Recent Medicaid Prescription Drug Laws and Strategies, 2001-2008

• preferred drug lists (PDL) or formularies,
• generic substitution,
• cost-sharing or copayments,
• multi-state purchasing,
• pharmacy benefit managers (PBMs)

AL
HB 35
(2002)
Rep. Johnson

This law imposes the state privilege tax on all retail prescription sales regardless of retail price. Under existing law, a privilege tax is imposed on each provider of pharmaceutical services at a rate of 10 cents for each prescription with a retail price of three dollars. This bill increase funds to the Alabama Health Care Trust Fund to be used by the Medicaid Agency by an estimated $150,000 annually.
(Filed 1/02; Passed House and Senate; signed by governor as Act No. 2002-414, 4/17/02)

AL
HB 603
(2003)
Rep. Beasley

Established a comprehensive preferred drug list (PDL), a "compilation of therapeutic agents from approximately 90 pharmacological classes and subclasses of drugs deemed most appropriate for use relative to their clinical efficacy and documented safety." The PDL is described "as the program is largely voluntary, physicians have wide latitude in prescribing. Use of a preferred drug is encouraged whenever appropriate, however." The list includes notations about prior authorization; however the state publishes separate requirements for 14 classes of products subject to some prior authorization.
(Signed by governor as Assigned Act No. 2003-297)|
[Alabama PDL online revised 4/05]

AZ
Chapter 265, §16
(2003)

AZ
HB 2863
Rep. Weiers
(2006)

AK
S 109
(2003)

States it is the intent of the legislature that the state continue to provide coverage for all Medicaid approved medications. If the department develops a preferred drug list to improve the Medicaid program's efficiency, it is the legislature's intent that the department should work with providers to develop the preferred drug list and that the department should establish an authorization system that is minimally intrusive to the providers while protecting access to medically necessary medications. The legislature encourages the department to develop case management systems or tools that allow for the comparison of cost savings associated with a preferred drug list or alternative cost containment methodologies. The cost containment measures taken may include new utilization review procedures, changes in provider payment rates, and negotiation for federal coverage under Indian Health or Medicare. As of December 2003, the Department is moving toward implementation.
(Passed House and Senate, signed by governor 6/16/03 as Chapter 106) ||
Alaska Preferred Drug Program online description 1/04

Authorizes the Department of Health and Social Services to create a PDL and to use other cost containment strategies including use of supplemental rebates from pharmaceutical manufacturers . Drugs approved for the PDL will be selected based on clinical effectiveness, safety and costs. The Department will phase in the PDL by sets of drug classes.

AR
S.932
(2001)
Sen. Beebe

Prescription Drug Access Improvement Act directs the state to apply for a Medicaid waiver for prescription drug subsidy coverage, with income eligibility maximum of 80% of federal poverty level (FPL, $7,088 for 2002), increasing to 100% FPL ($8,860) after 6/30/03. The program would provide benefits only after federal approval is received.
Notes: HHS had taken no action on the waiver as of 9/30/02.
Medicaid is establishing a "lock-in" requiring use of a single pharmacy for beneficiaries with high utilization of multiple prescriptions.
(Passed House and Senate, signed by governor 4/16/01)

CA
AB 442
(2002)
Budget Comm.

Establishes a list of preferred and prior authorization drugs, and revises the structure of rebates and supplemental rebates. It deletes a previous law that provided that a new drug designated by the FDA as having an important therapeutic gain shall be immediately included on the list of contract drugs for 3 years. Adjusts the dispensing fee paid to pharmacists, from $4.05 down to $3.55. Adjusts the Estimated Acquisition Costs to AWP - 10%.
Sec. 104 states, "It is the intent of the Legislature that ... the Director of Health Services shall direct the department to negotiate as aggressively as necessary to achieve savings levels related to pharmaceutical contracting identified in the Budget Act of 2002.
(Passed Assembly and Senate, signed by governor 9/30/02)

CA
AB 1762
(2003)
Budget Comm.

Reduces the time period in which pharmaceutical manufacturers have to respond to the state's demand for and completion of negotiations for Medi-Cal and Golden Bear Program drug rebates. The provisions do not apply to AIDS, cancer or mental health drugs. Also authorizes the Department of Health Services (DHS) to establish step therapies for drugs and other items.
(Passed Assembly and Senate, 7/03; signed by governor 8/9/03)

CO
S 03-11
(2003)

Requires that "the generic equivalent of a brand-name drug be prescribed" if a lower-cost therapeutic equivalent is available, with exemptions for mental health, cancer, epilepsy and HIV. Authorizes the use of mail order pharmaceuticals, with up to 90-day supply, in circumstances where local pharmacies are not available; also expands utilization review functions, with a budget increase of $300,000.
(Signed by governor 5/22/03)

CO
(2003)
Agency regulations

Establishes a monthly limit of eight prescriptions per month, per patient. Prior authorization is required for individuals requiring nine or more pharmaceuticals. An estimated 7,400 Medicaid enrollees will be affected.
(Agency rule, effective 5/1/03 statewide. On 5/28/03 the Medicaid Executive Director announced the 8-drug limit policy was "suspended temporarily" due to adverse impact on physicians seeking approvals)

CO
(2004)
Agency regulations

The CO Medicaid Department has established phased-in expanded use of prior authorization, with characteristics similar to a preferred drug list. Phase I (implemented 12/15/03) affected sleeping agents, acute pain, migraine and anti-emetics for chemotherapy.  Phase II (implemented 3/4/04) defined prior authorization exemptions for once-daily atypical antipsychotics, while requiring authorization for multiple-daily dosing, Cox-2 Inhibitors and Proton pump inhibitors.  Phase III (to be implemented early 2005) "will continue the approach of restricting the use of certain identified prescription drugs to FDA approved indications."
(CO Report online, 2004)

CO
HB 07-1021
Rep. Frangas
(2007)

Creates the prescription drug medication therapy management (MTM) program for Medicaid enrollees, providing Prescription Drug Information and Technical Assistance on "prudent use" of prescription drugs, avoiding drug interactions; also providing pharmacists who participate a financial incentive.  Department is required to contract with licensed pharmacists statewide to provide consultations to Medicaid clients regarding how each client may, with the approval of his/her prescribing provider, avoid dangerous drug interactions and improve patient outcomes, and save the State money for the prescribed drugs. Potential participants will be selected from a pool of Medicaid enrollees who use multiple covered drugs, who are at risk of complications from drug interactions and who otherwise lack access to such consultation.  The Department will contract with any pharmacist within the State who is licensed in good standing; assistance must be provided within ten days of a request.  See CO Rule: MSB 07-09-19-A, 12/14/07
(Filed 1/10/07; passed House 2/23/07; passed Senate amended 4/25/07; signed by governor as Chapter 377, 5/31/07) |

CT
H. 7503; Public Act 2
(2001)

(Section 33) Requires the state to seek a federal Medicaid waiver to obtain federal funds to cover seniors enrolled in the state-only ConnPACE subsidy program. If federal approval were obtained, eligibility would be extended to 300% of federal poverty level as of April 1, 2002.
(Signed by governor, 7/2/01)
(Update: waiver filed 12/01; it was on hold without action as of 11/03)

CT
H 6002
(2002)

Establishes a preferred drug list for Medicaid. Factors used in developing the preferred drug list "shall include clinical efficacy, safety and cost effectiveness of a product."
(Passed House and Senate, signed by governor 7/1/02 as Public Act 02-1)

CT
H 6004
(2002)
Budget

Eliminates the requirement that Medicaid pay pharmacies an additional dispensing fee of 50 cents for substituting a generic for a brand name drug. Requires Medicaid to implement a "prior authorization plan for brand name prescriptions for which a chemically equivalent generic is available. Requires at least an annual review and update of the Maximum Allowable Cost (MAC) list for Medicaid. Provides for supplemental manufacturers rebates, and gives manufacturers that provide such rebates the opportunity to present evidence in support of including products on the preferred drug list (PDL); also provides that the PDL may be used separately from supplemental rebates if there is not legal authority for such state-based rebates.
(Signed by governor, 8/15/02 as Public Act 02-07)

CT
H.6495
Budget
(2003)

FY 03 Budget reduction law reduces the dispensing fee to Medicaid retail pharmacies, from $3.85 to $3.60, revising §17b-280 of Connecticut statutes.
(Passed House and Senate, signed by governor 2/28/03 as Public Act 03-2)

CT
SB 2001
(2003)
Sen. Sullivan

Reduces pharmacies' dispensing fee by 30 cents from $3.60 to $ 3.30 in Medicaid, ConnPACE, and other state funded pharmacy benefits; it allows the state to provide an enhanced dispensing fee to a pharmacy enrolled in the federal 340B drug discount program or a pharmacy under contract to provide services under that program. (§52, effective 10/1/03).
Also requires the state to submit a Medicaid state plan amendment to allow pharmacies to refuse to fill Medicaid prescriptions for "beneficiaries who demonstrate a documented and continuous failure to pay co-payments in spite of their ability to make these payments", described as unpaid for six prescriptions or six months. (§69).
Existing law requires a state preferred drug list for its medical assistance programs by July 1, 2003. The bill specifies that the preferred drug list is for use in the Medicaid and ConnPACE programs and that the preferred drug list and the committee's functions also apply to the SAGA program. The bill specifies that, for FY 2003-04, the preferred drug list must be limited to three classes of drugs (§83). Current law generally requires prior authorization for brand name drugs under Medicaid or ConnPACE if a generic drug is available at a lower cost. The bill removes the requirement that the generic drug cost less and specifies that where the brand name drug is less costly than the generic, the pharmacist must dispense the brand name drug.
(passed House and Senate, 8/16/03, signed by governor 8/20/03)

CT
HB 7000
Appropriations Committee

DE
HB 300
(2003)

The Department of Health and Social Services is authorized to contract with a cooperative Multi-State purchasing contract alliance for the procurement of pharmaceutical products, services and allied supplies.
(Signed by governor, 6/25/03)

FL
SB 792
(2001)
Sen. Silver

The statute (in section 8) requires that the Medicaid program develop a "preferred drug formulary" or list for all categories of drugs. Drugs not on that list will be subject to prior authorization before being dispensed. The committee developing the preferred drug list must consider "the clinical efficacy, safety and cost effectiveness of a product." The preferred drug list shall provide "medically appropriate drug therapies for Medicaid patients which achieve cost savings contained in the General Appropriations Act." Florida is modeling its law on the supplemental rebate program now in place in the California Medicaid program. The legal authority for the program comes from two sections of federal law. The first, 42 USCA Section 1396r-8(d)(1)(a), says that state Medicaid programs may "subject to prior authorization any covered outpatient drug." The second, 42 USCA Section 1396r-8(c)(1)(C)(ii) allows the state to negotiate supplemental rebates without coming into conflict with the Medicaid "best price" rules. The "best price" rules state that the Medicaid net price must be better than any price available in the private sector, except for prices specifically exempt from "best price." If a negotiated supplemental rebate were not exempt from "best price" rules, the manufacturers would have to pay the larger rebates to Medicaid programs nationwide. Section 1396r-8(c)(1)(C)(ii) defines "best price" by saying that in calculating best price, "a manufacturer must (1) include cash discounts, free goods that are contingent on any purchase requirement, volume discounts, and rebates (other than rebates under this section)". The parenthetical portion of this definition is the section cited by both California officials and HCFA officials as exempting any supplemental rebates from the "best price" rules. Under this interpretation of the law, any supplemental rebate negotiated by a state Medicaid program is a rebate "under this section" so that manufacturers do not have to extend such a rebate negotiated with one state Medicaid program to all Medicaid programs.
(Passed House and Senate 5/4/01, signed into law by Governor Bush, 5/31/01)

Updates:
See HB 1843 of 2004, below  || Preferred Drug List online || FL Medicaid Should Improve Cost Reduction Reporting and Monitoring of Health Processes and Outcomes, 8/04 || Florida: Changes to Medicaid Preferred Drug List Requirements and Competitive Bidding Pharmacy Contracts Could Save an Additional $86.6 Million in 2003-04, 4/03 || Medicaid Disease Management Initiative Has Not Yet Met Cost-Savings and Health Outcomes Expectations, 5/04 || FL Rx Spending Control Report, 9/30/02 ||
Florida Medicaid changes were challenged by PhRMA; in December 2001 the U.S. District Court for FL upheld the state law. The U.S. 11th Circuit Court of Appeals ruled September 6, 2002 "in favor of the state's Medicaid law creating a prior authorization program for prescription drugs and rejecting drug manufacturers' claims that federal law preempted the new law." (No. 02-10151). On May 27, 2003 the U.S. Supreme Court denied the PhRMA petition to review the case. || FL agency release || Appeals Court decision, text ||

Pharmacy Lock-in Program The Bureau of Pharmacy Services recently implemented a program that may restrict a patient to filling all of his or her prescriptions at one pharmacy. The purpose of this program is to control duplicate and inappropriate drug therapies. Any patient is eligible for this lock-in. Patients most likely to benefit from this service are those who see multiple physicians with complicated drug regimens

FL
HB 59
(2002)

Establishes the Ron Silver Senior Drug Program. (§ 409.9065) Directs creation of a pharmacy benefit that includes annual per-member benefit limits and cost-sharing provisions. Persons age 65 or over with incomes between 88% and 120% of the poverty level will be eligible for coverage up to the amount of appropriations. If the federal government increases the federal Medicaid match, persons aged 65 or over with incomes up to 150% of poverty will be eligible. Authorizes submission of a section 1115 waiver request. If the 1115 waiver is approved, elderly persons will be eligible for coverage up to a "level that can be supported with funds provided."
(Signed by Governor Bush, 6/07/02)
[Update: HHS Florida waiver approved, July 31, 2002]

FL
SB 22A
(2003)
Special session
Budget

The FY 04 budget requires a 2.5 percent co-insurance for pharmaceuticals from Medicaid beneficiaries, up to $7.50 limit (see §409.9081); also establishes a prescription drug recycling/reuse program in long term care facilities, with estimated savings of $14.1 million.
Also includes $16.2 million for expansion of the Silver Lifesaver Rx Program, to cover seniors up to 200 percent of federal poverty, under the Pharmacy Plus federal waiver approved in 2002.
(passed House and Senate in special session, 5/27/03; signed by governor 6/26/03)

FL
HB 1843
(2004)

Increases the minimum combined Medicaid federal and state supplemental pharmaceutical rebate from 25 percent to a minimum of 27 percent of the average manufacturer price (AMP.) (The increase would save the state $4.3 million in state funds or $10.6 million in total funds.)  Also repeals authorization for so-called "value-added agreements" for disease management with pharmaceutical manufacturers in lieu of supplemental rebates. Also limits erectile dysfunction drug coverage to one dose per month. Effective July 1, 2004.
(Filed 1/04; passed House and Senate; signed by governor as Chapter No. 2004-270, 5/28/04)

FL

(2005)

Creates a step-therapy or "fail-first" Rx program for psychotropic drugs, with the same prior preferred drug list and authorization restrictions as other medications covered by Medicaid. Only drugs used to treat HIV/AIDS will remain exempt from restrictions that limit patients to four brand-name prescriptions per month, plus four generics.

GA
department regulation (2001)

The Department of Community Health has established a preferred drug list, along with $1-$3 tiered cost sharing. All generics are classified as preferred drugs. As of Jan. 2002, the same list applies to pharmaceutical benefits for public and state university employees. The policy is not tied to supplemental rebates.
(Department regulation, effective July 1, 2001| PDL updated 2/1/05 - by drug therapeutic

GA
HB 122
(2003)

The FY 2004 budget provides for an expanded Medicaid preferred drug list (PDL) and supplemental rebates.
(Signed by governor 6/4/03 as Act 345)

HI
HB 1950
(2002)
Rep. Takumi

Establishes the Medicaid prescription drug expansion program to offer discounted prescription drugs to qualified individuals with income up to 300 % of federal poverty level; establishes a prescription drug rebate special fund to receive all rebates from pharmaceutical manufacturers. Requires the state to obtain a federal waiver (similar to the Healthy Maine program); appropriates funds to the Department of Human Services (DHS) for the purpose of paying $1 for each prescription.
(Signed by governor 5/31/02 as Act 75)

HI
HB 1361
(2003)
Rep. Takumi

Allows the income eligibility limit for the Medicaid Prescription Drug Expansion Program, created in 2002, to be lower than the original 300 per cent of the federal poverty level.
(Signed by governor 6/17/03 as Act 191)

HI
SB 3237
(2004)
Sen. Menor

Specifies that if pharmaceutical manufacturers do not participate in the Medicaid supplemental rebate program, they will be placed on QUEST (Hawaii’s Medicaid prior authorization list). Sets the Rx program discount prices to the price that Medicaid pays for pharmaceuticals.
(Signed by governor, 04/16/2004)

ID
S 1274
(2001)
Comm. on Finance

FY 2002 budget section directs the Department of Health and Welfare to investigate the use of waivers or existing law and rule to implement cost-effective programs for requiring client copayments for Medicaid prescriptions and services. The Department is directed to report, by January 15, 2002, its progress in implementing a cost-sharing program.
(Signed by governor, 4/9/01)

ID
HB 324
Education Comm.
(2005)

Provides for Medicaid coverage of experimental pharmaceutical treatments if deemed as “cost-effective as traditional, standard treatments” by the Medicaid department.
(Passed House 3/21/05; passed Senate 3/25/05; signed by governor as Session Law Chapter 294, 4/6/05)

ID
HJM 1
(2007)

IL
HB 3491 (2001)

2001 budget language states the Medicaid agency is authorized to apply to seek federal matching funds for parts of current senior Rx program, up to 250 percent of federal poverty guidelines.
[The IL waiver was approved 1/28/02, and was the basis for a new federal initiative termed "Pharmacy Plus". The new "SeniorCare" program was launched June 1, 2002 and continued until December 31, 2005.  Since 2006 it has continued without federal funding.]
(Signed by governor, 6/11/01 as Public Act 92-0010 )

IL
H 4580
(2002)
Budget

FY03 Budget Implementation Act (in § 5-5.12) establishes new dispensing limits of 4 brand-name prescription drugs per patient per month and authorizes future changes in acquisition costs and dispensing fee (currently $3.60) by agency rule.
(Signed by governor 6/28/02 as Public Act 92-0597)

IL
S 2201
(2002)
Sen. Parker

Provides that Medicaid "shall not impose requirements for prior approval based on a preferred drug list for four drug types used for the treatment of serious mental illnesses until 30 days after it has conducted a study of the impact of such requirements on patient care" and submitted a report to the Speaker of the House and the President of the Senate.
(signed by governor, 8/21/02)

IL
(2002)

Effective July 1, 2002 the income threshold for the Aged, Blind and Disabled program increased from 85 percent to 100 percent of the federal poverty level (FPL), giving 110,000 more seniors and persons with disabilities access to health care, especially pharmaceutical coverage. This increase is directly tied to the new Pharmacy Plus program described above. In fiscal year 2000, the AABD income ceiling for a two-person household was $375 per month in Illinois. Beginning July 1, 2002, the income ceiling is increased to $995 for a couple and $738 for a single person. The fiscal year 2003 budget includes $45 million to fund the increase to 100 percent of FPL.
(News release from Governor Ryan, 7/1/02)

IL
(2002)
agency reg.

The Illinois Department of Public Aid has established a Preferred Drug List, tied to prior authorization. The list took effect 4/15/02 with two classes of medication, and was expanded in 6/02 to cover a total of eleven classes.
> There are plans for a $1 copayment for generic drugs and $3 for brand name drugs. ²
> The Department proposes to require pharmacies to bill Medicare before billing the Department for certain drugs and supplies provided to Medicaid beneficiaries who are also enrolled in the federal Medicare program (QMB and SLMB).
> As of July 2002, the reimbursement rate is reduced to AWP-12% for brand name drugs, with a $3.40 dispensing fee. For generic drugs the rate is AWP-25%, with a $4.60 dispensing fee. The Department estimated that this change will result in savings of $30 million during FY 2003.
[View IL Preferred Drug List updated 11/18/03]

IN
H 1001
(2001)
Ways and Means Comm.

The FY 2002 state budget requires several new steps, including the following: Reduce reimbursement rates for over-the-counter drugs; Implement a Maximum Allowable Cost schedule for off-patent drugs; Develop a plan for contracting with a pharmaceutical benefit management program; Implement an information strategy to high-volume prescribers; Phase in case management for aged, blind, and disabled Medicaid recipients; Contract with an outside vendor to implement disease management and case management programs; Provide new information to the Medicaid drug utilization review (DUR) board; Require the DUR board to meet monthly and hire support staff; Cooperate with the state attorney general in conducting an audit of the Medicaid prescription drug program; Require the use of generic drugs in the children's health insurance program.
(Passed House 2/26/01; passed Senate 3/29/01; became public law 291 without governor's signature, 5/11/01)

IN
H 1233
(2002)
Rep. Crosby

Prohibits Medicaid and SCHIP programs from requiring prior authorization of brand-name anti-anxiety, anti-depressant, or anti-psychotic drugs; any drugs classified in a central nervous system drug category; or any drug prescribed for the treatment of a mental illness. Requires that a Medicaid or SCHIP recipient "have unrestricted access" to any of these drugs except that the state may limit quantities dispensed or frequency or refills to prevent fraud or abuse or as part of a disease management program. Before the state implements fraud and abuse or disease management programs that limit access, it must seek the advice of its drug utilization review board, publish a provider notice, and consider quality of care issues. [Fiscal Note].
(Passed House 2/5/02; passed Senate 2/26/02; signed by governor, 3/12/02 as Public Law 6)

IN
S 158
(2002)
Sen. Simpson

Requires the state to conduct at least every two years "a survey of pharmacy providers to assess the appropriate level of dispensing fees to be paid" for Medicaid prescriptions. Requires the state to review operational data, professional services data, overhead data and profit data and to make any necessary adjustment in rates by November 1 of the year in which the survey is conducted.
(Passed House 2/5/02; passed Senate 2/26/02; signed by governor as Act 15, 3/14/02)

IN
S 216
(2002)
Sen. Kenley

§163 directs the Medicaid office to develop a plan for hiring a pharmaceutical benefit management company (PBM), to include utilization review, prescriber education about drug utilization and eligibility verification. Requires an independent analysis of the PBM program throughout 2002.
(Signed by governor as Public Act 1, 3/14/02)

IN
S 228
(2002)
Sen. Miller

1) Establishes a therapeutics committee with the authority for "research, development, and approval of a preferred drug list". Requires review and maintenance of the preferred drug list at least two times per year. "Prior authorization is required for coverage under a program described in subsection (a)(11) of a drug that is not included on the preferred drug list." Provides that "the board may not exclude a drug from the preferred drug list based solely on price," and other specified circumstances. The office or the board may require prior authorization for a drug that is included on the preferred drug list under the following circumstances: (A) To override a prospective drug utilization review alert; (B) To permit reimbursement for a medically necessary brand name drug that is subject to generic substitution. (C) To prevent fraud, abuse, waste, overutilization, or inappropriate utilization; (D) To permit implementation of a disease management program; (E) To implement other initiatives permitted by state or federal law. (2) All drugs described in IC 12-15-35.5-3(b) must be included on the preferred drug list."
2) Directs state agency to develop a federal Medicaid waiver application to use federal matching funds for a prescription drug program for low-income seniors. The application must be reviewed and approved by the prescription drug advisory committee prior to submissions before July 1, 2002. Limits to access of drugs under this program may be done so to the extent restrictions are in place in the Medicaid program. The waiver must limit the state expenditures to funding appropriated to the Indiana prescription drug account established from the Indiana tobacco settlement fund. Appropriates $15,516,618 to the Indiana prescription drug account.
(Passed Senate 2/5/01 and House 2/26/02; signed by governor, 3/26/02 as Public Law 107)

IN
Agency regulation
(2002)

The following policies are being implemented or proposed at the agency level: ² Require pharmacies to bill insurance companies before submitting claims to Medicaid.  Increase use of "lock-in" restricted card. Recipients who use multiple pharmacies and physicians are placed on a restricted card and required to establish a medical and pharmacy "home."  Implement disease management for asthma, HIV/AIDS, diabetes and other conditions in 16 most populous counties.  Limit number of brand name prescriptions to four brand names per month.  Expand Indiana Rational Drug Program. This program applies prior authorization to drug classes. Expand the Over-the-Counter Formulary. Limit prescriptions to a 34-day supply for most medications. The purpose is to reduce waste and abuse. Prescriber education/notification program. Develop a prescriber education and notification program to contact physicians prescribing certain, expensive treatments when less expensive drugs are considered to be "best practice." ²

IN
(2003)

On April 10, Indiana received approval for its Pharmacy Plus Medicaid waiver, allowing federal matching funds for their senior pharmacy program.
(HHS approval, 4/10/03)

IN
HB 1458
(2003)
Rep. Brown

Creates an evaluation procedure for mental health drugs in Medicaid.
(Signed by governor 5/7/03) |

IA
H 2627
(2002)

The FY 2003 budget includes requirements for the following:
> pharmacy dispensing fee set at a single rate of $5.17 per prescription or the pharmacy's "usual and customary fee" whichever is lower.
> creates the Iowa Drug Utilization Review Commission to make recommendations regarding "strategies to reduce state expenditures"; the commission must consider development of a preferred drug list, negotiation of supplemental rebates, disease management programs, counseling and education and expanded prior authorization; with a report due October 1, 2002.
(Signed by governor, 6/12/02 as Chapter 1003)

IA
(2002)
Administrative action

The existing prospective drug utilization review commission, established in 1997, "is creating a prior authorization quick reference system that lists criteria for 14 classes of medication" designed to make prior authorization "clearer and easier to use." The Commission calculated "direct cost savings to be $1.9 million" in FY'00, or $3.59 saved for every $1 spent administratively.
(Report of the DUR Commission, 5/14/02)

IA
HF 619
(2003)

Establishes a multi-agency bulk purchasing council; requires the creation and implementation of a Medicaid PDL; provides that "drugs not included on the preferred drug list shall be subject to prior authorization", with exceptions for mental health, HIV and cancer; mandates the state to "maximize expansion of prior authorization of prescription drugs under the medical assistance program beyond the 25 current categories of medications"; authorizes supplemental rebates from manufacturers; reduces dispensing fees from $5.17 to $4.26; increases co-pays to a sliding scale from $.50 (for Rx under $10) to $3.00 (for Rx over $50); sets ingredient reimbursement at AWP -12%, and makes other changes in pharmacy reimbursements for Medicaid.
(Signed by governor 5/2/03)

KS
S 422
(2002)

Authorizes the Department of Social and Rehabilitation Services to maintain a preferred drug formulary or list (PDL). Those drugs not on the PDL will be subject to prior authorization, with drugs used to treat mental illness exempt from prior authorization. In addition, the Department may limit reimbursement to the generic drug unless the prescriber indicates brand name necessary. It includes provisions for a program of differential dispensing fees for pharmacies that provide prescriptions for adult care homes under a unit dose system and that participate in the return of unused medications program under the state Medicaid plan. (Signed by governor, 5/29/02)

KY
HB 283
(2002)

Directs the state to institute nominal copayments for Medicaid recipients for non-emergency ambulance services, non-emergency services in a hospital emergency room, and prescription and over-the-counter drugs. Children, pregnant women, and institutionalized people continue to be exempt from copayments. The law specifies that "any copayment for a prescription shall not exceed $1."
(Signed by governor, 3/15/02)
Update:  In 2006 the state raised Rx co-pays to $1 per generic, $2 per preferred brand name & $3 per non-preferred brand name drug.

KY
HB 103 
(2002)

Repeals a previous law that had prohibited the Medicaid program from subjecting any new drug to prior authorization. Creates a Pharmacy and Therapeutics Advisory Committee to advise the state "on the development and administration of an outpatient drug formulary," "perform drug reviews and make recommendations regarding specific drugs or drug classes to be placed on prior authorization" and to "provide for an appeals process" for people who disagree with the recommendations. Establishes that a new drug shall be exempt from prior authorization unless 1) there has been a review of the drug and a recommendation regarding prior authorization by the Pharmacy and Therapeutics Advisory Committee or 2) the drug is in a class of drugs for which the Committee has recommended that all new drugs shall require prior authorization.
(Signed by governor as Act 7, 2/21/02)

KY
HB 170
(2002)

Requires an annual report beginning in October 2003, on "costs incurred by pharmacies in the provision of prescription medications to Medicaid eligible recipients including, but not limited to, dispensing fee costs and drug acquisition costs." The study is to include an analysis of factors such as urban versus rural location, chain versus independent affiliation, total prescription volume, and Medicaid volume as a percent of the total volume.
(Signed by governor, 2/21/02)

KY
(2001)

Bars placing new drugs on prior authorization for one year. (Repealed in HB 103 of 2002, above)
(Signed by governor, 2001)

SB 16 
(2004)
Sen. Denton

Deletes a provision requiring that each report to the governor and the Legislative Research Commission by the cabinet include a research study on costs incurred by pharmacies in the provision of prescription medications to Medicaid-eligible recipients. The report previously included information on dispensing fee costs and drug acquisition costs, the current level of dispensing fee provided by the cabinet and other third-party payors, and an estimate of any additional revenues needed to adjust reimbursement to pharmacies.   Provisions remain for reporting current data on the most utilized and abused drugs in the Kentucky Medicaid program, determining the factors causing high drug costs and drug usage rates of Medicaid recipients, and examining the effectiveness of the drug formulary and prior authorization process in managing drug costs.
(Signed by governor 04/09/04)

LA
H 865
(2001)

Generic/Therapeutic Drug Substitution. Amends current drug substitution provisions by prohibiting pharmacists to knowingly select an equivalent drug product if the prescriber instructs otherwise by stating "Dispense as Written," or the abbreviation "DAW", and personally signing the form. On an oral prescription, verbally indicating that a specific brand name drug or product is ordered by the practitioner. Requires patients to be informed of, and consent to, the equivalent drug product interchange. Failure to abide by these provisions can result in a fine and refusal, suspension or revocation of license. In compliance with federal regulations, the prescriber may prohibit equivalent drug product interchange only by handwriting the words "brand medically necessary" or "brand necessary" on the written prescription drug order. Recipients of Medicaid or Medicare prescription benefits demonstrate implied consent by their participation in the program.
(Signed by Governor Foster, 6/26/01)
Note: The Medicaid agency also is establishing a manufacturers supplemental rebate program. In 2002, Department of Health and Hospitals announced that it is establishing a six-to-eight prescription per month limit for Medicaid recipients. Extra prescriptions can be obtained through the prior approval process.
Article: "State gives ailing poor new pill to swallow": Prescription restrictions on Medicaid to start Feb. 3, 03.

LA
S 66
(2002)

Requires that the "terms and conditions of rebate agreements, rebate amounts, percent of rebate, manufacturer's pricing, and supplemental rebates" for the Medicaid Program shall be proprietary and confidential, but provides that the total amount of supplemental rebates obtained by the department shall be a public record.
(Passed in special session; signed by Governor Foster as Act 124, 4/23/02)

LA
HCR 58
(2002)
Rep. Alexander

Resolution urges and requests the Louisiana Dept. of Health and Hospitals to provide prescription drug coverage to Qualified Medicare Beneficiaries (QMBs) on a pilot basis since "federal matching funds may be available", with implementation including federal waiver application, state plan amendment and/or new state regulations.
(Adopted by House and Senate, 5/02; transmitted to the Secretary of State) |

LA
SB 446
(2004)
Sen. L. Jackson

Requires that all drugs must be reviewed by the P & T committee prior to inclusion on the preferred list.  Provides that any clinical decisions of the P & T committee should be transparent and that any decisions contrary to clinical evidence shall be justified in writing. Reiterates the public nature of P & T committee meetings and guarantees public comment before any committee vote. Minutes of the committee are required to be made public and documents given to committee members should be made available to the public within five days of the meeting.
(Signed by governor 7/5/04)

LA
SB 691
(2004)
Sen. L. Jackson

Provides that nominees to the Medicaid P & T (Pharmaceutical and Therapeutics) Committee shall be people who either care for or supervise the care for Medicaid recipients.(Signed by governor 7/5/04)

ME
LD 1790
(2001) Speaker Saxl

Creates the Healthy Maine Prescription Program, utilizing the Medicaid waiver approved by HHS in January 2001. Eligible participants up to 300% of federal poverty guidelines ($26,568 for individuals and $35,820 for couples in 2002) would be eligible to buy pharmaceuticals at the discounted Medicaid price, utilizing the existing manufacturers rebate program. The discount is described by the Medicaid agency as "an average of 25% savings off retail drug prices."
(Passed House and Senate; signed by governor 5/25/01 as Public Law Chapter 293)
Notes: 1) Program Description Online; 2) Federal court decisions of 2/25/02 and 12/24/02 affect this law.

ME
Executive regulation
(2001)

Executive action expanded prior authorization under Medicaid by imposing a prior authorization process for 150 prescription drugs. In 2001, Maine's Human Services Commissioner Kevin Concannon used a committee of medical professionals to make a list of prescription drugs that could be replaced by cheaper alternatives and told doctors to "avoid products on that list or convince state officials that the more expensive drugs are necessary." Concannon said that doctors sought approval for only one out of every 100 prescriptions; the state approved 90% of those requests. Maine reports it saved about $15 million in 2002.

In 2002 Maine lowered the Medicaid ingredient reimbursement basis from AWP -10% to AWP-13%. A lawsuit file in the summer of 2002 may affect the implementation of the program, although a ruling on 8/20/02 was favorable to the state policy.
(Maine Human Services Commission regulations, 2001)

ME
LD 2113/
S 777
(2002)
Sen. Treat

Requires the Department of Human Services to apply for a federal Medicaid waiver to expand the pharmaceutical benefits available to people covered by the current state subsidy program. Subject to funding, the department may expand subsidy eligibility up to 200% of FPL.
(Passed Senate and House; signed by governor as Public Law Chapter 650, 4/9/02)

ME
LD 1634/ SP 560
(2003)
Sen. Treat

Establishes Maine Rx Plus, a state-only, non-Medicaid plan provide discounts to people with incomes up to 350 percent of the federal poverty level. ($31,430 for an individual, $42,420 for a family of two). The program does use the "preferred drug list" that the state uses for the Medicaid program. For products not covered by state-only manufacturer rebate agreements, the state "shall impose prior authorization" in Medicaid "to the extent the department determines it is appropriate to do so" consistent with program goals and requirements of federal law.
(Passed House and Senate 6/03; signed by governor as Chapter 494, 6/24/03) |
Maine Preferred Drug List - link, revised 10/10/03

HP 217
(2004)
Rep. Norbert

A general omnibus bill to correct inconsistencies in Maine law, which incorporates a change in reporting on the Medicaid drug rebate program:  Deletes requirement from the Medicaid related portion of the bill that arises that, in the event that the department is not able to achieve the rebate amount required without compromising the best interest of Medicaid recipients and the Medicaid drug rebate program, the department shall report to the joint standing committee of the Legislature having jurisdiction over health and human services matters and the joint standing committee of the Legislature having jurisdiction over appropriations and financial affairs.
(Signed by governor 1/12/04)

ME
HP 1269(2004)
Rep. Craven

Specifies that when annual limits on the costs incurred for eligible household members' prescription or non-prescription medications have been reached, and program pays 80% of the cost of all prescriptions (minus $2), “any remaining amount will be paid by the member.” Removes requirement that the department seek to achieve an aggregate rebate amount from all agreements that is at least 6 percentage points higher than the percentage of the total Medicaid drug expenditures that the rebates would otherwise be under Section 1927 of the federal Social Security Act.  Deletes reporting requirement from the Medicaid related portion of the bill that arose in the event that the Department of Health and Welfare was not able to achieve the rebate amount required without compromising the best interest of Medicaid recipients and the Medicaid drug rebate program: previously, the department was required to report to the joint standing committee of the Legislature having jurisdiction over health and human services matters and the joint standing committee of the Legislature having jurisdiction over appropriations and financial affairs.
(Signed by governor 4/9/04)

MD
HB 6
SB 236
(2001)
Del. Taylor
Sen. Miller

Creates the Maryland Pharmacy Discount Program as part of Medicaid, which requires an 1115 waiver. If the federal waiver is approved, any Medicare beneficiary without drug coverage will be eligible to enroll and will receive a discount on purchases tied to the Medicaid price less rebates. Persons with incomes at or below 175% of the poverty line ($15,033 single; $20,318 couple) will receive a subsidy of 35% of the costs.
If the waiver is not approved, the Pharmacy Discount Program will be run as part of the existing state Pharmacy Assistance Program. In that case, eligibility will be limited to persons with annual incomes at or below 250% of poverty ($21,475 for single; $29,025 for couple). The discount will be tied to the Pharmacy Assistance Program prices less rebates. Persons with incomes at or below 175% will receive a subsidy of 25% of the costs. The law also expands the Short-Term Prescription Drug Subsidy Plan and creates the Maryland MedBank clearinghouse program.
[Update: HHS approved a Maryland waiver on July 30, 2002]
(Identical legislation passed each chamber; signed by governor 4/20/01 as Chapter 134 and 135) fiscal note online

MD
S 175
(2002)
Sen. President

FY 2003 budget includes a provision to implement a tiered copayment system with $1 for generic drugs and $3 for brand name drugs. Prohibits any other pharmacy cost containment measures prior to negotiations with stakeholders. Also see S 481 below.
(Became law without governor's signature, 5/16/02, as Chapter 439)

MD
S 481
(2002)
Sen. Kelly

Prohibits the state Medicaid program from increasing the total copayment amounts. The law allows the Department to implement cost containment measures including generic drugs, the use of tiered copayments as long as it does not result in an increase in total copayment collections, and the use of differential dispensing fees to pharmacies. The Department may not reduce the pharmacy reimbursement rate until October 1, 2002. If alternative measures fail to result in sufficient cost savings prior to October 1, 2002, the Department will amend the pharmacy reimbursement rate.
(Passed Senate and House 4/7/02; signed by governor 5/16/02)

MD
Agency regulation
SPA 04-001
SPA 05-003
(2003,
2004)

New regulations "allow the Department to implement a preferred drug list (PDL) and other cost containment measures and to update the Pharmacy Services regulations of the Maryland Medical Assistance Program. "Under this program the newly established Pharmacy and Therapeutics Committee would develop a list of preferred drugs. Drugs not on the list will be subject to preauthorization. The state is authorized to use supplemental rebates in connection with the PDL.
Increases the copay for those Medicaid beneficiaries subject to a copay requirement from $1 per prescription for all drugs to no copay for generic drugs or drugs on the preferred drug list and $2 for brand name drugs not on the preferred drug list. To further encourage this shift the Department is implementing two pharmacy dispensing fees, one fee for brand name drugs not on the preferred drug list and a higher fee for generic drugs or drugs on the preferred drug list.
MD Preferred Drug List '05 compiled by Provider Synergies
(MD Regulation §10.09.03, published 12/13/02, final 2/21/03; CMS State Plan Amendments 04-001 approved 10/22/03 & 05-003 approved 11/9/04)

Changes the method for determining the estimated acquisition cost (EAC) used to reimburse pharmacies for the drug portion of prescriptions for Medicaid recipients.
(State Plan Amendment 04-023 approved 4/21/04, effective 2/1/04) 

MA
Executive regulation
(2001, 2002)

Executive action: Generic substitution initiative. Agency regulations require, as of 11/28/01, that prescriber must specify generic products whenever available. Brand name alternatives require prior authorization. Products only available as brand-name products do not require authorization for the first half of 2002.
The agency implemented a product-specific prior authorization drug list as of July 2002.
(MA Division of Medical Assistance policy description, 10/01)
(MassHealth Drug List online, 7/02)

MA
H 5300 excerpt
(2002)
Ways & Means Comm.

(budget line-item 4100-0060). Requires state agency to reduce the Estimated Acquisition Cost of drugs from WAC+10% to WAC-2%. Provides that the commissioner shall also review the change to see if it "compromises the access to pharmacy services for covered patients; "and the division may establish... a new estimated acquisition cost that is in the best interests of the program recipients..." (see update below).
(§98) Requires Medicaid to establish a $2 per prescription copayment for beneficiaries outside of managed care; and authorizes copayments for managed care enrollees if approved by waiver.
(§101) Authorizes establishing an assessment or provider fee on all retail pharmaceutical sales, which "shall be implemented as a broad-based health care-related fee as defined in 42 U.S.C. § 1396b(w)(3)(B)." The assessment "shall be sufficient to generate $36 million in each fiscal year."
(Passed House and Senate, 7/02; signed by governor 7/19/02)
(Notice of regulation change, 9/5/02|| Pharmacy Assessment - FAQ, 1/9/03)
Update: On October 3, 2002 the administering agency announced it "will establish an Estimated Acquisition Cost to equal WAC plus 6 percent effective August 3, 2002." Dispensing fee for generics is $5 and brand names $3.50 effective November 1, 2002.
In May 2003, a state Superior Court judge struck down the provider tax as illegal because state regulators failed to get the required federal approval.

MA
H. 4004
Conference Committee
(2003)

FY 04 budget section 19 requires executive agencies to "develop and implement a coordinated prescription drug procurement plan for all pharmacy benefit plans funded or subsidized, in whole or in part, by the commonwealth. The plan shall maximize cost savings, efficiencies, affordability and be designed to improve health outcomes, benefits and coverage in the pharmacy benefit plans. Also mandates that the state "shall contract with a third party nonprofit pharmacy benefits manager to provide pharmacy benefit management services and negotiate pharmaceutical discounts, rebates and other prescription related cost savings with pharmaceutical manufacturers."
(Finally passed by House and Senate, 6/23/03; signed/vetoed by governor 6/30/03) [Section 19 veto recommendation]

MA
H 4141
Conference Comm.
(2007)

MI
H 4254;
Public Act 60, sec. 1620-1622
(2001)
Rep. Mortimer; Sen. Goguen

Authorizes the state to seek supplemental rebates from pharmaceutical manufacturers; also expands prior authorization; appropriations bill for Department dropped section in previous year language that had banned prior authorization; the new act also added authorization for mail-order, and two-tier copayments of $.50 and up to $3.
The state Dept. of Community Health has created a preferred drug list that includes a "reference pricing" feature, including a list of "best in class pharmaceuticals" in 40 categories. Excluded Rx products will require prior authorization. The list applies to Medicaid and other state-funded programs
(Passed House 4/24/01; passed Senate, 5/31/01; signed by governor, 7/21/01)
Notes: The Michigan preferred drug list, updated 3/25/02] || Agency description (session transcript, 7/26/02) || "Michigan Medicaid's Pharmaceutical Cost Containment Program" report 4/03 || MI Court of Appeals ruling (12/13/02) || Federal Court update (3/03) ||

MI
(2003)
Gov. Grahholm

In February 2003 the Governor announced the state would join with Vermont, and later South Carolina and Wisconsin in a new Medicaid multi-state buying pool, using similar preferred drug lists and prior authorization.
[news article, "Two more states join drug pool", 2/26/2003]

MI
SB 832
(2004)
Sen. S Hammerstrom

Prohibits the Department of Community Health from requiring prior authorization through the Pharmaceutical Best Practice Initiative for medications prescribed to patients with mental disorders, HIV/AIDS, cancer, organ replacement, and epilepsy or seizure disorders.  Maintains other exemptions from prior authorization that are in current policy.

(Signed by Governor 07/22/2004)

(Filed 2/28/06; SB 1083 passed Senate; passed House 5/31/06; signed in to law by governor as Act 330'06, 8/30/06)

MN
H 351
(2002)
Conference Committee

FY '02-'03 budget adjustment law provides authority to establish a supplemental rebate program for pharmaceuticals, including use of a preferred drug list. Allows the commissioner of human services to use prior authorization "for drugs that are from manufacturers that have not signed a supplemental rebate contract." (See line 136.19).
(Conference version passed Senate and House, 2/21/02; became law by veto override, 2/28/02 as Chapter 220)

MN
HF 1078
(2007)

As part of a broad Medicaid cost-containment bill, limits prescription drugs to seven per month per recipient and requires prior authorization for any prescriptions beyond five per month. Limits each prescription to a 34-day supply. Sets the dispensing fee at $3.91 per prescription. Prohibits a provider from prescribing, a pharmacy from billing, and the agency from reimbursing for brand name drugs if there are "equally effective generic equivalents available and if the generic equivalents are the least expensive." Establishes a Pharmacy and Therapeutics Committee to review recommendations regarding prior approval of prescription drugs.
(Passed House, 2/1/02; passed Senate, 2/12; signed by governor, 3/6/02)

MS
S. 2189 §9
(2002)
Sen. Huggins

Section 9 directs the Medicaid agency to adopt a "closed drug formulary as soon as practicable" and to opt out of the drug rebate program. Also includes implementation language for monthly limits on prescriptions and a prior authorization process. (see H 1200, above). Allows for additional payment for pharmacist consulting services, to total not more than twice the $3.91 dispensing fee. Also provides that certain unused drugs from nursing home facilities, "shall be returned to the pharmacy and not billed to Medicaid."
(Passed Senate 2/14/02 and House 3/7/02; became law by veto override, 4/12/02).
After enactment the state was advised they cannot use a closed formulary, so they are considering a preferred drug list.

MS
H 897
(2003)

Repeals 2002 law (above) allowing the state to opt out of the federal drug rebate program and requiring the state to create a closed drug formulary. Removes requirement requiring prior approval for every prescription over five per month. Provides that until July 1, 2005, any A-typical antipsychotic drug shall be included in any preferred drug list without requiring prior authorization.
(Signed by governor, 4/21/03)

MS
HB1434
(2004)

Shifts coverage from Medicaid to Medicare for appropriately 60,000 beneficiaries currently covered by Medicaid under the Poverty Level Aged and Disabled program , as of July 1, 2004 (by reducing maximum income for eligibility from the old 135% FPL to the new 75% FPL.) These individuals would used Medicare-approved discount cards, including the $600 annual federal "transitional assistance" payment.  A waiver plan will assist those whose out-of-pocket payments would increase.
Also establishes a mandatory preferred drug list (PDL) coupled with a prior authorization program for non-preferred products. Authorizes a partnership with another state to use bulk purchasing power to negotiate lower acquisition costs. Authorizes agreements and negotiations with other countries to facilitate the acquisition of prescription drugs, if allowed by federal law and if it will lower the acquisition costs of those drugs. Modeled after the Florida program, this law increases the prescription limits to four brand names plus unlimited generics. Also requires the use of counterfeit-proof prescription pads. 
(Passed House and Senate; signed by governor, 5/26/04) 
A Medicaid waiver was approved 9/9/04 to allow individuals with higher payments to retain Medicaid eligibility.