OLR Bill Analysis

sSB 295

AN ACT IMPLEMENTING THE RECOMMENDATIONS OF THE LEGISLATIVE PROGRAM REVIEW AND INVESTIGATIONS COMMITTEE RELATIVE TO PHARMACY BENEFITS

SUMMARY:

This bill requires the Department of Social Services (DSS) to make several changes related to its preferred drug list (PDL). It must (1) expand the required three-drug-class PDL to include all classes of drugs by October 1, 2004 and apply the expanded list to all DSS-administered pharmacy assistance programs, (2) make monthly reports to legislative committees until the three-drug-class PDL is adopted, and (3) contract with a pharmacy benefits organization or other entity to negotiate for supplemental prescription rebates once the PDL is established. Under current law, drugs not on the PDL, with certain exceptions, will require prior authorization. The bill, in addition, exempts those drugs that a patient was using for a chronic illness before adoption of the PDL.

The bill also:

1. (a) allows the DSS commissioner, when renewing existing contracts for HUSKY A and B with managed care organizations, to consolidate the programs' pharmacy benefits administration and assign it to an entity at her discretion, (b) requires DSS to consolidate HUSKY A and B pharmacy benefits administration with all the DSS-administered fee-for-service pharmacy programs, and (c) prescribes procedures for legislative committees' approval or disapproval of DSS's consolidation proposals;

2. replaces the current $ 16. 25 per-prescription copayment under the Connecticut Pharmaceutical Assistance Contract to the Elderly and Disabled (ConnPACE) with a two-tiered system of a $ 12 copay for brand name prescription drugs and $ 10 for generics (it also lowers, from $ 20 to $ 16 for brand name drugs and $ 10 for generics, the current law's potential copay for higher-income participants if the federal government approves a pending Medicaid waiver request to expand ConnPACE income limits (see BACKGROUND);

3. modifies certain aspects of the Nursing Home Drug Return Program and creates a new state agency drug return program; and

4. requires state agencies to submit reports to the Office of Policy and Management (OPM) on the prescription drug expenditures, rebates, and credits.

EFFECTIVE DATE: July 1, 2004

PREFERRED DRUG LIST

Preferred Drug List Applicability to DSS Programs and Monthly Reports

The FY 2002-03 budget revision act (PA 03-2, § 19) required DSS to adopt a PDL for its medical assistance programs by July 1, 2003 in consultation with the recently created Medicaid Pharmaceutical and Therapeutics Committee. PA 03-3, § 83, June 30 Special Session, specified that the PDL is for use in the Medicaid, ConnPACE, and State-Administered General Assistance (SAGA) programs, but it limited the list for FY 2003-04 to three classes of drugs, including proton pump inhibitors and two other classes the DSS commissioner chooses. It required the commissioner to notify the Human Services and Appropriations committees of the drug classes chosen by January 1, 2004.

The bill requires the DSS commissioner, until a PDL has been adopted, to report monthly on the activities of the Medicaid Pharmaceutical and Therapeutics Committee to the Appropriations, Public Health, Human Services, and Legislative Program Review and Investigations committees.

The bill limits use of the three-drug-class PDL to the Medicaid and ConnPACE programs for FY 2003-04. Under current law, the list also applies to SAGA. By October 1, 2004, the bill requires DSS, in consultation with the Medicaid Pharmaceutical and Therapeutics Committee, to expand the list to include all classes of drugs, with certain exceptions, and to apply it to all the DSS pharmacy assistance programs (ConnPACE, Medicaid, HUSKY Parts A and B, SAGA, and the Connecticut AIDS Drug Assistance Program).

Under current law, all drugs not on the PDL will be subject to prior authorization, except for mental health-related drugs and antiretroviral drugs. The bill adds another exception for drugs not on the list that a patient was using for a chronic illness before the list was adopted.

Pharmacy Benefit Organization and Supplemental Rebate Negotiations

The bill requires the commissioner to contract with a pharmacy benefits organization or a single entity qualified to negotiate with pharmaceutical manufacturers for supplemental rebates available under federal law for drugs on the PDL (42 U. S. C. A. § 1396r-8(c)).

HUSKY AND FEE-FOR-SERVICE PHARMACY BENEFITS ADMINISTRATION CONSOLIDATION

The bill allows the commissioner, when renewing contracts between DSS and managed care organizations (MCOs) serving HUSKY A and B clients, to assign and consolidate all administrative responsibility for pharmacy benefits under the programs. And it requires DSS to consolidate the administration of HUSKY pharmacy benefits with the department's fee-for-service pharmacy programs. Currently, HUSKY A and B pharmacy benefits are administered by the individual MCOs.

Before undertaking any action to implement the consolidation, issuing a request for proposal under these provisions, or awarding a contract to a managed care organization for consolidated pharmacy benefits administration, the bill requires the DSS commissioner to submit the proposed actions to the Appropriations, Public Health, and Human Services committees. Under the bill, the committees may approve or disapprove the proposed actions within 60 days after receiving the proposals. If the committees take no action within the 60-day period, the proposal is considered approved. Disapproval by any one committee is sufficient to disapprove the proposal. After the 60-day period, the bill requires the committees' chairmen to advise the commissioner of their approval or disapproval.

NURSING HOME DRUG RETURN PROGRAM CHANGES

With respect to the state's nursing home drug return program, the bill:

1. requires pharmacies providing drugs to nursing homes to do so in packaging that facilitates the return of unused drugs to the pharmacy under the drug return program;

2. reduces the per-incidence fine for failure to return drugs or other violations of the law from $ 30,000 to $ 1,000;

3. allows the commissioner to expand the number of unused drugs that must be returned to more than the current 50; and

4. makes several technical changes and clarifications concerning the program.

NEW STATE AGENCY DRUG RETURN PROGRAM

The bill creates a drug return program for state agencies similar to the existing nursing home drug return program and the Department of Corrections drug return program (which is run by the UConn Health Center). Specifically, the bill requires the Department of Administrative Services (DAS) commissioner to require each agency that obtains drugs through a DAS-negotiated contract and dispenses them directly to patients to return any unused drugs to the vendor pharmacy. It requires the vendor pharmacy to take the drugs back for repackaging and reimbursement to the agency if the drugs are:

1. not controlled substances;

2. sealed in individually packaged units;

3. returned so they can be redispensed within the recommended shelf life;

4. determined to be of acceptable integrity by a licensed pharmacist; and

5. oral and parenteral (such as injectable) medication in single-dose sealed containers approved by the federal Food and Drug Administration (FDA), topical or inhalant drug products in FDA-approved units of use containers, or parenteral medication in multiple-dose FDA-approved sealed containers from which no doses have been used.

But, regardless of the above requirements, the bill requires the agencies to return these unused drugs to the vendor pharmacy for redispensing and the pharmacy to reimburse the agency if the drugs are:

1. packaged in manufacturer's unit-dose packages and can be redispensed for use before they expire or

2. repackaged in manufacturer's unit-dose or multiple-dose blister packs and (a) the repackaging date, the drug's lot number, and its expiration date are clearly marked on the repackaged drug; (b) 90 days or fewer have elapsed from the repackaging date; and (c) the pharmacy maintains a repackaging log for those repackaged in advance of immediate need.

The bill prohibits return of drugs dispensed in bulk dispensing containers.

It requires DAS to establish procedures for these drug returns and requires the state agencies to reimburse the vendor pharmacies for the reasonable cost of services incurred in the drug return program's operation, as the DAS commissioner determines.

The bill also requires the Department of Agriculture and Consumer Protection (DACP), in consultation with DAS, to adopt regulations governing the returned drugs' repackaging and labeling.

STATE AGENCY DRUG PURCHASE REPORTING REQUIREMENTS

The bill requires each state agency that purchases prescription drugs to prepare and submit a report to OPM annually, beginning October 15, 2004. It requires the agencies to list total amounts of:

1. agency prescription drug expenditures for the preceding fiscal year and

2. rebates or credits the agency received from manufacturers, wholesalers, or group purchasing organizations of which the state is a participating member.

Any agency with multiple institutions that purchase drugs must list the required information for each institution. Under the bill, "state agency" means each state board, authority, commission, department, office, institution, council, or other agency of the state, including each constituent unit of higher education and each public institution of higher education. The bill, for reporting purposes, excludes from the prescription drug definition products prescribed for cosmetic purposes, diet pills, smoking cessation gum, contraceptives, multivitamin combinations, cough preparations, and antihistamines.

BACKGROUND

Legislative History

On March 24, the Senate referred the bill (File 82) to the Public Health Committee, which favorably reported out a substitute bill on March 31.

The Public Health Committee's substitute bill (1) changes the starting date for the expanded PDL from July 1, 2004 to October 1, 2004, (2) adds the Public Health Committee to the list of legislative committees that must receive the DSS commissioner's monthly progress reports until the initial three-drug-class PDL is adopted, (3) adds the exception to prior authorization for drugs that are not on the list but that a patient was using for a chronic illness before the list was adopted, (4) allows rather than requires consolidation of HUSKY A and B pharmacy benefits administration at contract renewal time, and (5) adds procedures for legislative approval of consolidation proposals. It also lowers the ConnPACE copay for brand name drugs from $ 16. 25 to $ 12 and makes related changes. Finally, it removes a duplicative provision in the bill concerning regulations for the state agency drug return program and makes other minor changes.

Prior Authorization

On July 16, 2003, DSS began implementing a prior authorization (PA) program for drugs dispensed under the Medicaid, ConnPACE, SAGA, and General Assistance pharmacy programs.

PA means that before a patient enrolled in any of these programs can get certain drugs, and before pharmacists can get reimbursed for them, DSS must approve the prescription. (DSS has contracted with a company, ACS Healthcare, to run this program. ) PA is now required when DSS clients have prescriptions for:

1. with one exception, brand-name drugs when a chemically equivalent generic is available;

2. early refills; and

3. drugs costing more than $ 500 for a 30-day supply.

Individuals who were already taking atypical antipsychotic drugs on July 16, 2003 and continue to need them can receive these drugs without PA. But patients who need these drugs for the first time after July 16, 2003 must get PA.

For brand-name drugs or for early refills of controlled drugs, the prescribing practitioner must request PA. For all others, the pharmacist requests PA.

Nursing Home Drug Return Program

Under this program, nursing homes must return certain unused prescriptions (individually packaged unit dose medications for about 50 of the most commonly used drugs) for their Medicaid residents to the pharmacies that dispense them. The pharmacies may return the drugs to stock (in new packages) and resell them before they expire. DSS must reimburse pharmacies for processing each returned medication (currently $ 5).

Facilities that violate this requirement are currently subject to a $ 30,000 fine for each incident of noncompliance. The DSS commissioner can deduct the fine from a facility's Medicaid reimbursement. Fines collected must be deposited in the General Fund and credited to the Medicaid account.

PA 03-116 required the DSS commissioner annually to update and expand the list of drugs included in the program beginning by June 30, 2003. It required the list to include the 50 drugs with the highest average wholesale price that meet the program's requirements.

Related Bills

sSB 352 (File 398), reported favorably by the Public Health Committee on March 16, also, among other provisions, (1) expands the PDL and the programs it applies to as of October 1, 2004 and (2) exempts drugs the patient was using for chronic illness before the PDL is adopted from prior authorization even though they are not on the PDL.

sHB 5041 (PA 04-6), passed by the House and Senate on March 24 and signed by the governor on March 30, updates the ConnPACE income limits in statute to 2004 levels (they are adjusted for inflation annually by regulation). It further deletes the language in statute concerning potential higher income limits and copays if federal approval is received for a Medicaid waiver to expand ConnPACE income limits, which this bill (sSB 295) modifies to reduce the copayment for the higher income groups in that event.

COMMITTEE ACTION

Program Review and Investigations Committee

Joint Favorable Report

Yea

11

Nay

0

Public Health Committee

Joint Favorable Substitute

Yea

21

Nay

1