Compliance January 7, 2002

Court Finds Viagra Coverage Not 'Medically Necessary'

July 1, 2002 (PLANSPONSOR.com) - A California government agency did not have the latitude to require health plan coverage of drugs that some might deem "medically necessary," according to a state appellate court.
Reported by

In affirming the trial court ruling in the case, a three-judge panel of the Third Appellate District agreed with Kaiser Foundation Health Plan’s argument that the Department of Managed Health Care exceeded its authority when it said the health plan could not exclude Viagra from its benefits menu.

Legislative Intent

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California’s Knox-Keene Health Care Service Plan Act spells out specific requirements for health plans that offer a prescription drug benefit – a list that does not include coverage of drugs for sexual dysfunction, according to the court.  The court found that the intention was to prevent health plans from steering patients toward cheaper drugs when a doctor found it medically necessary to prescribe a more expensive approach. 

Health plans are required to include:

  • medically necessary pain management drugs for terminally ill patients
  • drugs approved by the Food and Drug Administration (FDA) that are prescribed to treat a life-threatening illness
  • FDA-approved contraceptives
  • an AIDS vaccine, and 
  • insulin and other medications to treat diabetes.

The court rejected an argument that since state law requires plans to “maintain an expeditious process by which prescribing providers may obtain authorization for a medically necessary nonformulary prescription drug,” the state legislature intended to require drugs benefits to include all medically necessary drugs, according to BNA.

Menu Musts

Kaiser sued the department in an attempt to overturn a 1998 decision from DMHC’s predecessor, the Department of Corporations, to deny the plan’s request to exclude Viagra from its formulary.  Kaiser had argued that it was difficult to differentiate situations where Viagra is a medical necessity from those who want the drug for sexual enhancement, according to the report.  Furthermore, Kaiser said that inclusion of the drug could increase premium rates, impacting the availability of coverage for a wider range of enrollees than those who would benefit from Viagra coverage.

DMHC says it will not appeal the decision, according to the BNA report.  However, the department will seek legislation as soon as possible to clarify what must be included in a health plan’s formulary.

The case is Kaiser Foundation Health Plan Inc. v. Zingale, Cal.Ct.App., and text of the opinion may be found at http://www.courtinfo.ca.gov/opinions/documents/C039437.PDF

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