Federal Upper Limit Dimitry Gotlinsky Western University

Rx Pricing It is extremely difficult to understand U.S. pharmaceutical pricing Not everyone pays the same price Prices for different payers are often a secret The only official price released by pharmaceutical company is called WAC

WAC (whole sale acquisition cost)- The price paid by a wholesaler for drugs purchased from the wholesaler's supplier AWP (avg, wholesale price) –an average of list prices quoted by wholesalers to pharmacies - AMP (avg. manufacturer price)-an average price paid to manufacturer by wholesalers for drugs distributed to retail pharmacies -AMP is used in calculating Medicaid Rebates

What is FUL? In 1987 CMS (centers for Medicare & Medicaid Services) established a Federal Upper Limit FUL was established to limit the amount that Medicaid could reimburse for multiple-source drugs Multiple source drugs-is the same as generic, but multiple manufacturers make the same medication

How does a drug get picked to be on FUL? 2 criteria's must be met 1)there must be 3 or more versions of the drug rated therapeutically equivalent by the FDA (A rated) 2) and the drug has at least three suppliers listed in current editions of national compendia

Problem with FUL FUL is updated only twice a year Not all categories of drugs are covered under FUL

Reasons why generics may not have FUL 1. Very old generic 2. Recently marketed generics for single source drugs whose patents just expired 3. generic may have a 6 months period of exclusivity granted by the FDA

What does it mean? Drug price competition benefits Medicaid reimbursements Example In August 2001, a generic form of Prozac called Fluoxetine became available Before the 1 st generic was available Medicaid was reimbursing $2.86 per capsule Once the 1 st generic became available (it had 6 months exclusivity period) Medicaid was reimbursing $2.46/capsule After the 6 months exclusivity period, reimbursement was $.70/cap This sets an incentive for pharmacies to purchase generics at lower than FUL price.

Drug classes covered under FUL Narcotic analgesics (tylenol w/codeine) Anti-virals (acyclovir) Anti-gout (allopurinol) Benzodiazepines (alprazolam) B-blokers (atenolol) Bronchodialators (albuterol) Diuretics (bumetanide) ACE inhibitors (captopril) Anti-histamines (chlorpheniramine) Cephalosporins (Keflex) Antifungals (ketokonazole)

Continued H-2-antagonists (cimetidine) TCA (clomipramine) NSAIDs (diclofenac) Topical steroids (desonide) Ca channel blockeers (diltiazem) SSRI (fluoxetine) Muscle relaxants (carisoprodol) Alpha adrenergic blockers (doxazosin) Statin (lovastatin) Sufonylureal (glyburide) Typical antipsychotic (haldol)

Drugs not included in FUL These drugs meet the FUL criteria but are not included in the FUL Clozapine (anti-psychotic) Morphine Sulfate (opioid) Phentermine HCl (anorectic) Sotalol HCl (anti-arrhythmic) Bupropion (anti-depressant) Clotrimazole cream (anti-fungal) Dipyridamole (platelet aggregation inhibitor)

. ● Since FUL does not cover all the drugs, MAC (maximum alloawble cost) was established ● PBM and TPA use MAC lists to cover all generic medications ●Unlike FUL, MAC is updated monthly

Recommendation FULs were created to help Medicaid save money by taking advantage of lower prices for multiple-source drugs available There are more drugs that fit the criteria to be added to FUL By including more drugs to FULs that meet the requirement, can save millions of dollars to State Medicaid Also, updating FUL at least once a month would encourage greater use of cost-effective generic drugs

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