Status Report on Development of a Medicaid Preferred Drug List Program

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Status Report on Development of a Medicaid
Preferred Drug List Program

• Presentation to
• Subcommittee on Health and Human Resources
• House Appropriations

Cynthia B. Jones Department of Medical Assistance
Services
July 11, 2003 Richmond, Virginia
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Presentation Outline
Background Actions Taken Thus Far Next Steps
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Medicaid Coverageof Prescription Drugs

• Prescription drug coverage is an optional benefit
  that all state Medicaid programs provide.
• In Virginia, this coverage is provided through
  fee-for-service and managed care programs.
• The focus of this PDL program is on the 220,000
  clients that are in the fee-for-service program.
  These clients live in areas of the State that
  currently do not have a managed care organization
  available or who are excluded from managed care
  (such as persons in nursing facilities, community
  based waiver programs, and foster care).
• The 300,000 Medicaid recipients in one of the
  five managed care programs are already subject to
  a preferred drug list or similar program.

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Fee-For-Service (FFS) Pharmacy Costs Have
Increased 89 Since 1997
Annual FFS Pharmacy Costs (Millions)
Net of drug rebates
Source Statistical Record of the Virginia
Medicaid Program
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FFS Pharmacy Costs As A Percentage of Total
Medical Costs Is Increasing
FFS Pharmacy Costs As A Percentage of Total
Medical Costs
Source Statistical Record of the Virginia
Medicaid Program
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Other States Medicaid PDL Programs

• There is no uniform definition of a PDL program.
• More than 20 states have implemented or have
  legislation to implement a PDL program.
• The Centers for Medicare and Medicaid Services
  support PDL programs, including those that
  require supplemental rebates.
• Florida was one of the first states to establish
  a PDL. It utilizes supplemental rebates or
  value added services to generate program
  savings.
• Michigan focuses on reference pricing and rebates
  only.
• Oregons PDL program started out as voluntary for
  physicians.
• Vermont and Ohio have recently implemented their
  PDL program.

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Other States Medicaid PDL Programs

• Both the Michigan and the Florida PDL programs
  have been the subject of external reviews.
• A recent Kaiser Commission report on the Michigan
  Program found that the program was implemented
  too rapidly, excluded the views of key
  stakeholders, failed to educate physicians,
  pharmacists, and beneficiaries adequately, had a
  cumbersome prior authorization and appeals
  process, and appears to be restrictive in certain
  categories of drugs, such as mental health drugs.
• A recent legislative review of Floridas program
  found that an additional 64.2 million in
  2003-2004 could be saved by restricting
  supplemental rebates to only cash rebates rather
  than services.

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2003 Appropriations Act Preferred Drug List
(PDL) Program

• Item 325(ZZ.1) of the 2003 Appropriations Act
  directs DMAS to
• Implement PDL program no later than Jan. 1, 2004
• Seek input from physicians, pharmacists,
  pharmaceutical manufacturers, patient advocates,
  and others
• Form a Pharmacy Therapeutics (PT) Committee
• Ensure drugs on the PDL are safe and clinically
  effective before considering cost effectiveness
• Include several key provisions 72-hour emergency
  supply 24-hour prior authorization process
  expedited review of denials and
  consumer/provider training and education
• Report to General Assembly on main design
  components
• Program must generate savings of 9 million GF in
  FY 2004, and 18 million GF in subsequent fiscal
  years.

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2003 Appropriations Act PT Committee
Responsibilities

• The PT Committee shall recommend to the
  Department
• therapeutic classes of drugs to be subject to the
  PDL and prior authorization requirements
• specific drugs within each class to be included
  on the PDL
• appropriate exclusions for medications, including
  atypical anti-psychotics, used for the treatment
  of serious mental illnesses such as bi-polar
  disorders, schizophrenia, and depression
• appropriate exclusions for medications used for
  the treatment of brain disorders, cancer, and
  HIV-related conditions
• other appropriate exclusions and grandfather
  clauses

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Additional Responsibilities of PT Committee
(contd)

• Conduct clinical reviews of preferred and
  non-preferred drugs as needed to maintain the PDL
• Conduct clinical reviews of new drugs
• Provide advice to DMAS and Contractor on clinical
  issues regarding all aspects of the PDL program,
  including the prior authorization process for
  non-preferred drugs
• Provide clinical advice/input to DMAS and
  Contractor on prior authorization of more than 9
  unique prescriptions

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DMAS Responsibilities

• Ensure PDL program conforms to all
  statutory/regulatory requirements
• Support PT Committee Members and activities
• Procure services of a PDL Contractor
• monitor Contractor and ensure performance meets
  required quality and service standards
• Review and approve all Contractor-written
  communications to clients, providers, and others
  prior to release
• Provide Contractor with all necessary and current
  client eligibility and utilization data
• Coordinate Contractors support of PT Committee
• ensure Contractor is responsive to PT Committee

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DMAS Responsibilities(contd)

• Interpret policies and make final decisions
  regarding all aspects of program
• Appropriations Act requires that DMAS establish a
  process for acting on the recommendations of the
  PT Committee and documenting any decisions that
  deviate from recommendations of the Committee
• Review and approve all supplemental rebate
  agreements
• Handle all media inquiries

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PDL Contractor Responsibilities

• Provide information and staff support to the PT
  Committee
• Establish and maintain the PDL based on clinical
  recommendations of the PT Committee
• cost effectiveness is to be considered only after
  drug is determined to be safe and clinically
  effective
• exclude from the PDL and prior authorization
  program for non-preferred drugs those classes of
  drugs previously excluded by DMAS
• Manage the reference pricing process
• Ensure all program components required by the
  Appropriations Act are implemented
• Negotiate and administer state supplemental
  rebates

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PDL Contractor Responsibilities(contd)

• Administer the PDL prior authorization program
  for non-preferred drugs and the prior
  authorization program for more than nine unique
  prescriptions
• administer a reconsideration and appeals process
• Provide and maintain Call Center 24 hours/day 7
  days/week
• Provide PDL and prior authorization program
  education services for clients and providers
• Ensure confidentiality of client/provider
  information

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PDL Development Process
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Overview of PDL With Reference Pricing and
Supplemental Rebates
70
Non-Participating Manuf. Drug Available through
P.A.
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Source DMAS Staff Illustration
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Presentation Outline
Background Actions Taken Thus Far Next Steps
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Actions Taken Thus Far

• Met with 30 different interested parties on PDL
  issues
• pharmaceutical manufacturers, physicians,
  pharmacists, hospitals, nursing homes, advocacy
  groups,and others
• Submitted status reports to General Assembly on
  April 1 and June 17
• Solicited nominations from provider associations
  for physicians and pharmacists to serve on the
  PT Committee
• First PT committee meeting held June 18 purpose
  was organizational
• More than 60 persons were in attendance 12 spoke
  during public comment

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Actions Taken Thus Far

• Established a pharmacy web page at DMAS internet
  site (www.dmas.state.va.us) and e-mail address
  for PDL comments/input
• pdlinput_at_dmas.state.va.us
• Issued an Request for Proposals to select a PDL
  contract administrator
• Solicited public comments on a draft Request for
  Proposals (RFP)
• Issued final RFP on May 1 proposals were
  received June 5
• Published Notice of Intent to Award on July 1
  proposed contractor is First Health

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Members of PT Committee

• Member Background
• Randy Axelrod (MD) (Chairman) Anthem Chief
  Medical Officer
• Roy Beveridge (MD) Oncologist
• Avtar Dhillon (MD) Psychiatrist (CSB)
• James Reinhard (MD) Psychiatrist (DMHMRSAS)
• Arthur Garson, Jr (MD) Dean, UVA Med. School
• Mariann Johnson (MD) Family Practice
• Eleanor (Sue) Cantrell (MD) Local Health
  District Director
• Christine Tully (MD) Geriatrician, VCU/MCV
• Mark Szalwinski (Pharmacist) Sentara Health Care
• (Vice Chairman)
• Gill Abernathy (Pharmacist) INOVA Health System
• Mark Oley (Pharmacist) Westwood Pharmacy
• Renita Warren (Pharmacist) Edloes Pharmacies

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An Initial List of Key Classes of Drugs to be
Excluded from the PDL Program Has Been Developed

• Therapeutic Class Description
• Insulins
• Cholinesterase Inhibitors
• Platelet Aggregation Inhibitors
• Antivirals for HIV
• Cancer Chemo. Agents
• Anti-convulsants
• Immunosupressants
• Antiemetics
• Anti-psychotics, Atypical and Typicals

• Used in the Treatment of
• Diabetes
• Alzheimers
• Clotting Disorders
• HIV/AIDS
• Cancer
• Seizure Disorders, Mental Health
• Transplant rejections, Arthritis
• Nausea in cancer patients, Aging
• Serious Mental Illness

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Presentation Outline
Background Actions Taken Thus Far Next Steps
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Next Steps

• Contractor for PDL administrator services
• Sign contract
• Call center operational and soft edits completed
  in November 2003
• Fully operational in January 2004
• Hold next PT Committee meeting on July 30
  schedule additional meetings
• Develop emergency regulations and submit State
  Plan amendment to Centers for Medicare Medicaid
  Services
• Provide status reports to the General Assembly at
  key points in development process

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Next Steps(continued)

• Establish a PDL Implementation Advisory Group
• Continue to receive input from interested parties
• Incorporate other pharmacy-related prior
  authorization requirements
• prior authorization for more than 9 unique
  prescriptions in 180 days (non-institutionalized
  patients) or 30 days (institutionalized patients)
• Modify Medicaid Management Information System
  (MMIS) to process PDL and prior
  authorization-related transactions

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Next Steps(continued)

• Develop provider/consumer education and training
  program
• PDL contractor will have major responsibilities
• PDL Implementation Advisory Group will play a key
  role
• Contract with independent assessor to evaluate
  the PDL and prior authorization program
  implementation and customer satisfaction