Location:
DRUGS- LAW AND LEGISLATION;
Scope:
Connecticut laws/regulations; Program Description;

OLR Research Report


October 13, 2010

 

2010-R-0394

OLR BACKGROUNDER: STATE DRUG RETURN PROGRAMS

By: Robin K. Cohen, Principal Analyst

Duke Chen, Legislative Analyst II

SUMMARY

The legislature has passed several initiatives over the years in an effort to contain prescription drug costs in the state's budget. One such initiative has been prescription drug return programs, which recover unused drugs from two types of institutions—nursing homes and prisons. The Department of Social Services (DSS) administers the nursing home drug return program. The Department of Correction operates the prisons program through a memorandum of understanding with UConn Health Center's Correctional Managed Health Care Program (CMHC). The Department of Consumer Protection (DCP) has adopted regulations to ensure the safe handling and re-sale of the drugs once they are returned.

Both programs require the institutions to return to the pharmacy that originally dispensed the drug any drug products that (1) were dispensed to residents in the institution and (2) were not used. In the nursing home program, the pharmacies reimburse DSS for these unused drugs and DSS pays them a $5.00 per prescription processing fee. The CMHC's pharmacy employs people to process the prison drug returns.

Nursing homes failing to comply with the law are fined up to $30,000 for each incident. To date, no penalties have been levied.

Since 2005, the nursing home drug return program has saved the state over $11 million. Over the last three years, the DOC program has saved the state over $3.7 million.

DRUG RETURNS

Statutes

Under CGS 17b-363a and 18-81q, nursing homes and correctional facilities must return drug products dispensed to a patient and not used to the vendor pharmacy for repackaging and reimbursement.  Qualifying drug products are:

1. prescription drug products that are not controlled substances;

2. sealed in individually packaged units;

3. returned to the vendor pharmacy within the recommended period of shelf life for the purpose of re-dispensing such drug products;

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

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

Drug products packaged in the manufacturer's unit-dose packages must be returned to the pharmacy for re-dispensing and reimbursement to DSS or DOC if reimbursement for use can occur before the expiration date.

Drug products repackaged in manufacturers' unit-dose or multiple-dose blister packs must be returned to the vendor pharmacy for re-dispensing and reimbursement to DSS or DOC if (1) the date of repackage, the lot number, and the expiration date are indicated clearly; (2) it has been 90 days or less since the date of repackaging; and (3) a repackaging log is maintained by the pharmacy in advance of immediate needs.

Drug products dispensed in a bulk dispensing container may not be returned to the vendor pharmacy.

DSS or DOC must reimburse the vendor pharmacy the reasonable cost of services incurred. The DSS commissioner may establish procedures, if feasible, for reimbursing non-Medicaid payers for drug products returned.

Penalties for Non-Compliant Nursing Homes. Long-term care facilities that violate or fail to comply with the law are fined up to $30,000 for each noncompliance incident. The DSS commissioner can offset a nursing home's Medicaid reimbursement to collect the fine. Before he can impose a penalty, the commissioner must notify the facility of the alleged violation and the accompanying penalty. The facility has 15 days from receiving the notice to ask DSS to review its findings, and DSS may not impose the penalty until after the review.

DSS may impose a penalty regardless of whether the facility has changed ownership since the time of the violation. But it may do this only if it has issued a notice of the alleged violation and penalty before the change of ownership occurred, and a record of the notice is readily available in a central registry that DSS maintains.

Fines are deposited into the state General Fund and credited to DSS' Medicaid account. To DSS' knowledge, no fines have been issued.

Department of Consumer Protection (DCP) Regulation

Under DCP regulation, a vendor pharmacy must immediately physically inspect all drug products that are returned by nursing homes and prisons. Any drug product in original manufacturer's dispensing packages that have (1) been opened, (2) had doses removed, or (3) any signs of tampering must not be returned to stock.

Any drug products packaged in unit dose or blister type packaging that appear to have been (1) removed from and then returned to the package or (2) tampered with or the integrity of which appears to be compromised, must not be returned to stock unless permitted by another section of the regulations.

Vendor pharmacies may return to stock for re-dispensing drug products that are:

1. packaged in original manufacturer's dispensing packages,

2. packaged in unit dose or blister type packaging whose individual labeling and integrity remains intact even though doses may have been removed from the outer package, or

3. originally packaged by the vendor pharmacy into multiple dose blister packaging.

Except where otherwise permitted, drug products must be removed from the original dispensing package before being placed into pharmacy stock for re-dispensing. This process must be done in a manner that ensures the lot number and expiration date are maintained and the individual doses are not exposed to possible adulteration or cross-contamination.

Removal of drug products from the original dispensing package prior to re-dispensing is not required for a package (1) where no doses have been removed and (2) that allows disassembly without handling the drug product, while maintaining product identification, lot number, and expiration date. Generically equivalent drug products from more than one drug manufacturer must not be co-mingled.

All drug products re-dispensed by prescription from the vendor pharmacy must be labeled with all required information, including lot number and expiration date. The expiration date assigned for re-dispensing must be no later than the expiration date assigned to the product when originally dispensed. For products dispensed in original packaging, it must contain the manufacturer's original lot number; but for a repackaged product, it must contain a lot number assigned by the vendor pharmacy, from which the original lot number may be referenced. (Conn. Agencies Regs., 17b-363a-1 et. seq., 18-81q-1, et. seq.)

Pharmacy Process

DSS has issued guidance for participating pharmacies which spells out the criteria for the returns (as specified in the law). Pharmacies must reverse the original paid claim and then electronically submit a new claim to DSS to reflect the amount of prescription actually used by the DSS client. The data collected during this reversal is used in verifying whether the prescription was dispensed to a nursing home resident, which then makes the pharmacy eligible for the $5.00 return fee.

The CMHC operates the health services program for the state's prisons. It receives a large volume of unused prescription returns due to inmate transfers, inmate releases, sentencing, and court discharges. The CMHC's central pharmacy employs a full-time pharmacy technician, uses one quarter of another technician's time, and one quarter of a pharmacist's time to process these returns. These positions cost an estimated $80,000 annually. CMHC does not charge the DOC a processing fee.

SAVINGS FROM DRUG RETURNS

During the last several years, the state has achieved considerable savings from the drug return programs. The DSS savings are declining, mostly because the federal government has largely taken over paying the drug costs for nursing home residents, either through the Medicare Part D drug benefit or the Medicare Savings Program, a program that offers federal drug benefits to lower-income individuals, including Connecticut Pharmaceutical Assistance Contract to the Elderly and Disabled (ConnPACE) recipients.

Table 1 shows (1) savings from the nursing home drug return program since 2005, (2) the amount DSS paid to participating pharmacies (3) three years of DOC program savings and (4) DOC program costs since 2005.

Table 1: Nursing Home and Prison Drug Return Savings and Costs

Year

Nursing Home Return Savings [1]

DSS Payments to Pharmacies

Prison Drug Return Savings [1]

Prison Drug Return Costs

2005

$3,947,470

$57,475

NA

$80,000

2006

3,351,833

9,965

NA

$80,000

2007

2,262,215

1,195

NA

$80,000

2008

902,035

835

$1,084,656

$80,000

2009

696,179

1,370

1,241,792

$80,000

2010 (Jan-July)

303,537

2,670

1,409,051

$80,000

Source: Department of Social Services; University of Connecticut Health Center, Correctional Managed Health Care Program (2010)

[1] The DSS information was reported by calendar year; the DOC information is by state fiscal year.

Potential for Additional Savings

According to DSS' Pharmacy Unit manager, Evelyn Dudley, the federal government has indicated that if there is an unused prescription paid for by the federal Medicare program, the Medicare beneficiary can donate it to state agencies or charitable organizations. This has caused some confusion among pharmacies and nursing homes and DSS intends to meet with both to offer clarity.

DSS believes that once the beneficiary of the drug benefit (covered by private or public insurance) possesses the drug, he or she is the owner and can dispose of it as he or she deems necessary. Dudley suggested that one way to ensure that all unused drugs go through the DSS drug return program would be to have nursing home residents give signed consent upon entering the home.

But the frequency with which Medicare-paid drugs are returned may be reduced in the future as a result of the new federal health care reform law. Starting January 1, 2012, Section 3310 of the Patient Protection and Affordable Care Act requires Medicare prescription drug plan sponsors to use uniform dispensing techniques when dispensing Part D- covered medications to beneficiaries residing in long-term care facilities in order to reduce waste associated with 30-day refills. These techniques will be determined by the U.S. Department of Health and Human Services secretary, in consultation with relevant stakeholders, and may include weekly, daily, or automated dose dispensing.

 

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