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IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 Preferred Drug List (PDL) and Supplemental Rebate Program A. Introduction The objective of the Preferred Drug List (PDL) and Supplemental Rebate (SR) Program is to obtain the highest quality health care drug-related outcomes for the least amount of money. There are several factors to consider in determining success. The after-rebates adjusted per member per month (PMPM) cost relative to the drug budget baseline is the primary measure. If it declines significantly, some degree of reassurance is warranted, but only if the total benefit PMPM cost also declines correspondingly. This is the most immediate metric for measuring the consequences of a PDL. However, the behavior of the non-drug PMPM cost is a proxy for the quality of healthcare outcomes. A PDL that reduces drug costs and results in higher non-drug costs is a failure. A PDL based on clinical efficacy should improve or at least maintain the current quality of health care. If this is the standard, then DHS acquires an implied obligation to subsequently study and report on the effects of the PDL. It is better to plan for this at the start rather than reacting to unanticipated adverse effects after the fact. A qualified, motivated, and clinically objective P&T committee significantly enhances the probability of surpassing expectations. Only an exceptional collection of physicians and pharmacists will achieve an optimal outcome. We propose to use the federally administered 340B Program as a pricing point of reference from which to negotiate SRs. This program requires drug manufacturers to make their products available at a substantial discount to qualified entities. On average, these prices are usually 35 to 40 percent below average wholesale price and can be discounted 70 to 85 percent on selected drugs. Finally, we would like to note that generic drugs should not be considered immune from SRs. Many generics are quite expensive even after the first six months of their exclusivity has expired. We believe it is important to summarize our overall philosophy on PDL creation and operation. It addresses many questions not specifically posed in the RFP that we feel are important for DHS to know about our approach. There are many aspects to the creation of a PDL that are worth emphasizing: There is no point re-creating the PDL wheel. Other states have already gone through the process. We can learn from them. Is there any valid reason to repeat subjecting drugs to an intensive consideration process? Concentrate on drug categories where states vary widely on preferred choices. Spend time with the P&T Committee evaluating why other states reached different conclusions. Tab 9 Page 217 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 Invest time on expensive categories where drugs possess very similar efficacy and costs. Drugs that become preferred are ones whose companies offer SRs. If no company offers a significant SR then subject the drug with the largest market share to PA. These drug companies have the most to lose. As DHS discerns the balance between the targeted savings and level of acceptable disruption for providers and members (more savings mean more changes), the political challenges lying ahead will be more clearly understood. The State of Iowa needs to be prepared to withstand the political pressures and headaches that come with implementing PDLs in Medicaid Programs. For example, some doctors will threaten to quit the Program unless the PDL is abandoned and a few will actually stop participating. Iowa‘s PDL will likely be more restrictive in some areas and less in others; however, any medically necessary, non-preferred medication will be available by means of PA. As long as there are reasonable choices, the PDL/PA programs will succeed. There is a big difference between treating a member and treating a population. The power to predict individual results is modest at best; the capacity to do so at the population level of a state Medicaid program is excellent. Two to three choices in most (not all) drug categories will adequately treat 70 to 90 percent of all members. Subtle differences between drugs only come into play after the initial preferred choices have failed. At the most basic level of understanding, PDLs and PAs are about exerting influence on therapeutic choices. In any given member, if certain criteria are not present, there is a pre-defined order commencing on the preferred drug side of the list and proceeding into and through the non-preferred region. In other words, if medical necessity does not dictate a specific choice, then the order of therapy is predictable. There is a considerable amount of savings with maximizing Step Care approaches to therapy. The effort it takes to create a PDL often tempts its creators to become attached to their solution; it is easy to think that ―our‖ solution is the best. Although every PDL is different and in fact unique, there are enough similarities for states to be able to discuss common characteristics. The challenge is performing the complicated, integrated medical-pharmacy claims analysis that proves that the combination of drugs on the preferred list produces not only the most optimal drug budget, but also the ideal cost/total benefit structure. Various parties have accomplished these analyses for individual drugs and certain drug categories but no one has gone through them all. Although one drug may be 5 to 10 percent relatively more effective than another, the more important consideration is that any of the available choices works 70 to 80 percent of the time. When this is true, and it often is, then it makes sense to have as many people as possible initiate therapy with the most cost-effective agent. The marginally more effective Tab 9 Page 218 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 drug is reserved for people failing to respond to the preferred first choice. The vast majority of members are satisfied and well controlled on preferred drugs without venturing into prior authorized products. There are a few important concepts to keep in mind with designing a PDL: Many drug categories are stuffed with “me too” drugs, distinguished by minor or negligible differences. Choosing on the basis of price is rational. There is a lot of subjectivity in establishing the cut-off point between the preferred and non-preferred drugs. This is the largest cause of variation in PDLs. Generics are almost always preferred. There are exceptions, especially during the first six months that a new generic comes onto the market. Several generic manufacturers have given supplemental rebates during this time period in exchange for being on the PDL. Look ahead. A state should never lock itself into an agreement that precludes it from directing market share onto the most cost-effective product. Insist on including a clause that either allows the state to accept a superior offer in the future or at least one that first allows the manufacturer the option to meet or beat it. This work includes anticipating the introduction of generics and significant new products before they show up on the weekly claims paid report. Knowing what drugs are coming will give valuable leverage in dealing with manufacturers for supplemental rebates as manufacturers dread losing market share. The quickest way for them to lose market share and the corresponding revenue is through preferred drugs list changes. De-listed drugs can lose 70 to 90 percent of their market share overnight. Manufacturers will pay attention and respond to these changes, especially if the state has an agreement that allows for flexibility. The state should strategize for the long run. A long-term view is needed to overcome some of the big companies that resist offering supplemental rebates. As more and more states create PDLs and negotiate supplemental rebates, these companies will lose more and more market share. At some point they will negotiate a rebate. Until then, maintain a firm position and prior authorize their products to the greatest extent possible while preserving access to their drugs when true medical necessity exists. B. Contractor Responsibilities Preferred Drug List and Supplemental Rebate Program IFMC is responding to RFP requirements by restating the number and text of the requirement in sequence and writing a response immediately after the restated text. The restated RFP number and text is displayed in italics and enclosed in a text frame. Tab 9 Page 219 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 The contractor responsibilities for the Preferred Drug List and Supplemental Rebate program are: 1. Provide the following services for design, development, implementation and maintenance of the Preferred Drug List (PDL). The contractor shall: Provide the DHS with a detailed project work plan and timeline within five (5) business days of signing the contract. The project work plan shall include the methodology for savings calculations including assumptions, associated with the PDL and supplemental rebates. The following is a general outline of our PDL work plan and includes discussion on how we would arrive at a recommended list of ―preferred‖ drugs. A detailed work plan will be available within five business days of signing a contract. The cornerstone of the plan is the methodology for calculating savings. We use several complementary methods that mutually validate each other. The first approach evaluates the per user per month (or quarter, year) cost. This is expressed first without rebate considerations. The second level subtracts CMS rebates and the third level subtracts supplemental rebates. Next, each PDL category is compared to the baseline period adopted prior to the PDL onset. Straight difference in savings are then calculated. In the next version, the savings are expressed relative to the agreed upon trend line. This is best done at the aggregate drug budget level. The projected trend without the PDL needs to account for any reimbursement rate changes, average manufacturer price increases, utilization trends and product drift. Upcoming products scheduled for release in the next twelve months are valuable. Eligibility data does not affect the per user cost projections unless there is a shift in the mix of members entering the program. Once the projected trend without intervention is agreed upon, the savings model can work efficiently. We have included an example of how this report works in several key PDL drug categories (see a sample PPI drug category PDL savings report at the end of this section in PDL Attachment 01). The model used for estimating PDL savings and monitoring progress within categories is significantly different than the methodology described above for retrospectively calculating net aggregate savings. The forecasting/early results model watches two key indicators- percent preferred prescribing and average script cost. If the percentage of preferred prescribing does not increase then the PDL is doomed. Many of the savings are due to switches to less expensive drugs even prior to supplemental rebates. For most drug categories the average script cost must go down or likewise the PDL is not effective. For PDL categories affected by SRs, the volume of such preferred scripts is monitored, especially the distribution of market share between preferred drugs with different levels of rebates in the same class since this affects ultimate savings (see the monthly PDL compliance reports by drug category at the end of this section in PDL Attachment 02). Tab 9 Page 220 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 The initial forecasting of savings is done at a script level. Assumptions are plugged in and the resulting changes in market share and average unit cost result in estimates of approximate dollar savings for each category. Cost-effectiveness analyses allow for informed P&T decisions; they do not determine them. In a world faced with limited resources there will always be a tension between favoring the therapy with the lowest cost-effectiveness ratio and adopting the most effective therapy. It is vital that DHS be involved in determining whether implicit or explicit decision rules are used in attempting to control the drug budget. Perform an analysis and clinical review of one year of the Medicaid program's pharmacy claims data and drug members within each therapeutic class (including safety and efficacy guidelines as compared to others within the class), and use pharmaco-economic modeling to formulate recommendations for preferred drug(s) in each class to DHS. We have already performed a preliminary analysis of Iowa‘s pharmacy claims utilization for the past two years. We did this because we are acutely aware of the State‘s pressing needs and tight timelines. We obtained your pharmacy data for CY 2002 and CY 2003 (Q1-Q3) by going to the www.cms.gov web site and downloading the publicly available state pharmacy data files. In prior public statements by State officials, we noted that $7.5 million in savings is sought by DHS in SFY 2005. Obviously this figure is subject to change and perhaps already has been modified but we did utilize it as the basis for determining an initial strategy. Considering your FFP match, we assumed that the state wishes to save at least $21 million in total dollars. We have also assumed that you have calculated your savings target after subtracting the costs of operating the pharmacy PDL and prior authorization. For the sake of this projection, we will call this cost $2.5 million annually but of course you will get some Federal matching money. Therefore, it will be necessary to save approximately $23.5 million to comfortably achieve the objective. For estimation purposes, we have rounded up to allow some room for less than expected results in various drug categories, making the savings goal $25 million in SFY 05. Iowa‘s pre-rebate expenditures through the first three quarters of 2003 was $254 million, which annualizes to $339 million. However, supplemental materials to the RFP released by DHS indicate an expenditure level of $325 million annually (SFY 04). Assuming this is a pre-rebate figure, we need to save 7.7 percent of that year‘s budget to meet the overall savings goal. We have also reasoned that other pharmacy interventions such as reimbursement changes represent separate line item savings in the budget and that the savings model needs to accommodate these recent alterations. Tab 9 Page 221 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 The potential PDL savings calculated from analyzing the CY 03 data needs to be adjusted for the different reimbursement rates occurring in CY 04. After a careful examination of the utilization data, we have concluded that a savings target representing approximately 8 percent of a recent year‘s expenditures is quite realistic even though handicapped with several large dollar, drug category exclusions. We will complete a formal analysis following contract award. We retrieved Iowa‘s pharmacy claims data from the CMS website. We used the first three (3) quarters of 2003 and averaged them to arrive at full year projection. Potential savings, at this first pass of analysis using Maine drug prices (also from the CMS website) are approximately $27 million, net of PDL/PA administrative costs. Please see the next section for more discussion and details on how we arrived at this projection. Our estimated savings based on our first round of analysis on Iowa data is displayed at the end of this section in PDL Attachment 03. There are many factors to consider in arriving at recommendations for preferred drugs. These include: · Top dollar drug categories and drugs · Drug categories with: - The greatest number of choices (competition) - The greatest variation in price - Likely reference drugs also priced the lowest - Whose reference drugs are also priced among the highest - Most susceptible to fears that new (―better‖) drugs are about to enter the market - Most affected (at a huge premium) by convenience promotions · Drugs/drug categories with pre-existing PA criteria readily available (Kaiser Permanente—a very successful Cox-2 PA) · Drugs currently affected by PAs on the Medicaid HMO side · Drugs/drug categories with PAs operating in the state but not presently affecting the Medicaid population (manufacturers fear these while doctors are familiar with them) · Categories most amenable to generic (especially state MAC generics) reference drug designation such as enalapril and lisinipril, ACE inhibitors · Technical requirements for potential PAs · The number of affected members · The likelihood of a successful switch The P&T Committee needs a consolidated way to review the entire drug list in a reasonable amount of time. They then need to implement their decision ―rules‖ on the claims processing system. Tab 9 Page 222 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 DHS can use P&T Committee recommendations as leverage one final time with the drug manufacturers before actually implementing them. Ideally, we prefer to receive the final SR offers prior to P&T Committee deliberations. In the end, members and physicians will appreciate having the greatest possible degree of choices. The timeline is only of importance if, by necessity, the review process must occur over months to a year. Several states have taken this approach and it works. It is a concession to the fact that committee and state have other pressing responsibilities and obligations. A drawback to this approach is that potential savings are sometimes lost. In some cases the SRs can be tentatively accepted by DHS prior to P&T Committee involvement and contingent upon P&T Committee agreement in the near or distant future. This enables DHS to bill for SRs retroactive to the initial acceptance date as long as the products eventually receive preferred status. However, this tack is problematic as it jeopardizes the rebates and further delays decision-making, which then magnifies the risk of successfully reducing pharmaceutical costs. Based on the results of the analyses and by no later than ten (10) business days after the effective date of the contract, the contractor shall develop a proposed phase-in schedule for the specific therapeutic classes for both an initial PDL, then for adding additional therapeutic classes to the PDL that is clinically sound, cost-effective and minimally disruptive to Iowa Medicaid members. We will develop a proposed phase-in process for PDL implementation. The proposed schedule will be presented to DHS within ten (10) business days of the effective contract date. The preferred approach is a swift, direct, and intensive one. It includes the following steps: · Analyze and review each drug relative to other same class medications and dissected pertinent peer-review clinical studies. · Use Medicaid rebate-adjusted data to compare and contrast relative efficacies, cost-effectiveness, adverse events, and adherence rates. · Rank practically every class with its constituents, top to bottom, along these axes. · Determine the clinical superiority, inferiority or equivalence of each agent and define specific niches. · Watch for new studies that have the potential to shift assessments, to research new products, and to determine their impact before they enter the market. In the meantime, DHS moves toward a strong position; ready to solicit, analyze, negotiate, and decide on SRs. Tab 9 Page 223 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 · Incorporate SRs into tentative PDL rankings. The summary arguments for recommending inclusion or exclusion from the PDL can be conveyed to DHS days later. The PDL construction can begin several days after this point. · Convene the P&T committee and immediately proceed through all of the drug classes in as few closely placed workdays as possible. DHS can then publish a solid PDL draft and begin collecting SRs. Physicians and members would benefit from a swift approach because they have more time to become familiar with the PDL design and voluntarily comply with the usage of preferred products on a schedule synchronous with planned visits. This will earn significant amounts of good will in the provider community. An unrelenting, intensive approach will also help to reduce negative, outside influences. There will be time for the Committee to reconvene in order to revise and expand upon the PA approval/denial criteria. Prior authorizing some popular brand drugs may be painful in the short term. Over the long run, however, the state may reap significantly larger SRs. DHS must be willing to demonstrate its resolve and capacity to persevere despite painful political pressures. PAs belong to either of two fundamental categories: · Those designed to restrict non-preferred product usage (use drug A rather than drug B) · Those planned to improve the quality of care by ensuring appropriate member selection, dosage level or duration of therapy (use drug A correctly/optimally) DHS should endeavor to attain a proper balance between these forms of PAs. We suggest not waiting for high-risk members to initiate contact with the PA program. First, analyze population data using regression models to arrive at predictors of impending high-cost members. Second, develop algorithms to identify these members in the Medicaid population for the purpose of intervention. Third, research members at high risk of adverse drug events. Finally, single out members and their providers for attention. As stated in previous sections, there is a direct relationship between achieving savings and disruption to members. A higher savings target will mean more changes to member‘s drug accessibility. However, there are strategies available to predict what the effect will be on the members for a particular PDL strategy. We will consult with the P&T committee and DHS to discern this impact. There are many factors relevant and instrumental to the financial, clinical and political success of the PDL. Most drug budgets have ample areas of opportunity. As long as the desired magnitude of savings is less than the sum of all the savings opportunities available by way of well-studied interventions, then it will be possible to design a successful PDL. Reasonable savings goals allow the optimal Tab 9 Page 224 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 blend of PDL design and operational factors such as those mentioned above. This allows DHS to continue building on early successful stages and realize greater degrees of savings in the future. Grand-Fathering ―Grand-fathering‖, both as a concept and a readily available tool, is desirable to minimize potentially dangerous interruptions in drug regimens. At the same time, its actual application must be severely limited or the readily available savings will never be fully realized. Prior experiences in other states have repeatedly demonstrated resistance from a variety of strong lobbies. Advocates include representatives for the Native Americans, children, institutionalized, HIV, and the mentally ill. Most states have considered and in some cases granted exclusions or exemptions to established users of the following drug classes: · Antiretrovirals · Oral contraceptives · Antineoplastics · Antipsychotics · Antidepressants From a different perspective, other states have considered granting exemptions by demographic characteristics such as: · Children · Elderly · Institutionalized setting · Ethnic status Across most states, 0 to 18 year olds comprise nearly 50 percent of the member base but use only 10 to 15 percent of the drug budget. Therefore, most states can be very liberal about granting most prior authorization exemptions to children and risk a small loss of savings. On the other hand, the aged (older than 60 years of age), comprise approximately 10 to 15 percent of all members and account for nearly 30 percent of the drug budget. The nursing home, SSI and SOBRA aged and disabled members represent 25 to 30 percent of the average State Medicaid Program but tax resources by consuming 60 to 65 percent of the funding. This is where the most savings must be extracted. Grand-fathering must be limited as much as possible while remaining consistent with standards of appropriate clinical care. Tab 9 Page 225 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 In other states, including Maine, the institutionalized elderly are exempted from several prior authorizations. For example, the elderly are more susceptible to the sedative side effects of antihistamines. The Beer‘s List recommends that elderly avoid these drugs; therefore, this group is exempt from needing prior authorization to access non-sedating antihistamines. Another example is Oxycontin. Abuse is much less of an issue in institutional settings, so prior authorization is not required. Members being treated for cancer are also exempted by means of a diagnostic code and Pro-DUR edit process. Another common type of grand-fathering concerns the Cox-2 agents. Many states and HMO‘s have exempted the over 60 year-old population from PA requirements for this drug class because studies have shown that they are at sufficiently high risk by virtue of their age. In order to help reduce the PA burden on members and physicians, the pharmacy claims processing system can be programmed to recognize other high-risk groups on the basis of specific concurrent drugs such as warfarin and steroids in medication profiles and permit adjudication without prior approval. This is an extremely important point since it is crucial to operating a cost-effective PDL/PA program. We will establish a positive working relationship with the new IME MMIS and POS vendors to implement overrides such as these. The greatest potential savings are with the members who use drugs for long spans of time. The longer they are on a preferred product the more the savings. If the member successfully makes the switch to a preferred product, the state collects the ―residuals‖(savings) for years. Therefore, it is preferable to restrict the use of grand-fathering to only the situations that are clinically warranted. One alternative method to grand-fathering involves utilizing variable implementation dates for different populations. While it may be arguable whether or not switching from one non-preferred to a preferred drug involves significant risk, the state would not appreciate having to defend the tenuous practice of requiring members to change 3 to 5 drugs simultaneously. In order to avoid or at least minimize this situation, the prior authorizations could be implemented on a slower schedule for the populations most severely affected. For example the start date for a Proton Pump Inhibitor PA could begin on July 1, 2004, for members less than 65 years of age and October 1, 2004, for those over 65 years of age. This would allow the affected members and their physicians more time for equilibration from the required drug substitutions. Another variable implementation date possibility, dependent upon the programming capability of the claims processor, allows the member to avoid being subject to a second prior authorization drug until at least thirty (30) (or any specified number of) days has elapsed. This type of edit would search for a prior authorization number within the specified time frame and if found, allow a prior Tab 9 Page 226 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 authorization override for a one month prescription. The next fill/refill will re- encounter the PA edit and not allow an override unless the member obtained a PA approval for another drug in the interim. Phasing in All Classes of Drugs The key components to successfully phasing in a PDL with its attendant prior authorizations require time and educational efforts. Members, prescribers, pharmacists, and the claims processor will need to learn how to accommodate the new PDLs and associated PAs. Members need to be notified that their pharmacy benefit is being modified. Prescribers and pharmacists need to be educated in great detail. They have to be instructed in what the PDL is and how to go about obtaining non-preferred products through the PA process. They need to be taught the PA criteria and which populations or physicians are exempted or excluded. Everyone needs to know about seventy-two (72)-hour emergency fills, especially the pharmacies that will have to use the correct overrides. There has to be a process to collect, review and respond to comments from affected and interested parties. Frequent updates must be sent to prescribers and stores by letter, facsimile, email and especially by posting on a devoted website. Special attention must be paid to nursing home pharmacies and IV therapy companies. The drug claims processor must test the PA and assorted edits beforehand. They must be able to accommodate titration overrides. Step care algorithms must be clearly communicated to minimize PA volume. We recommend a successful PDL transition strategy we have used previously: After creating a PDL, generate a selected prescribers report that highlights which members are on non-preferred drugs categorizing those that appear to need a switch to preferred choices and those that appear to need PAs. Prescribers can use the information to switch members ahead of time or as preparation for a planned office visit in the next three months. We can supply a nursing facility version to the members‘ pharmacy provider. Pharmacies are especially proficient at conversions if given two months notice. Before arriving at an actual implementation timeline we need to research what the P&T Committee recently attempted and plan in tandem with them and DHS, a new implementation strategy. The following suggested PDL timeline represents a typical phasing process and starts primarily with classes already reviewed since they will require the least rework after SRs are obtained. These timelines are very malleable and can be adjusted to accommodate a more urgent plan. Tab 9 Page 227 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 The first mailing to members, prescribers, and pharmacies will include: · Effective date of first wave · PDL pocket reference guide · Information regarding substations to preferred drugs or PA In addition to the mailing we will post information on the website and arrange several open meetings to provide information and solicit comments. During the first wave we recommend the PDL be available via e-Pocrates palm device. Mailing 1: Mail a complete PDL to members, prescribers, and pharmacies. The First Wave takes effect in two to three months. For this initial set of preferred drugs, those affected will need to take preferred drugs or obtain PAs within this time period. Begin planning on other substitutions or PAs for the other four PDL waves. Solicit comments to aid in revising criteria. Post information on the website. Mail a pocket reference PDL guide. We strongly recommend making the PDL available via the e-Pocrates palm device. Arrange several open meetings. Implement the PAs on a staggered schedule to avoid overwhelming the stores. First Wave Implementation Timeline Day Drug Type Antifungals ACE Inhibitors/ARB‘s/hypotensives Beta adrenergics Beta Blockers 1-60 Calcium Channel Blockers Diuretics Gastric secretion reducers/Proton Pump Inhibitors Lipotropics Brand NSAIDs/Cox-2 agents Cephalosporins Narcotics 61-90 Botox Low/nonsedating antihistamines Sympathomimetics HMG coA Reductase inhibitors The second mailing will emphasize the Second Wave implementation schedule. The PDL team will use lessons learned during the First Wave to enlist interventions for the Second Wave’s successful implementation. Tab 9 Page 228 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 Second Wave Implementation Timeline Day Drug Type Antidiabetics Inhaled steroids Nasal steroids Leukotriene inhibitors Antianginals 91 – 120 Contraceptives Hematopoietic Agents (EPO) Platelet aggregation inhibitors Migraine drugs Sedative-hypnotics Hormone Replacement Therapies The third mailing will include information regarding: · Effective dates for Third, Fourth, and Fifth Waves · Third, Fourth, and Fifth Wave drug types · Previous revisions During each wave we will solicit comments to ensure a successful PDL implementation. Third Wave Implementation Timeline Day Drug Type Other Antibiotics Antivirals Miscellaneous Narcotics 121 – 150 Osteoporosis drugs 5-HT3 Receptor Antagonists Smoking deterrents Urinary antispasmodics Tab 9 Page 229 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 Fourth Wave Implementation Timeline Day Drug Type Antidementia Anticonvulsants-Off-label use Hepatitis B and C drugs Hemophilia 151 – 180 Anticoagulants (Lovenox and others) Multiple Sclerosis RA drugs (Enbrel, Arava, etc…) Other Endocrine drugs- GH, thyroid Fifth Wave Implementation Timeline Day Drug Type Antiarrhythmics Other Analgesics Assorted GI agents- enzymes, Crohns disease Parkinson drugs 181 – 210 Musculoskeletal drugs Immunosuppresives Ophthalmics Topicals Miscellaneous drugs With DHS approval incorporate the review of these therapeutic classes at subsequent Pharmaceutical and Therapeutics (P&T) Committee meetings and respond to questions from the Committee. The contractor shall include documentation of monographs, supplemental rebate negotiations, and savings information for each therapeutic class. The contractor shall provide supplemental rebate information in a format agreed to DHS. In addition, the contractor shall perform and include documentation of benchmark analyses for financial and clinical outcomes to monitor trends, and shall provide program recommendations to improve clinical and financial outcomes. Rather than be overly repetitive, we direct you to our discussion provided later in this section for a description of what will be provided in the way of cost and clinical data to the P&T committee. The materials provided shall be thoroughly documented and in the format sought by DHS. There are many worthwhile baseline and benchmark analyses that may serve to guide both DHS‘ and the committee‘s decision making. As discussed later, it is wise and proactive to choose a set of financial and clinical outcomes, prior to the onset of the PDL, that will attest to the both the success and safety of the program. At the very least, office visits, emergency department visits, and hospitalization rate trends should be followed closely, at both the aggregate Tab 9 Page 230 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 level and at the diagnosis level. The diagnosis level is important to deal with major PDL categories like the Cox-2 agents. If fewer people will be taking these drugs then it will be necessary to prove that Upper GI bleeding rates do not increase. If fewer members are taking a brand name ACE inhibitor, it will be useful to show that hospitalizations do not increase for CHF, hypertensive urgency or related side effects. Other potential outcomes relate to using the PDL as a platform to increase the utilization of drugs in specific categories for specific conditions in order to reduce hospitalizations and non-drug related health expenditures. This valuable PDL information may be usable for defending challenges to PDL decisions. GHS regularly performs studies to assist in its ability of predicting the effect PDL decisions will have on the member population, with the goal to confirm that a PA will not have an adverse effect on health outcomes. One such study in particular, a generic substitution analyses between Cox-2 and NSAIDs, was very helpful in assuring physicians that the PA approach selected by the P&T Committee would actually benefit the population. See PDL Attachment 04 for additional information. When two or more drugs within a therapeutic class have equal effectiveness and therapeutic value, review the drugs on a cost basis to formulate recommendations to DHS. When two or more drugs within a drug class are felt to have equal effectiveness and clinical value, they shall be evaluated on a cost basis as specified in the RFP. Since the definition of equal effectiveness and therapeutic value requires some clinical interpretation, the process we follow will be briefly described. This also appears to be the best section to address how to handle drugs that are not equally effective and vary considerably in cost. This is very important to the success of the PDL. Physicians will always prefer even a marginally superior drug if there is no cost consequence. If they are aware of the price differences prior to the clinical PDL decision, they will make a clinical recommendation tempered by its relative value. Reference Drugs As we discuss throughout our proposal, there are several different strategies to establishing a PDL. Florida and Michigan‘s methods and the advantages and disadvantages of each are briefly discussed in this section as well as our suggestions for incorporating them into Iowa‘s program. Florida‘s PDL was primarily a cost based model. PDL status was assured if a predetermined fixed percent supplemental rebate was offered. It was not a clinically driven model. An advantage of a model such as this is its simplicity. Tab 9 Page 231 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 Disadvantages included not being clinically based and rebates that were not aligned with therapeutic values. Many higher rebate opportunities were ignored. The Michigan model is built on the ―reference drug‖ (RD) concept. In this model, the ―best‖ drug in the class is identified and the supplemental rebates are primarily derived from the products priced higher than this ―best‖ RD. This leads to superior but variable rebates on products priced higher than the RD but correspondingly lower rebates on those priced lower than the RD. Besides not receiving rebates on some drugs, another disadvantage quickly became apparent. Several prominent, large manufacturers declined to participate. Many companies feel less threatened by the simpler, fixed percentage rebates. The reason is simple—everyone is treated alike, so no one competitor gains any advantage. If everyone participates, everyone‘s market share remains the same. The Michigan model, on the other hand, drastically changes the rules of the game. It attempts to pay everyone the same price for a unit of product. Some companies are winners—their products maintain the same profit margin. Other companies would see theirs slashed. Adding to the volatility of this exercise is the risk of losing market share at the same time that they reduce their profit margins. There are two critical elements determining the success and magnitude of savings with the RD approach: · The market share of the RD · The number of significant market share drugs priced above or below the RD The state will collect most of its savings from the drugs priced higher than the RD. RDs that coincidentally are also ―best priced‖ will maximize supplemental rebates because there are only higher priced drugs, which will all get discounted with rebates. Reference drug designation is the most significant determinant of the extent of savings. If the RDs are skewed toward the higher price ends of their drug classes then it would have been wiser to pursue fixed percentage rebates. The other major problem is collecting a supplemental rebate on the RD. If the RD is on the expensive side and it already has a large market share, then the state concedes a huge source of revenue. Recall the variability in PDLs across the country. Your RD is someone else‘s non-reference drug. Other states and HMO‘s are collecting good-sized supplemental rebates on the RDs that you consider well- priced. Despite the limitations imposed by an RD framework, it remains the soundest approach. The RD methodology will best serve the state if it is used as a flexible guideline rather than a dogmatic requirement. We propose a hybrid of the cost- and clinical-based models. If there is an unequivocal ―best‖ drug in a class then it Tab 9 Page 232 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 will be designated as the RD. If there is no clear consensus then the most cost- effective choice or choices will be used as the baseline instead. Supplemental rebates are calculated using the drug‘s price difference from the RD or the baseline drug(s). This reconciliation of two successful but somewhat flawed strategies should maximize the state‘s supplemental rebates and resultant savings. The following summarizes the our proposed RD model: Reference Drug Model · Wherever possible choose a RD in each drug class · If not possible choose the most cost-effective drug(s) as the baseline drug (BD) · If neither of the above is possible (i.e. there is no RD and all the choices are tightly priced together) then seek fixed percentage rebates on all drugs in the class · At the very least, collect a lesser fixed percent rebate on all the RDs and insert a clause entitling the state to a higher supplemental rebate contingent upon volume increases GHS recently performed a reference drug comparison in the statin class. We took advantage of a published cholesterol reduction study to incorporate rebates and negotiate for rebates. We were able to establish how much Medicaid programs spend for the same amount of clinical result, finding less expensive drugs that provide the same clinical outcomes. We would be able to provide this study or perform others for DHS. (See PDL Attachment 05 for additional information.) Develop a strategy to merge current prior authorization guidelines into the PDL program. We are aware of all the pharmacy prior authorizations and guidelines listed in Human Services Chapter 78 and have reviewed them thoroughly. They are extremely detailed and comprehensive. A strategy has been developed to update, modify and merge these guidelines into the PDL including the following thoughts: · Since weight-loss medicines are minimally effective over the long term and optional, this may be suitable for non-coverage again · Supplemental rebates obtained on stimulants will still require the same PA criteria · Stimulants being sought for non-mental illness indications are potentially subject to new criteria on the PDL · Restrictions on some currently prior authorized drugs may be suitable for removal since the prices are quite low, are getting lower due to the MAC formula adjustment and the cost/benefit ratio for PA is becoming unfavorable (example-H2-receptor antagonists) Tab 9 Page 233 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 · The requirement to fail on H2-blockers before proceeding to the proton pump inhibitors has been very successful and should be continued. Many states have no such requirement and consequently have many more members on expensive PPI‘s than cheap H2-blockers. Iowa has more people on H2-blockers than PPI‘s and has been saving millions of dollars annually with this strategy. · The NSAID criteria are similarly well designed and effective · The growth hormone criteria need to reflect some recent literature. This PA category usually draws SR bids (like EPO products) and when you collect SRs on prior authorized drugs you generally need to accommodate all of the FDA- approved indications as a starting point. · Although there was a tentative P&T meeting January 8 to address the low/nonsedating antihistamines we are unaware of any published recommendations on this class. The OTC versions of Claritin available are quite inexpensive and becoming more so. The current PA criteria need to be revisited as part of the PDL process. The end result may be requiring failure on traditional antihistamines and the OTC loratidines before proceeding to other single source low/nonsedating brands. This provides a good example to discuss transition from PA with the current vendor and PA with the winning PDL/PA contractor. If the OTC product was to become preferred, then the new criteria would be developed, published with an implementation date and the old form would be pulled back from the existing vendor and the new form and criteria would instead be available on the new contractors web site (or via facsimile/mailings etc…). A version of the PDL would be published on the web and mailed that would provide all the most common criteria necessary for prior authorization requests. Since many non-preferred drugs can be handled with a generic PA form it is important to provide a complete yet concise listing of the PDL that describes the pertinent criteria for as many of the drugs as possible. · Erectile dysfunction drugs—other states are dropping the covered quantity down to one or two per month · Oral antifungals—would recommend considering adding laboratory proof of fungal infection since clinical exam can be wrong 50 percent of the time with respect to onychomycosis and not allowing any non-prior authorized use for any time period for Lamisil or Sporanox. · 5-HT1 receptor agonists—consider reducing allowed thresholds to 10 to 12 units per month and in parallel aggressively promote the wider use of first line prophylactic medications for anyone having more than two (2) treated headaches per week. Tab 9 Page 234 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 · Palivizumab—this drug in particular is susceptible to hazy interpretation by the PA pharmacists. Submitting doctors push the envelope on trying to use this drug in populations not really meeting the criteria. For example, our audits in this area showed many inappropriate approvals for infants with physiologically insignificant cardiac defects (like a small VSD or ASD). Iowa spent $2.7 million on this drug which is significantly more than would be expected. Consider expanding coverage of nonprescription drugs and including on the PDL as preferred agents when they are determined to be cost-effective. This includes establishing the reimbursement rate as set forth in state law. The selective coverage of nonprescription drugs is a wonderful tool for the PDL. This has already been discussed elsewhere so only a brief review is needed. The P&T Committee already saw the value of OTC Prilosec. It is of immense value because any brand Prilosec or generic omeprazole users that switch over save several dollars per member per day and because it serves as leverage in inducing superior rebates on the remaining preferred PPI choice(s). A similar opportunity is also present with OTC Claritin. Hopefully these opportunities will continue to surface and be seized. Our OTC management practice is to monitor the market and present pertinent information to DHS and the Committee and then develop a strategy for incorporating cost-effective OTC medications in the formulary. We have had very positive results through this practice. Our clinical staff continually researches and monitors the market for appropriate OTC inclusion. We would always recommend covering OTC‘s that are cost effective, thereby reducing the utilization of more expensive products. The biggest problem usually relates to covering the most cost- effective package sizes and accommodating the larger day supplies. The reimbursement rates will be factored in and established according to state law. Include on the PDL those "preferred drugs" recommended by the P&T Committee and confirmed by DHS. This is a very important activity. We will include preferred drugs on the PDL which have been recommended by the P&T Committee and confirmed by DHS. This implies that DHS may at some time exercise its authority to not accept specific recommendations. This is an important right to reserve because it is essential to be able to protect the viability of the Medicaid Program. Committees are comprised of people with areas of expertise that are strong in some parts of the PDL and weak in others. Attendance at P&T Committee meetings may also affect key votes depending on whether the leader in that area is present. Less than ideal results can and do happen and DHS needs a way to rectify any problem that may occur. Tab 9 Page 235 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 Subject to DHS approval, establish written criteria and a prior authorization process for obtaining the "non-preferred" drugs. We know that the PA process is changing. The prescriber is becoming involved at the onset and is the party responsible for submitting the PA. DHS will need to approve the criteria for approval and the precise process for obtaining non- preferred drugs. Other states have required the submission of paper PA forms either by mail or facsimile, preferably by facsimile in order to speed access to decisions and medicines. In urgent situations telephone requests are honored. Since a successful PDL requires a higher standard of evidence for approvals, written PA forms with explicit criteria, including needed chart documentation, is the norm. Requests for additional information can be expressed by telephone the same day if the prescriber is available or by written/facsimile response if not available by telephone. As described throughout these PDL sections, we will develop written PA criteria and PA processes for obtaining non-preferred drugs. We understand that DHS must approve these processes. Ensure that the PDL program includes provisions for: a) The dispensing of a 72-hour emergency supply and/or a 30 day supply of the prescribed drug and a dispensing fee to be paid to the pharmacy for such a supply, in accordance with policies established by DHS. b) Responses by telephone or other telecommunications device within 24 hours of a request for prior authorization; c) Consumer and provider education, training and information regarding before and after implementation of the PDL program, which shall include telephone and website access to information. Overrides The Prior Authorization process will be compliant and will remain compliant with all Federal and state laws and regulations. OBRA ‗90 stipulates that a response to a complete PA request must occur within twenty-four hours and that, except for non-covered drugs, a seventy-two hour supply of medication must be provided in emergency situations. As noted above, we have and will continue to devote all resources necessary to maintain the efficient performance of our PA processing system. It is a standard practice to include override-options for non-preferred drugs. With our guidance, the P&T Committee and DHS can establish the policies for these overrides as otherwise they can become prone to misuse for obtaining non- preferred drugs. Overrides include seventy-two (72)-hour emergency supplies and thirty (30)-day supplies. Implementation of these overrides is usually initiated by a data feed from the PDL database, which we would provide, to the POS system. Tab 9 Page 236 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 The POS vendor would be responsible to creating the logic to handle such overrides. Turn Around Times for Completed PA Requests Federal law and State Medicaid rules require the timely consideration of all PA requests within twenty-four (24) hours. We are aware of the paramount importance of always meeting these requirements. Responses will be made by facsimile, telephone, and in writing so that determinations are conveyed in the timely manner demanded by law. We will perform all of the necessary monitoring in order to continually verify turn around times. We will meet the performance requirement that all determinations must be made within twenty-four (24) hours of a complete PA request. Our PA help desk will be responsible for responding to these requests. They respond via telephone, facsimile, email, and mail. Member and Provider Access to Information The PDL program will provide both telephonic and web-based access to information about the ongoing efforts including member and provider education and more formal training opportunities. As described elsewhere, we will proactively provide information to prescribers, pharmacists, and members, periodically communicating with them about upcoming changes to the PDL and to follow-up with past changes. We have unique strategies that disseminate information to targeted populations via specialized analysis; we are able to notify specific prescribers about upcoming PDL changes and members that may be affected. This allows physicians to initiate drug regimen changes with their members before a PDL restriction come into effect. Our PA help desk technicians and pharmacists are available via telephone and email to respond to PDL-related inquiries. We also will have PDL information available on our website. Member specific information (personal health information or PHI) would not be available via the web, in compliance with HIPAA requirements. Ensure that Medicaid providers have accurate, timely and complete information about all drugs on the PDL; the Contractor shall make this information available through various sources, such as written materials and on the Internet. The minimum notification to providers is thirty (30) days prior to implementation. Accurate, complete, and timely information on the PDL for all providers is vital for success. This is our standard practice to facilitate and dampen the volume of unnecessary PAs from ill-informed providers. We utilize electronic and paper newsletters, email, facsimile, and mail. All of this information will also be Tab 9 Page 237 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 prominently posted on the website. All public disseminations will be approved by DHS and will follow DHS‘ minimum notification timeframe policies of thirty (30) days. In certain situations, such as positive additions to the PDL after implementation, drugs can be become preferred with simultaneous notification. In this case, dispersed information would not meet the thirty (30)-day requirement. We would violate the information dispersion timelines only upon written request from DHS. Any changes to the PDL will be highlighted in a section devoted to interim changes. Receive monthly claims files from the DHS contractor(s) to support evaluation and management of the PDL program. Monthly claims analysis will be an important part of evaluating whether the PDL strategies are working. As stated in other sections, the PDL is a dynamic structure; it must be able to shift and adjust to prescribing practices, new drugs, and fluctuations in drug pricing. Analysis of drug category expenditures and trends will be valuable information in discerning necessary PDL changes. Monthly pharmacy claims extracts will be obtained monthly from DHS‘ POS contractor. These extracts will enable us to perform the many elements of evaluation and management critical to the well being of this program. After the PDL is implemented, the Contractor will support the management and coordination of all activities related to the maintenance of the PDL, including presentation of ongoing efforts to DHS and the P&T Committee as appropriate. Activities include but are not limited to the following: a) Clinical review of new name brand drugs for clinical safety and efficacy as well as a cost analysis. b) Clinical review of new generic drugs for clinical safety and efficacy as well as a cost analysis. c) Clinical review and cost analysis of existing drugs for new indications or changes to indications d) Review of new product forms and strengths and associated cost analysis e) Development of and changes to criteria based on new information f) The contractor shall perform ongoing analysis and clinical reviews of the State of Iowa Medicaid pharmacy claims history and shall conduct a review and cost analysis of each therapeutic class at least one time per calendar year. The creation of the initial PDL does not mean that the Committee‘s work is complete. The following scenarios may require further action: · Drugs become unavailable due to shortages or discontinuation · New products and new forms enter the market incessantly and require prompt attention · Generics become available but are often financially unattractive initially · New FDA approved indications appear often and necessitate revisions of existing criteria Tab 9 Page 238 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 · Warnings are released on drugs and corresponding alterations must be made in the PDL · Prices drop and prices increase (mostly) · Companies come to the table late and negotiations begin anew · Especially in the first few months, updates and revisions seem to occur on a daily basis PDLs (and formularies) and their enforcers, the prior authorizations, must evolve over time or become obsolete. Criteria must be constantly revisited and revised. PDLs are not meant to be static entities. Although consistency and stability over time are desirable from the physician and member points of view, the trade-off is a measurably significant loss of budgetary control. The state will need to exercise strong oversight in deciding how to balance these opposing factors. We suggest several standing procedures to help automate the maintenance process and minimize losses due to inaction or procrastination. First, all new products are automatically non-preferred, unless covered by an existing agreement until they are reviewed at the next P&T Committee meeting. This gets the drug company‘s attention. Second, new generics are priced compared to the after-rebate cost of the brand and only made preferred if less expensive. The proposed mechanics of the maintenance process and the criteria for consideration by the P&T Committee for the addition or deletion of drugs to/from the PDL can be conceptualized in the following three steps. In addition to abiding by the Iowa P&T Committee‘s bylaws, we have incorporated the requirements suggested in the Federal Medicaid regulations regarding deliberations for formularies, which entails a stricter standard. Naturally we would amend the proposed processes as necessary. Step 1. We will prepare material for distribution to Committee members commenting on efficacy, therapeutic benefits, and current peer-reviewed, evidence-based literature. The Committee will arrange for specialty providers, as appropriate, to comment on this written material. We will classify the drug(s) under consideration into one of three categories, described below, which shall trigger a predetermined procedure. According to the Iowa bylaws, the Committee shall review that determination and after review of the available material, may change the determination by a majority of a quorum. One potential framework is the following in which drugs are Tab 9 Page 239 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 characterized relative to the reference drug or baseline drug as the case may be. This process is described as an ongoing routine, not as a one- time intervention. Category A: Highly Desirable and Affordable Additions Therapeutic benefit and no projected fiscal impact Approval for drugs with no fiscal impact as defined herein shall be submitted to the next meeting of the P&T Committee and shall be automatically recommended for addition to the PDL. No projected fiscal impact is defined as follows. Reimbursement for the drug at the lowest adult daily dose for the primary indication will be compared to the average costs of the lowest adult daily dose for drugs within the same class, weighted by utilization for each drug within that class for the prior quarter. No consideration should be given to a recommended course of therapy, improved compliance, or other similar component for drugs in this category. For combination drugs, the billed amount should be less than the combined prices of its components to have no fiscal impact. Category B: Desirable but affordable? Therapeutic benefit and a projected fiscal impact Therapeutic benefit is defined as clinically (not pharmacologically) more effective drug and/or a less toxic drug than alternative therapies currently on the PDL. A drug for which the sole advantage is convenience or compliance is not considered to have a therapeutic benefit. The clinician assigned to a particular drug will address the therapeutic benefit through his or her review. The Committee will make the final determination. Drugs with an estimated fiscal impact would normally be conceptualized as only being added to the PDL in either of two ways with: i. A specific appropriation of funds from the state or ii. A deletion (non-preferred designation) of other drugs from the PDL to maintain budget neutrality. Tab 9 Page 240 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 The therapeutic benefit of the drug being considered should be weighed against the therapeutic benefit of drugs already on the PDL. If the value of the drug under consideration is not thought to be great enough to justify an offsetting deletion and if no funds are appropriated for the addition, the drug shall be put on a pending list of drugs to be added to the PDL once funds become available. Category C: Undesirable and Unaffordable No therapeutic benefit and a projected fiscal impact Drugs that are determined to be of no therapeutic benefit which have a projected fiscal impact shall not be added to the PDL. Such drugs would be available only through the prior authorization process to the extent necessary for a specific individual. Step 2. At the conclusion of discussion of all drugs being considered at a meeting, the Committee members shall vote as specified in the Bylaws. The chairperson will tally the votes and announce the Committee's preliminary determination. Step 3. After a comment period has expired, the Committee shall review any comments and take a final vote on the addition or deletion of any drugs. Any preliminary or final determination by the Committee requires a two- thirds majority vote of the members present. Inclusion of a drug on the PDL will automatically include all conventional dosage forms of that drug, with the exception of transdermal systems, sustained release and injectable dosage forms, unless specifically approved by the P&T Committee. DHS will need to exercise strong oversight in deciding how to reach final decisions that will yield the desired budgetary savings. Every therapeutic class will be reviewed at least once annually. Supplemental contracts may run from one to three years but it is worthwhile for many reasons to re-analyze the PDL completely each year. Expectations in each category should be reviewed. Were they met? What lessons can be learned? Is there a different approach possible this year for under performing areas? Can successful categories be tightened further? If the category is problematic, is it due to incorrect assumptions (excessive switching failures) or faulty execution (PA criteria not being applied properly)? Tab 9 Page 241 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 2. Represent DHS in public relations matters and coordinate with other agencies, groups, boards and individuals regarding the program at the request of DHS. Such consulting may include, but not necessarily be limited to: Preparing draft written responses or assisting the DHS in responding to inquiries from providers and other interested parties concerning the PDL. Implementing a PDL requires soliciting and responding to input from various sources: prescribers, pharmacies, manufacturers, and members. We understand that during the development, implementation, and operation phases of the PDL, these various sources are going to have PDL-related inquiries. It is to the benefit of the PDL process and all associated parties, and ultimately to meeting the drug savings target to respond to inquiries with accurate and timely information. It makes sense that the PDL contractor assist DHS in these responses. It is our current practice in to have our Medical Director, PA pharmacists, and administrative staff available to respond to inquiries via email, telephone, and mail. We understand from experience that there will be a nearly overwhelming interest in the PDL. The state will need assistance coping with this initial blitz. Many questions will be posed that will command rapid responses. Some questions raised will be rhetorical and though not needing to be answered per se in writing, will need to be addressed with action. The prime example of this issue is when providers ask who is responsible for member injuries allegedly due to adverse drug switches. Another common theme will be an accusation of a lack of implementation time allowed. However slow the process is phased in, it will be too fast in the eyes of these providers. Other letters will question the motives of the PDL/PA contractor after hearing rumors that they are being paid per PA or per denial. Many letters will decry a perceived lack of input and public comment. Some parties will ask for exceptions; they will want specific groups excluded. Nursing home providers may ask for special treatment. Some doctors will ask about exceptions for members discharged home from hospitals. Members will call and ask about PDL issues related to out of state travel. Many providers will argue that pharmacy savings will be needed to pay for increased utilization of office and emergency room visits and hospitalizations. They will ask for an independent study of the issue. DHS needs to have a plan for addressing these common themes as soon as possible. We already possess answer templates for dealing with these and many other thorny queries. Tab 9 Page 242 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 Orally presenting the PDL process or otherwise informing various DHS personnel and designees including but not limited to the legislature, provider groups or associations, other state agencies, or any other interested parties about the PDL and supplemental rebate process. In addition to responding to PDL-related input as described above, it is important to be available to provide PDL-related information to the various state entities involved in PDL policy-setting and lawmaking actions. We are accustomed to making oral presentations and preparing presentations for state agencies to interested parties. Presenting an accurate reflection of the PDL strategies may relieve some of the tension that sometimes arises from implementing PDL-type restrictions. We will participate in the activities when it is appropriate for us to do so. We are experienced in presenting the PDL to a vast variety of audiences including state personnel, associated state agencies, physicians, pharmacists, hospitals, and legislative groups. Our presentations can be adjusted to the interests and functional level of each group. This is actually one of the most satisfying aspects of the job since it is much easier to develop a mutually beneficial relationship with personal contact. The audience begins to acquire a sense of control over the process with a better understanding of the inner workings of the PDL. Periodic interaction with the legislature is especially worthwhile since threatening PDL bills will pop up from time to time. Furthermore, control over the entire drug budget can only occur if the legislature removes the exclusion on the mental illness drugs. They will need to develop trust in the PDL and their early experiences with it must be good ones or this will never happen. Providing education materials, communication strategies, and/or providing training for groups that may be impacted by the PDL process. We will provide all of the educational materials, trainings and communication strategies necessary to ensure that all parties affected by the PDL will be in the best prepared state possible prior to and after implementation of the PDL. Individualized training materials will be developed for certain groups like nursing home and IV therapy providers. Special attention will also be paid to boarding homes and assisted living facilities. We discuss our various methods in more detail later in this section. 3. Stakeholder support must be provided by the contractor and include: a. A method of communication, approved by DHS, for manufacturers to receive assistance with questions related to the PDL. The bulk of manufacturer communication in regards to the PDL comes during the supplemental rebate negotiation process. It is during this time that manufacturers are notified of Iowa‘s desire to implement a PDL and they have an opportunity to Tab 9 Page 243 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 impact whether their product(s) are designated as preferred or non-preferred. We will engage with manufacturers in a method approved by DHS. We offer suggestions on how we think this should occur later in this section. It would be most beneficial to allow any and all methods of communication with manufacturers to facilitate the PDL process. In terms of efficiency and speed, the two preferred modes would be email and telephone. Facsimile and mail would augment negotiations. In person meetings are the most time consuming. They should be reserved for appropriate special situations and not be an entitlement or routine occurrence since they consume an inordinate amount of resources. We will follow the state‘s directions in this matter. b. A website approved by DHS and available to all the public. The website must include but is not limited to the following: the preferred drug list prior authorization criteria and forms P&T Committee meetings, agendas and minutes information as set forth in article 6 under education services manufacturer specific directions for the supplemental rebate process a mailbox for submission of questions, which must be monitored regularly and responded to within a timeframe specified by DHS a mailbox for submission of public comment which must be monitored regularly and posted to the website within a timeframe specified by DHS all communications to members and providers, including training documents any other documents deemed necessary by DHS We will create a website that contains all of the elements listed in this section. We understand that it must be approved before becoming live. We already provide potential solutions for many of these website requirements in other programs we administer. All of the mailings to manufacturers, providers, members and affected parties will be posted on this website. They will be periodically archived and/or purged at the frequency specified by DHS. For example, it is probably unnecessary and confusing to keep multiple draft PDL versions posted on the site as the PDL enters into its second year. It may also be worthwhile to post relevant analyses to the PDL on the website. A number of utilization analyses, abstracts and links to articles/journals can be very informative and bolster the rationale for PDL decisions. We will be able to post other documents as deemed necessary by DHS. Tab 9 Page 244 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 In addition, we find that it is valuable to include items that alert prescribers, pharmacists, members, manufacturers, and other interested parties to recently implemented changes. A ―PDL Changes Summary‖ document allows these users an easy ―one-click‖ way to view recent changes rather than sorting through the longer and more detail-specific documents like the PDL, PA forms, minutes, etc. Our experience shows that maintaining an up-to-date website is an important part of a successful program. We monitor website access or ―hits‖ and have found that these documents are viewed frequently and the information obtained contributes to users‘ education. We have on-staff a web master who is able to meet our design requirements. As we move into the implementation phase of this contract, we would seek approval for our website content and design. 4. Provide administrative support to the P&T Committee to develop, implement, administer and maintain the PDL and prior authorization services. The contractor shall: We have a thorough understanding of all the required elements necessary to ensure the clinically appropriate operations of a state Medicaid P&T Committee. The process of placing drugs on the PDL must balance the desire to provide the best clinical choice against the need to preserve an affordable health care benefit. Please read the previous sections to further understand our level of P&T support and interactions we are accustomed to having with the Committee. Ensure that meetings of the P&T Committee are conducted in accordance with Chapter 21 of the Code of Iowa (open meetings). In accordance with Chapter 21, notice shall be given of the time, date, and place of each meeting and its tentative agenda by publication in the news media and by appropriate posting of the notice. Notice shall be mailed on request to organizations or associations whose membership consists of persons who have an interest in the activities of the P&T Commission. The P&T Committee meetings will be conducted as required by Chapter 21 of the Iowa Code. Adequate notice will be given including time, place and date, along with the tentative agenda both on the website and in the news media. Interested parties such as medical and pharmacy associations will be included on the notification list. We understand the importance of following establishes rules, laws, and policies, as they affect the validity to the PDL program. The responsibility of complying with the required meeting obligations will be assigned to various staff by the implementation manager and then the operations manager once the program is implemented. Following established rules from the onset of the PDL makes the appeals component easier as the precedence for ―playing by the rules‖ is established and cannot be challenged. That means appeal decisions are made on their merit and not for protocol violations. Tab 9 Page 245 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 Schedule meetings, including presentations by manufacturers according to the policy established by the P&T Committee and provide public notice of the meetings. We will take responsibility for scheduling meetings and providing public notice. Presentations by manufacturers and other parties will also be scheduled for an agreed upon amount of time. The committee and/or DHS will dictate the quantity and types of presentation materials. Public notice will occur as per the above- specified manner. Maintain a website listing the P&T Committee meeting schedule, agendas, committee members, minutes of the meetings and other information deemed necessary by DHS. We will maintain a website that will include P&T Committee meeting schedules, agendas, committee member listings, minutes, and other pertinent information approved by DHS. Formulate information packets, including the preparation of the agenda, meeting minutes for Committee’s review and approval, and Therapeutic Class Reviews, and mail to the P&T Committee at least thirty (30) days prior to each meeting. At the same time post the therapeutic class recommendations to the website for public comment. We will provide information packets (information packets including agenda and prior draft minutes) for the P&T Committee members and mail these packets at least thirty (30) days prior to each meeting unless otherwise directed by DHS. It is conceivable that DHS may want to schedule a meeting within thirty (30) days of the onset of this contract in order to potentially have a portion of the PDL operational by July 1. Whether or not this is the case, the therapeutic class recommendations will be posted on the website promptly for discussion. Another possible exception to meeting these requirements is when P&T Committee meetings are scheduled on consecutive days. In these situations it will obviously be impossible to mail the prior meeting minutes thirty (30) days before the next day‘s meeting; however, an overall outline will be available. As described in other sections of our proposal, we will not only research Therapeutic Drug Class Reviews, but also assemble them into packets to assist the P&T Committee in performing the necessary comparable drug reviews for the PDL. In addition to providing informational packets, we will make other resources available (electronic and paper media) at P&T Committee meetings to supplement these packets. Therapeutic class recommendations will be posted on the website. We find this is a useful strategy for promoting supplemental rebate bids from manufacturers, as manufacturers can see what preferred status their product would hold prior to Tab 9 Page 246 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 formal PDL approval. Many times manufacturers will adjust their bid in an attempt to receive a preferred categorization. Record minutes of the P&T Committee meetings for approval by the P&T Committee and distribute the minutes as approved. We will record the minutes of each P&T Committee meeting. We will distribute these as is outlined in the previous section. We will make any corrections to the minutes and publish the approved version on the website. After the approval of the draft minutes with any corrections, an approved version is sent to members, DHS and then posted on the website. Provide information and staff support to the P&T Committee as needed to ensure timely implementation and on-going maintenance of the PDL and prior authorization programs. As discussed in previous sections, there will be a considerable amount of effort devoted to keeping the P&T Committee informed of PDL activities. The Committee will be kept apprised of negotiations, upcoming opportunities and all PDL maintenance data. They will be given all of the new drug information as it becomes available. With the state‘s approval, they will also be given a substantial amount of internal operations data that the state typically uses to monitor the program. For example we will share PA process statistics like: · PA determination times · PA approval/denial rates · PA volume by PDL category and by drug We will also provide them data on PDL success indicators like: · Average script cost · % Preferred activity in each PDL category · Average script cost changes within PDL categories · PMPM costs in aggregate and per PDL category, pre- and post baseline Facilitate the review of all therapeutic classes by the P&T Committee before and after implementation of the program. We will facilitate the review of all therapeutic classes by the P&T Committee before and after implementation of the program. In other sections of our proposal we describe this review process in detail. The initial review and the ongoing analyses after implementation are time consuming and vitally important. A significant amount of resources needs to be devoted to these functions. Therapeutic classes must be scanned nearly constantly after implementation for new targets and modifications. In keeping an eye on the PDL, the primary objective is to be observant regarding PA possibilities. This Tab 9 Page 247 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 process is data-driven, primarily by a quarterly rebate adjusted utilization report described later in this section. If you cannot obtain savings by attracting supplemental rebates then you need to obtain the savings through prior authorization. Prior authorizations are not always about redirecting members to a different drug. In some cases the purpose is to be certain that the intended drug is medically necessary. In other cases the reason is to promote the use of the medicine in the most optimal manner possible. This means that prior authorizations can support and drive clinical guidelines. Most of the drugs suitable for placement on a prior authorization (non-preferred) list meet one of the following three basic criteria: · The drug costs substantially more than a therapeutic equivalent (especially generics) · The drug is not as safe as other therapeutic equivalents · The drug is prone to misuse or waste, especially due to improper diagnosis We have institutionalized a number of reports and analyses that accurately identify drugs meeting the above criteria. We routinely run a series of net cost reports, safety profiles, and linked drug/medical claims analyses to distill a list of drugs potentially suitable for prior authorization. We routinely run a quarterly report termed the ―Prior Authorization Suspect List‖. This report details all drugs paid for in the prior quarter sorted by ascending GPI (generic product indicator) code. It also provides the relative rebate-adjusted unit drug price along with the script count, total quantity, day‘s supply, amount paid and cost per day. We begin the PA search from this list and continuously update the list each quarter. The developmental history of a PA begins with an analysis of rebate-adjusted drug utilization data. Cost centers are identified, pricing variation inside drug categories are examined, and drugs are ranked by cost. Patterns detected in the member‘s data are researched further and prior authorizations from a collection of other agencies and HMOs are studied; these activities suggest new ideas for PA initiatives. The potential savings are estimated as well as the costs. Draft clinical decision criteria are formulated based on the best clinical evidence and guidelines available. The rough drafts for the potential PAs are then presented to the P&T Committee. This group studies the problems and proposed PA structure, offering guidance in criteria revision, exemptions and exclusions. They also offer additional ideas for exploration. Most members sit on other HMO or hospital drug committees and provide assistance in how to streamline the process and align the criteria with what already exists elsewhere in the industry. Tab 9 Page 248 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 Recommendations obtained from the P&T Committee are then presented to the DUR Committee. This group ensures that the PA is consistent with promoting and delivering clinically appropriate care. Criteria are often expanded and more precisely defined at this stage. Drugs that receive a recommendation of approval from this Committee are brought up for discussion and ultimate approval for implementation. Promoting an optimal sequence of medications (step order) can be extremely beneficial in both a clinical and financial sense. There is a significant amount of incremental savings to be realized by developing PA that supports more than just a referred drug, but also a preferred order of drugs. We will collaborate with DHS to devise unique PA criteria and also refine and customize criteria for different subpopulations. Another component that is helpful in tandem with step order is having access to a member‘s drug and/or medical history. As a POS provider, we have found that this availability can be utilized on the claims processor and for the PA pharmacist or PA physician as another way to make quality-informed determinations. Provide P&T Committee support by providing reviews of all medications in a therapeutic class for comparative efficacy, side effects, dosing, prescribing trends, and other clinical indications. The Therapeutic Class Reviews should include at a minimum a description of products scheduled for review at the meeting and clinical, safety and cost-effectiveness information for each drug class. The information must be accurate, reflect recent cost and clinical outcomes information, and be based on acceptable clinical review protocols and nationally peer reviewed, evidence-based research. In other sections of our proposal, we have described how we specifically address the clinical, safety, efficacy, and cost effectiveness for each drug class. We will provide the P&T Committee with accurate, up-to-date information that follow acceptable clinical review protocols and nationally peer reviewed, evidence-based research. The P&T Committee meeting reviews will include all of the required elements listed in this section of the RFP. Our approach mirrors what Iowa expects to occur in this process. Before the P&T Committee begins their deliberations, we would initially calculate the relative costs of medications within drug categories, net of all discounts and rebates, including what has been negotiated to date with the manufacturers. Generally, any medication determined to be superior to all other therapeutic alternatives is initially placed in the PDL regardless of the (best value) cost. Therapeutic equivalents are then subject to ranking in order of ascending cost. Tab 9 Page 249 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 The Committee endeavors to provide a sufficient number of preferred choices within each drug category to allow for differences in individual response rates and tolerability. They consider unique qualities of the various medications at this point. The Committee will designate the more expensive choices that do not offer substantial clinical attractions as non-preferred. If DHS agrees, there is an opportunity at this point for a drug manufacturer to improve their rebate offer in order to re-position their drug as either cost-neutral or cost-favorable relative to the index/preferred drugs. There is no interest however in designating less expensive but clinically inferior drugs as preferred or in accepting rebates from drug companies for the purpose of making such products more financially attractive. The cost-effectiveness analysis often provides the rationale or framework for opening a SR discussion with a particular manufacturer. For example, in the statin (cholesterol-reducing drug) category, the surrogate healthcare outcome is the amount of LDL cholesterol reduction. The statins vary considerably in potency and even more so in cost per unit of cholesterol reduction. It is a relatively simple and intellectually defensible strategy to request that manufacturers price their products cost-neutral to the index drug on this parameter. It is much easier to argue that DHS should not pay more for lesser clinical outcomes. The PDL process must be rigorous. Manufacturers must submit dossiers that include information on the disease in question, the product‘s role in therapy, clinical efficacy, safety and effectiveness data (including off-label), an economic evaluation, economic modeling, any reporting bias, outcomes modeling and the drug‘s cost and value. The usual drug compendia recommended in the Federal formulary regulations are also used for the development of a PDL including the AHFS and USPDI. The most important components of the Therapeutic Class Reviews are summarized below: Evaluate new drugs on the basis of clinical efficacy, safety, expected level of use, cost of treatment and overall cost-effectiveness. In as much as it is available, the pharmacoeconomic data is compared for the various treatment alternatives in order to determine the most cost-effective option. Pharmacoeconomic studies are used to identify, measure and compare the cost and consequences of various treatment alternatives. The goal of considering this data is to contain overall costs without unintentionally causing a negative effect on member outcomes. Have a PDL decision-making process that actively incorporates effects on overall health treatment costs. When a program solely focuses attention on controlling drug costs, ignoring complex therapeutic trade-offs, there is admittedly some risk of spending drug ―savings‖ on adverse or sub-optimal medical outcomes. Tab 9 Page 250 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 Therefore, it is important to either have an internal PDL decision support system capable of accepting, integrating and analyzing non-drug medical data or an independent third party that can supply this capability. Evidence-based guidelines are instrumental to the ultimate success of the PDL. An ever-increasing number of reputable medical journals have formally adopted the standards of only reporting on evidence-based medicine. There is no longer any shortage of evidence-based guidelines upon which to build a solid PDL foundation. Although incomplete in scope, the bi-annual Clinical Evidence, published by the British Medical Journal, is a superior and heavily utilized source of substrate data. It specifically aims not to provide recommendations but rather the raw material necessary for P&T Committees to form independent and unbiased opinions. Other complementary compendia currently utilized include but are not limited to the Cochrane Library, ACP Journal Club, Evidence-Based Medicine, Evidence-Based Mental Health, and the Journal of Family Practice. It is crucial for effective P&T Committee operations that only truly useful information sources are mined. Decisions such as the choice of products on a PDL must be taken using a selection process that is fully transparent and that can be justified to all parties concerned. When healthcare resources are limited, decisions about the treatment options can be complex and difficult to make, involving the careful balancing of multiple factors. The decisions taken may have far-reaching consequences affecting many people. Although everyone would agree that drug selection should be a rational process that follows the guidelines of evidence-based medicine, many other factors may play a role in decision-making. Some of these are explicit and rational, others are less clearly defined, and decision-makers may be unaware of the influence exerted by some of these factors. In order to facilitate transparent decision-making that makes rational use of health outcomes information, the System of Objectified Judgment Analysis (SOJA), combines the quality advantages of the 'top-down' approach to drug selection, based on a thorough literature review, with the compliance advantages of a 'bottom-up' approach, where the final decision is made by the individual P&T Committee and not by the authors of the review. The SOJA method, based on decision-making processes in economics, ensures that health outcomes information is given appropriate weight. Such approaches are valuable tools in discussions about product selection for formularies. In evaluating the clinical literature pertaining to drugs under consideration, we prefer particular study designs. When the effectiveness of a drug is tested we prefer randomized, double-blinded, placebo-controlled trials. Assessing whether a substance is related to the development of an illness is best studied with a cohort of cases control design. Determining the prognosis or outcome of a particular disease Tab 9 Page 251 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 is best served with a longitudinal cohort study. The P&T Committee (or a working group reference drug subcommittee) uses a formal clinical evaluation trial checklist to assist in reviewing the relevant literature. This tool allows scoring on a number of characteristics including: · Population studied (inclusion/exclusion criteria) · Treatments compared (biopharmaceutics) · Experimental design detail (controls, randomized) · Data collection (reproducible) · Bias control (blinding) · Results (measures, drop outs) · Data analysis (statistical tests, clinically meaningful In the end, the driving force for or against PDL placement is the drug‘s unique clinical contribution. The P&T Committee must primarily rely on evidence-based guidelines to determine this value, rather than clinical experience, expert opinions, professional relationships, pathophysiology, common sense, community standards, publications, and other sources. The Contractor must develop and maintain a predictive pricing methodology that incorporates rebate and administration costs to estimate the net cost to the State associated with individual PDL decisions. This information must be provided to DHS and the P&T Committee for specific drugs reviewed by the P&T Committee. We have developed a predictive pricing approach to estimate the final budget impact of PDL decisions after accounting for all rebates, prescribing alterations and offsetting administrative costs. This was based on our experience in other states. We went through the process of estimating savings prior to each PDL decision, then after each final PDL decision and then after implementation. This approach is not perfect; however we have improved our projection accuracy over the past few years due to practice and constant reassessment. Many categories can be projected extremely accurately (PPI) because we have gone through several iterations of the process. Other neophyte categories (Atypical antipsychotics) are much more difficult precisely because it is the first time and because there is precious little data published on PDLs in this drug area. Based on our experience, we have acquired a good sense of all the factors necessary to predict accurately. It is vital to know what percent of a population can successfully be maintained on two or three specific preferred drugs. Each category is different. Prior utilization data around the PDL and prior authorizations must be mined to glean this information. It is also key to know what percent of the population is already on the preferred and nonpreferred agents. This is useful both for calculating successful switches and for estimating PA volume, a key component of administrative costs. Tab 9 Page 252 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 Although it may take more time, it is also very useful to determine who would already meet PA approval criteria by virtue of having already tried every preferred choice. This can lead to accurate savings discounts and to consideration of POS online ―approvals‖. Any age or condition exclusions need to be factored in as well as implementation timelines. Exceptionally tight or demanding criteria that require testing or specialty consultations must have their ancillary costs included. A number of categories have unique considerations that require further projection adjustments. The narcotics category had a lot of twists in it because many Oxycontin users became ―allergic ― to morphine as soon as the PDL was announced. It became necessary to insist on prior medical records to document these mostly unwitnessed allergic reactions. It also became prudent to require urine drug tests that monitored for morphine use since many members who developed morphine side effects were found to have negative morphine tests during the time they were allegedly on the preferred morphine product. All of this information will be made available to DHS and the P&T Committee. Administration costs including the PA and PDL contracts will be assimilated into the projections. We will also be able to provide some help in forecasting administrative fair hearing rates in the various PDL categories. Provide DHS with a written report of the P&T Committee’s PDL recommendations within three (3) business days of the conclusion of the meeting for review and final approval by DHS. This must be accompanied by a contractor analysis in cases where the P&T Committee made modifications to the original recommendations. In addition to writing and publishing P&T Committee minutes, we will create a summary report that highlights the Committee‘s specific PDL recommendations for DHS‘ review and action. In addition to this summary we will perform analysis (such as the PA volume impact) on cases where the Committee made modifications to the original PDL recommendations. DHS‘ approval of this report will trigger the implementation plan for the affected class(es) of drugs. We will produce this report, and any analysis within three (3) business days of the conclusion of the Committee meeting. Approved changes made to the PDL will be included in our ―Summary of Changes‖ report that we post on the web. This report will be useful to our internal processes of making PDL changes and PA forms. The report will also include a synopsis and an analysis of any recommendations that ran counter to our proposed actions. When this occurs we will attempt to explain: · Why we think the committee acted the way they did; · Whether it will have negative, positive or neutral consequences; · Whether or not DHS should approve or reject; and · Offer alternative courses of action or strategy Tab 9 Page 253 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 Provide quarterly summaries to DHS on the activities and decisions of the P&T Committee by the 5th business day following the end of each quarter. Every quarter, we will provide P&T Committee activity and decision summaries to DHS. These will be delivered within five (5) business days following the end of each quarter. If there is a particular format desired, we will accommodate. Facilitate the P&T Committee’s use of clinical subject matter experts in reviewing various classes of drugs or individual drugs if such expertise is needed and is not represented among the P&T committee members. We realize that the P&T Committee will not have clinical expertise that deals with every therapeutic drug class. Therefore, we will facilitate the use of clinical subject matter experts. We provide the same service in other states and find that it relieves not only the Committee from the burden of making decisions in areas beyond their capabilities, but it gives answers to members and manufacturers who may question a clinical PDL decision. In addition to providing subject matter experts, we think the selection of P&T Committee members has a great impact on the probability of the success of the PDL. Where and when possible, we would like to be involved in the selection process. We have analyzed and acquired extensive knowledge of other state Medicaid formularies. It is desirable that most Committee members have demonstrable experience in P&T related areas. It is questionable for a dentist that presumably prescribes on a limited basis in the analgesic and antibiotic drug categories should occupy one of the positions on a nine member P&T Committee. We recommend soliciting providers that are participating in or have actively participated on insurance company (HMO/state) or hospital P&T or Drug Utilization Review Committees. We would be willing to advise and support the state to help ensure that the P&T Committee is able to meet the requirements of its bylaws. We would be interested in assisting the Committee in identifying qualified individuals to fill vacant Committee seats. We have the necessary experience in identifying, screening, and preparing P&T Committee members. We recommend that Iowa’s P&T Committee develop specific bylaws beyond the requirements imposed by OBRA ‗90. P&T Committees should be prepared to constitute advisory subcommittees to deal with issues outside the areas of expertise of its members. The P&T Committee should also demonstrate a willingness to educate itself before trying to educate others. Inviting guest speakers is a good way to deliver useful and provocative presentations. Tab 9 Page 254 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 We recognize that a strong, successful P&T program is contingent upon a dedicated, supportive P&T Committee. The relationship must be a symbiotic one. We are totally committed to this relationship. Committee members become increasingly valuable over time. It takes a considerable, sustained effort to cultivate the requisite knowledge in P&T Committee members. The proper analysis of drug utilization data is exacting and complicated by the idiosyncrasies of pharmacy benefit programs. It normally takes six months for new members to acquire the necessary skills to fully understand the complex array of reports and analyses. Experienced members are a treasured commodity and treated accordingly. New members are given introductory materials such as sample reports, definitions and the Bylaws. We would be willing to meet with new members prior to their first P&T Committee session to walk them through the program goals, procedures and reports. We also solicit information regarding any P&T study preferences that the Committee may have interest in pursuing. It has been our experience that pursuing P&T ideas of mutual interest is extremely productive for the long-term success of the PDL; it is essential to stimulate and maintain the intellectual interest of every member. Develop and facilitate a process for DHS to act on or deviate from the recommendations by the P&T. As briefly discussed above, DHS needs a mechanism to promptly review and approve recommendations while also discerning and mitigating poor advice. It has always been our practice to go into committee meetings with preconceived ideas of what constitutes good or bad recommendations. It is our belief that one of our duties is to influence the Committee decision making by providing them with the same data that led us to our opinions. Frequently, when the committee is given the same information, enough time to digest it and enough time for collegial discussion, consensus is reached. Unfortunately some committees are endowed with members that are philosophically opposed to the goals of a financially constrained Medicaid Program. Sometimes a provider, for whatever reason, may be entrenched in their opinion of a particular issue and may have been persuasive enough to affect the entire committee vote. Sometimes the entire Committee (including us) makes a decision in error and does not recognize it until after the meeting is over. When these scenarios arise, we can do the following: · Review all recommendations the following day · Recognize and investigate feelings of ―buyers remorse‖ Tab 9 Page 255 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 · Point out to DHS the potential negative ramifications · Suggest corrective actions · In some cases would recommend that DHS not accept the decision at this time and ask for reconsideration by the Committee or a detailed explanation of their rationale · In other cases we will propose that DHS actually send back a counterproposal for consideration, especially if it becomes apparent that key data was not available or given due consideration · Finally, there may be times when a particular decision is biased and/or ignorant due to a lack of specialty education or specialist involvement. In these cases the Committee may be directed by DHS to seek specialty input prior to a new recommendation. 5. Provide the following Supplemental Drug Rebate services: · Conduct meetings with the DHS, concurrent with the development of the PDL, to develop a competitive supplemental drug rebate strategy to negotiate with the pharmaceutical manufacturers. This process must be approved by DHS. It is not the Departments intent to simply accept the rate submitted by a manufacturer. We would have preferred to start negotiating supplemental rebates prior to the P&T Committee issuing recommendations. This weakens the state‘s bargaining position and makes it more difficult in this next phase of work. We would like to reach agreement with the Committee that many of the original recommendations would have been different if, at that time, the soon-to-be-negotiated supplemental rebates were available. Many of their original recommendations would appear to allow this line of secondary reappraisal since they involve therapeutically equivalent or comparable products. Essentially we need to communicate to the manufacturers what we would prefer if no supplemental rebates were available and what we would prefer if they suddenly do become available. It is somewhat disconcerting to potentially reverse positions on many drugs so close to the original deliberations, but this is exactly what happens in this process (but usually a year later). We predict that the manufacturers will not be fazed by this situation; however, it may challenge some members of the Committee. The first steps are to: · Sit down with DHS and map out the overall strategy · Explain how much of the PDL savings is likely to occur from supplemental rebates and how much will emanate from redirection to lower net-priced drugs · Review what needs to happen with key drugs and key categories to achieve success · Highlight the drugs that are popular and that will create pushback if designated non-preferred Tab 9 Page 256 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 · Using examples, explain how competitive bids will be stimulated and then maximized with subsequent counteroffers and by setting conditions · Illustrate to DHS how selective data analyses can be used to point out misuse or waste of certain medications thereby strengthening the state‘s position and forcing improved offers and/or protective limitations · Obtain approval from DHS to move forward with the strategy and the prescribed processes Certainly the process will include re-announcing to manufacturers that Iowa is creating a PDL; asking them to give their best SR price; ranking all drugs by their final cost—net of all rebates; and, using this data in collaboration with the P&T Committee to create a PDL. Many companies also prefer to have their government liaison personnel involved in this process and kept in the communication loop. It is important for all parties involved to know and agree that a SR offer does not guarantee drug placement on the PDL. Likewise, the absence of an offer does not necessarily mean that the drug will not be placed on the PDL. It is worth keeping in mind that SR offers inform, rather than dictate, the PDL construction process. · The Contractor shall serve as the DHS’ agent during analysis and negotiation of state supplemental rebate agreements with pharmaceutical manufacturers in a format approved by DHS. The resulting contract regarding supplemental drug rebates shall be between the manufacturer and the DHS and shall be presented to DHS for approval and execution. One hundred percent (100%) of the supplemental drug rebates collected on behalf of the state must be remitted to the DHS. The Supplemental Rebate Contract will be written using the template provided by DHS, as authorized by CMS. Manufacturers will not be surprised to receive the state‘s letter soliciting supplemental rebates. At least nineteen (19) Medicaid Programs are receiving, negotiating for or intending to collect supplemental rebates. Another fifteen (15) states have said that they are seriously considering them. In addition, states that implemented prior authorizations without inquiring first about supplemental rebates have received ―spontaneous‖ offers of such from drug manufacturers. After informing the manufacturers that the window for offering supplemental rebates is fast approaching, the negotiations commence. The format for doing so will be discussed with and approved by DHS prior to any manufacturer contact. Three business days after the initial request for contact information, we would typically send the SR Offer Forms to the manufacturers (via email). If no contact responses were received we would use the default contacts that we already possess from prior dealings with the manufacturers. We ordinarily require proposal returns within one to two weeks but we would have to be flexible in order to accommodate the state‘s needs. Tab 9 Page 257 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 If the goal is to be able invoice for SRs for the third quarter of 2004, then agreements will need to be in place shortly after the contract is awarded in April. Squeezing in SR negotiations between a notice of intention to award on April 26 and a partial PDL implementation date of July 1 means that the negotiation period will be brief, intense and focused. The manufacturers are not going to pay rebates unless the PDL is in effect. It may make the most sense to immediately collect SR offers on only the categories that have been reviewed to date by the P&T Committee since they could be reworked the quickest and easiest. These revised categories could potentially be implemented by July 1 so that the SRs could be legitimately captured. The merits of this approach include the fact that the Committee, prescriber and pharmacy communities are already fairly well acquainted with the original recommendations. Subsequent modifications will be easier to digest, especially if SRs allow some additional choices in key categories. Each company would be requested to supply the list of their products and net price in relation to AWP, AMP, wholesale acquisition cost (WAC) or guaranteed net price (GNP). The final net price would be expressed as AWP minus both the CMS negotiated basic rebate per unit and the proposed SR per unit. Some companies will request an audience. Most of the time, we arrange and conduct these by telephone. If DHS agrees, certain companies will receive an initial, exactly defined, proposed SR. These companies will almost certainly desire a more intensive discussion prior to their counter-proposal. One example is the statin class (as discussed in the prior section). We expect these companies to contribute additional rebates based on their products cost per unit of outcome, not simply cost per unit. These companies will almost certainly desire a more intensive discussion prior to their counter-proposal. This approach has been very effective in producing substantial rebates and is potentially applicable to several other drug classes. We would analyze the offers over a one-week period, at the end of which the state would receive an initial set of recommendations. Depending on how many issues were raised after the state‘s considerations, the final recommendations would be available in a week or less. At this point, the P&T Committee could begin serious deliberations (or revisions) on the PDL. This approach has been very effective in producing substantial rebates. The timeline must be rigidly enforced or the process will disintegrate into a protracted mess. Drug companies know that slowing the process will interfere with the receipt of rebates. As long as they keep negotiating, no supplemental rebates will flow to the state. Tab 9 Page 258 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 Our basic approach to rebate and program benefit analysis is to always keep in mind that access to therapy cannot be eliminated. Starting with therapeutic categorization and the understanding that individual therapies are not eliminated, but instead ranked, we review the prudence of individual therapies with respect to efficacy, safety market share, cost of therapy change, clinical relevance, PA volume, and projected volume of approved PAs by drug. Including the above and with initial SR offers in hand, individual products are ranked by net cost and potential PA volume (movement of market share). We consider other factors such as step therapy and grand-fathering. This ―ranking‖ becomes a working draft of the PDL, from which we can review overall positioning of drugs and return to the manufacturer negotiating table. Additional negotiations must occur within the allotted timeframe. At the close of negotiations, the working draft of the PDL will be submitted to the P&T Committee. We recommend using a GNP as opposed to a percent of AWP, AMP or WAC. GNP forces prices to stay flat. Percentage arrangements do not limit prices from going up. This being said, not all manufacturers will negotiate a GNP, so it is also wise to remain flexible, while still preferring GNP. Nonetheless, we are able to negotiate the rebates relative to whatever price standard the state wishes us to use. We would negotiate and execute all contracts using Iowa‘s CMS authorized Supplemental Rebates Contract (template). As required and expected, 100 percent of the supplemental rebates collected will be remitted to the state in the manner specified. · Provide an opportunity for all manufacturers to negotiate supplemental rebate agreements for their product(s) prior to the P&T Committee’s review of a product. This opportunity must be transmitted in a timely and accurate manner. There must also be established a method for communication between the Contractor and manufacturers, as approved by DHS. All manufacturers will have the opportunity to have their products placed on the state PDL. Some will not care to take advantage of this chance for various reasons. Some will prefer to negotiate with the legislature, advocates and provider groups with the intention to mount opposition to the PDL. Others feel that their products are immune to adverse PDL effects. Initially some may take their chances and see if the Committee will vote against their product. They may even wait to see if the state will stay the course and actually implement a hard prior authorization. Prior experience has shown them that PDLs do not always become reality and delays can save money. Tab 9 Page 259 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 The invitation to participate will be clearly and loudly communicated to all manufacturers. Written letters will be followed up with telephone calls. Email notification will also occur (if the state allows). Web site pronouncements will also assist in dispersing the information. The method(s) of communication will be clarified and specified by the state. The documentation of all contacts and content will also be specified by the state. · The contractor shall accept and handle all contract discussions and inquiries from manufacturers, consulting with the DHS as needed. On behalf of DHS, we will accept and handle all contract discussions and inquiries from manufacturers. We find that this granted authority allows the negotiations to become more competitive; by being the center point of contract discussions, we will immediately know whether a proposed supplemental rebate is reasonable since we are also performing the analysis. When we realize DHS needs to be consulted, we will do so. In addition, we will provide periodic updates to DHS on the status of negotiations and the project impact they will have on the PDL. It is our preferred practice to negotiate all contracts completely and directly with the manufacturers and consult with the state as is wise and necessary. Some manufacturers will try to negotiate directly with the state or even the legislature or Governor‘s staff. It would be extremely valuable at the onset if these other state parties acknowledge beforehand their intention to stay divorced from this part of the process. Inevitably, some companies faring poorly in negotiations will try these other avenues, frequently claiming that they are not being treated fairly and that their ―great‖ offer is being ignored or snubbed. There are situations when a state representative can help to close a deal. If we sense we are in that type of situation it would be helpful if we could include a DHS representative in negotiation meetings with manufacturers. · The contractor shall maintain all the original agreements, and provide DHS with access to all supplemental rebate agreements and related documentation within twenty-four hours of request. The contractor must maintain electronic copies of all executed supplemental rebate agreements. We will maintain all of the original SR agreements, and provide DHS with access within twenty-four (24) hours of a request. A log of all contract negotiations, including failed negotiation materials, will also be available. It is just as important for DHS to be able to audit why SR agreements were not recommended for acceptance as it is for positive recommendations. Every decision will leave an audit trail. Tab 9 Page 260 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 Once DHS accepts and signs a supplemental rebate agreement, we will maintain the original agreements. These agreements will be scanned and saved as electronic ―pdf‖ files, which will facilitate prompt access and delivery to DHS should they request a copy of an agreement. In addition to meeting the basic RFP requirements listed in this section, it is our current practice to maintain a status log of all supplemental rebate agreements and potential supplemental agreements. We have found that there is usually a lag between the time when an agreement is verbally reached and when it is formally executed via a signed supplemental rebate agreement contract. This log helps track the status of agreements and then is also incorporated into our supplemental rebate billing process. · Ensure that supplemental rebates are over and above the federal rebates and in compliance with federal law. We will ensure that supplemental rebate offers are over and above the Federal rebates and in full compliance with the law. We will also ensure the same for the billing and collection of said rebates. Please note that some SR offers change over time and are sensitive to alterations in the Federal rebate. · Provide opportunities for a manufacturer to amend the amount of its rebate agreement. As a part of our overall strategy to achieve the most competitive, and thus the greatest supplemental rebate amounts, we include a defined period in which manufacturers may amend the amount of their rebate agreement. This will be formally done on an annual basis, and is done on an as-needed basis throughout the year. Changes in market conditions and drug conditions may promote an opportunity for a manufacturer to improve their bid. We think that the Iowa PDL should always be receptive to SR rebate agreement amendments. Although it is important for a coordinated, thorough PDL review process to attempt to synchronize all final offers to one point in time so that fair head-to-head comparisons can occur, it is also true that a PDL is so large and fluid that constant reassessments are the norm. The goal is to arrive at the most cost- effective PDL possible while preserving the greatest degree of choice. To do both requires a perpetually open door and open mind. If a new proposal is received that would not affect a current agreement and could be valuable to the PDL then we will compare the new drug to preferred choices (if applicable) and ask: · If it is equal, can it be added and not violate current SR constraints? Tab 9 Page 261 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 · If it is less than, can it be added and then used as leverage to obtain a SR or improved SR from other more expensive choices? · If it is greater, contact the manufacturer prior to the next P&T Committee meeting, inform them of the potential non-preferred status and ask if a SR is possible. · The terms of the supplemental rebate agreement with each pharmaceutical manufacturer shall be confidential, separate from any of the contractor’s other clients and shall not be disclosed except to DHS or it’s designee. We agree to the keep all terms of supplemental rebate agreements confidential and separate from our other clients. Details of agreements will only be disclosed to DHS or DHS‘ designee. We have a confidentiality policy for all employees; they must agree to the policy as a condition of employment. We are in the business of handling confidential data and maintain this confidence with all our clients. Any attempts by outside parties to ask for or otherwise inquire about this information shall be reported to DHS. · Provide supplemental drug rebate-billing data quarterly in a DHS approved format in accordance with timelines established by DHS. Ensure system interface with IME POS contractor for the receipt of data to track and invoice the supplemental rebates. We will provide the SR billing data quarterly in DHS approved format and in compliance with DHS timelines. We will do whatever is necessary to interface successfully with the POS contractor. Our preferred process includes the following steps: Calculation and Invoicing: Using data collected from the claims processing system and the pricing structure collected and loaded quarterly from the Centers for Medicare & Medicaid Services (CMS), we calculate rebates on a quarterly basis. This process generates invoices that are mailed to all participating manufacturers showing the units paid for by the program during a given time period. A database of manufacturer addresses, telephone numbers and contacts is maintained for reference and mailing information. We also use alternative media such as diskettes and compact discs to provide invoice data to manufacturers. Checks: Manufacturers submit checks reflecting the invoiced amount. We post receivables in an accounts receivable transaction system. After posting the remittance and notation of adjustments, the checks and transaction log are forwarded to the state. Tab 9 Page 262 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 Disputes: We communicate with the manufacturer to reach agreement regarding units billed and rebated amount. We send the manufacturer a drug inquiry report, which is a summary of actual pharmacy submitted claims. We generate and mail letters to manufacturers that have not sent rebate money. If necessary, we create reports to accommodate disputes. Manufacturers: We track manufacturers to determine if they have signed a contract and are participating in the rebate program. Manufacturers not participating in the rebate program are taken off the rebate list and the claims validation process marks their NDC-specific drugs as ―not covered.‖ Pharmacies are notified that specific manufacturer‘s products will no longer be covered for rebate reimbursement. DHS may modify this process. Reports: Reports generated for the rebate program include drug inquiry reports, vendor transactions by date, transactions for selected vendor(s) by date, and payments by quarter. · Provide all supplemental drug rebate functions referenced in 184.108.40.206 of RFP MED-04-015 and the amendments, through June 29, 2005 at which point the IME POS contractor will assume these functions. The Medical Services contractor must assist in the transition of this function to the IME POS contractor. We would maintain the supplemental rebate process only until the new POS contractor assumes responsibility in June 2005. In order for us to expeditiously handle the supplemental rebate portion, we expect the current POS contractor to manage the federal program. The rebate process for the supplemental program should be similar to the federal process except that manufacturers would need to establish their supplemental rebate amounts in addition to their federal rebates. We want to caution the state, based on our experience, that late reporting of CMS rebates by manufacturers may create some difficulties with invoicing supplemental rebates on a timely and accurate basis (drug NDCs with heavy utilization but lacking a rebate amount on the CMS rebate tape). For supplemental rebates, GHS will need key claims fields and the federal rebate amounts from the POS processor. These fields will enable us to compute the number of units of drugs used and the supplemental rebate amounts. Invoices would be made separately for the federal and supplemental rebates to eliminate confusion in the case of disputes. Keeping the processes separate will also allow for easier processing of reversals and utilization corrections. Tab 9 Page 263 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 DHS will be responsible for providing a dispute resolution team. This team would be responsible for reconciling manufacturer disputes. In addition to dispute resolution, this team would proactively track rebates and confirm that the federally mandated timelines for submission of claims and disputes are met. · Establish and operate a process for accurate reporting and monitoring of negotiated supplemental rebates. We incorporate our negotiation tracking, SRs contract status, and SR contracted amounts into a database. We use this during negotiations, for communicating status to the state, and for computing SRs. We track PDL saving progress via standard reporting. This is referred to during any dispute resolutions when actual SR invoicing begins to occur. · During implementation phase provide weekly written reports concerning negotiation of supplemental drug rebates. In addition to serving as DHS‘ representative during contract negotiations, we will deliver a weekly negotiation status report to DHS. As a part of those reports, we will also include the supplemental rebate tracking log. SR negotiation status reports to be generated and provided weekly will discuss: · Who is (and is not) negotiating · Actual offers and projected savings · Initial reactions to standing offers · Recommendations to accept or reject specific offers · Recommendations to make counteroffers · Recommendations to accept with conditions · Offers needing special data analyses to calculate impact · Advice on what can be done to attract more interest, etc. · Provide to DHS monthly and ad hoc reports on the performance and savings associated with the PDL and supplemental rebates. Reports will be delivered to DHS in a format and on a schedule approved by DHS. We have a portfolio of standard monthly reports which includes PDL and supplemental rebate-related reports. DHS may choose from these or develop a unique format. IFMC has data analysts on staff that specialize in working with clients and our medical director to develop usable ad hoc reports. We frequently find that ad hoc reports become part of the standard set of reporting. We will work with DHS to determine a delivery schedule of standard reports. Tab 9 Page 264 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 Monthly and other ad hoc reports can be accommodated to allow DHS to monitor performance and savings attributable to the PDL. Any format and schedule are possible. We have provided some examples at the end of this section in PDL Attachments 04 - 06. · Provide quarterly supplemental rebate projection reports with projections of quarterly savings broken down by supplemental rebates and market shift data. This report must utilize a DHS approved methodology for determining savings. Reports will be delivered to DHS in a format and on a schedule approved by DHS. We will also provide quarterly and annual supplemental rebate projection reports. The reports will incorporate assumptions based on current utilization, conversion rates, successful conversion rates, expected market shifts and eligibility/user increases (or decreases). The savings will be identified as related to supplemental rebates, market shift or purely prior authorization in origin. We will utilize a DHS approved methodology to determine savings and we will deliver the reports in the format and schedule specified by DHS. · Provide quarterly rebate analysis and suggestions for enhancing rebates and/or lowering net pharmacy costs. This includes review and analysis of utilization data for performance under PDL drug classes, and areas for improvement for both clinical impact and cost effectiveness of PDL classes. Reports will be delivered to DHS in a format and on a schedule approved by DHS. We will provide quarterly rebate analysis after we invoice Iowa‘s supplemental rebates. Running supplemental rebate invoices is dependent upon the POS contractor running of the federal CMS rebates, as supplemental rebates are computed from the federal rebate amounts. We will include utilization data and the effects the PDL has had on utilization. In previous sections we discussed how we monitor for opportunities with our PA Suspect report. The general monitoring strategy is to check if non-preferred drugs (on the basis of cost alone) begin to match preferred drugs‘ preference level, then there is reason to consider either adding to the preferred side or putting more pressure on the preferred drug manufacturer to improve its SR amount. Quarterly rebate and utilization analysis is a useful method to be kept abreast of both positive and negative trends. Inadvertent effects need to be kept in mind. When you drive members away from specific drugs, they are sometimes unintentionally redirected into an unforeseen alley. For example, in Maine, when members were steered away from the off-label use of an atypical antipsychotic, some doctors prescribed expensive anticonvulsants that were just as off-label. On the other hand, some unintentional effects are fortuitous. When Oxycontin was made non-preferred, hundreds of users began to pay cash without bothering to try using preferred long acting narcotics. Tab 9 Page 265 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 The PDL Compliance Report is our most valuable tool for monitoring the success of the PDL (see PDL Attachment 02 at the end of this section). Under performing categories are easily detected by virtue of their lower preferred prescribing percentages and/or lack of change in average script price relative to the non- preferred choices. These reports provide the data to differentiate between and diagnose the healthy and ill sections of the PDL. We will provide them in the format and schedule dictated by DHS. There are many reasons why Iowa‘s pharmaceutical budget (adjusted for eligibility) increased at an average 14.5 percent annual rate over the last eight (8) years: · Costly new drugs that have little or no clinical advantage over cheaper and older therapies · Direct-to-consumer ads · Physicians‘ lack of basic medication cost knowledge · Off-label prescribing not adequately supported by solid evidence · An aging population We will look to our analysts to discern what expense increases are preventable. In 1993, the OBRA ‘90 was the most effective means to achieve drug manufacturer cost savings. At that time the rebates represented a savings. However, as time passed and new drugs entered into the market, manufacturers have figured the cost of rebates into the price of the new product thereby reassuring their profit margin. The major problem, with respect to Medicaid, is the inability to control utilization due to the fact that Medicaid is an entitlement program. The good news is that in addition to negotiating SRs, there are other synergistic cost-controlling strategies: · Contain off-label prescribing on new drugs lacking sufficient evidence. · Selective utilization of disease management initiatives that complement the PDL. · Increase efforts to promote fewer prescribers on polypharmacy efforts. Dual eligibles (especially in pharmacy care) are often quite expensive. Medicaid provisions do not restrict who they can see, but rather, who prescribes for them. Although dose consolidation was not described explicitly in the PDL section of the RFP, we feel it is worth raising and offering in the context of other interventions that can lower net costs. Tab 9 Page 266 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 Dose Consolidation Another key educational component concerns the savings attainable by dose consolidation. Many drug companies uni-price the different strengths of their drugs. In other words, all the different strengths are comparably priced. Unfortunately, doctors often mistakenly believe the opposite. They think that the next higher strength is double the cost of the lower strength and that it makes no difference if two of a lower strength are used instead of one unit of the higher. Therefore, a significant amount of effort should be spent alerting and educating providers about these situations. Another potential benefit to dose consolidation is that it may allow DHS to obtain savings in the mental illness medications. House File 619 says that drugs used for the treatment of mental illness shall not be subject to prior authorization. It does not prohibit limitations on the quantity of these drugs. Therefore it could be argued that dose consolidation strategies could be instituted since they only affect how many units of a particular strength of a drug one gets, not if one will get it. This would be very advantageous to the savings target. 6. Provide the following education services: · Subject to DHS approval, design, develop and implement an ongoing, broad-based education effort to ensure that providers and members are provided with timely and accurate information regarding the PDL and prior authorization. The education effort must begin immediately upon contract award and continue on an ongoing basis. This includes at a minimum Provider Manual changes and updates, direct mailings of written materials and web-based information. The website must be accessible within seven (7) calendar days of contract award. The website information must be approved by DHS and be accurate with regular updates as determined necessary by the DHS. Topics may include but not be limited to: a Program intent; b Process used to develop PDL; c Prior authorization criteria and processes; d Appeal process for denials; e How each group can assist to make the program a success; and f The process that will be followed upon implementation. We will meet the requirement as outlined in the RFP. The educational effort will start as soon as the contract is awarded. It will be sweeping in scope and persistent. At a minimum, it will include Provider Manual changes, updates, mailings and web-based information. Any presentations could also be posted on the approved website. As required, the website will be operational within seven days and it will be kept updated. We have extensive experience in providing relevant clinical information and supportive pharmacoeconomic data to targeted high volume prescribers. This effort, called the Physician Directed Drug Initiative (PDDI), identified opportunities for prescribers to select cost effective clinically approved Tab 9 Page 267 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 medications for a variety of medical needs. It included targeted mailing of price specific information relating to high impact diseases as well as information supporting improved member health care outcomes. PDDI resulted in significant changes in prescribing behaviors resulting in direct cost savings. As a result of the PDDI effort we became experienced at meeting with a wide variety of physician groups and working in numerous presentation formats. Due to our subsequent efforts with PA and PDL we met frequently with hospital, medical associations, medical societies, health centers, larger practices and residency programs. We learned to tailor the presentation the needs of the group. Certain components like program intent, developmental process and PA criteria would always be included; however for some groups we would customize the PDL section presentations. We would detail and emphasize the various PDL areas that can be accessed. Along with handouts, we reviewed implementation timelines and emphasize any differences in how established versus new users are treated. We will create a customized website for Iowa. Although it is probably true that many providers will not choose to use a website to access information, we have found that the providers who are so inclined are rather rabid about demanding this option. Internally, a website is also ideal for archiving all valuable pharmacy materials in a readily accessible format. We currently provide other ancillary materials such as enrollment applications for email newsletters, disease management materials, a variety of pricing reports along with program information on the website. It may be useful in the future to consider posting PDL provider data on the web for prescribers to access. This could include member-specific data to help them manage their members such as recent drug profiles or PDL compliance reports. If pursued, the following steps would be taken to ensure confidential information remains secure, and that those providers who would like to use this resource may do so conveniently. · Access to this confidential information will be handled with the best security and encryption available using 128 bit SSL certified login and encryption, and will therefore be in compliance with HIPPA regulations. · In anticipation of security and provider convenience, we will provide on-line provider registration for those providers who wish to obtain secure access to their information. · Once registered, the provider may log on to, access, and view only their information through their web browser. · We will develop on-line technical specifications, helpful tips, instructions, and answers to frequently asked questions to providers regarding on-line access. Tab 9 Page 268 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 · We will provide telephone technical support to assist providers in setting up their secure connection. · For those providers who wish to use this service, we will also provide a ―list- service‖ email system to notify providers when new and important information is published to the website. In the future we envision posting provider pharmacy outcome data on the web site. In order to maximize the effectiveness of this drug outcome reporting tool, our goal is to provide the ability to ―drill-down‖ to the much more basic parts of the information that makes up the provider‘s outcome report. All PDL and relevant drug and disease management information, letters, and bulletins will be published to the website archive and will be available for viewing, and also downloadable in multiple formats. The web site will be immediately updated following the generation of the quarterly PDL compliance and drug outcome reports and mailings. This includes all drug lists, letters, bulletins, and outcome reports. Although it is equally important to educate all providers, we suggest first focusing on high-volume providers: Educate High Volume Providers We provide on-site PDL educational programs in order to facilitate an understanding of the program goals and to acquire the cooperation necessary to ensure success. Attendance at on-site presentations is actively encouraged and quite successful. It has been our experience that incorporating the audience‘s prescribing data into the presentation is extremely engaging and effective. Being able to show the provider their own volume of prescriptions, their detailed prescribing irregularities and the many opportunities for improvement is of paramount importance. Sending provocative provider-specific data will often open the door for an invitation to explore the matter further. In the framework of a PDL program, the most important prescribers to concentrate on educating are the ones who have a similar alignment of interests. These prescribers are philosophically, intellectually or financially motivated to both give and accept assistance in the matter of keeping health care affordable. Several hundred prescribers are responsible for an inordinately high percentage of the drug budget and are crucial to the success of the PDL. Tab 9 Page 269 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 A further consideration is the division of the Medicaid drug benefit into two broad categories. The essential areas of the Medicaid drug benefit for PDL educational efforts to focus on are the drugs that are commonly prescribed by most physicians and that: · Have less expensive therapeutically equivalent alternatives, and · Form a large fraction of the drug budget and in some cases can be: - Consolidated, or - Stopped, or - Curbed with limits. Within this framework, the less essential drugs to address are the low volume, high expense medications. The use of such drugs, representing about 20 percent of the Medicaid drug budget, is best addressed with specialty-specific disease management activities. · Assist DHS in developing communication strategies for Medicaid members, Medicaid providers, pharmaceutical manufacturers, advocacy groups, DHS staff, DHS contractor staff and others with an interest in the PDL and prior authorization programs. No program materials may be distributed unless approved by DHS. The communication strategies include, but are not limited to: a Direct training of providers to educate them; b Direct involvement with constituent groups to facilitate their understanding of the program and the processes that will be followed; and c A combination of live trainings, telephone support, web-based information and direct mail. This includes printing and mailing services. We will assist the state in developing and implementing communication strategies as requested for all of the groups described in the RFP with respect to both the PDL and its PA components. We will distribute information only with DHS authorization. We have extensive experience in all the described communication strategies. We have experience in live trainings with state staff, doctors and pharmacies. We have been involved in working with various constituent groups including the legislature. Telephone support, the Internet, and direct mailings will be used to augment the educational efforts. For certain vital providers, targeted face-to-face discussions may be worthwhile. These discussions may include information gleaned from the provider and member database and related pharmacy claim information. This may be accomplished as part of a seminar program or video learning program made available utilizing recognized experts in various health care issues. Tab 9 Page 270 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 Provider Training Materials and Training Sessions We provide educational, clinical, and pricing information to all designated providers. In this context, the definition of provider includes any professional that either can currently prescribe or will soon be able to do so (physicians, mid-levels, residents, medical students). As mentioned earlier, it has always been our practice to tailor the materials specifically to the audience at hand. · Monitor and report on outcomes of the educational efforts. Providers, both pharmacists and physicians, need to be thoroughly educated concerning all aspects of the PDL and prior authorization process. A provider‘s understanding of the PDL is inversely correlated with their frequency of contact with the PA system. As the array of choices widens within the PDL, the need for prior authorizations proportionately diminish. Prior authorization is an effective but potentially expensive cost management technique. If physicians do not understand exactly what is and is not subject to prior authorization, many prior approval requests will be submitted needlessly. As more drugs are affected by the PDL and as the rules grow more complex with respect to exemptions and criteria exceptions, provider confusion will flourish and non-required PAs will multiply. New PDLs and PA systems often produce a 10 to 15 percent rate of unnecessary PAs. There are many metrics readily available to measure the success of educational efforts. As noted above, one is the rate of submitted PAs that were unnecessary. Another is provider correspondence. These should all be logged and reviewed, regardless of whether they are telephone calls, facsimiles, electronic, or letters. Themes, including ignorance and inadequate preparedness, will be readily apparent. Feedback forms can be handed out and collected at presentations. Comment forms can be posted on the website and included in mailings. A sub-optimal level of comprehension exacts a toll on many fronts. The provider wastes time needlessly and may resent the program. The member thinks they need a decision before they can pick up the drug. The PA staff squanders time and indirectly the state‘s resources. Inefficiencies of this sort are not completely avoidable but they are amenable to educational interventions. In a broad sense the educational efforts must instill a working knowledge of: · PDL composition by physicians, pharmacists, and members · Prior authorization process by the same parties · Criteria for approval of non-preferred medications Tab 9 Page 271 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 · Exempted drugs, conditions, members, and providers · Emergency script rules (and correct overrides for pharmacists) · Processes for interacting with the P&T and/or DUR committees concerning PDL changes and the addition/revision of criteria · Administrative rights, Fair Hearing availability for members While all of the above components are essential for success, they remain insufficient to maximize the savings opportunities afforded by a PDL and PA program. In order to capture this additional level of savings the state must interact aggressively with providers using readily available pharmacy data. The state must routinely share provider-prescribing data with the providers themselves. The focus of this data is to: · Let them see how well they comply with the PDL. · Show them how their prescribing compares to their peers. · Investigate aberrancies and intervene with the outliers. · Reward the superior providers with earned benefits like specific PA exemptions for periods of time. · Periodically assess comprehension of the frequent provider communications. · Provide useful feedback to physicians that submit unnecessary PAs. We have included an example provider PDL compliance report at the end of this section (PDL Attachment 02). · Coordinate with the IME Provider Services contractor in training. We will coordinate all provider trainings with the IME Provider Services contractor. In addition, we will forward all pertinent training materials to the contractor to keep them up-to-date with current PDL and PA practices. · Recommend to DHS education and notification processes and methods that minimize transition disruptions. We will offer a number of suggestions in the areas of education and optimal notification process that will minimize transition disruptions. One of the first priorities is the provider address file. No amount of notification is going to help if it does not get to the right place. The more locations the information can be posted the better. Provider groups, hospitals, and professional associations may agree to either post the educational material on their websites or provide web links to the PDL. Many advocacy and society newsletters were more than willing to provide space. Our mailings have extensive checklists to remind us who gets what notices and whether they receive part or all of scheduled quarterly mailings. Tab 9 Page 272 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 · Design and implement targeted educational efforts approved by DHS to improve compliance among outlier providers in order to maximize the effectiveness of the PDL. Inevitably there will be providers that adversely affect the success of the PDL. These outliers, and they are few in number, will cause headaches far out of proportion to their size. They may be philosophically opposed to the restraints imposed on their professional autonomy. They may be ignorant or oblivious. They will be loud and they will be costly and DHS will need to be prepared. We spend a lot of time and effort profiling the practices of providers. With some doctors it is not possible to reach mutual agreement on what the best drug is. If you want to change their minds or at least their behavior, you will need to be persistent and prove repeatedly that the PDL choices are helpful or not harmful. This means showing them population and practice level data that PDL choices result in good health care outcomes. Finally, there may be some providers so recalcitrant that extraordinary measures like individually restricted prescribing privileges, across the board prior authorizations and Medicaid provider expulsion may have to be considered. In the remainder of this section, we discuss our various efforts directed at improving the understanding of and compliance with PDLs and PA with the typical provider and then with the more difficult variety. This is so vital to the long-term success of the PDL that we want to devote extra attention to the tools and methods available. Before we provide additional details, it may be worthwhile to consider approaching the education issue from the vantage point of the P&T Committee. The P&T Committee must be extensively involved in any strategy developed aimed at educating physicians. The three essential elements of any specific strategy are physician leadership, effective incentives, and tools for improving performance. Effective incentives may include: · Having a significant portion of compensation at risk · Consistent performance measures · Regular and timely distribution · Simple and intuitive programs · Evolution over time to meet new challenges It is also evident that the P&T Committee must support the various tools for improving performance such as quality management, clinical guidelines, case management, disease management and health risk assessment. Tab 9 Page 273 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 The clinical literature also suggests that different types of interventions may work better for different types of clinicians. Pragmatic doctors are best aided by concise, bottom-line information from reputable sources, removing obstacles and strong incentives. The knowledge-seeker must be handled with journal articles, professional meetings, guidelines and the removal of major impediments. The traditionalist benefits from academic counter-detailing, minimal obstacles, reminders, feedback, rewards, penalties, and reinforcement. The receptive physician can be reached with continuing medical education, sound guidelines, and obstacle removal and are minimally affected by rewards and penalties. Profiling involves providing physicians with data showing how their performance compares to their peers. We will perform a wide variety and high volume of provider profiles each quarter. There are many reasons why profiling is employed so frequently. First of all, profiling is an excellent source of performance data to feed back to physicians. Most doctors are firmly committed to the tenet of self- improvement. Better performing providers appreciate the confirmation of their quality work. Others respond to the challenge of further improvement. Although profiles are mirrors, they can be subject to distortion. Depending on the profile measure, case-risk adjustment may be necessary to eliminate clinically significant distortions. Typically adjustments are made for differences in age and gender. In certain situations case-mix adjustments are made for varying levels and severity of co-morbid medical conditions. This requires either integrating non- drug claims or inferring diagnoses from drug profiles. Unfortunately, age, gender, and disease case-mix adjustments alone probably explain only 4 percent of the variation seen in outlier providers. There are many other profiling methodologies to consider. The accuracy of the claims data is hindered by the increasing tendency to submit creative or ―power‖ bills aimed at maximizing reimbursement. Sample sizes are crucial. Many experts point out that the member‘s prior utilization or experience is a much stronger predictor of variation than known case-mix variables. One way to obtain a good profile is to mimic the HMO practice of purposefully selecting healthy members. Another alternative to this process is to form fairer comparators. This might only involve comparing a pediatrician to other pediatricians. Intra-specialty profiling demand extra care and mitigate the need for complicated risk adjustments. Depending on the situation, we can employ different physician profiling methodologies. A guideline-based system (ETG's) looks at what a physician does about disease episodes relative to a set of predetermined practice standards. Practice based methodologies (ACG's and CCI) approach profiling from a population-based perspective. The community determines the normative standard. Physicians are compared to their peers in the community, not to a remote, Tab 9 Page 274 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 prescriptive guideline. Regardless of the importance of physician profiling systems, there is a slow transition to outcomes profiling that enhance the quality of care for members. PDL Compliance The compliance report provides data on prescriptions, members, dollars paid, and spending PMPM for preferred and non-preferred drugs across a large number of drug categories. In any given category, prescribers may view their scores with respect to what percent of their prescribing was preferred. Compliance scores provide valuable information. They monitor the success or failure of the PDL. They identify problematic drug categories and nettlesome individual providers. Regional groupings occasionally reveal pockets of like- thinkers. This may be helpful when considering interventions. Strategically located counter-detailing is often rewarding. Compliance scores can also be used as incentives. Physicians with exemplary scores can be granted privileges such as exemption from specific prior authorization requirements. Each earned exemption is valid until the next quarterly report is run. Many physicians appear to value relief from administrative processes as much as they do monetary rewards. When it is clear that providers understand and comply with the PDL most of the time, it is reasonable to allow those same providers greater autonomy as long as we maintain vigilant monitoring. We will distribute reports to providers who prescribed drugs for at least ten (10) members during the quarter. For PDL, the reports will provide essential feedback to physicians as to how cost-effective they are prescribing compared to their peers. For PA, it allows physicians to gauge their performance for the purpose of exemption to PA. GHS has the ability to respond to the recommendations of specialist and supportive physicians through our capacity to engage in extensive studies of drug utilization data. Dealing effectively with the specialty communities requires both in-depth knowledge and the commitment to fully explore available data. Studies engage the critics in a productive conversation. These studies reinforce that all parties can be reassured that the PDL and PA programs are promoting quality health care. Tab 9 Page 275 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 7. Provide information for system changes as follows: · Develop and implement a DHS approved procedure for communicating system changes to all affected contractors and State agencies. We recommend a simple and straightforward procedure that is also practical, thorough, and done in such a way that it meets both administrative and technical needs. We suggest setting up email groups for each affected contractor and state agency that contain email addresses of all necessary stakeholders. This methodology would be used to distribute all information about PDL, PA, and SR system changes to other IME vendors affected by the changes. · By no later than ten (10) business days after approval of the PDL by the DHS, the contractor shall transmit the PDL to: (1) the DHS and (2) the State’s fiscal agent or IME POS contractor. The contractor will design, develop, test and implement an electronic interface with the State’s fiscal agent to assure timely transmission and uploading of prior authorization data. The contractor must ensure computer system capability and interface between the contractor and the State’s fiscal agent or IME POS contractor so that the information provided by the contractor can be accurately accepted. The first step in designing an electronic interface to deliver the PDL to the IME POS contractor is to establish business rules of how the PDL will operate in the POS. From these rules, a file format, data content, and programming can be developed and tested. Sign off would be based upon whether the developed systems meet the business rules. As we have discussed throughout our proposal, there are PDL tools such as ―automated prior authorizations‖ (grand-fathering, step therapy, etc.) that, if selected by DHS as an appropriate tool, will need to be programmed on the POS. Transfer and transmittal of data should be done via a secure electronic exchange. For example, we would recommend secure email exchange using PGP, sFTP (secure ftp), or normal FTP with encrypted files utilizing PGP. If DHS or the POS contractor utilizes another proprietary file transfer system, we will be compatible using only standard protocols to interface with them. We will verify that transfers and transmittals of data are received. We will incorporate quality control measures to ensure that the entire transmission was sent, received, and electronic copies of all transmissions will be archived. We will have an acceptable electronic interface with DHS and the State‘s fiscal agent to provide the transmission of data. This transfer will be performed as described above within ten (10) business days after receiving DHS (written) approval of the PDL. Tab 9 Page 276 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 · The contractor shall electronically transmit to the State’s fiscal agent or IME POS contractor, the list of drugs requiring prior authorization due to the level of participation on the PDL in a format approved by DHS. Much of the same protocol discussed in the previous two sections will pertain here. IFMC will provide the assistance to ensure appropriate connectivity of PDL/PA data to the POS. IFMC has experienced Data Processing staff and IT departments to assist in establishing this connectivity. Connecting to POS data is of vital importance for a successful running PA program; therefore, we will dedicate the staff and resources to assist in this connection. We will work with DHS and the POS contractor to determine the best means of communicating the drugs that will require prior authorization based upon the PDL rating and rules. Once the format is established and approved by DHS, the PDL will be transmitted in the approved format and on a DHS approved schedule. We will assist the POS contractor in understanding the data and the requirements being placed upon the claims processor to accommodate DHS‘ PDL driven PA program. The actual implementation of the necessary claims processor edits to accept the PDL based rules reside solely on the POS contractor. Our PA system would need access to the following information: · Client eligibility · PDL · PA rules · Client profiles (pharmacy claims history) · Pharmacy providers (NABP numbers, addresses, facsimile numbers, etc.) · Member doctors (DEA numbers, addresses, facsimile numbers, etc.) In addition to the information necessary to administer a PA system, we desire to establish a positive working relationship with the current POS contractor. There are times when PA pharmacists need to access real-time information off the claims system or when the adjudication claims help desk needs to find out PA information from the PA help desk. Our system is able to accommodate these interactions, and we expect the current vendor‘s system to do the same. Ideally, we would like to see a telephone system setup so help desk calls to either vendor could be transferred. This would eliminate the need for the provider or member to dial another number to get service. Our telephone system has this capability. Current eligibility information is another point of information that sometimes demands a solid working relationship with the IME vendor responsible for Tab 9 Page 277 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 administering eligibility. Our customer service standards are such that we strive to respond to member requests immediately, and if the issue cannot be resolved quickly, to assure a prompt response. Having a strong working relationship with DHS and other vendors plays an important role in accomplishing this high level of service. There are various ways to form data connections to the PA system. For example, we could utilize a T1 line, a VPN connection, or a FTP server. Whatever the method, it would need to be mutually agreed upon by the connecting parties. We would expect the participating parties to be in compliance with HIPAA, by either following HIPAA formats or developing a trading partner agreement for ―flat file‖ exchanges. Our PA system is a robust system, with the ability to send data to the claims adjudication system on-line in real time. The member pharmacy claims data we receive does not have to be real time. It is acceptable for the claims history data accessible to the PA program to be sent in regular cycles. However, the PA pharmacist occasionally needs real time access. It would be helpful to have an account set up and accessible on the adjudicator‘s system especially for this instance. · The contractor shall also prepare and transmit the PDL list to the DHS in a format approved by the state agency for posting on the DHS website in addition to maintaining an external website. We have significant experience in producing PDL documentation and training material that reflect its many changes and impacts not only the vendors involved, but also the provider community and the member population. IFMC will support DHS in creating appropriate formats to represent the PDL on state approved websites. There are several possibilities in posting a PDL. The PDL to the most detailed level would include every NDC that is preferred and non-preferred. This list would include the entire drug file of over 200,000 products. When we post or publish the PDL, we have varying formats depending upon the intended audience. The most widely used format is a summarized higher-level version that shows selected drugs (without strengths or package sizes unless applicable) in categories. This gives prescribers, members, and pharmacists a way to view alternatives to non-preferred drugs. We will review all the format options with DHS and transmit to them a version for their website and also post it on our website. We recommend posting the PDL in an electronic pdf format. Tab 9 Page 278 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 · The contractor’s project work plan should include detailed data integration requirements and the steps the contractor will take to ensure successful integration. Our data integration requirements are outlined above. We would need to establish business rules and agree upon the complexity of the PDL. We will work with POS contractor to create the formats for the PDL data files that follow the established business rules and allow the POS contractor to effectively program their system. The drug information in these files will be based on our standard drug reference database. We will create a work plan that incorporates all the strategies mentioned in these sections to ensure successful integration. Contractor Responsibilities – PDL Member Inquiries/Relationships 1. Staff and operate a toll-free member hotline from 8:00 a.m. to 5:00 p.m. CST, Monday through Friday. Calls received outside of these hours are greeted by a voice message that lists the hours of hotline availability. We will have a help desk specifically set up to respond to member inquiries related to the PDL. The operating hours will be from 8:00 a.m. to 5:00 p.m. CST, Monday through Friday. For calls outside of the regular business hours, a voice message will announce the help desk hours and direct them to our website as an alternative way of submitting inquiries. In addition, we will provide the telephone system and toll-free line in our current office space until the IME office site becomes available. A help desk for prescribers and pharmacists will also be provided. This help desk will be related to the PDL and PA processes. 2. The contractor will be expected to research requests and provide information back to members. Our help desk is backed up with professional licensed pharmacist consultants. Our pharmacists know point of sale systems and are available to advise and provide information pertaining to prospective drug utilization, proper use of prescription drugs, and other medical standards. Generally, their purpose is to assist pharmacists and members in managing health problems more effectively so members can stay healthier and keep costs down. The first line of responses to members will come from help desk staff. If there are inquiries outside of a help desk technician‘s scope of knowledge, they will direct the inquiry to the help desk supervisor who will then find the appropriate level of expertise to respond to the inquiry. All inquiries, whether by telephone or in writing, will be logged. Tab 9 Page 279 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 3. Provide reports indicating types and numbers of inquiries received and resolution, in a format and schedule determined by DHS. The call logging system incorporates the data necessary for providing reports as required, including the types and quantity of received inquiries, summaries on resolutions, and review of all (if any at the time of reporting) outstanding inquiries. Please see the following section for more detail on our call and inquiry logging system, including on-line reporting capabilities. 4. Maintain telephone statistics report showing, for each month in the quarter, the number of calls taken and the issue. Maintain statistics on written correspondence for each month in the quarter. We will meet the requirement as outlined in the RFP. Customer services logs are one of the ways we monitor common provider issues, identify ways in which the system might be improved and assure an important level of Contractor accountability. We have a help desk logging utility called HDCALL. HDCALL identifies calls by type, the length of the call, the time the call was taken, details of the call, completed calls, and the number of incomplete calls. Reporting, such as histograms for the average call volume over the hours of the day, will be produced on a monthly basis. Other help desk activity and performance reports may be produced upon request. C. Required Reports All reports will be in a format and on a schedule approved by DHS. The preferred drug list and supplemental rebate contractor will provide the following reports: 1. Weekly written reports concerning negotiation of supplemental rebates during implementation. 2. Monthly and ad hoc reports on the performance and savings associated with the PDL and supplemental rebates. 3. Quarterly supplemental rebate projection reports with projections of quarterly savings broken down by supplemental rebates and market shift data. 4. Quarterly rebate analysis reports with specific suggestions for enhancing rebates and/or lowering net pharmacy costs. 5. Ongoing analysis and clinical reviews of the State of Iowa Medicaid pharmacy claims history and with a review and cost analysis of each therapeutic class at least one time per calendar year. 6. Quarterly summaries to DHS on the activities and decisions of the P&T Committee; also a written report of the P&T Committee’s PDL recommendations within three (3) business days of the conclusion of the meeting. We presently employs data analysts, database administrators, programmers, pharmacists, and other professional staff who have years of experience creating customized reports. We also have specific computer resources allocated specifically for this purpose. We encourage and will provide consultation to determine the best ways to access data to respond to specific reports or requests. Tab 9 Page 280 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 Reporting is a key to finding how to lower overall costs and identify ongoing savings. By analyzing reports, managers decide how and when to change policies. Time must be taken to analyze data, and before that, it needs to be generated. We have the capabilities to do both efficiently and cost effectively. The following discussion defines our reporting system and capabilities—we would need to negotiate with DHS to discern what is expected. We have four reporting tiers available. This approach, consisting of Level One, Level Two, and Level Three reports along with a web-based ad hoc reporting system, provides structure to our reporting responsibilities. Reports are intended to provide the state with information it requires to effectively and efficiently manage its programs, as well as to develop sound policy. The first tier of reports (Level One) consists of standard reports that are generated routinely in accordance with a pre-determined schedule. The content of the reports, their format and production schedule will be approved by DHS. They are static reports, intended to provide updated information on the same set of parameters week after week, month after month. Copies of Level One reports can also be posted on our website (with secured and limited access and with DHS approval), allowing a broad audience to view the findings. The second tier of reports (Level Two) are reports that fall between the true standard report and a highly complex, or Level Three, analytic report. This report is run periodically, but not in accordance with a particular, predetermined schedule. The report usually requires some modification each time it is run; this entails the investment of some programming time, but does not require any substantial clinical expertise to accomplish the desired modifications. We define Level Two reports as those that require less than thirty (30) minutes of professional resource time for completion. The level of input necessary to run the report correctly may include the medical director, pharmacists, analysts, and/or programmers. The third tier of reports (Level Three) are for new analyses that are produced for very specific circumstances. They require considerable investment of time and expertise by GHS clinical staff, programmers, and analysts at levels much higher than that required in the more routine, Level Two reporting. We are able to generate reports displaying five-year trends, along with analysis of fiscal information. Such reports prove to be not only valuable as fiscal management tools, but also allow for in-depth study and analysis of drug utilization patterns that will assist in DHS policymaking. We also recommend and offer reports on PA approval rate by physician, store, day of week, PDL category, and PA volume by drug name. Tab 9 Page 281 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 A fourth tier of reporting is described below as an enhancement to the scope of work. In addition to meeting the requirements outlined in the RFP, the following optional reporting mechanisms may interest DHS. This fourth avenue of our reporting system provides web-based access for independent reporting. This system could provide authorized DHS personnel with on-line access to a querying tool populated by the POS database. There are two aspects to this web- based tool. The first is best characterized as a parameterized reporting module for look up reports. Look up reports have a preset design and information pool. Users – who will access the system by logging on to a secure website – would be prompted to provide parameters that will establish criteria for the report. Our experience has revealed that certain types of ad hoc reports are requested over and over again. While the parameters for the reports change at each request, many of the reports share the same basic characteristics. This class of reports is suitable for user- driven ―re-specification‖ that do not require GHS professional resources for redesign. Instead, a user can access the system, find a report format that they have seen before, and ―re-run‖ the report, substituting their own specifications. This could allow DHS staff to create a variety of versions of a ―favorite‖ report easily and quickly. The second aspect of the web-based access system is a data mining capability, which we refer to as OLAP, or On-line Analytic Programming. The system could be populated with POS data and allow users to build their own reports. The interface for the system relies on familiar ―drag and drop‖ technology. Users may generate output in any variety of formats, using graphs, histograms or other visual presentations, in Word, Excel, PDF format, and others. Like the look up reports module, this system could be accessed through log in to a secure website. We have the ability to provide DHS staff with web access tool training and on-going user support. Tab 9 Page 282 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 D. Performance Standards IFMC will meet all performance standards specified below. Performance Measures – 220.127.116.11 PDL & Supplemental Rebate Minimum Standards No. Measure % 1. Complete required reports accurately and timely. Monthly reports 100 are due five (5) business days following the end of the month. Quarterly reports are due five (5) business days following the end of the quarter. Annual reports are due the 10th business day following the end of the year whether Federal fiscal year, State fiscal year, or other annual period. 2. Be able to demonstrate annual savings in the total outlay for 100 prescription drugs. 3. Provide DHS with access to all supplemental rebate agreements 100 and related documentation within twenty-four (24) hours of request. 4. Provide the P&T Committee with required information a minimum 100 of thirty (30) days prior to the meeting. 5. Provide notification to providers a minimum of thirty (30) days 100 prior to implementation. 6. All providers must receive a notification of provider training a 100 minimum of thirty (30) days prior to the training. 7. Provide DHS with a detailed project workplan and timeline within 100 five (5) business days of signing the contract. 8. Within ten (10) business days of signing the contract provide DHS 100 with a PDL phase in schedule. 9. Provide DHS with a written report of the P&T Committee 100 recommendations within three (3) business days of the conclusion of the meeting. Tab 9 Page 283 March 26, 2004 IFMC Response to the Iowa Department of Human Services Medical Services with Preferred Drug List - RFP #MED-04-034 No. Measure % 10. For call in which a member has a person-to-person conversation, 95 100 percent of the inquiries whose answer is not immediately available to the customer service attendant will be researched and answered within forty-eight (48) hours of receipt of the inquiry. 11. Maintain a service level of 80 percent for incoming calls. The 100 service level (SL) will be calculated as follows: SL = (T – (A+B) ) 100/T Where T = all calls that enter the queue A = calls that are answered after thirty (30) seconds B = calls that are abandoned after thirty (30) seconds 12. Answer to at least 90 percent of telephone inquiries during the 100 initial call from the member. 13. Respond, with a complete response, to 90 percent of written 100 inquiries from a member within five (5) working days of receipt. Tab 9 Page 284 March 26, 2004
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