Pharmacy Program Initiatives

Threshold, Mandatory Generic, Maximum Allowable Cost (MAC)

Javier Menendez, RPhPharmacy Manager

Department of Medical Assistance Services

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PDL

Threshold/ PolyPharmac

y

ProDUR Enhancemen

ts

PDL

OTC Drug List

Pharmacy Programs

MAC Mandatory Generic

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Threshold Program

This program was required by the 2003 Appropriations Act, which directed the department to review recipients’ drug profiles after a threshold of nine prescriptions.

The purpose of this program is to improve the health and safety of recipients and offer DMAS enhanced opportunities to improve quality by:

– Reducing potential and actual severe adverse reactions to drugs,– Retrospectively monitoring high drug utilization by Medicaid

recipients,– Providing pharmacists with additional support for Drug Utilization

Review,– Enhancing continuity and coordination of care in the use of

prescription drugs, and– Identifying clinical abuse/misuse and fraud of prescriptions.

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Threshold Program

Two-Step Program

– Step-one: Coordination of Care Initiative Patients with multiple prescriptions from multiple

medical providers dispensed from multiple pharmacy providers (Implemented October 1, 2004)

– Step-two: Threshold/Polypharmacy ProgramRetrospective review of all patients with greater than 9 prescriptions in 30 days (Implemented October 15, 2004)

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Coordination of Care

This initiative would use the following criteria (for a 30 day period) to identify recipients with potential coordination of care issues:

– Prescriptions filled at ≥ 3 different pharmacies – Prescriptions written by ≥ 3 different prescribers – Received ≥ 6 prescriptions

1307 letters to prescribers involving 412 recipients

To determine the impact of the initiative on prescription volume and prescription costs, the identified recipients will be compared after six months to a group of recipients with similar prescription utilization.

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Threshold - First 10 daysEdits for Threshold by code and day (10/15 to 10/25)

Date Code AMB LTC TOTAL

10/16/2004 1501 26 26 5210/17/2004 1501 7 5 1210/18/2004 1501 1 3 410/19/2004 1501 12 17 2910/20/2004 1501 12 12 2410/21/2004 1501 11 12 2310/22/2004 1501 8 14 2210/23/2004 1501 15 15 3010/24/2004 1501 6 7 1310/25/2004 1501 6 3 9

Total 104 114 218

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Threshold - First 10 days generated 12 letters

Number Reason Reference Number Drug Letter sent to

1 Duplicate therapy 0000011 Protonix MD2 Duplicate therapy 0000012 Zyprexa LTC3 Drug interaction 0000013 Gemfibrozil MD4 Duplicate therapy/ different MD 0000014 Skelaxin LTC5 Duplicate therapy/ different MD 0000015 Skelaxin LTC6 Duplicate therapy 0000016 Clarinex MD7 Drug interaction 0000019 Spironolactone MD8 Duplicate therapy/ different MD 0000020 Lasix MD9 Duplicate therapy/ different MD 0000021 Lasix MD10 Duplicate therapy 0000023 Seroquel LTC11 Drug interaction 0000025 Gemfibrozil MD12 Duplicate therapy 0000028 Zyprexa MD

Letters sent (10/15/04 to 10/25/04)

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PDL

Threshold/ PolyPharmacy

ProDUR Enhancements

PDL

OTC Drug List

Pharmacy Programs

MAC Mandatory Generic

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Background

What is a Brand name drug? A brand name drug is an innovator drug that holds a patent to prevent other manufacturers from copying and is usually available from a single source or one manufacturer.

What is a Generic drug? A generic drug is a copy of a brand name drug. It is the same medicine with the same active ingredients as the brand name drug, but usually made by another company at a less expensive cost.

What is a Multi-source drug? Multi-Source drug is a drug that is made by both a brand name manufacturer and is also available from several generic manufacturers.

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Mandatory Generic Program

Previous to September 1st 2004, this edit messaged the dispensing pharmacist to substitute with the generic, most commercial insurers have the same edit.

11.74% of total claims processed in calendar year 2003 were filled with multi-source brand name drugs

Effective September 1st, 2004 , ALL multi-source prescriptions require a DAW of “1” (brand necessary) for claim to adjudicate for a brand name drug

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2003 Results

Service Month Total Claims

Total RClaim Count

Paymen% Total Claim

Cnt Claim Count% Total Claim

Cnt Claim Count% Total Claim

Cnt1 846,514 336,07531.820M 39.70% 101,904 12.04% 400,804 47.35%2 787,452 312,53829.677M 39.69% 95,115 12.08% 372,389 47.29%3 852,456 342,01332.220M 40.12% 101,033 11.85% 401,346 47.08%4 895,627 363,16734.116M 40.55% 105,234 11.75% 418,866 46.77%5 959,657 387,49535.991M 40.38% 111,782 11.65% 451,372 47.03%6 890,419 356,66634.691M 40.06% 102,737 11.54% 423,539 47.57%7 899,736 358,89835.570M 39.89% 104,177 11.58% 429,715 47.76%8 890,206 354,96935.410M 39.87% 102,278 11.49% 425,893 47.84%9 902,790 359,03235.993M 39.77% 104,369 11.56% 432,280 47.88%

10 963,905 381,60438.902M 39.59% 112,619 11.68% 461,981 47.93%11 892,996 350,80735.886M 39.28% 104,883 11.75% 430,359 48.19%12 963,140 376,76238.719M 39.12% 115,550 12.00% 463,979 48.17%

Total 10,744,898 4,280,026419.001M 39.83% 1,261,681 11.74% 5,112,523 47.58%

All Drugs Single Source Brand Multi Source Brand Generic Drugs

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2004 Results

Service Month Total Claims Claim Count

% Total Claim Cnt Claim Count

% Total Claim Cnt Claim Count % Total Claim Cnt

1 854,828 329,039 38.49% 97,447 11.40% 422,664 49.44%2 796,601 288,446 36.21% 90,770 11.39% 411,892 51.71%3 905,049 328,845 36.33% 100,681 11.12% 469,342 51.86%4 865,240 314,664 36.37% 94,533 10.93% 450,148 52.03%5 833,821 300,686 36.06% 90,598 10.87% 437,047 52.41%6 855,521 307,235 35.91% 91,685 10.72% 450,940 52.71%7 840,879 301,034 35.80% 88,710 10.55% 445,557 52.99%8 840,405 299,403 35.63% 88,124 10.49% 447,297 53.22%9 813,319 291,488 35.84% 79,839 9.82% 436,449 53.66%

Total 5,951,939 2,169,949 36.46% 654,424 11.00% 3,087,590 51.88%

All Drugs Single Source Brand Multi Source Brand Generic Drugs

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PDL

Threshold/ PolyPharmacy

ProDUR Enhancements

PDL

OTC Drug List

Pharmacy Programs

MAC Mandatory Generic

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Nomenclature

MAC- Maximum allowable cost (also known as VMAC)

FUL- Federal Upper limit (federal-MAC)

AWP- Average Wholesale Price

WAC- Wholesale Acquisition Cost

U & C- Usual and Customary- Price charged to paying customers

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Current VMAC

Current Virginia MAC based on Virginia Voluntary Formulary

Pricing methodology = 75th percentile and 60th percentile

for unit-dose drugs

“Lower Of Logic” applied to determine the price paid(AWP-10.25%, FUL, MAC, Usual & Customary)

Most claims use the FUL price, because current MAC is

higher

Great opportunity for improvement

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Key MAC Program Notes

30-60 days notice to pharmacy providers

Pro-active work with VaPHA and select pharmacy providers in September to facilitate provider acceptance

Easy Dispute Resolution Process (phone, fax, email)

Easy access to MAC list through Mailing and Website

Complete MAC list (800+ drugs) in easy to read and understand format

IT coordination with Optima-FHSC-VAMMIS

Reporting framework with DMAS policy department

Projected utilization data on target for estimated budget savings

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Dispute Resolution ProcessThe intent of the MAC (maximum allowable cost) program is to reimburse

providers fairly based on accurate generic drug costs. If a provider discovers that the MAC price does not accurately reflect the drug cost, the provider should explore alternative manufacturers or wholesalers that more accurately reflect the MAC price. If there are no manufacturers or wholesalers that are at or below the established MAC price, the providers may request a review for resolution.

The providers may call 1-866-312-8467, or fax the designated form to 1-866-312-8470 or e-mail disputeresolution@dmas.virginia.gov . with dispute resolution requests with the proper information; NDC, drug name, strength and dosage form, manufacturer, package size, wholesaler, lowest price found and search date. All the information will be researched and the appropriate action taken.

 Providers will be notified of the receipt of their dispute resolution request within one business day. A resolution and notification to the provider will take place within three business days. The providers will either receive a notice stating that there has been confirmation of alternative manufacturers or wholesalers who have the product available at or below the MAC price, or the MAC price will be adjusted accordingly to reflect the collected data. The revised price will be effective from the date of the request. Providers may reverse and resubmit all affected claims made from the effective date forward. The MAC list will be updated monthly and can be found and downloaded from our website at www.dmas.virginia.gov.

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MAC Pricing For Generics

At least 41 other state Medicaid programs utilize MAC pricing for generics

MAC pricing is used throughout commercial insurance market

State Medicaid programs and private insurers vary in how aggressive they are in setting their MAC pricing

The MAC that is set for each drug must be reviewed and updated periodically to ensure appropriate pricing

DMAS estimates the net savings for its proposed MAC program to be $5.15 million (GF) in each of the 2004-2006 biennium