Washington State Medicaid Prescription Drug Purchasing: Preferred Drug List

Transcription

1 Washington tate Medicaid Prescription rug Purchasing: Preferred rug List NLPE Conference eptember 21, 2011 John Bowden Joint Legislative udit & eview Committee

2 JLC Background he Joint Legislative udit and eview Committee (JLC): Consists of 8 senators and 8 representatives equally divided between emocrats and epublicans. eceives assignments through: Budget provisos; Policy bills; and opics selected by JLC members. Medicaid Prescription rug tudy eptember 21,

3 Why id JLC Conduct the Medicaid rug tudy? Y M N E In 2009, JLC directed staff to review Medicaid prescription drug expenditures because: In 2003, to save on prescription drug costs, the Legislature mandated H, Health Care uthority, and epartment of Labor and Industries to create a state preferred drug list for outpatient prescriptions. $46.5 million in Medicaid prescription drug cost savings were assumed in Operating Budget. However, $9.4 million was restored in 2004 upplemental Budget. No information on costs savings after eport Page 2 Medicaid Prescription rug tudy eptember 21,

4 udit Questions 1. Has H complied with statutory requirements in creating and using the state preferred drug list (PL)? 2. Has the PL resulted in Medicaid prescription drugs cost savings? 3. Is a separate process needed for estimating PL savings for budget development purposes? eport Page 2-3 Medicaid Prescription rug tudy eptember 21,

5 What is the Preferred rug List? P O G M B C K G O N preferred drug list (PL) is a list of prescription drugs selected to save money and ensure the safety, efficacy, and effectiveness of the drugs. he purpose of a PL is to guide practitioners in prescribing clinically appropriate, costeffective drugs. eport Page 1 Medicaid Prescription rug tudy eptember 21,

6 How Medical ssistance Prescription rug Purchasing Works Client Centers for Medicare & Medicaid ervices Practitioner prescribes drug. Client gets prescription filled at Pharmacy at no cost to Client CM maintains contract with Manufacturer for federally established unit rebate amounts Pharmacy Pharmacy purchases drugs from Wholesaler or from the Manufacturer Pharmacy submits claim to H. H reimburses Pharmacy for filled prescriptions + dispensing fee rug Manufacturer or Wholesaler H H invoices Manufacturer for rebates. Manufacturer sends rebates to H ource: JLC analysis of agency data. Medicaid Prescription rug tudy eptember 21,

7 First udit esult: Compliance tatute requires H to work with two other state agencies to: evelop a process that designates preferred drugs based on cost, safety, efficacy, and effectiveness; dopt rules governing practitioner endorsement and use of the PL; and Provide for reasonable exceptions to the PL. eport Page 2 & 9 Medicaid Prescription rug tudy eptember 21,

8 PL Process esignates Preferred rugs P O G M B C K G O N rug classes are groups of drugs which are used to treat specific diseases and conditions. he process compares the drugs within the drug classes to identify the drugs that are equally or more safe and effective, and when possible, less expensive. eport Page 5 Medicaid Prescription rug tudy eptember 21,

9 Preferred rug esignation Process Begins with rug Classes High overall expenditures High overall volume Large price variation among drugs rug classes reviewed for PL Medical reasons Low overall expenditures Low overall volume Little price variation among drugs rug classes not reviewed for PL eport Page 5 Medicaid Prescription rug tudy eptember 21,

10 Process for esignating Preferred rugs I E L Entity H taff Prescription rug Program (H, HC, and L&I) rug Effectiveness eview Project (W, 13 other states, and Canada) W Pharmacy and herapeutic (P&) Committee hird-party ctuary and Prescription rug Program (H, HC, and L&I) H, HC, and L&I irectors ctions eviews utilization data for drug classes with potential Medicaid savings. Nominates drug classes for review that have the greatest potential savings for the state as a whole. ubmits nominations to the rug Effectiveness eview Project (EP). elects drug classes, jointly with other EP members, to be reviewed or updated. Produces independent evidence-based reviews of the drug classes. eviews the evidence-based reports supplied by EP and makes recommendations about types of drugs for inclusion on the Washington PL. eview recommendations from the P& and conduct cost analysis to recommend preferred and non-preferred drugs. Make final decision about which drugs will be included on the preferred drug list. Emphasis of ction Cost Cost afety, Efficacy, and Effectiveness afety, Efficacy, and Effectiveness Cost, afety, Efficacy, and Effectiveness Cost, afety, Efficacy, and Effectiveness eport Page 6 Medicaid Prescription rug tudy eptember 21,

11 dopt ules Governing Practitioner Endorsement P O G M B C K G O N For the PL to work, practitioners should: Prescribe preferred drugs; or llow the substitution of preferred drugs for non-preferred drugs. Practitioners complete a short on-line form to become endorsing practitioners which allows automatic substitutions to occur. eport Page 7-8 Medicaid Prescription rug tudy eptember 21,

12 dopt ules Governing easonable Exceptions to the PL P O G M B C K G O N easonable exceptions are important because in certain instances, a preferred drug may not be clinically appropriate for a patient. If an endorsing practitioner wants a prescription automatically filled with a specific non-preferred drug, he or she can sign dispense as written on the prescription. eport Page 8 Medicaid Prescription rug tudy eptember 21,

13 Practitioners, Pharmacists, and se of the Preferred rug List Endorsing Practitioner Non-Endorsing Practitioner I E L eport Page 8 Medicaid Prescription rug tudy eptember 21,

14 econd udit esult: Cost avings everal factors complicate the ability to attribute or quantify specific cost savings to the PL ix positive indicators that the PL has produced Medicaid prescription drug cost savings Medicaid Prescription rug tudy eptember 21,

15 Factors that Complicate ttributing pecific Cost avings to the PL I E L PL not only cost containment effort concurrent efforts underway (e.g., reimbursement mechanisms and push to increase generic drug use) Market and population factors affecting costs (e.g., inflation, generics becoming available, new drugs, and population changes) Challenges with cost savings analysis methodologies (accuracy of all methodologies decreases over time) eport Pages Medicaid Prescription rug tudy eptember 21,

16 Percent Increase in verage aily Cost from FY 2003 to FY 2008 Positive Indicator #1: PL Cost Increases Less than Inflation and Non-PL rug Class Costs 35% I E L 30% 25% 20% 15% 10% 5% 0% PL rug Classes National rug Inflation Non-PL rug Classes ource: JLC analysis of H data and.. Bureau of Labor national drug inflation statistics. eport Pages Medicaid Prescription rug tudy eptember 21,

17 Positive Indicator #2: 28 PL rug Classes Capture lmost Half of Expenditures I E L PL drug classes accounted for 49 percent of Medicaid fee-for-service drug expenditures in FY his is because: he number of drug classes with preferred drugs increased from 7 in 2004 to 28 in Most of the higher expenditure drug classes have been included. eport Pages 15 Medicaid Prescription rug tudy eptember 21,

18 Prescription Claims (in millions) I E L Positive Indicator #3: More Prescriptions are Being Filled with Preferred rugs Note: based on current 28 PL classes. Preferred Non-preferred Fiscal Year eport Page 16 Medicaid Prescription rug tudy eptember 21,

19 Positive Indicator #4: se of ispense as Written has eclined I E L ispense as written (W) was used on about 50 percent of PL claims in In FY 2008, W was used on 5 percent of PL claims. ome practitioners have unusually high W prescribing patterns compared to their peers. In 2009, H was granted limited authority to impose restrictions on the W privileges of these practitioners. eport Pages Medicaid Prescription rug tudy eptember 21,

20 Positive Indicator #5: upplemental ebates from rug Manufacturers I E L H received supplemental rebates in 15 of the 28 drug classes. upplemental rebates increased each year since the PL was implemented. he state received $6.6 million in supplemental rebates in FY 2008 for drugs dispensed to Medicaid clients. eport Page 17 Medicaid Prescription rug tudy eptember 21,

21 Prescription Claims (in millions) Positive Indicator #6: se of Generic rugs has Increased I E L Generic Brand Fiscal Year eport Pages Medicaid Prescription rug tudy eptember 21,

22 hird udit esult: Budgeting I E L PL savings estimates are no longer necessary for budget development because: he PL is not a separate factor in forecasting drug expenditures savings from the PL are part of the base budget; and Increases in future savings are not likely to be large because: rug changes within drug classes are not usually significant; and emaining drug classes do not contain large expenditures or are excluded for medical reasons. eport Page 19 Medicaid Prescription rug tudy eptember 21,

23 udit esults ummary Has H complied with statutory requirements in creating and using the PL? Has use of the PL resulted in Medicaid prescription drug cost savings? However, specific PL cost savings cannot be calculated. Is a separate process for estimating savings still needed for budget development purposes? Yes Yes Not any more Medicaid Prescription rug tudy eptember 21,

24 Contact Information John Bowden Medicaid Prescription rug tudy eptember 21,