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Status Report on
Development of a Medicaid
Preferred Drug List Program
Presentation to:
The Medicaid Pharmacy & Therapeutics Committee
Cynthia B. Jones June 18, 2003
Department of Medical Assistance Services Richmond, Virginia
Presentation Outline
Background
Actions Taken Thus Far
Next Steps
2
Medicaid Coverage
of 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 $400.0 $379.6
(Millions) $350.0 $342.0
$300.0 $298.4
$250.0 $262.4
$222.0
$200.0 $201.2
$150.0
$100.0
$50.0
$0.0
1997 1998 1999 2000 2001 2002
Net of drug rebates Pharmacy Costs
Source: Statistical Record of the Virginia Medicaid Program 4
FFS Pharmacy Costs As A Percentage
of Total Medical Costs Is Increasing
FFS Pharmacy
Costs As A
Percentage of
Total Medical 14.0%
Costs 11.9%
12.0% 10.9% 11.3%
10.7%
10.0% 9.5%
8.9%
8.0%
6.0%
4.0%
2.0%
0.0%
1997 1998 1999 2000 2001 2002
Source: Statistical Record of the Virginia Medicaid Program 5
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 (P&T) 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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Other States’
Medicaid PDL Programs
There is no uniform definition of a PDL program.
At least 22 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.
Oregon’s PDL program started out as voluntary for
physicians.
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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 Florida’s 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.
8
Presentation Outline
Background
Actions Taken Thus Far
Next Steps
9
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 report to General Assembly on April 1
Solicited nominations from provider associations for
physicians and pharmacists to serve on the P&T
Committee
10
Actions Taken Thus Far
Solicited public comments on a draft Request for Proposals
(RFP) to select a PDL contract administrator; RFP issued on
May 1
– proposals were received on June 5th
Established a pharmacy web page at DMAS’ internet site
(www.dmas.state.va.us) and e-mail address for PDL
comments/input
– pdlinput@dmas.state.va.us
Submitted a PDL program status memorandum to General
Assembly on June 17th
11
An Initial List of Key Classes of
Drugs to be Excluded from the
PDL Program Has Been Developed
Therapeutic Class Description Used in the Treatment of
Insulins Diabetes
Cholinesterase Inhibitors Alzheimers
Platelet Aggregation Inhibitors Clotting Disorders
Antivirals for HIV HIV/AIDS
Cancer Chemo. Agents Cancer
Anti-convulsants Seizure Disorders, Mental Health
Immunosupressants Transplant rejections, Arthritis
Antiemetics Nausea in cancer patients, Aging
Anti-psychotics, Atypical and Serious Mental Illness
Typicals
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Presentation Outline
Background
Actions Taken Thus Far
Next Steps
13
Next Steps
Procure PDL contractor services
– contract award is expected by early July
Schedule additional P&T Committee 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
Establish a PDL Implementation Advisory Group
– Continue to receive input from interested parties
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Next Steps
(continued)
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
Develop provider/consumer education and training
program
– PDL contractor will have major responsibilities
– PDL Implementation Advisory Group will play key role
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