DEPARTMENT OF HEALTH AND SOCIAL SERVICES

Division of Medicaid and Medical Assistance

Statutory Authority: 31 Delaware Code,

Section 512 (31 Del.C. §512)

ORDER

Pharmaceutical Services – Multi-State Pooling Rebate Program

Nature of the Proceedings

Delaware Health and Social Services (“Department”) / Division of Medicaid and Medical Assistance (DMMA) initiated proceedings to amend the Title XIX Medicaid State Plan to expand the recently approved preferred drug list by participating in a Medicaid Multi-State Pooling Rebate Program to reduce the cost of pharmaceuticals in a clinically sound way. The Department’s proceedings to amend its regulations were initiated pursuant to 29 Delaware Code Section 10114 and its authority as prescribed by 31 Delaware Code Section 512.

The Department published its notice of proposed regulation changes pursuant to 29 Delaware Code Section 10115 in the October 2005 Delaware Register of Regulations, requiring written materials and suggestions from the public concerning the proposed regulations to be produced by October 31, 2005 at which time the Department would receive information, factual evidence and public comment to the said proposed changes to the regulations.

Summary of Proposed Amendment

Statutory Authority

• 1927(a)(1) and 1927 (a)(4) of the Social Security Act, Authorizes state to enter directly into separate or supplemental rebate agreements with manufacturers

• 1902(a)(19) of the Social Security Act, Care and services under a Medicaid state plan be provided in a manner consistent with simplicity of administration and the best interests of beneficiaries

• 42 CFR §440.120, Prescribed drugs et al

• 42 CFR §447.201, State plan requirements

• State Medicaid Director Letter, SMDL #04-006, September 9, 2004, Guidelines for Multi-State Pooling Agreements

Amending the Following State Plan Page

Attachment 3.1-A, Page 5 Addendum

Background

On September 9, 2004, CMS issued a State Medicaid Director letter giving guidance to states on how to implement multi-state pooling arrangements that achieve cost savings and protect the interest of Medicaid beneficiaries while promoting competition.

Summary of Proposed Changes

DMMA intends to submit an amendment to the Title XIX Medicaid State Plan to the Centers for Medicare and Medicaid Services (CMS) to participate in a multi-state pool by submitting a SPA package that includes the following elements:

1. Standard multi-state pooling language incorporated into the supplemental rebate agreement portion of the state plan.

2. A supplemental rebate agreement template.

3. A document referenced in the supplemental rebate agreement template that indicates the state’s participation in the purchasing pool.

Although, the state will pool its efforts in buying drugs, DMMA will maintain its own Preferred Drug List (PDL) and exercise clinical oversight of the list to assure adequate access to needed prescribed drugs for its beneficiaries. This approach builds on the Department’s efforts to curb program costs while assuring access to prescribed drugs and quality care.

DMMA is working with Provider Synergies, L.L.C. TOP$(SM), a multi-state pharmaceutical purchasing pool administered by Provider Synergies, L.L.C., has received CMS approval. TOP$ (SM) stands for “The Optimal PDL Solution”.

Summary of Comments Received with Agency Response

The Delaware Developmental Disabilities Council (DDDC) and the State Council for Persons with Disabilities (SCPD) offered the following concerns summarized below. DMMA has considered each comment and responds as follows:

DDDC

Delaware plans to join a multi-state pool administered by a firm (Provider Synergies) already approved by CMS in this context. DMMA provides assurances that participation in the purchasing pool will not affect its individual PDL. In other words, DMMA does not intend to define its PDL based on a multi-state list. And, yet we understand that Provider Synergies currently is a consultant for EDS, the agency that DMMA contracts with to manage the system and make recommendations for our PDL. We are concerned as citizens and taxpayers that a potential conflict of interest may be present in this relationship.

We strongly encourage the DMMA to keep a close eye on this process and the development of the PDL for Delaware so that we do not end up with a PDL that is comprised of only generic medications for Medicaid recipients. We also strongly encourage that Provider Synergies, EDS, and the members of the PDL review committee adhere to a strict disclosure of conflict of interest while doing business in Delaware.

SCPD

While the SCPD is generally supportive of securing drugs at competitive prices, this proposal gives us reason for pause. The regulations ostensibly provide assurances that the selection of drugs on the PDL will be based on clinical factors without influence from the existence or lack of existence of a rebate. The Council has been advised that inclusion of drugs in PDLs in other states has been materially influenced by the availability of multi-state drug pool rebates. As a result, some clinically effective medications have been excluded from PDLS in other states.

Since Provider Synergies may be involved in both development of the PDL and the rebate program, it is imperative that a “firewall” be established to prevent the rebate program from affecting selection of drugs on the PDL in any way. Council recommends that further assurances in this context be provided.

Agency Response: The Secretary has formed a committee of fifteen (15) members that includes Doctors, Pharmacist, Nurses, Medical Practitioners, and Consumers that review and make decisions on what drugs will be put on the PDL. The members act independently and, based on sound medical evidence, determine which drugs should be placed on the PDL. All members of the committee are aware of their responsibilities concerning conflict of interests and the need for them to declare any potential conflict of interest. DMMA appreciates your comments and will closely monitor the process.

Findings of Fact

The Department finds that the proposed changes as set forth in the October 2005 Register of Regulations should be adopted.

THEREFORE, IT IS ORDERED, that the proposed regulation to amend the Title XIX Medicaid State Plan regarding Pharmaceutical Services – Multi-State Pooling Drug Rebate Program is adopted and shall be final effective December 10, 2005.

Vincent P. Meconi, Secretary, DHSS, November 17, 2005

Pharmaceutical Services – Multi-State Pooling Rebate Program

DSS FINAL ORDER REGULATION #05-74

REVISIONS: ATTACHMENT 3.1-A

Page 5 Addendum

LIMITATIONS

12.a. Prescribed Drugs:

Drug Coverage

1. Drug products are covered when prescribed or ordered by a physician, or other licensed practitioner within the scope of their practice and when obtained from a licensed pharmacy. Covered drugs, as defined in Section 1927(k)(2) of the Act, are those which are prescribed for a medically accepted indication, medically necessary, and produced by any pharmaceutical manufacturer, which has entered into and complies with a drug rebate agreement under Section 1927(a) of the Act.

2. Drugs excluded from coverage as provided by Section 1927(d)(2) of the Act, include:

a. Drugs designated less than effective by the FDA (DESI drugs) or which are identical, similar, or related to such drugs;

b. Drugs when used for cosmetic purposes or hair growth (products, such as Minoxidil Lotion and Retin A are not covered for adults, except for certain medical conditions);

c. Drugs when used to promote fertility;

d. Drugs that have an investigational or experimental or unproven efficacy or safety status;

e. Drugs when used for anorexia, weight loss, or weight gain. Drugs for the purpose of weight control may be reimbursed when prior authorized following established criteria as reviewed and approved by the DUR Board and deemed medically necessary.

3. Non-covered services also include: drugs used to correct sexual dysfunction and compound drugs (compound prescriptions must include at least one medication that on its own would be a covered entity).

4. Participating manufacturers' new drugs are covered (except excluded/restricted drugs specified in Section 1927[d][1]-[2] of the Social Security Act) for six months after FDA approval and upon notification by the manufacturer of a new drug.

Quantity and Duration

1. Dosage limits: Medications are limited to a maximum dose recommended by the FDA and appropriate medical compendia described in section 1927(k) of the Social Security Act, that indicate that doses that exceed FDA guidelines are both safe and effective or doses that are specified in regional or national guidelines published by established expert groups such as the American Academy of Pediatrics, or guidelines recommended by the Delaware Medicaid Drug Utilization Review (DUR) Board and accepted by the DHSS Secretary.

2. Quantity limits are placed on therapeutic categories that will allow for coordinated care and improve outcomes. Limits exist for:

a. Sedative hypnotics-15 doses per 30 days

b. Triptans, acute treatment of migraines, 9 doses per 45 days

c. Opioid analgesics-200 doses per 30 days

d. Skeletal muscle relaxants-120 tablets/capsules per 30 days

e. Benzodiazepines-120 tablets per 30 days

f. Tramadol-240 tablets per 30 days

g. Narcotic cough medications-480ml per 30 days

h. Adjunctive anticonvulsants-240 tablets/capsules per 30 days

i. Nebulizer solutions-3 acute exacerbations per 30 days

j. Clients utilizing greater than 15 unique medications per 30 days

k. Medications that are dosed once a day are limited to one dose per day unless that total dosage required is within the limits stated above and require more than one tablet/capsule to obtain the required therapeutic amount.

3. Duration of therapy

a. Nicotine cessation products are limited to the duration that has been approved by the FDA.

b. Palivizumab-6 months during the high viral period of the year.

4. Prescriptions are limited to a quantity not to exceed the greater of 100 dosing units or a 34-day supply except for drugs selected and received through mail order.

Prior Authorization

1. Prior authorization requirements may be established for certain drug classes or particular drugs, or a medically accepted indication for uses and doses.

2. The DUR Board determines which prescription drugs may require prior authorization. The Board assesses data on drug use in accordance with predetermined standards. The standards shall be:

a. monitoring for therapeutic appropriateness

b. over-utilization and underutilization

c. appropriate use of generic products

d. therapeutic duplication

e. drug-disease contraindications

f. drug-drug interactions

g. incorrect drug dosage or duration of drug treatment

h. clinical efficacy

i. safety

j. medical necessity

k. potential for abuse, misuse and diversion

l. experimental use opportunity

m. cost effectiveness relative to similar therapies

The recommendations of the DUR Board constitute interpretive guidelines to be used in determining whether to grant or deny prior authorization of a prescription drug. The make up and membership authority for the DUR Board complies with 42 U.S.C. S1396r-8.

3. A request for prior authorization for covered outpatient drugs is processed within 24 hours of receipt of a completed prior authorization request from a prescribing provider by telephone, mail or electronic communication. A 72-hour supply of medically necessary covered drugs is provided in an emergency situation as mandated and pursuant to 42 United States Code s1396r-8.

Preferred Drug Lists with Prior Authorization

A process is established which utilized a preferred drug list (PDL) for selected therapeutic classes. Drugs in those classes that are not included on the PDL shall require prior authorization. A Pharmaceutical & Therapeutics (P&T) Committee, comprised of pharmacists, physicians, and community members, appointed by the Secretary, Delaware Health and Social Services, selects drugs for the PDL.

Delaware will participate in a multi-state pooling program that will negotiate supplemental rebates in addition to the federal rebates provided for in Title XIX of the Social Security Act.

Drug Rebate Agreements

CMS has authorized the state of Delaware to enter into The State of Delaware Department of Health and Social Services supplemental drug rebate agreement. This supplemental drug rebate agreement was submitted to CMS on April 7, 2005 and has been authorized by CMS.

• Pharmaceutical manufacturers are allowed to audit utilization rates;

• Compliance with the reporting requirements for state utilization information and restrictions to coverage;

• The unit rebate amount is confidential and cannot be disclosed for purposes other than rebate invoicing and verification; and,

• Rebate agreements between the state and a pharmaceutical manufacturer that are separate from the drug rebate agreements of Section 1927 are approved by the Centers for Medicare and Medicaid Services. The state reports rebates from separate agreements to the Secretary of Health and Human Services. The state will remit the federal portion of any cash state supplemental rebates collected.

Diagnostic Services

Medicaid will pay for the rental of an apnea monitor to monitor the breathing of an infant for whom a diagnosis of apneic episodes (near-miss Sudden Infant Death Syndrome) has been made.

9 DE Reg. 420 (9/1/05)

9 DE Reg. 975 (12/01/05)(Final)