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Medicaid Pharmaceutical Laws and Policies

Recent Medicaid Prescription Drug Laws and Strategies

  Updated 2012; selected material added April 2014.  


  Note: This report contains both current information and separate archive sections.  It may not contain all individual state measures created in 2009-2013.

 

States are considering or have enacted a variety of changes in their Medicaid programs to respond to the challenges arising from increased demand for and higher costs of prescription drugs. Recent state legislation related to Medicaid prescription drugs generally is designed around new or expanded applications of management tools already available to states through federal law. Among the strategies receiving legislative attention are use of:

  • preferred drug lists (PDL) or formularies,
  • generic substitution,
  • cost-sharing or copayments,
  • multi-state purchasing,
  • pharmacy benefit managers (PBMs)
  • prior authorization,
  • drug utilization review (DUR),
  • dispensing fees,
  • ingredient reimbursements (AWP, AMP, ASP),
  • supplemental rebates from manufacturers,
  • disease management,
  • carve-outs from managed care plans. 
 

Many legislative initiatives address several Medicaid policy areas simultaneously. Several laws focus on altering the mix of drugs prescribed, either through broadened generic substitution or through creation of preferred drug lists (PDL) and the use of prior authorization (PA).

Federal Health Reform: Requirements Change for Medicaid Drug Rebates

The Affordable Care Act includes significant changes to the Medicaid prescription drug program.  These changes include 

  • revising the definition of average manufacturer price (AMP),
  • establishing a new formula for calculating Federal upper limit (FUL),
  • increasing the rebate percentages for covered outpatient drugs dispensed to Medicaid patients and including the rebate offset associated with the increase in the rebate percentages.
    •  The health law increases the rebates that drugmakers must offer state Medicaid programs from 15.1 percent to 23.1 percent for most brand name drugs, and by smaller amounts for other drugs and generics. In the past, states and Washington shared those savings. But under the new law, Washington will keep all rebates within that 8-percentage-point range. State officials already negotiated "many drug discounts that exceed 15.1 percent so they will lose that money under the new federal rules. Some said millions of dollars could be on the line for individual states, but federal officials said they have not estimated the cost to states.
  • extending the prescription drug rebates to covered outpatient drugs dispensed to enrollees of Medicaid managed care organizations (MCOs).

    Providing 50 percent discounts for Medicare Part D brand prescrptions drugs in the "donut hole" or coverage gap. (This provision applies only to dual-eligible Medicare-Medicaid enrollees above a specific low-income eligibility level)

To explain the impact of these provisions on the Medicaid prescription drug program, CMS/HHS has provided guidance to stakeholders.  Highlights and links include:

  • The Centers for Medicare & Medicaid Services (CMS) has issued a State Medicaid Director letter that revises the previous instructions concerning the Federal offset of rebates associated with the increase in the rebate percentages and further specifies the process we will use for the estimation and collection of these offsets. It also provides information on prescription drug rebates for covered outpatient drugs dispensed to enrollees of Medicaid managed care organizations (MCOs), MCO formularies, and the treatment of MCO physician-administered drugs. Also addressed are manufacturer reporting requirements, the treatment of discounts under the Medicare Coverage Gap Discount Program for purposes of the determination of best price, and the changes to the excluded drug provisions in Medicaid.
    > September 28, 2010 State Medicaid Director Letter on Medicaid Prescription Drug Rebates [PDF, 140KB] - CMS, September 28, 2010
  • Updated List of Drugs Approved by the FDA Exclusively for Pediatric Indications
    > Guidance on List of Pediatric Drugs and Blood Clotting Factors [PDF, 32KB] -CMS, October 4, 2010

Recent Reports 

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ARCHIVE: State Table of Medicaid Prescription Drug Laws and Policies  (Examples) 

The measures listed are extensive examples of policies in the 50 states, but do not include every statute, appropriation or regulation affecting Medicaid pharmaceuticals. Note that some enacted state laws require subsequent federal action or approval, and therefore may not be in operation. This report does not include proposed bills which have not been passed or signed into law.

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State / citation / link/sposnor

 Description / legislative history

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 4/09]

AZ
Chapter 265, §16
(2003)
 

Authorizes increased copayments in Medicaid.  ($10 per brand name Rx, $5 per generic, $5 per doctor visit). 
(Laws 2003, Chapter 265, § 16)
Update: CMS agreed to let the state set higher co-pays  On April 20, 2004, the United States District Court for the District of Arizona issued a preliminary injunction prohibiting enforcement of increased copayments for Medicaid services as authorized per Laws 2003, Chapter 265, § 16. [Details]   A May 2004 rule clarifies that individuals who were subject to increased copayments are now only required to pay nominal copayments.

AZ
HB 2863
Rep. Weiers
(2006)

2006-2007 budget bill includes $1.5 million appropriations for payment of Part D copays for dual eligible enrollees, including acute, long-term care and behavioral health, administered by AHCCCS, the Medicaid agency.  "The intent of the Legislature is that all Part D copayments will be covered as a state subsidy."  Effective 7/1/06-6/30/07.
(Filed 5/16/06, passed House and Senate; signed into law by governor as Chapter 344, 6/21/06) | 

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 4/22/09 .

AK
(2004)

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)

   

AR
S 223
(2007)
Jt. Budget Comm

Health budget includes requirement for a survey of the actual costs of Rx dispensing, to determine if an adjustment in the Medicaid dispensing fee is needed.
(Signed into law by governor as Chapter 1236, 4/5/07)

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)

CA
AB 522
(2005)
Assm. Plescia

Bans Medicaid/Medi-Cal payment for erectile dysfunction treatment for registered sex offenders.
(Passed Assembly and Senate 8/15/05; signed by governor as Chapter 469, 10/4/05)

CA
AB 132
(2006)
Rep. Nunez 

This law requires the state, beginning on January 12, 2006, and concluding 15 calendar days later, to provide drug benefits to a Medicare-eligible person who is also eligible for Medi-Cal prescription drug benefits and who is not able to obtain drug benefits from his or her prescription drug plan under the Medicare Program.  The bill would allow the Governor to extend coverage for these drug benefits from the close of the initial 15-day period for up to an additional 15-calendar-day period. 
(Filed 1/13/06; reactivated 1/17/06; signed into law by governor  as Chapter 2, Statutes of 2006, 1/20/06) |

CA
AB 2911
Assm. Nunez
(2006)

Establishes the California Discount Prescription Drug Program within the Department of Health Services.  The voluntary drug discount program includes: 1) individuals with annual income to 300% of the federal poverty guidelines, 2) persons or families facing extraordinary medical expenses equal to at least 10 percent of annual income, or 3) is enrolled in the Medicare Program, but whose prescription drugs are not covered by the
Medicare Program.  The program excludes persons who receive coverage in whole or in part by Medi-Cal (Medicaid), state-funded health programs like the Healthy Families Program or "another third-party payer, provided that the individual has not reached the annual limit on his or her prescription drug coverage."  Also requires the Department to negotiate drug discount agreements with drug manufacturers " and shall attempt to negotiate the maximum possible discount" and pursue manufacturer rebate agreements for drugs in each therapeutic category, with such manufacturer price disclosures defined as confidential.  Law also includes a mechanism allowing the state to remove a manufacturer’s product from the state’s Medi-Cal preferred drug formulary and "may require prior authorization" if the drug company does not provide sufficient discounts.  The use of prior authorization option takes effect August 2010.  The state also will "encourage a participating manufacturer to maintain those private discount drug programs" that provide more favorable discounts, including simplified single-point-of-entry" applications.
(Filed 2/24/06; passed Assembly 48y-32n, 5/31/06; passed Senate 25y-12n, 8/29/06 signed into law by governor as Chapter 619 of 2006, 9/29/06) |Legislative news release 8/30/06

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
EO 07-04
(2007)
Gov. Ritter

Based in part on SB06-01 passed in 2006, this Executive Order establishes a "preferred drug list for non-Medicare clients receiving drugs through the fee-for-service and primary care physician programs in the Colorado Medical Assistance Program."  Requires the Department  to "evaluate the various methods by which a PDL is implemented and maintained and shall determine the best option for Colorado’s PDL; also requires obtaining supplemental rebates and an evaluation of the feasibility and cost-effectiveness of entering into one of the existing multi-state purchasing pools.
(SB06-01 passed in 2006; Signed by governor as Executive Order 1/31/07)

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) |

CO
HB08-1062
Rep. Green
(2008)

Authorizes the expansion of the "Medication Therapy Management" prescription drug information and technical assistance program (created in Sec. 25.5-5-507) to include persons receiving drug benefits from any program administered by the Department of Health Care Policy and Financing.
(Filed 1/9/08; passed House 1/17/08; passed Senate 3/13/08; signed into law by governor 3/31/08)

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

FY 2006 budget implementation law includes provision that (§18)  clarifies that "Medicaid coverage will be provided for prescription drugs that are not Medicare Part D drugs," as defined in the MMA.
Also provides (§21) that ConnPACE subsidy eligibility includes individuals eligible for Medicare Part D; also provides "The Department of Social Services shall pay Medicare Part D monthly beneficiary premiums on behalf of the beneficiary.
(Passed House and Senate 6/8/05; became law as Public Act No. 05-280, 6/27/05)

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 || 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 ||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. || 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 1044
Reps. Mizuno, Bertram, Sonson

Provides equal access to immunosuppressant medication for medicaid patients with HIV, AIDS, or hepatitis C, or who require immunosuppressives due to organ transplants, regardless of whether they are inthe medicaid programs. Requires economic impact assessment. Effective January 1, 2008, and sunsets July 1, 2013.
(Enacted and signed into law by governor 5/23/07)

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)

HI
HB 1051
(2005)
Rep. Arakaki

Prohibits DHS from restricting Medicaid recipient's access to psychotropic medication and establishes presumptive eligibility in emergency. Exempts prescriptions for psychotropic, HIV/AIDS, Hepatitis C medications and transplant immunosuppresives from prior authorization requirement.
(Passed House and Senate 4/12/05; became law without the Governor's signature as Act 241, 7/12/05) 

HI
HR 34
(2007)
Rep. Yamashita

Creates a task force to review the state's maximum allowable cost (MAC) program's reimbursement policy and its impact on community pharmacies.
(HR 34 Filed 3/2/07; final version adopted in House, 4/12/07)

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
SPA 004-002
Agency Regs.
(2004)

Idaho established a Manufacturers supplemental rebate program; "companies that do not participate in the program will have their drugs made available to Medicaid beneficiaries through the prior authorization process."  Effective 1/1/04.
(State Plan Amendment approved 5/7/04)

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
HCR 49
State Affairs Comm.
(2006)

States that the Legislature encourage the Department of Health and Welfare to implement programs that integrate financing for prescription drugs excluded from coverage under Medicare Part D.  Financing Medicaid coverage for these drugs through providers of Medicare drug benefits will result in more coordinated care and delivery of prescription drug benefits to individuals dually eligible for Medicaid and Medicare.
(Filed and referred to committee 2/22/06; adopted by House 3/15; adopted by Senate 3/24; sent to Secretary of State, 3/29/06)

ID
HJM 1
(2007)

Non-binding memorial requests the U.S. Secretary of Health and Human Services to amend, if not eliminate, the Phased-Down State Contribution or "clawback" payments relating to pharmacy benefits for Medicare and Medicaid programs.
(Filed and adopted by House and Senate 2/26/07)

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.

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) |

IN
SR 35
Rep. Miller
(2009)

Non-binding resolution urges the legislative council to assign to the Select Joint Commission on Medicaid Oversight the issue of Medicaid managed care prescription drug programs.
(Filed 3/9/09; Adopted by the Senate 4/13/09)

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)

IA
HF 2734
(2006)

FY 2007 budget for Human Services includes: $3,050,082 that may be used by Medicaid field operations for implementation and operational costs associated with Part D; also $500,000 may be retained for the next (FY 2008) fiscal year.  Sets the Medicaid pharmacy dispensing fees at a single rate of $4.52 per prescription, an increase of $.26.
(Passed House and Senate; signed into law by governor, 6/2/06)

IA
HF 909
(2007)

FY 2008 budget requires the Medicaid department to "reimburse pharmacy dispensing fees using a single rate of $4.52 per prescription, or the pharmacy's usual and customary fee, whichever is lower. Beginning July 1, 2007, the department shall adopt rules to adjust the pharmacy dispensing fee to compensate for any reduction in the drug product cost due to the federal DRA.
(Signed into law by governor, 5/29/07)

IA
(2012)

In compliance with HF 649 of 2011, the Medicaid program will move from AWP -12% pricing for brand name drugs, to AAC pricing, for an estimated savings of $1.9 million annually. 

Medicaid agency report: 2012 Medicaid cost saving strategies  |   2011_Average_Wholesale_Price_Replacement_Recommendation

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)

KS
SB 357
(2007)

FY08 budget section 13 provides for a review of the impact of changes in Medicaid dispensing fees due to federal DRA changes, and specifies that the agency "shall adjust dispensing fees as necessary to meet federal guide-lines and maintain total medicaid reimbursement to pharmacies at current levels" in FY 2008.
(Signed by governor as Chapter No. 2007-201, 5/21/07) |

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

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)

LA
SB 19
(2006)
Sen. McPherson

Would require Medicaid providers to donate to charitable pharmacies or any entity approved for distribution and charitable pharmacies to accept unused portions of prescription drugs that are within the expiration date, and for such prescription drugs to be dispensed, in accordance with the determination of the pharmacist.
(Filed and referred to committee 3/27/06; passed Senate 35y-0n, 5/15/06; passed House 93y-0n, 6/16/06; signed into law by governor as Act 643, 6/29/06)

LA
HB 680
(2007)
Rep. Durand

Provides that within Medicaid, antipsychotic and Hepatitis C drugs be included in the Louisiana prior authorization process and preferred drug list, for an estimated annual savings of $9.1 million in 2007-07.  [see fiscal note]
(Filed 4/20/07; passed House 98y-0n, 5/8/07; passed Senate 36y-0n, 6/13/07; signed by the governor as Act 107 6/22/2007)

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)

ME
HP 1269(2004)
Rep. Craven
(2004)

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)

ME
HP 321 / LD 405
Rep. Lewin
(2008)

Directs the Department of Health and Human Services to amend the rules for MaineCare reimbursement to pharmacies for prescription drugs in order to increase the dispensing fee on a basis that is indexed to the Consumer Price Index and to provide other increases in reimbursement.
(Filed 1/30/07; passed House 3/31/08; passed Senate 4/1/08, signed into law by governor as Chapter 590, 4/10/08) |

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)

MD
Agency Regulation
SPA 04-023
(2004)

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
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. 4850
Budget Conference Committee
(2004)

FY05 budget (§15) Creates a "coordinated, aggregate prescription drug procurement plan" (bulk purchasing) including  "all pharmacy benefit plans funded or subsidized" by  the state. Medicaid is included as "shall separately manage" the Medicaid pharmaceutical benefits.  Effective operational date is Nov 5, 2004
(Sec. 305) requires the state to submit by February 1, 2005 to the house and senate committees on ways and means a report detailing the cost-effectiveness of the Medicaid drug prior authorization program, including an (a) the direct cost of the prior authorization program; (b) the estimated amount of cost shifting to physicians in terms of additional time spent in obtaining authorization (c) cost shifting related to additional prescriptions, laboratory tests, physician visits, hospitalization, and skilled nursing care that are associated with implementation of the prior authorization program, (d) whether the prior authorization program is adequately meeting the needs of patients to obtain needed medications in a timely manner, including length of time it takes for the prior authorization program to approve or deny requests for prescriptions, and grievance mechanism for interested parties to appeal any decision.
(Passed House and Senate 6/20/04; Sec. 15 signed by governor 6/26/04)
Sec 305 vetoed by governor 6/26/04; override pending)

MA
H 5000
Conference Comm.
(2006)

Final FY07 state budget includes several provisions:
1) Extends the Prescription Advantage (state subsidy program) policy that the program provide wrap around assistance for Medicare Part D "premiums, deductibles, payments, and copayments" but is "the payer of last resort for eligible persons with regard to any other third-party prescription coverage or benefits available to such eligible persons" after Medicare and other insurance coverage. Also will wrap around other retiree plans which provide Medicare "creditable" prescription drug coverage.  Appropriates $63 million.
2) Authorizes both Prescription Advantage and MassHealth to provide coverage for dual eligible enrollees for a transitional, one-time supply of prescribed medications up to a 30 day supply, between July 1, 2006 and December 31, 2006 and a 72-hour emergency transitional coverage after January 1, 2007, to be "available in all instances in which the pharmacist cannot bill a Medicare prescription drug plan at the time the prescription is presented." (Sec 86)
3) Authorizes increased cost sharing required of enrollees in the form of co-payments, premiums, and deductibles, or any combination "to reflect price trends for outpatient prescription drugs" but only after approval by a majority vote of the legislature. (Sec. 106) (partially vetoed 7/8/06; see H.5154 below)
4) Requires dual eligibles seeking state assistance to apply for federal special assistance and authorizes the state to apply on enrollees' behalf.  Establishes 500% of federal poverty as the maximum income for Prescription Advantage; continues eligibility for the traditional Rx insurance program for non-Medicare eligibles.
5) $238.9 million for the required Medicare Part D "clawback payment" covering Medicaid enrollee expenses.
(Passed House and Senate 6/30/06; signed into law by governor and partially vetoed, 7/8/06) 

MA
H 4141
Conference Comm.
(2007)

FY 2008 state budget provides:
A) The state Health Care Financing agency is authorized to change the pricing formula for generic and multiple-source drugs to achieve savings for the state publicly aided programs.
B) funds for the Prescription Advantage "SPAP" subsidy program of $63.8 million, including a policy that no copayments or deductibles may be increased expect by majority vote of the legislature; clarifies that the state covers wrap around benefits for Medicare Advantage and no-Part D credible coverage plans; also requires enrollment to remain open through the year. (in §46)
C) payments to community health centers for pharmaceutical services provided to uninsured individuals including "the office shall pay community health centers a base rate that shall be no less than the then-current federal Medicare FQHC rate, including "the office shall add payments for additional services not included in the base rate, including 340B pharmacy." (in §39)
D) $233.9 million for the Medicaid program's dual-eligible pharmaceutical "clawback" payment.
(Amended by Conference Committee, enacted; signed into law by governor as Chapter 61 of 2007, 7/12/07)

MA
H 4900
Ways & Means Com (2008)

FY09 budget authorizes (in item 4100-0060) the state "to change the pricing standard used "when determining the rate of payment to pharmacy providers for publicly-aided patients" if such a change would financially benefit the state; also would require a report on the savings realized by the MassHealth Pharmacy Program as a result of the reimbursement rate reductions for multiple source drugs.  Also would allow "adjust pharmacy dispensing fees for multiple source prescription drugs to compensate for any reduction as a result of the upper limits implemented in federal law."  Also appropriates $238,900,000 for the Medicare Part D clawback payment.
( Passed House 5/2/07; passed Senate; signed into law by governor as Chapter 182 7/13/08)

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)
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)

MI
SB 1083,
HB 5723
Sen. Cherry
(2006)

The FY 2006-07 budget (in §1628) requires the Department of Community Health to convene by April 2007 a committee to study the implementation of psychotropic pharmacy administration under Medicare part D for individuals dually enrolled in the Medicare and Medicaid programs, including evaluation of the effectiveness of mental health consumer enrollment and medication access through the Medicare part D procedures for pharmaceutical management for dual eligibles.
Budgets for "recovery of pharmaceutical overpayments" calculated at $22,924,800; establishes conditions for the proposed carve out of anti-psychotic medication to Community Mental Health (CMH) agencies and antidepressant medication to Medicaid Health Maintenance Organizations (HMO), requiring statewide implementation policy and actual costs in Medicaid capitation rates.  Also requires Medicaid to "utilize maximum allowable cost pricing for generic drugs that is based on wholesaler pricing" in Michigan (in §1929); Requires a study of the "impact of a required change in the basis for Medicaid reimbursement to pharmacists from average wholesale price to average manufacturer price."

(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)

Requires the Commissioner of Human Services to provide notice when a prescription drug is removed from the formulary.  Also requires a  report to the legislature by January 15, 2008, on the fiscal impact of Deficit Reduction Act including dispensing fees for generic drugs.
(Filed, passed House 5/25/07; passed Senate 5/16/07; signed into law by governor as Chapter 147, 5/27/07 with numerous line-item vetoes) |

MS
H 1200
(2002)
Rep. Moody

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.

MS
HB 528
(2007)
Rep. Dedeaux

Reauthorizes the 2004 law requiring that the state develop and implement methods, sometimes termed "counter-detailing," to provide to Medicaid providers information about the costs to the Medicaid program of single source drugs and innovator multiple source drugs, and information about other generic drug choices and the comparatives costs to the Medicaid program of those alternatives.  Reaffirms and reenacts the 2004 law that required Medicaid to "establish a mandatory preferred drug list (PDL), with drugs not on the list to "be made available by utilizing prior authorization;" also requires mandatory generic substitution and affirms a 5-drug cap or limit per month only two of which may be brand name products.  Re-authorizes establishing relationships with other states for bulk purchasing, as well as negotiations with other countries "if allowed by federal law or regulation."
(Filed; passed House; passed Senate 3/13/07; signed into law by governor, 4/20/07)

MO
HB 1111
(2002)
Rep. Green

As part of FY03 appropriations bill, Sec. 11.425 authorizes the Medicaid agency to set up, prior to January 2003, a preferred drug product list incorporating best medical practices. The list shall "provide patient access without restriction in every therapeutic class." Manufacturers may enter into supplemental drug rebate agreements "for the privilege of greater access." Requires an annual report to the legislature on prior authorization criteria, number of prior authorization requests, and cost effectiveness.
(Passed House and Senate; vetoed in part & signed by governor, 6/28/02)

In FY'03, Medicaid will impose prior authorization for all new drugs; use increased provider audits, eliminate all over-the-counter drugs (except insulin); establish a drug management program for all patients who receive more than 9 prescriptions per month. FY03 savings for all pharmacy cost containment measures are estimated by the department to be about $156 million.

MT
SB 473
(2003)
Sen. Elliott

Creates a Medicaid expansion plan to provide prescription drug discounts to needy seniors over age 62 and not more than 200 percent of the federal poverty level. It also covers people with disabilities over age 18 and those eligible for state mental health services. The program will include a $25 annual fee. Medicaid rebate fund collections may be used to "reimburse participating retail pharmacies for the discount on the average wholesale price of prescription drugs provided to qualified residents." It is contingent on federal waiver approval. Effective date 7/1/03; expires 6/30/05.
(Passed House and Senate 4/03; signed by governor, 5/1/03) |

MT
SB 324
Sen. Pres. Tester
(2005)

Authorizes negotiation for discount process and rebates among all state-funded programs using Rx including Medicaid; also establishes a prescription drug consumer information and technical assistance program.
(Passed Senate 39y-10n, 3/7/05; passed House 92y-10n signed by governor 4/19/05) |

MT
HB 365
Rep. Roberts
(2009)

Allows a waiver of health maintenance organization requirements for Pharmaceutical Assistance Contracts for Elderly organizations; clarifies that such programs are not Medicaid managed care networks.
(filed 1/24/09; signed into law by governor as Chapter 195, 4/9/09)

NE

LB 8
(2002)
Sen. Bromm

Requires the Department to adopt and promulgate rules and regulations to establish a schedule of premiums, copayments, and deductibles for goods and services, including pharmaceuticals, provided under Medicaid.
(Signed by governor, 8/15/02)
Update: As of October '02 the Department was implementing expanded prior authorization and an adjustment of reimbursement from AWP -10% down to AWP -11%. 2

NE
LB 830
Sen. Lathrop
(2008)

Requires that the state "establish and maintain a preferred drug list" for Medicaid an d create a Pharmaceutical and Therapeutics Committee to design the PDL. Antidepressant, antipsychotic and anticonvulsant prescription drugs are exempt from PDL restrictions.  Also requires the state to enter "into a multistate purchasing pool, negotiate directly with manufacturers or labelers or contract with a pharmacy benefit manager for negotiated discounts or rebates for all prescription drugs under the medical assistance program in order to achieve the lowest available price for such drugs under such program."  Includes proposed $1 million for start-up costs, to be effective January 2009.
(Filed 1/10/08; signed into law by governor 4/17/08)

NV
AB 384
(2003)
Assm. Koivisto

Establishes a preferred drug list (PDL), expands prior authorization and creates a pharmacy therapeutics committee for prescription drugs dispensed by the state Medicaid program. Mental illness and HIV drugs are exempted from restrictions.
(Passed Assembly and Senate, 5/03; signed by governor 5/27/03 as Chapter 247)

NH
HB 1218
(2002)
Rep. Millham

Authorizes a program for managing prescription benefits under Medicaid, including prior authorization and a lock-in program, and establishes a legislative oversight committee. The bill specifies the composition of a pharmacy and therapeutics committee to advise the Medicaid agency on medications subject to prior authorization, criteria for medical necessity to be used in a prior authorization program, and criteria for lock-in programs to prevent unauthorized multiple refills. Requires a report to a legislative oversight committee each year on cost savings, unintended costs in other Medicaid programs, volume of prior authorizations, and other elements.
(Passed Senate and House 5/2/02; became law without governor's signature, 5/23/02)

NH
(2003)

The budget enacted in 2003 includes authorization for a preferred drug list, with exclusions for mental health drugs.
(Passed House and Senate, signed by governor, 2003)

NH
HB 1762
HB 1763
HB 1764
Rep. Wendelboe
(2006)

Would extend the committee to study Medicaid reimbursement rates for pharmacy providers, which was established in 2005.
(Filed and referred to committee 1/4/06; HB 1762 did not pass by end of 2006 regular session)
(HB 1763 passed House 2/22/06; passed Senate 5/4/06; signed into law by governor as Ch. 253, 6/6/06)
(HB 1764 passed House 2/22/06; passed Senate 5/4/06; signed into law by governor as Ch. 155, 5/25/06)

NH
SB 392
(2006) 

Authorizes the state to make full federal "clawback" payments by repealing 2005 language withholding such payments. 
(Filed 1/10/06; signed into law by governor 1/10/06).

NH
SB 393
Sen. Clegg
(2006)

Authorizes the Commissioner of Health and Human Services to provide temporary assistance in the purchase of pharmaceuticals by persons eligible for services under both Medicaid and Medicare (dual-eligibles).  Includes a state appropriation of $500,000.
(Filed 1/10/06; signed into law by governor 1/10/06).

NJ
S 3000
(2003)
Budget

Changes Medicaid pharmaceutical reimbursement from AWP -10% to AWP - 12.5%; establishes new terms and restrictions for use of prior authorization. Restates the federal manufacturer rebate terms, but add generic drugs at that higher 15.1% rebate level. (This provision has been interpreted to preclude other supplemental rebates.)
Also establishes a state Rx disease management program and a recycle "system to utilize unopened prescription drugs at nursing facilities."
(Filed 6/23/03; passed Assembly and Senate 6/30/03; signed by governor as Chapter 122)

NJ
S 3000,
(2005)
Sen. Bryant

 

FY 2005-06 budget (item 24-4275 et seq.) includes provisions to:
a) authorize a voluntary prescription drug mail-order program.
b) allow that use of Medicaid prescription drug funds shall only be available for dual-eligibles "to cover co-payments and non-formulary drugs to pharmacies participating in the federal Medicare Part D program;" also requires Medicaid rebate agreements on such products.
(Passed Senate and Assembly 6/30/05 signed  by governor as Chapter 132, 7/2/05)

NM

SB 1
(2002)
Sen. Altamirano

FY 2003 budget: 1) [page 114] Directs the Human Services Department to introduce a drug formulary list for the fee-for-service Medicaid enrollees, to result in an estimated savings of $1.8 million; 2) [§5, page 190] appropriates funds to purchase an automated system for processing applications to pharmacy manufacturers for free prescription drugs for qualifying low income persons.
(Became law by veto override, 5/24/02)

NM

 

SB 253
(2002)
Sen. Feldman

Requires the Medicaid program to "implement a formulary or preferred drug list that will consider the clinical efficacy, safety and cost effectiveness of a product." Requires prior authorization before a drug not on the formulary can be dispensed. Requires "negotiated discount prices or rebates for prescription drugs from drug manufacturers and labelers that include supplemental rebates" for Medicaid. The state shall review whether to place a drug on the prior authorization list if there is no agreement on a supplemental Medicaid rebate and the rebates are not as favorable to the state as the prices paid through the federal 340B drug pricing program. Also authorizes executive branch action "if it is beneficial to Medicaid and another state program to combine drug-pricing negotiations to maximize drug rebates."
(Passed Senate and House; signed by governor as Chapter 105, 3/6/02)

NM

SB 391
(2003)
Sen. Feldman

Directs the state to apply for a Pharmacy Plus 1115 waiver, to provide matching funds for a subsidy assistance program for residents 65 and over or disabled, with incomes up to 185% of federal poverty.
(Passed Senate and House; signed by governor as Chapter 34, 3/18/03)

NY

 

S 6084
(2002)

Generic drugs: Provides that the Medicaid pharmaceutical benefit does not include reimbursement for a brand name drug for which a multi-source therapeutically and generically equivalent drug, as determined by the FDA, is available. However, the Commissioner of Health is allowed to exempt any brand name drug from this restriction. Effective date is April 1, 2002.
(Passed by House and Senate, 1/15/02; signed by governor, 1/25/02 as Chapter 1)

NY
S 3668
Rules Committee
(2005)

Authorizes the creation of a preferred drug list within Medicaid. Provides that any doctor or prescriber may specify and prescribe a non-preferred drug if they notify the state Department by telephone; such requests cannot be denied. Prescribers "... shall consult with the program to confirm that in his or her reasonable professional judgment, the patient's clinical condition is consistent wit the criteria for approval of the non-preferred drug." Exempts mental health and HIV related drugs from prior authorization or preferred drug restrictions.  Authorizes negotiation for manufacturer supplemental rebates. (§272)
Also authorizes six disease management demonstration projects.
(Passed Assembly and Senate 3/31/05; signed into law by governor as Chapter 58, 4/12/05)

NY
A 9462
Assm. Gottfried
S 6410
Sen. Hannon
(2006)

Provides for emergency prescription drug benefits under Medicaid during the implementation of the federal Medicare Part D program, until "no longer necessary." 
(Filed 1/13/06; passed Assembly 1/18/06; passed Senate 1/24/06; A9462 vetoed by governor 2/3/06; became law by veto override 2/7/06)

NY
A 9554
Health Sub-comm.

(See also A 9557/A 10257)
(See also S 6457)
(2006)

FY 06-07 state budget includes $130.7 million to continue Medicaid program wrap around pharmacy coverage until January 14, 2007. Also modifies mandatory enrollment of low-income EPIC beneficiaries into Medicare Part D.
(Filed 1/06; committee report 3/26/06; A 9554 enacted by Assembly and Senate; sections vetoed by governor 4/12/06; sections became law by veto override as Chapter 54, 4/26/06)
Update: Disagreement between Legislature and Gov. Pataki has led to a court suit over the binding effect of the veto actions)

NY
S 2108
(2007)

Requires that any pharmacy PARTICIPATING IN Medicaid must provide the "usual and customary price" data for the 150 most commonly used drugs.
(Signed into law by governor as Chapter58, 4/9/07)

NC

H 1115
Budget
(2002)

The budget adjustment act (§21.26) directs the state to implement a pharmacy management plan based on recommendations of the "North Carolina Medicaid Benefit Study" to achieve cost savings. The pharmacy management plan may include the following activities: (a) Establishing a prior authorization program to manage utilization of high cost brand name drugs; (b) Limiting prescription drugs to a 34-day supply for some or all drugs and copayments up to the maximum allowed under federal law; (c) Developing physician prescribing practice profiles; (d) Establishing therapeutic limits based on appropriate dosage or usage standards; (e) Encouraging use of generic drugs; (f) Using "MAC" or maximum allowable pricing; (g) Contracting with a pharmacy benefits manager; (h) Studying the impact of eliminating the six prescription drug monthly limit combined with a more rigorous prior authorization program to ensure cost decisions are made based on evidence-based clinical guidelines; (i) Expanding disease management initiatives; (j) If cost-effective, expanding Medicaid drug coverage to include selected over-the-counter medications. Allows for temporary rules to clarify recipient appeal rights related to the pharmacy management plan. States that Medicaid will not require supplemental rebates from pharmaceutical manufacturers.
(Passed House and Senate; signed by governor, 9/30/02)

NC
Agency Regulation
(2001)

(2002)

As of December 2001, Medicaid lowered the dispensing fee for brand-name drugs from $5.60 to $4 per prescription. Generic drugs remain at $5.60 (described by the agency as an incentive to promote or prefer generic use). The state also established lower price limits for approximately 400 specified generic drugs.
(Executive agency action, 12/01)
In June 2002. Governor Easley announced that NC Medicaid was establishing a preferred drug list, including an option for supplemental rebates, and use of prior authorization for products not on the list. The first list was scheduled to be phased in beginning December 2002, but the plan is on hold indefinitely in 2003.

ND
H. 1430
(2003)
Rep. Devlin

Establishes a revised medical assistance prospective and retrospective drug use review program and drug prior authorization program. The 15-member board shall review all drugs to be placed on prior authorization, with an annual review of the list required. The Board must "Propose remedial strategies to improve the quality of care and to promote effective use of medical assistance program funds or recipient expenditures." Also prohibits Medicaid financial incentives by stating "The department may not offer or pay, directly or indirectly, any material inducement, bonus, or other financial incentive to a participating provider based on the denial or delay of medically necessary and appropriate prescription drug therapy or based on a reduction in the proportion of recipients who receive prescription drug therapy under the medical assistance program."
(Passed House and Senate, signed by governor 4/14/03)

ND
HB 1465
(2005)
Rep. Price

Provides that, as soon as MMA benefits are available in 2006, ND Medicaid will not pay for prescription drugs within a drug class covered by Part D, or a class in which Medicare does not pay for any of those drugs (with an exception for medically necessary Rx for dual-eligibles), or a drug for which federal matching funds are not available, except the state may pay for a drug in an emergency to ensure that dual eligibles continue to receive their drugs after Part D is implemented.  This exception covers the period between January 1, 2006 and February 15, 2006; appropriates $300,000 for transitional activities.
(Passed House 2/16/05; passed Senate 3/28/05; signed by governor 4/25/05)

OH
SB 261
(2002)
Sen. Carnes

As part of the state's budget bill, (§5111.082) states that the Medicaid agency may "establish and implement a supplemental drug rebate program" and make drugs of manufacturers not making such payments subject to prior authorization. Specifies that, at the Medicaid Director's discretion, a supplemental rebate may include cash payments or services that will produce savings. Examples may include disease management, drug product donations, drug utilization control, beneficiary counseling, and fraud and abuse initiatives. Supplemental rebates shall not be required for drugs used to treat mental illness or HIV/AIDS. Also requires the agency to examine instituting a copayment program, and to seek federal waivers if appropriate. Also creates a non-Medicaid discount card program (see Buckeye Card Program).
(Passed Senate and House 5/29/02; signed by governor on 06/05/02)

OH
H 40
(2003)
Rep. Calvert

Provides that any record, data, pricing information, or other information regarding a drug rebate agreement or a supplemental drug rebate agreement for the Medicaid program or the Disability Medical Assistance Program shall remain confidential.
(Passed by Senate and House, 2/19/02; signed by governor 3/7/03)

OK
H 2763
(2002)
Rep. Lindley & Sen. Monson

Establishes limits on the expanded use of prior authorization by requiring: a written estimate of savings, a report on paid claims from the most recent month, trends in product use, and a detailed estimate of administrative costs involved in the prior authorization expansion including "anticipated increase in petition volume" and four separate meetings of the DUR Board to consider specified steps before adopting a new requirement. Also authorizes expanded use of disease management.
(Signed by governor, 6/5/02)

OK
S 134
(2001)
Sen. Monson

Requires the Oklahoma Health Care Authority to immediately provide coverage under prior authorization for any new drug approved by the United States Food and Drug Administration if the drug falls within a drug class that the Authority has already placed under prior authorization.
(Signed by governor, 6/1/01)

OR
S 819
(2001)
Sen. Clarno

Creates a prescription drug list or formulary for the Oregon Health Plan. Also seeks waiver to allow up to $5 copayments. Requires Department of Human Services to apply to federal government for waiver to allow copayments.
Final version directs the Department of Human Services (DHS) to adopt a Practitioner-managed Prescription Drug Plan for the Oregon Health Plan to ensure that enrollees "receive the most effective prescription drug available at the best possible price." Stipulates the following provisions under the plan: Prior to adopting the plan, DHS is required to conduct public meetings and consult with the Health Resources Commission. Allows a practitioner to prescribe any drug that the practitioner indicates is medically necessary for an enrollee as being the most effective available.
(Passed Senate 7/6/01 and House 7/7/01, signed by governor 8/2/01)

OR
HB 2519
(2001)
Rep. Kruse

Department of Human Services shall apply to the Centers for Medicare and Medicaid Services for waivers to obtain federal matching dollars for public subsidies for low-income, working Oregonians for the purpose of making private health insurance more accessible and affordable. Establishes a Waiver Application Steering Committee including four legislators to assist and advise the department. As drafted, includes various co-pays between generics/brands, with the amounts being higher for people in the higher FPL range and lower for the lower FPL range.
(Passed House and Senate 7/6/01; signed by governor 8/01; waiver scheduled to be finalized 6/02; also see below)

OR
Agency regulation
(2002)

CMS approved Oregon to proceed with an Rx copay of $2 for generic and $3 brand. Applies to fee-for-service drugs (about 30% of OHP clients in FFS) - all drugs prescribed to fee-for-service clients and mental health drugs (7 & 11 drugs, plus Depakote and Neurontin) for patients in managed care plans (up to now all OHP client mental health drugs--even those in managed care--were provided for through a carve out program). Exceptions include: pregnant women, children under age 19, institutionalized individuals, services supplied through a federally recognized tribal health facility, patients enrolled in managed care (except mental health drugs), emergency services, family planning supplies and mail order drugs. Provider cannot refuse service to a patient due to the patient's inability to pay. However, the co-payment is a legal debt and provider can use any legal means to collect.
(Agency regulation, effective 7/1/02)
Limit initial prescription for chronic medications - Effective March 4, 2002, maintenance medications were limited to a 15-day supply for the initial fill of the medication.
Reimbursement: Effective September 1, 2002, payment for eligible prescription drugs will be made to pharmacies at Average Wholesale Price (AWP) less 14%, changed from AWP-13%. Dispensing fees were changed on October 1, 2001 to $3.50 for retail pharmacies and $3.80 for institutional pharmacies.

OR
HB 5077
(2003)

FY 04 budget eliminates the agency rule calling for prior authorization within the state's preferred drug list program; initiates a polypharmacy review of enrollees with more than 6 prescriptions or evidence of frequent refills; initiates a two-year phase-in of a mail order prescription program for maintenance prescriptions for chronic diseases. Also establishes a work group to study establishing a program of recycling unused drugs.
(Passed House and Senate 8/25/03; signed by governor 8/29/03)

OR
HB 3624
(2003)

Bill restructuring the Oregon Health Plan includes a prohibition on using prior authorization for enforcement of the preferred drug list. "The Department of Human Services may not adopt or amend any rule that requires a prescribing practitioner to contact the department to request an exception for a medically appropriate or medically necessary drug that is not listed on the Practitioner-Managed Prescription Drug Plan drug list for that class of drugs..."
(Passed House and Senate, signed by governor, 9/24/03 as Chapter)

RI
H 7732
(2002)
Rep. Watson

Within FY 03 budget, (§40-8-24) authorizes submission of a Section 1115 waiver to establish the Healthy Rhode Island Pharmacy Program. Authorizes a benefit "comparable" to the Medicaid pharmacy benefit. Older persons and "incapacitated persons" with incomes up to 200% of the poverty level would be eligible for enrollment as would all persons who are severely mentally ill and eligible for community support services. Calls for detailed implementation plan if waiver is awarded.
(Became law by veto override, 6/12/02)

RI
H 6187
(2007)
Rep. Mumford

Would authorize and direct Medicaid to impose co-payments for prescription drugs in the amount of $1.00 for generic drug prescriptions and $3.00 for brand name drug prescriptions as part of the medical care benefits to eligible beneficiaries.
(Filed; passed House 4/24/07; passed Senate and signed by the governor 7/03/07)

SC

(2002)

South Carolina applied for a "Pharmacy Plus" 1115 waiver to allow for Medicaid reimbursement for part of the state subsidy program.

SC
(2003,
2004)
Governor

South Carolina has submitted a preferred drug list plan for federal approval; in February 2003 the Governor announced the state would join with Michigan, Vermont and Wisconsin in a new multi-state buying pool, using similar preferred drug lists and prior authorization. The program includes state-negotiated supplemental rebates.
In 2004 The Department of Health and Human Services began implementation of the Medicaid Preferred Drug List, including several phases involving an additional set of therapeutic classes to be included on the PDL, building on the existing prior authorization (PA) program.  Phase I implementation began July 21, 2004.  The state is also negotiating supplemental rebates with pharmaceutical companies and creating an enhanced prior authorization program for South Carolina Medicaid pharmacy services.

SC
H 3620
(2007)

Provides that Medicaid recipients using pharmaceuticals "are deemed to have consented to substitution of a less costly equivalent generic product which will result in a cost savings" to the Medicaid program.  Therefore, individual patient consent for substitution as required in S.C.   Law (Section 40-43-86(H)(6) does not apply.
(Filed 3/07; signed into law 6/29/07)

SD

(2003)
Executive

The Medicaid agency established a state maximum allowable cost (MAC) for prescription drugs, including state-specific upper limits.
(Agency regulations, 2002, 2003)

TN
Agency waiver
(2002)

TennCare received HHS approval for a comprehensive redesign of the state's Medicaid program, including a new pharmacy-only program for low-income Medicare beneficiaries enrolled as of December 31, 2001, who are not otherwise entitled to Medicaid.
(Agency application approved June 2002)

TN
HB 1650
(2003)
Rep. McMillan

Creates a TennCare/Medicaid "Formulary Committee" to develop details for a preferred drug list (PDL); also requires a contract with a PBM for all state Rx purchases; authorizes a Medicaid PDL, a supplemental rebate program (with the state to receive 100 percent of all rebates and any other financial incentives), tiered copayments and moving pharmacy services out of Medicaid managed care contracts. The fiscal note estimates the bill could reduce overall state expenditures by "more than $50 million."
Also provides for a "TennCare Rx program prescription benefit to individuals lacking prescription drug insurance coverage who meet criteria established by the bureau of TennCare and the general assembly in its annual appropriation," designed to serve a non-Medicaid population, with further details not specified. The Rx program requires federal Medicaid approval of a waiver.
(Passed House and Senate 5/27/03; signed by governor as Chapter 350, 6/13/03)

TN
Executive Agency
(2005)

Tennessee has joined as the ninth state in the National Medicaid Buying Pool (NMBP), effective June 1, 2005.  The pool is administered by First Health Services/Coventry Health.
(State Plan Amendment, approved effective 6/05.)

TN
HB 121,
SB 442
Rep. BeBerry
(2007) 

Requires informed consent before interchanging or substituting for a prescribed anti-epileptic drug; violation is a misdemeanor.
(Filed 1/30/07; HB 121 passed House 95y-1n, 4/30/07; passed Senate 5/14/07; signed into law by governor 6/7/07)

TN
HB 586, HB 2261
SB 775, SB 2227
Rep. DuBois,
Rep. Odom
(2007)

Makes it a criminal offense to divert TennCare prescriptions as well as failure to disclose to a doctor that a person has received a prescription for a controlled substance within 30 days when obtaining another prescription for a controlled substance.
(Filed 2/21/07; HB 2261 passed House 94y-0n, 5/24/07; passed Senate; signed into law by governor as Public Chapter 418, 6/19/07) |

TN
HB 2249,
SB 2192

Sen. Kyle
(2007)

Removes provision whereby controlled substance database information is available to TN Bureau of Investigation criminal enforcement personnel actively engaged in analysis of controlled substances prescription information as a part of their assigned duties and responsibilities related directly to TennCare.
(Filed 2/15/07; SB 2192 passed Senate 29y-0n, 6/6/07; passed House 94y-1n, 6/7/07; signed by governor 6/25/07)

TX
HB 915
(2001)
Rep. Gray

Creates the Interagency Council on Pharmaceuticals Bulk Purchasing. The Council "shall investigate" options of expanding Medicaid purchasing, and using DSH and FQHC facilities. Would create a system of bulk purchasing of prescription drugs by state agencies, including Dept. of Health, Mental Health, state employees, retirees, teachers, prison system and any other agency that purchases pharmaceuticals. Final version includes provisions for manufacturer and wholesaler price reporting and enforcement powers for the Attorney General.
[fiscal note estimates savings of $13 million for first two years]
(Amended and passed House 4/30/01; passed Senate, signed by governor 6/15/01)

TX
(2001)
Agency Initiative

The Medicaid program initiated the "Texas Medication Algorithm Project", a type of "step therapy" to bring greater consistency (and greater quality) to medication treatment of mental health conditions, based on guidelines stating "most efficacious, safest treatment should be used first" and "simpler interventions should proceed more complex ones." The project was launched in 1996 and expanded in 2001.

TX
HB 2292
(2003)
Rep. Nelson

Provides that the state "shall negotiate" with manufacturers and labelers to obtain supplemental rebates for prescription drugs provided under Medicaid CHIP, and any other state program administered by the commission or a health and human services agency, including community mental health centers and state mental health hospitals. Allows for contract with a benefits manager (PBM). (in §2.11).
Establishes a preferred drug list for Medicaid, CHIP, and any other state program" the PDL "may contain only drugs provided by a manufacturer or labeler that reaches an agreement with the commission on supplemental rebates," with some exceptions. (§2.13) Also expands use of 340B and allows drug reuse in some situations. Effective date 9/1/03.
(Signed by governor 6/10/03)

UT
S 1
(2002)
Sen. Blackham

[non-binding] Item 128 directs the state to convene an ad hoc advisory committee by July 1, 2002 to advise the legislature regarding options to improve access to pharmaceuticals for seniors, people with disabilities, Medicaid recipients and the uninsured. Includes the option of a Medicaid waiver or demonstration project; an initial report is due by 11/30/02 and recommendations on possible legislation or waiver by 6/30/03.
(Signed by governor as Chapter 277, 3/26/02)

UT
S 5009
(2002 special)
Sen. Steele

Requires the Department of Health to reimburse for the use of generic drugs when generics are available, unless the treating physician demonstrates medical necessity for a brand name drug. States that except as provided, the Department "may not maintain a restrictive drug formulary that restricts a physician's ability to treat a patient..." Also provides for redistribution of unused drugs under controlled circumstances.
(Signed by governor as Chapter 18, 7/23/02)

UT
H 6001
(2002)

Spending reduction law, facilitates a reduction in the Medicaid pharmacy dispensing fee, from $3.90 ~$4.40 downward; effective January 1, 2003.
(passed in 6th special session, 12/20/02; partial veto by governor, 1/4/03)

UT
H.126
(2003)

Authorizes the Department of Health to study a revised Medicaid drug program that shall "be based on clinical and cost-related factors which include medical necessity." It requires legislative oversight before a new drug program is implemented. The act clarifies that the department must submit a proposed administrative rule that would modify Medicaid benefits, services, or reimbursement methodologies to a legislative committee before adopting the rule.
(Passed by House and Senate 3/03; signed by governor, 3/24/03)

UT
HB 105
Rep. Walker
(2006)

Would amend the Pharmacy Practice Act to permit the state's Medicaid program to reimburse for nongeneric drugs when the brand name drug is cheaper to the state than the generic form of the drug.
(Filed and referred to committee 1/16/06; passed House 72y-0n, 2/1/06; passed Senate 27y-0n, 2/14/06; signed into law by governor 3/10/06 as Ch. 90)

UT
SB 42
Sen. Christensen
(2007)

Allows use of a Preferred Prescription Drug List in Medicaid, which “may include placing some drugs on a preferred drug list to the extent determined appropriate by the department” and repeals 2003 language restricting PDLs.  Final version provides a blanket exemption for psychotropic or anti-psychotic drugs and allows prescribers to override restrictions to in cases of "medical necessity" when documented in the patient's medical file and by handwriting on the prescription.
(Filed 12/26/06; passed Senate 28y-10n, 1/26/07; passed House 70y-1n, 2/6/07; signed into law by governor 3/20/07)

UT
H 74 [text]
Rep. Litvack

Requires the Department of Health and Human Services to explore the feasibility of expanding the use of 340B drug pricing programs in the state Medicaid program, which limits the cost of covered outpatient drugs to federally qualified health centers including consolidated health centers, migrant health centers, health care for the homeless, Healthy Schools/Healthy Communities and Tribal Programs.
(Prefiled 12/14/07; passed House 1/23/08; passed Senate 2/7/08; signed into law by governor 3/14/08 )

UT
S 87
(2009)

Removes the automatic override to the preferred drug list in the state Medicaid program; requires the Drug Utilization Review Board to implement prior authorization requirements for a non-preferred drug that is in the same therapeutic class as a drug that is on the list; requires a health care provider requesting an override to provide documentation of the medical need for the preferred drug list override. A preferred drug list developed under the provisions of this section must exclude  psychotropic or anti-psychotic drug and immunosuppressive drug for organ transplants.
(Filed 1/26/09; passed Senate; passed House; signed into law by governor, 3/25/09)

VT
H.31
(2002)
Rep. Koch;
Sen. Shumlin

1) Establishes a Healthy Vermont Prescription Discount program for residents "without adequate coverage for prescription drugs". The law specifies eligibility up to 400% of federal poverty with a 2% state payment toward the cost of drugs. The law uses Medicaid rebates to lower prices for eligible individuals and is patterned after Maine's Medicaid waiver program.
2) Directs Medicaid to establish a "pharmacy best practices and control program", with cost containment tools to include development of a preferred drug list (PDL) and utilization review initiatives to implement the PDL; it specifies that prescribing doctors will make the final decision on use of a higher priced drug. Encourages broader use of a statewide PDL by other health plans.
3) Provides for negotiation of manufacturers supplemental rebates for both Medicaid and the state VScript subsidy program.
4) Requires the state to apply for a Medicaid waiver to seek federal matching funds for the state subsidy program, similar to the "Pharmacy Plus" waiver granted Illinois.
5) State departments are directed to aggregate or combine public and private health benefit plans within and outside the states, to achieve better prices for residents.
Not specific to Medicaid, the law also:
6) requires pharmaceutical manufacturers to disclose to the state the "value, nature and purpose" of their marketing activities in the state. Free samples, clinical trials, material having a value less than $25 and scholarship funding are exempt from disclosure. Trade secrets are to be kept confidential.
7) Authorizes participation in the Northeast Legislative Association on Prescription Drugs; also names the West Virginia multi-state initiative.
8) Establishes detailed disclosure and financial reporting requirements for any PBMs that contract with the state.
(Passed House 4/25/01; Senate substituted & passed 2/21/02; signed by governor 6/13/02)
(In February 2003 Vermont's new Governor announced the state was joining with Michigan, South Carolina and Vermont in a new multi-state buying pool, using similar preferred drug lists and prior authorization. As of September 2004 eight states had join this project.)

VT
H.485, § 123
(2001)
House Appropriations Comm.

The FY 2002 budget, section 123, directs the Department to establish a Pharmacy Best Practices and Cost Control program and contract with a Pharmacy Benefit Manager (PBM) to develop a "preferred list" or formulary for prescription drugs, with utilization review, including prior authorization procedures. The program shall be implemented for Medicaid and state-funded V-Script beneficiaries, and may be implemented for any public or private plan within or outside the state that agrees to participate in the program, and for individual Vermonters without adequate public or private coverage for prescription drugs. The program's consumer protections permit the patient's doctor to require the dispensing of a higher cost drug if the lower cost drug is not effective or may result in adverse reactions. Special utilization rules are retained for HIV/AIDS patients. (In 2002 Vermont hired First Health for "up to $8.9 million to coordinate pharmaceutical services for up to 128,445 beneficiaries. Goal is to operate by mid-2002.)
(Passed House, 3/28/01; passed Senate, 5/22/01; signed by governor, 6/16/01 as Act 63)

VT
H 766
(2002)

The FY 2003 budget extends use of preferred drug lists to "all state pharmaceutical assistance programs"; the board must "review and consider for inclusion... "all prescription drugs on the Medicaid formulary." Also provides that if VT receives increased federal matching funds for pharmaceuticals, any closed enrollment in a state Rx program may be reopened. Also allocates $200,000 for the state share of the pharmacy discount program established in H.31.
(Signed by governor, 6/21/02 as Act 142)

VT
H 464
(2003)
Budget

The FY 2004 budget provides that the state is authorized to amend the rules for the VHAP-Rx, VScript and VScript Expanded (operated under Medicaid waivers) to eliminate deductibles and co-payments for any drug. The pharmacy best practices and cost control program (including preferred drug list) shall govern these programs; the department "shall establish monthly premiums" for VHAP-Rx ($13 per month); VScript programs ($17 per month); VScript Expanded program ($35 per month.)
(Passed House and Senate in differing forms, 4/03; signed by governor 6/18/03)

VT
H 582
(2006)

 Emergency law, provides that the state will cover all unadjudicated or unpaid charges for Medicare Part D enrollees until 3/1/06 or "until federal operational problems cease."  
(Filed 1/6/06; passed House and Senate; signed into law by governor, 1/10/06)

VT
S 115
(2007)
S. Finance Comm.

Expands the Medicaid preferred drug list, establishing an evidence-based education program, providing additional pricing information including "AMP" and "Best Price," to the Medicaid program from drug manufacturers and requiring disclosure of education programs funded by drug manufacturers. 
Includes a "plan to inform residents of the availability of health services and 340B prescription prices through federally qualified health centers, aimed at Medicaid, state employees, corrections, workers comp and any other public programs; also authorizes a joint pharmaceuticals purchasing consortium. 

(Passed Senate 28y-1n, 4/4/07; passed House 89y-44n, 5/4/07; signed into law by governor 6/9/07)

VA
H 30
(2002)

The FY 2003 budget (Section 325) directs Medicaid to adopt regulations by July 1, 2002 to decrease the maximum reimbursement for pharmacy products Average Wholesale Price (currently AWP-9%) to AWP-10.25%).
> Also requires state plan amendments aimed at generating $7,079,320 in general fund savings by changing the Maximum Allowable Cost (MAC) based on available generic drugs.; enhance prospective drug utilization review (DUR) for duplication or excess dose or duration.
> Establishes dispensing limits to provide a maximum of 34 day supply per prescription per patient.
(Signed by governor as Chapter 899, 5/17/02)
Virginia: "State Spending on Medical Supplies and Pharmaceuticals" - legislative research report, Dec. 2002 [52 pp.]

VA
HB 1400
Governor
(2003)

FY 03-04 Budget (§ZZ) requires state to implement a Medicaid preferred drug list by January 1, 2004 and reduce the dispensing fee paid to pharmacists from $4.25 to $3.75 per prescription per month. States that other state agencies should "consider utilizing a Preferred Drug List program for non-Medicaid clients." (Sec. AAA) requires an increase in copayments for brand name drugs to $3.  In the designated therapeutic classes, drug products that do not appear on the PDL will be subject to prior authorization.
(Passed House and Senate, 3/11/03; amended and signed by governor as Chapter 1042, 5/1/03)

WA
S 6387
(2002)
Sen. Brown

Budget section 209(18) requires the state to implement an academic counter detailing program that educates prescribers on the availability of generic drugs. If the net cost of generic products, after rebates, is less than the off-patent brand name drug, generics will be substituted, subject to approval by the prescriber.
(Signed by governor, 4/5/02)

WA
H 2285
(2003)
Rep. Sommers

The department is authorized to establish cost-sharing requirements (such as monthly premium payments, or annual enrollment fees) for recipients of any medical programs.
(Passed House and senate 6/5/03, Signed by governor, 6/20/03)

WA
Executive regulations
(2001)
(2002)

A new agency initiative aimed at reducing prescription drug costs under the state's Medicaid program by limiting beneficiaries to four brand-name prescriptions per month took effect Feb. 1, 2002. Under the "Therapeutic Consultation Service" program, if a patient attempted to fill a fifth brand-name prescription in a month, the pharmacist would contact the beneficiary's physician, who would then have to contact a pharmacist hired by the state for approval. Besides granting or rejecting doctors' prescription requests, the pharmacists, provided by Consultec, also will examine the patient's current prescriptions to "prevent duplications and dangerous interactions." Contraceptives, HIV medications, chemotherapy drugs, antidepressant and antipsychotic drugs would be exempt from the four-drug limit. The program will cover 437,000 Medicaid beneficiaries with an agency goal of saving $30 million over the next year and a half.
> A separate 2002 initiative reduced pharmacy reimbursements by 3% for brand names and 44% for generics.
> In October 2002, Medicaid established a mail-order prescription drug service, in part because retail pharmacists withdrew from the program when dispensing fees were reduced. Medco Health Solutions runs the service.
(WA Medical Assistance Administration regulations, 12/1/01) -

WA

SB 6088
(2003)
Sen. Deccio

Requires the state to seek a "Pharmacy Plus" waiver under Medicaid to serve Medicare-eligible residents up to 200 percent of federal poverty guidelines; Authorizes state agencies to develop and use a preferred drug list created by a committee of medical professionals, termed an "evidence-based prescription drug program."
(Passed in special session; signed by governor, 6/26/03)

WV
H 4666
(2002)
Del. Warner

Authorizes the Department of Health and Human Resources "to negotiate and enter into agreements with pharmaceutical manufacturers for supplemental rebates for Medicaid reimbursable drugs." Authorizes the department to develop a preferred drug list and to implement a drug utilization review program to achieve "the most rational cost-effective medication therapy." Also affirms that "trade secrets, rebate amounts, percentage of rebate, manufacturer's pricing and supplemental rebates" remain confidential and not subject to public release.
(Passed House,3/7/02; passed Senate; signed by governor 3/18/02)

 WV
SPA 03-004
(2003)
Agency Regs.

Authorizes establishing a copayment of $3.00 on prescriptions of $50.01 and above, effective 5/03.
(State Plan Amendment 03-004 approved 7/8/03)

WV
HB 3057
(2007)
Del. Perdue

Creates comprehensive health and social services to disabled and frail elderly persons, known as "PACE."  Includes prescription drug services within a managed care structure; consistent with federal laws, it exempts health providers participating in these programs from regulation as insurers.
(Filed 2/22/07; passed House; passed Senate; signed into law by governor 4/2/07)

WI
SB 55, Rx excerpt
(2001)
Gov. McCallum

The 2001-03 biennial budget creates a state-only prescription drug assistance program. The program will covers persons 65 and older up to 240% of federal poverty ($21,264 for individual in '02); it requires a $20 annual enrollment fee, and a $500 deductible for those with income over 160% of FPL plus a 2-tier copayment of $5 for generics and $15 for all others. The start date is September 1, 2002. The budget appropriates $49.9 million for benefits to be paid 9/1/02 through 6/30/03. It also provides for manufacturer rebates and a Medicaid waiver application to seek federal matching funds for portions of the program.
(Budget passed Senate and House, signed by Governor 8/31/01 as 2001 Act 16, section 1838gb, etc. Link to full bill, see pages 313 - 315 of this 789-page law)
Update: On June 28, 2002 HHS approved the 2nd Pharmacy Plus waiver, providing an estimated $51 million in matching funds for Wisconsin. This SeniorCare Program is described as intended to save costs by delaying seniors' enrollment in Medicaid.

WI
Agency actions
(2002)

The Medicaid agency reduced payment for certain brand name drugs (from AWP -10% to AWP -11.25%); Added certain drugs to prior authorization list; Developing an RFP for disease management and established stronger fraud and abuse legislation.
(Agency regulation, 2002)

WI
(2003)
Gov. Doyle

In February the Governor announced the state would join with Michigan, Vermont and South Carolina in a new multi-state buying pool, using similar preferred drug lists and prior authorization.

WI
SB 44
(2003)
Governor Doyle

2003-4 Budget provides for a Medicaid PDL. Authorizes joining a multi-state purchasing group or agreement; establishes supplemental rebates for Medicaid, Badger Care and others such as senior pharmacy, if feasible; exempts most mental health drugs from prior authorization [§1393; also see veto]; Requires Group Insurance Board to "develop a purchasing pool for pharmacy benefits that uses a preferred list of covered prescription drugs". The pool shall consist of the state and any eligible party that satisfies the conditions established for joining the pool. The PDL must use an "evidence-based analysis that first identifies the relative effectiveness of prescription drugs within therapeutic classes for particular diseases and conditions and next identifies the least costly prescription drugs"; [§1026r]; drug assistance for elderly persons: deductible increase from $500 to $850; enrollment fee increased from $20 to $30; payment rate to pharmacies reduced. [§1438-1445]. Effective dates 9/1/03 and later.
(Passed Senate and Assembly; signed/partial veto by governor 7/24/03 as Act 33 )

WY
H 43
(2003)
Committee

Directs the Department of Health to apply for an 1115 waiver to allow individuals with income or assets in excess of limits generally established in the state plan to receive services under a pharmacy plus program provided that the individual is Medicare eligible, but not been determined to be eligible for full Medicaid benefits under the state plan; the family income of the individual does not exceed 175% of the federal poverty level; and total family net assets do not exceed $350,000. Appropriates $691,488, for waiver implementation or state assistance if the waiver is not approved by September '03.  Provides that the state may use a preferred drug list as a cost-saving tool. Implementation began in phases by drug class, with full implementation set for December 2004, including an expanded prior authorization program.
(Signed by governor, 3/7/03)

State / citation / link / lead sponsor

Description / legislative history
 

Copayments on Prescription Drugs: CMS RulesNEW item

Medicaid rules give states the ability to use out of pocket charges to promote the most cost-effective use of prescription drugs. To encourage the use of lower-cost drugs, states may establish different copayments for generic versus brand-name drugs or for drugs included on a preferred drug list. For people with incomes above 150% FPL, copayments for non-preferred drugs may be as high as 20 percent of the cost of the drug. For people with income at or below 150% FPL, copayments are limited to nominal amounts. States must specify which drugs are considered either “preferred” or “non-preferred.” States also have the option to establish different copayments for mail order drugs and for drugs sold in a pharmacy. See more information on Prescription Drugs.

Archive and History of Law Changes:

The reports and material described below are from the past 10 years and provide a spectrum of facts and examples.  Please note the dates listed for individual entries. Some items, including statutes and policies, may no longer be current. 

In 2009, Indiana passed a resolution on Medicaid managed care; Montana will allow wiavers for pharmaceutical assistance. Utah has expanded and clarified use of preferred drug lists. 

In 2008, Colorado expanded a "Medication Therapy Management Program"; Maine authorized higher dispensing fees for Medicaid generics and expanded use of 340B discounts; Massacusetts authorized adjusted dispending fees and reimbursements.  Nebraska created a Medicaid "cost-effective" PDL and a multi-state bulk purchasing option.  Utah passed a law expanding use of 340B discounts through Medicaid.

 In 2007, Colorado authorized use of a PDL in January and authorized an Rx management plan using reimbursed pharmacists; a Hawaii task force will review the state's maximum allowable cost (MAC) program's reimbursement policy; Idaho urged Congress to modify or drop the "clawback" state payments; Kansas adjusted dispensing fees. Louisiana expanded their preferred drug list to include antipsychotic and Hepatitis C drugs in June; Massachusetts conference committee expanded the FY2008 state budget to Health Care Financing, SPAP, and payments to community health centers; Minnesota requires notice of formulary changes and a report on dispensing fees; Mississippi reenacted a 2004 law that requires Medicaid to have a PDL and use counter-detailing; Rhode Island authorized and directed Medicaid to impose co-payments for prescription drugs in June; Tennessee signed in three laws in June, one made it a criminal offense to divert TennCare prescriptions, another requires informed consent of changed prescribed anti-epileptic drugs, and the last removed provision whereby controlled substance database information is available; Utah also authorized PDLs in March; Vermont expanded their preferred drug list, establishing an evidence-based education program and providing additional pricing information including "AMP" and "Best Price;" Washington voted to continue to offer Medicare part D prescription drug copayment coverage to dual eligible medical assistance and medically needy beneficiaries; West Virginia created comprehensive provision health and social services to disabled and elderly in April.

Delay of Final Rules on State Flexibility for Medicaid Benefit Packages Announced 11/30/2009

The Centers for Medicare and Medicaid Services (CMS) has issued a final rule November 30th which again temporarily delays the effective date of the final rule implementing “State Flexibility for Medicaid Benefits Packages ”.  The rules were to implement certain provisions of the Deficit Reduction Act (DRA) that was enacted February 8,2006.  The delay moves the effective date from December 31, 2009 until July 1, 2010 allowing time to revise a substantial portion of the final rule based on a review and consideration of provisions in the Children’s Health Insurance Program Reauthorization Act (CHIPRA), enacted February 4, 2009, and  the American Recovery and Reinvestment Act of 2009 (ARRA), enacted February 17, 2009. 

 

Section 1937 of the DRA provided states with  increased flexibility under an approved state plan to provide covered medical assistance through enrollment of certain Medicaid recipients in benchmark or benchmark equivalent benefit packages. Certain provisions in CHIPRA amend Section 1937 by requiring that states provide the full range of Early Periodic Screening, Diagnosis, and Treatment (EPSDT) coverage benefit to children under the age of 21, rather than those under 19 as specified in the DRA, who are enrolled in benchmark or benchmark-equivalent plans. In addition, provisions in ARRA amend Section 1916A of the Social Security Act which was added by the DRA. The DRA had amended the Social Security Act by adding language which provides state Medicaid agencies increased flexibility to impose premiums and cost sharing requirements on certain Medicaid recipients. Earlier this year ARRA prohibited the imposing of premiums or other cost sharing payments on Indians who received services under a state Medicaid plan by Indian health providers or through referral under contract health services.  

 

Based on these issues and public comments CMS determined that additional time would allow for further consideration on the impact of the rules on the affected stakeholders and to revise them as necessary. The final rule may be found in the Federal Register at http://edocket.access.gpo.gov/2009/pdf/E9-28569.pdf.


Medicaid Tamper Proof Prescription Pads Law:  A Congressional Appropriations Act, signed into law on May 25, 2007, required all Medicaid prescriptions be written on tamper-resistant prescription pads. This provision (amending Section 7002(b) of the Social Security Act) was intended as an anti-fraud measure, and was scheduled to take effect on October 1, 2007.  Advocates and pharmacists alike feared that Medicaid beneficiaries would be unable to fill prescriptions in the many states that had not taken the necessary steps to meet this new requirement.  On September 20, over 90 members of Congress requested a delay in implementation of the tamper proof prescription pad requirement, in response to a joint education effort by pharmacists and advocates.  H.R. 3668 included a provision delaying implementation of the tamper resistant prescription pad mandate until March 31, 2008; it passed both Houses of Congress and was signed into law on September 29, 2007.

The Medicare Modernization Act:  The federal Medicare law, signed in 2003, made extensive changes that have had an impact on every state Medicaid program.  NCSL has compiled a report on 2007 Prescription Drug State Legislation describing Medicaid-related measures in 27 states,  featuring 100+ bills in over 40 states and NCSL Medicare Part D Pharmaceutical Resources.

"Carve-outs" of Pharmaceutical Benefits:  At least 21 states “carve out” a portion of their pharmacy program to retain state control of pharmacy benefits for specific beneficiary groups and classes of drugs.  Nine states with risk-based Medicaid managed care report carving out all drugs from their managed care contracts; these states are: Delaware, Illinois, Iowa,  Massachusetts, Nebraska, New York, North Carolina, Utah and West Virginia.  12 states report carving out pharmacy benefits for specific populations, specific drugs, and/or specific drug classes, including Arizona, California, Colorado, Hawaii, Kansas, Kentucky, Maryland, Michigan, Missouri, New Jersey, Oregon and Washington.  Almost one-fifth of respondents indicated they carve out for anti-psychotics or mental health drugs. [See NASMD report]

Supplemental Rebates and PDLs: Federal Approval: In September 2002 the federal Centers for Medicare and Medicaid Services (CMS) issued a letter to State Medicaid Directors to clarify issues related to supplemental drug rebate agreements and prior authorization. In general it confirms that "states may enter separate or supplemental drug rebate agreements" and "may subject covered outpatient prescription drugs to prior authorization as a means of encouraging drug manufacturers to enter into" such rebate agreements. The CMS letter (SMDL #02-014) is online. See notes below for lawsuits related to Florida, Maine and Michigan.

Waivers: State laws designed to extend some of the benefits of Medicaid prescription drug pricing to other groups of people through Medicaid Section 1115 demonstration waivers also are included in this summary.   Not all measures listed are in effect in 2007.

Not all recent laws have the same effect. For example a 2002 Oklahoma law establishes a detailed set of requirements that must be met before any new decisions are made to require prior authorization. A 2001 Oregon law established a preferred drug list, but allows individual physicians to make final decisions and does not require prior authorization.

"Pharmacy Plus initiative." On January 28, 2002 HHS announced an optional federal Medicaid benefit program covering persons from 100% up to 200% of federal poverty. The first state approval, for Illinois, provides a federal dollar match, with the state providing 50% of the cost. As of late April 2003, Florida, Indiana, Illinois, Maryland, South Carolina and Wisconsin have approved waivers. NCSL has latest details about these "Pharmacy Plus" initiatives, including nine unapproved waivers, on a related pharmaceuticals web report.  These programs were phased out after implementation of the federal Medicare Part D benefits.

The Michigan Medicaid Pharmaceuticals Court Rulings: On March 28, 2003 the U.S. District Court for the District of Columbia ruled that Michigan's preferred drug list, prior authorization and supplemental rebate policies were acceptable under federal law. The court decision rejected legal claims brought by manufacturers, and permits the Michigan program, and similar laws in at least a dozen states, to remain in place. In December a Michigan state court also ruled in favor of the program. Because of potential impacts on laws in other states, NCSL has additional materials about the Michigan program:

In 2003, substantive new laws were signed in Alabama, Alaska, California, Connecticut, Colorado, Delaware, Florida, Georgia, Hawaii, Iowa, Mississippi, Montana, Nevada, New Hampshire, New Mexico, New York, Oregon, Tennessee, Texas, Utah, Virginia, Washington and Wyoming among others. New executive branch initiatives for multi-state purchasing are being implemented in Michigan, South Carolina, Vermont and Wisconsin, while new regulations in Alabama, Maryland, Massachusetts and New York affect preferred drug lists and fees.

In 2004, new laws were enacted in Florida, Hawaii, Kentucky, Louisiana, Maine, Massachusetts, Michigan and Mississippi.   Alaska, South Carolina, and Wyoming worked to implement Medicaid Preferred Drug List programs. 

In 2005, new laws were enacted in California, Connecticut, Florida, Hawaii, Idaho, Montana, New Jersey and North Dakota.  The National Medicaid Buying Pool has expanded to include Hawaii, Montana and Tennessee.

In 2006, new laws were enacted in Arizona, California, Idaho, Iowa, Louisiana, Massachusetts, Minnesota, New Hampshire, New York, Utah, and Vermont. 

Additional NCSL Pharmaceutical Resources:

Non-NCSL Medicaid Pharmaceutical Resources

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