Transcript CALIFORNIA MEDICAID (Medi-Cal)

EFFECTIVE PREFERRED
DRUG LISTS
National State Attorneys General Program of
Columbia Law School
Presented by
J. Kevin Gorospe, Pharm.D.
Chief, Pharmacy Policy
California Medicaid
Formularies v. Preferred Drug List





Terms often considered to mean the same thing
Perspective different between private sector and
Medicaid
Statutory differentiation in the Social Security
Act
Method of PDL implementation is different in
private and public sector
Medicare Part D is a hybrid of public and private
sector PDL implementation
Formularies




Traditionally a formulary can be closed or
open
Open – everything is available with few or
no restrictions
Closed – products can be excluded , i.e.
non-benefits
Social Security Act, section 1927 provides
specific requirements for a formulary
under Medicaid
Formularies




Provides ability to exclude drugs from
coverage
Requires written explanation available to
the public
Provides for prior authorization
Committee meetings are generally open to
the public
Preferred Drug Lists





Benefits are typically tiered (private sector)
Tier selection primarily a financial decision
Typical 4 tier benefit – generic, preferred brand,
non-preferred brand, and non-covered drugs
Co-payments provide patient centric decision
making through lower co-payments for less
expense drugs
Drug selection in various therapeutic categories
can be limited
Preferred Drug Lists




Private sector relies heavily on mail order
to lower costs
Drug selection in various therapeutic
categories often limited
Cost more often the primary driver of
decisions
Generic heavy (only?) PDL
Medicaid PDL




Prior authorization programs as described
in the Social Security Act
Almost all drugs are benefits
Typically two tiers, prior authorization and
non-prior authorization
Lack of co-payments and entitlement do
not provide for cost-effective patient
decision making
Medicaid PDL



Utilization control driven by the Medicaid
program
PDL created differently
Two general designs:
• Non-PA to PA vs. PA to Non-PA


Both are acceptable to CMS
One should provide better control
Non-PA to PA





All drugs start out available without PA
May have some utilization controls
Individual drug or categories of drugs
reviewed
Drugs moved to PA only based on review
Decisions based on evidence and cost
factors
PA to Non-PA





All drugs start out available through PA
only
Individual drug or categories of drugs
reviewed
Drugs moved to PDL only based on review
Decisions based on evidence and cost
factors
This is Medi-Cal’s design
Drug Reviews

Begin with:
• Manufacturer petitions – a letter, FDA approval
document and official labeling
• Medi-Cal self initiates drug or category review


AMCP dossier and other documents follow
Request for input is sent to the Medi-Cal
Contract Drug Advisory Committee (MCDAC)
for input
• Physicians (3)
• Pharmacists (3)
• Beneficiary representative (1)

MCDAC provides written input – advisory only
Drug Review


A pharmacist is assigned as primary
reviewer
Meeting arranged with manufacturer
representatives
• Therapeutics – Evidence Based!
• Cost proposal

Primary reviewer prepares documents to
address the 5 criteria
The Criteria





Efficacy – how well does it work?
Safety – how safe is it?
Misuse Potential – overuse or
inappropriate use?
Essential Need – does it need to be
available without PA?
Cost – what is the cost effectiveness?
Evidence Based





Clinical features are reviewed using a
variety of literature resources
Studies – published and un-published
Compendia – statutorily mandated
Personal contact with practitioners
Input from MCDAC
Evidence Based



Provides a clinical assessment of 4 of the 5
criteria
Any single criterion can be the overriding
emphasis on approving or denying a drug
addition to the PDL
Discussions are internal – pharmaceutical
consultant staff only
Cost as THE Criterion







When the efficacy, safety and misuse do not
distinguish one drug from another
Lack of an essential need for a drug
Less costly alternatives available
Can a manufacturer buy their way onto the PDL
What does “COST” truly mean
Manufacturer’s definition
Medi-Cal’s definition
Cost as THE Criterion


What does “COST” truly mean
Manufacturer’s definition
• Price competitive with other drugs OR
• Other health savings
• Sometimes both?

Net cost to the manufacturer is their
primary concern
Cost as THE Criterion

Medi-Cal’s definition
• Price competitive with other drugs/medical
interventions AND
• Provides improved outcomes which lead to
• Improved health resource use AND
• Cost effectiveness is sustainable over time
Addressing Drug Cost

Net Cost has two components
• Payment to pharmacies
• Discounts from manufacturers

Pharmacy reimbursement
• Contractual in the private sector
• Set by statutes and state plans for Medicaid
• Profit margins for pharmacies small
compared to manufacturers
Manufacturer Rebates





Discounts = Rebates
Federally required rebate in Medicaid
State supplemental rebates obtained
through contracting associated with drug
review
Allowed by state and federal statutes
How successful has Medi-Cal been?
Medi-Cal Budget Numbers

Pre-Medicare Part D
• Expenditures
• Federal Rebates
• State Rebates

-
$4.8 Billion
$1.4 Billion
$0.7 Billion
Post Medicare Part D
• Expenditures
• Federal Rebates
• State Rebates
-
$3.1 Billion
$0.8 Billion
$0.4 Billion
Rebates





Rebates 38% of gross expenditures
Supplemental 13% of gross expenditures,
previously 15%
Not all drugs have supplemental rebates;
primarily brand name drugs on the PDL
82% of expenditures are for brand name
drugs, but only 37% of the drug claims
Shift to generic drugs – reimbursement
changes needed
Barriers to an effective PDL



Ineffective prior authorization program
Non-PA to PA design – continuing care
Mandatory coverage of drug categories
•
•
•
•

HIV/AIDS
Cancer
Mental Health
Diabetes
Lack of a evidence based review
Barriers to an effective PDL





Cost is THE criteria trap
Use of Pharmacy Benefit Management
companies
Inability to move market share
Group purchasing (multi-state) coupled to
individual state PDL
Lack of follow-up analysis
Follow-up


Was the decision correct?
What are the clinical outcomes?
•
•
•
•

System to capture and analyze data
Use of standards to apply data findings to
Establishing new standards
Educating providers and patients
Medi-Cal recognized this deficiency and is
changing the dynamic
Outcomes


Commit resources to analysis
Data tools to enable work
•
•
•
•

Rebate Accounting and Information System
Data Mining software
Commitment of staff
Use of outside consultants (DUR)
Education of providers, patients and
family – CalMEND as a model
Innovation
“A government that robs Peter to pay Paul
can always depend upon the support of
Paul.”
-George Bernard Shaw