1. 1 Iowa Medicaid Preferred Drug List Presented by: Timothy Clifford, MD September 28 & 29, 2004

2. 2 Overview Today and next month: Review data and evidence to design 1 st PDL This may seem like a daunting task Does the PDL need to be perfect? No such thing Maintenance is fluid and evolutionary

3. 3 The 1 st Year Together we will create an extensive PDL affecting most drug categories The 1 st year will be relatively simple “Relative” may not seem so until next year Recommended “easy” approach (despite more savings being available through PA approach) Base year—subsequent versions will be more complex and with the potential for fewer choices in order to realize greater savings

4. 4 Focus for Next Two Days Need to keep an open but skeptical mind Listen carefully and critically Concentrate on drugs with draft PDL positions that concern you

5. 5 Ranking Drugs Categorize drugs as: Preferred without conditions, or Preferred with conditions not involving PA (eg. age ranges Ortho-Evra preferred if under 21 years), or Preferred with conditions involving PA (eg. Genotropin GH), or Non-preferred with all non-preferred drugs equal, or Non-preferred with same non-preferred drugs favored over others (eg. Protonix less non- preferred than Prilosec)

6. 6 PDL Basics In many PDL categories: Although there may be many differences in individual responsiveness to any one given product, the majority who eventually respond to any drug in the category will respond to the first drug tried Law of diminishing returns can be validated with utilization data

7. 7 Success Targets Drug response averages: 1 st product from roughly equivalent class works 60 – 65% of the time 2 nd increases to 75 – 85% 3 rd to 85 – 90% 4 th to near 95% No matter how many drugs are available, it will never be 100%

8. 8 The Initial Drug Selections Unless there is a need for a particular characteristic of one drug that is not present in the others (or vice-versa with side effects), then the initial choice should be based on the average probability of response in the population (as per studies), since this cannot be predicted with any greater certainty at the patient level

9. 9 How to Test Choices PA is the best method for testing and validating clinical arguments for medical necessity based on relative risks or relative differences in efficacy between preferred and non- preferred drugs Must be an acceptable cost:benefit ratio to curtailing access to initial choices

10. 10 PDL Engineering There are many different ways to create a PDL Two different groups can follow the same process precisely and arrive at a different result Two different group can follow grossly different rules and reach the same results

11. 11 Sorting Through It All There is much information and data from manufacturers and other presenters The efficacy or value of the manufacturer products to the practice of medicine is not in dispute Keep it simple and focused on the following three key issues

12. 12 Three Keys 1. Does manufacturer have proof that their product is clinically better/safer than preferred choices for the majority of the Medicaid members—not just subpopulations? 2. Can manufacturer demonstrate that their product is as or more cost-effective than the preferred choices? 3. If the above cannot be shown, then focus on what PDL criteria should be in order to access the product via the PA process.

13. 13 PDL vs. PA The decision to make a drug preferred or non-preferred can be simplified by using the three keys as precepts The level of clinical complexity necessary for a P&T Committee decision on preferred status is much different and markedly simpler than it is for that involved in determining prior authorization approval criteria because…

14. 14 Prior Authorization Criteria In a PDL, the objective is to designate as preferred the most cost-effective drugs that will work for the majority of the Medicaid population as initial choices The PA arm or component of the PDL requires a greater level of purely clinical reasoning (the issues are different): Does this individual (yes/no?) need this particular drug (y/n?) for this condition (y/n?) at this time (y/n?)?

15. 15 In Summary… The PDL is all about creating an array of cost effective drugs that will suffice for most patients, most of the time All other drugs are available via PA Preferred drugs are a set of tools that can be used freely and hopefully prudently without permissions