1. Status Report on Development of a Medicaid Preferred Drug List Program Presentation to: The Joint Commission on Health Care Patrick W. Finnerty Department of Medical Assistance Services May 6, 2003 Richmond, Virginia

2. 2 Presentation Outline Background Actions Taken Thus Far Next Steps

3. 3 2003 Appropriations Act: Preferred Drug List (PDL) Program n Item 325(ZZ.1) of the 2003 Appropriations Act directs DMAS to: –Implement PDL program no later than Jan. 1, 2004 –Seek input from physicians, pharmacists, pharmaceutical manufacturers, patient advocates, and others –Form a Pharmacy & Therapeutics (P&T) Committee –Ensure drugs on the PDL are safe and clinically effective before considering cost effectiveness –Include several key provisions: 72-hour emergency supply; 24-hour prior authorization process; expedited review of denials; and consumer/provider training and education –Report to General Assembly on main design components n Program must generate savings of $9 million GF in FY 2004, and $18 million GF in subsequent fiscal years.

4. 4 2003 Appropriations Act: P&T Committee Responsibilities n The P&T Committee shall recommend to the Department: –therapeutic classes of drugs to be subject to the PDL and prior authorization requirements –specific drugs within each class to be included on the PDL –appropriate exclusions for medications, including atypical anti-psychotics, used for the treatment of serious mental illnesses such as bi-polar disorders, schizophrenia, and depression –appropriate exclusions for medications used for the treatment of brain disorders, cancer, and HIV-related conditions –other appropriate exclusions and “grandfather” clauses

5. 5 PDL Development Process All Therapeutic Classes of Drugs P&T Committee Recommends Drug Classes To Be Subject to PDL & P.A. P&T Committee Recommends Drugs Within Each Class That Are Clinically Effective and Safe Preferred Drugs Drugs at or below cost of most cost-effective drug Non-Preferred Drugs Drugs above cost of most cost-effective drug require P.A.

6. 6 Overview of PDL With Reference Pricing and Supplemental Rebates Source: DMAS Staff Illustration $27 $22 $11 $29 $70 $38 $56 Non-Participating Manuf. Drug Available through P.A. Original Price Most Cost Effective Drug

7. 7 Presentation Outline Background Actions Taken Thus Far Next Steps

8. 8 Actions Taken Thus Far n Met with 30+ different interested parties on PDL issues –pharmaceutical manufacturers, physicians, pharmacists, hospitals, nursing homes, advocacy groups and others n Submitted status report to General Assembly on April 1 n Solicited nominations from provider associations for physicians and pharmacists to serve on the P&T Committee n Solicited public comments on a draft Request for Proposals (RFP) to select a PDL contract administrator; RFP issued on May 1 n Established a pharmacy web page at DMAS’ internet site and e-mail address for PDL comments/input –pdlinput@dmas.state.va.us

9. 9 Members of P&T Committee Have Been Selected Member Background n Randy Axelrod (MD)Anthem Chief Medical Officer n Roy Beveridge (MD)Oncologist n Randall Dalton (MD)Ear, Nose & Throat n James Reinhard (MD)Psychiatrist (DMHMRSAS) n Arthur Garson, Jr (MD)Dean, UVA Med. School n Mariann Johnson (MD)Family Practice n Eleanor (Sue) Cantrell (MD)Local Health District Director n Christine Tully (MD)Geriatrician, VCU/MCV n Mark Szalwinski (Pharmacist)Sentara Health Care n Gill Abernathy (Pharmacist) INOVA Health System n Mark Oley (Pharmacist) Westwood Pharmacy n Renita Warren (Pharmacist) Edloe’s Pharmacies

10. 10 An Initial List of Key Classes of Drugs to be Excluded from the PDL Program Has Been Developed Therapeutic Class Description n Insulins n Cholinesterase Inhibitors n Platelet Aggregation Inhibitors n Antivirals for HIV n Cancer Chemo. Agents n Anti-convulsants n Immunosupressants n Antiemetics n Anti-psychotics, Atypical and Typicals Used in the Treatment of n Diabetes n Alzheimers n Clotting Disorders n HIV/AIDS n Cancer n Seizure Disorders, Mental Health n Transplant rejections, Arthritis n Nausea in cancer patients, Aging n Serious Mental Illness

11. 11 Presentation Outline Background Actions Taken Thus Far Next Steps

12. 12 Next Steps n Procure PDL contractor services n Develop emergency regulations and submit State Plan amendment to Centers for Medicare & Medicaid Services n Provide status reports to the General Assembly at key points in development process n Schedule initial P&T Committee meeting n Continue to receive input from interested parties

13. 13 Next Steps (continued) n Incorporate other pharmacy-related prior authorization requirements –prior authorization for more than 9 unique prescriptions in 180 days (non-institutionalized patients) or 30 days (institutionalized patients) n Modify Medicaid Management Information System (MMIS) to process PDL and prior authorization-related transactions n Develop provider/consumer education and training program –PDL contractor will have major responsibilities