage may limit that coverage to drugs included in a formulary. HAP denied the Petitioner's request to cover Aubagio because it has other drugs on its formulary, including Gilenya, to treat the Petitioner's condition. However, Michigan law requires health insurers that provide prescription drug coverage to make an exception to a formulary limitation when a nonformulary alternative is "medically necessary and appropriate." Section 3406o of the Insurance Code1 says: An insurer that delivers, issues for delivery, or renews in this state an expenseincurred hospital, medical, or surgical policy or certificate that provides coverage for prescription drugs and limits those benefits to drugs included in a formulary shall do all ofthe following: (a) Provide for participation of participating physicians, dentists, and pharmacists in the development ofthe formulary. (b) Disclose to health care providers and upon request to insureds the na ture ofthe formulary restrictions. (c) Provide for exceptions from the formulary limitation when a nonfor mulary alternative is a medically necessary and appropriate alternative. This subdivision does not prevent an insurer from establishing prior authorization re quirements or another process for consideration of coverage or higher costsharing for nonformulary alternatives. Notice as to whether or not an exception under this subdivision has been granted shall be given by the insurer within 24 hours after receiving all information necessary to determine whether the excep tion should be granted. To determine whether Aubagio is "a medically necessary and appropriate alternative" to the drugs on HAP's formulary, the Director presented the issue to an independent review organization (IRO) as required by section 11(6) ofthe PRIRA, MCL (6). The IRO physician reviewer is certified by the American Board ofpsychiatry & Neurology with a subspecialty in neuro-oncology and is in active practice. The IRO report included the following analysis and conclusion: This case involves a then sixty three (63) year old female with relapsing remittingmultiple sclerosis which is typically treated with a disease-modifying medication. Disease-modifying medications include injectable medications such as interferons (Avonex, Rebif, Betaseron and Extavia) and Copaxone, and oral medications includinggilenya, Tecfidera and Aubagio. While many ofthese 1 Section 3406o applies to health maintenanceorganizations. See MCL

5 File No Page 5 disease-modifying medications have not been compared head-to-head, efficacy is similar with regards to a reduction in frequency of attacks, accumulation of disability, and accumulation of imaging abnormalities. Aubagio has been approved by The Food and Drug Administration (FDA) for the treatment of relapsing remitting multiple sclerosis. This drug was prescribed by the enrollee's neurologist for this purpose; however, while Aubagio has been shown to be superiorto placebo, there is no evidence in the peer-reviewed medical literature that Aubagio is superior to other disease-modifying medications, specifically high-dose interferons (Rebif / Betaseron / Extavia), Copaxone or other oral medications. Therefore, the use of most other diseasemodifying medications would be appropriate for this enrollee and there is no specific need for Aubagio. The enrollee's physician... indicated that Aubagio was being prescribed because the enrollee is needle-phobic. She was also concerned about the cardiac effects ofgilenya, though did not document any cardiac history that would make it a risk. She did not recommend any supportive measures that would assist with tolerance ofthe injectable medication. The Michigan Insurance Code provides for exceptions to formulary limitation when the non-formulary alternative is a medically necessary and appropriate alternative. In this case, however, there is no specific medical necessity for Aubagio for the reasons detailed above; it has not been shown to be better than other disease-modifying medications. In conclusion, this enrollee has no medical contraindications to any other formulary medication for her multiple sclerosis. Therefore, the prescription drug, Aubagio, is not medically necessary for the treatment ofthe enrollee's condition. [Citations omitted] The Director is not required to accept the IRO's recommendation. Ross v Blue Care Network ofmichigan, 480 Mich 153 (2008). However, the IRO recommendation is afforded deference by the Director. In a decision to uphold or reverse an adverse determination the Directormust cite "the principal reason or reasons why the [Director] did not follow the assigned independent review organization's recommendation." MCL l(16)(b). The IRO's analysis is based on extensive experience, expertise and professional judgment. In addition, the IRO's recommendation is not contrary to any provision ofthe Petitioner's certificate of coverage. MCL (15). The Director, discerning no reason why the IRO's recommendation should be rejected, finds that Aubagio is not a medically necessary alternative to treat the Petitioner's condition.

6 File No Page 6 V. Order The Director upholds HAP's July 24, 2014, final adverse determination. HAP is not required to cover the prescription drug Aubagio to treat the Petitioner's condition. This is a final decision ofan administrative agency. Under MCL , any person aggrieved by this Order may seek judicial review no later than sixty days from the date ofthis Order in the circuit court for the Michigan county where the covered person resides or in the circuit court of Ingham County. A copy of the petition for judicial review should be sent to the Department of Insurance and Financial Services, Office ofgeneral Counsel, Post Office Box 30220, Lansing, MI Annette E. Flood Director For the Direct Randall S73regg Special Deputy Director

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