2004 Session

Budget Amendments - HB30 (Member Request)

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Chief Patron: Jones S.C.
Modify Reimbursement for Generic Drugs

Item 326 #17h

Item 326 #17h

First Year - FY2005 Second Year - FY2006
Health And Human Resources
Medical Assistance Services, Department of FY2005 $3,000,000 FY2006 $3,000,000 GF
FY2005 $3,000,000 FY2006 $3,000,000 NGF

Page 250, line 37, strike "$4,057,098,577" and insert "$4,063,098,577".
Page 250, line 37, strike "$4,428,632,619" and insert "$4,434,632,619".
Page 263, strike lines 53 through 59 and insert:
"WW.1.  The Department of Medical Assistance Services shall amend the State Plan for Medical Assistance to modify the reimbursement methodology used to reimburse for generic drug products. The new methodology shall reimburse for the product cost based on a Maximum Allowable Cost list to be established by the Department.  Such amendments shall be effective within 280 days or less from the enactment of this act.
2. The Department may not adopt a maximum allowable cost (MAC) reimbursement rate for generic pharmaceuticals unless:   (i) the Department has published its methodology for setting state MAC rates, including, the identity of the reference product used to set the MAC rate; the NDC number of the reference product; the factor by which the MAC rate exceeds the reference product price, which shall be not less than 150 percent of the lowest-published wholesale acquisition cost for products widely available for purchase in the state, and included in national pricing compendia; and the identity and date of the published compendia used to determine the reference product and set the MAC rate; (ii) the Department demonstrates that three different suppliers, including the supplier of the innovator product, are able to supply, and pharmacies are able to purchase, sufficient quantities of the drug from these sources of supply. The drugs considered must be listed as therapeutically and pharmaceutically equivalent in the FDA’s most recent version of the “Orange Book"; (iii) the Department demonstrates that the use of a MAC rate that is lower than the Federal Upper Limit (FUL) for the drug, or the development of a MAC rate that does not have a FUL will not result in the use of higher-cost innovator brand name or single source drugs in the Medicaid program; and (vi) the Department shall publish the list of state MAC rates in accordance with the state administrative procedure act, and consistent with state procedures governing the adoption of Medicaid provider rates.
2.  The Department shall (i) review and update the list of MAC rates at least quarterly; (ii) implement and maintain a procedure to eliminate products from the list, or increase MAC rates, consistent with changes in the marketplace; and
(iii) provide an administrative appeals procedure that complies with the state administrative procedure act, to allow the manufacturer of the listed drug or a manufacturer of a competing drug in the same therapeutic category or a prescribing provider or a dispensing provider to contest a listed MAC rate."
Page 264, strike line 1.

(This amendment sets forth criteria for the Department of Medical Assistance Services to use in developing a new methodology for reimbursing for generic drugs through the Medicaid program. Language prohibits the implementation of the new reimbursement methodology unless the Departments adheres to the requirements set forth in the language.)