2004 Special Session I

Budget Amendments - HB5001 (Committee Approved)

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Modify Reimbursement for Generic Drugs (language only)

Item 326 #2h

Item 326 #2h

Health And Human Resources
Medical Assistance Services, Department of

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. In developing the maximum allowable cost (MAC) reimbursement rate for generic pharmaceuticals, the Department shall (i) publish the factors used to set 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 110 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) identify three different suppliers that are able to supply the product and from whom pharmacies are able to purchase sufficient quantities of the drug. The drugs considered must be listed as therapeutically and pharmaceutically equivalent in the FDA’s most recent version of the “Orange Book"; (iii) identify that the use of a MAC rate 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) distribute the list of state MAC rates to pharmacy providers in a timely manner prior to the implementation of MAC rates and subsequent modifications.
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 modify MAC rates, consistent with changes in the marketplace; and (iii) provide an administrative appeals procedure to allow a dispensing provider to contest a listed MAC rate.
3.  The Department shall report on savings achieved through the implementation of measures to implement MAC rates in the Medicaid pharmacy program to the Chairmen of the House Appropriations and Senate Finance Committees, and the Joint Commission on Health Care by January 1 of each year."
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 requires the Department to adhere to set criteria in implementing of the new reimbursement methodology and to report on savings achieved through the initiative by January 1 of each year.)