Pharmaceutical Manufacturers Formulary and Supplemental Rebate Briefing

1. Pharmaceutical Manufacturers Formulary and Supplemental Rebate Briefing Agency for Health Care Administration May 31, 2001Tampa, Florida

2. Legislative Update Bob SharpeDeputy Secretary for MedicaidAgency for Health Care Administration

3. Pharmacy AppropriationFiscal Year 2001/02 All Funds Continue Current Funding Estimated Expenditures 1,316,457,799 Florida Kidcare Program Lump Sum 434,348 Drug Price Level Estimated Increase 207,097,447 Caseload Estimated Increase 368,525,684 Total Estimated Expenditure For Pharmacy * 1,892,515,278 * SSEC Feb. 2001 Forecast Reduction For Formulary And Other Issues (213,836,853) Reduction For Brand Drug Patent Expiration (14,546,498) Medicaid Coverage For Working Disabled (April 2002) 483,111 Coverage For Women Cancer Treatment (July 2001) 476,670 Total Reductions and Other Adjustments: (227,423,570) * All Funding From State and Federal Share of Grants & Donation TF Total Pharmacy Appropriation: 1,665,091,708

4. Senate Bill 792 • Creates a Medicaid Pharmaceutical & Therapeutics Committee • Members of Committee to be appointed as specified in 42 U.S.C. s. 1396r-8 • Governor appoints all members

5. Senate Bill 792 (continued) • Eleven members: • Four physicians licensed under chapter 458 • One physician licensed under chapter 459 • Five pharmacists licensed under chapter 465 • One consumer representative • Medicaid participating physicians and pharmacists must be represented • Interests of all segments of the Medicaid population must be represented • At least one member shall represent the interests of pharmaceutical manufacturers • Members will serve two year terms, and can be reappointed • P&T Committee appointed per 2000 legislation will not exist after June 30

6. Senate Bill 792 (continued) • Until the new P&T Committee is appointed and a preferred drug list adopted by the Agency, the Agency shall use the existing voluntary preferred drug list. Drugs not listed on the voluntary preferred drug list will require prior authorization by the Agency or its contractor. • The voluntary preferred drug list will be expanded to function as an interim formulary in order to have a manageable prior authorization system, thereby minimizing disruption of service to patients. • The existing P&T Committee (appointed pursuant to Chapter 2000-367, Section 72, Laws of Florida) will meet to consider expansion of the voluntary preferred drug list prior to July 1.

7. Duties of the Pharmaceutical and Therapeutics Committee • To recommend a preferred drug formulary pursuant to 42 U.S.C. s 1396R-8 • Elect a chairperson and vice chairperson each year • Meet at least quarterly • Comply with Agency rules • To extend possible review all drug classes at least every twelve months • Recommend additions to and deletions from the formulary • Assure that their recommendations provide for medically appropriate drug therapies for Medicaid patients which achieve cost savings contained in the General Appropriations Act

8. Except for mental health related drugs, anti-retroviral drugs, and drugs for nursing home residents and other institutional residents, reimbursement of drugs not included in the formulary is subject to prior authorization. • Formulary drugs are not exempt from 4-brand limit, but formulary drugs may be requested by pharmacy.

9. State Supplemental Rebate Legislation • Assures pharmaceutical manufacturers an opportunity to present evidence supporting inclusion of their products • Authorizes the Agency to negotiate rebates from manufacturers in addition to those required by Title XIX of the Social Security Act • No less than 10 percent of Average Manufacturer Price (as defined in 42 U.S.C. s. 1936); or federal or supplemental rebate, or both, equals or exceeds 25 percent • Agreement to pay the minimum supplemental rebate will ensure consideration of the product for preferred drug formulary inclusion—however placement is not guaranteed • There are no upper limits on the supplemental rebates the agency may negotiate.

10. State Supplemental Rebate Legislation (continued) • Agency decisions will be made on clinical efficacy, safety, cost effectiveness and recommendations of the P&T Committee, as well as net price to Medicaid after federal and state rebates • Agency is authorized to contract for rebate negotiation services • Supplemental rebate offers may include cash rebates and other program benefits, so long as guaranteed savings to the Medicaid program occur in the same year the rebate reduction is included in the General Appropriations Act

11. Nursing Home Formulary Advisory Committee • Mandated to study the feasibility of using a restricted drug formulary for nursing home residents and other institutionalized adults • Seven members to be appointed by the Secretary of Health Care Administration: • Two physicians licensed under chapter 458 or 459 • Three pharmacists licensed under chapter 465, from recommendations provided by the Florida Long-Term Care Pharmacy Alliance • Two pharmacists licensed under chapter 465

12. Senate Bill 904 • Supplemental Rebate Negotiations Exempt from Florida Sunshine Law • Just as federal law requires confidentiality of average manufacturer price and federal rebates, new state legislation extends the same protection to the state supplemental rebate process. • All records pertaining to supplemental rebates are confidential and exempt from section 119.07, Florida Statutes, and Section 24(a) of Article I of the State Constitution.

13. Senate Bill 904 (continued) • Those portions of meetings of the Medicaid P&T Committee at which rebates or pricing are disclosed for discussion or negotiation are to be confidential. • This ensures that pharmaceutical manufacturers will not be placed at a competitive disadvantage and the number and value of supplemental rebates will increase to the benefit of Medicaid recipients and to the state.

14. HCFA Exemption from Best Price Calculation • Additional rebates paid to states under the terms of separate Medicaid drug rebate agreements must be excluded by the manufacturer from the calculation of AMP and best price. (See HCFA release 102, November 15, 2000.)

15. Other Pharmacy Related Initiatives in Senate Bill 792 • Drugs on formulary are not exempt from the four brand limit. • Nursing home residents are now subject to the four brand limit. • Prior authorization to exceed the four brand limit must be obtained by the prescriber, except for nursing home or those in an institutional setting. When prior authorization is approved for those patients, such approval is authorized for up to twelve months.

16. Other Pharmacy Related Initiatives in Senate Bill 792 (continued) • The Medicaid drug benefit management program shall include initiatives to manage drug therapies for: • HIV/AIDS patients • patients using 20 or more unique prescriptions in a 180-day period • the top 1,000 patients in annual spending.

17. Implementation Timeline George Kitchens, R. Ph.Chief, Medicaid Pharmacy Services Agency for Health Care Administration

18. Implementation Timeline June 1 - June 21, 2001 Rebate negotiation for expansion of current voluntary formulary June 26, 2001 Conference call with current P&T committee to review revised formulary Rebate negotiations for 10/1/01 formulary continue July 1 - September 9, 2001 Revised formulary implemented July 1 - July 30, 2001 New P&T Committee selected August 1 - December 31, 2001 P&T Committee begin monthly meetings to review therapeutic categories January 2, 2002 P&T Committee begins quarterly meeting schedule

19. Formulary and Supplemental Rebate Procedures Terry Taylor, R.Ph., President Dan Kincaid, Vice-PresidentProvider Synergies

21. Agenda • Responsibilities • Manufacturer • Provider Synergies • Process for evaluation • Timing for meetings • Pricing proposals • Clinical reviews • P&T Reviews

22. Program at a Glance • Save $214,000,000 for FY 2002 • Non-Preferred Drugs subject to PA • Competitive selection • Clinical and Financial Value • Net Cost (rebates and unit price)

23. Manufacturer Responsibilities(Phase I) • Make sure your company is on our list • LBrown@ProviderSynergies.com • Provide primary/secondary contact info • Use handout as guide to required information • Please register at front desk before leaving • Adhere to process and timeframes • Provide your BEST offer first….make sure it has complete information

24. Manufacturer Responsibilities(Phase I) (continued) • Base your proposal on Federal 1Q2001 data • Provide list of products for proposal • Discount amounts: Federal + Supplemental = Total rebate per unit rebate by NDC • Provide the NET rebate per unit; do NOT break out by Federal and Supplemental

25. Provider Synergies Responsibilities • Provide for presentation of proposals • Provide formats • Proposals • Contract template • Drug information • Drug reviews • Evaluation of clinical/financial proposals

26. Provider Synergies: Contacts • Contracting: Dan Kincaid, Esq. • Clinical: Valerie Taylor, Pharm.D • Scheduling: Lori Brown • Phone: 513-774-8500 • Lbrown@ProviderSynergies.com

27. Important Dates(Phase I) • 6/1: Manufacturer contact information due • 6/5: Forms to manufacturer contacts • 6/12: Proposals due to Provider Synergies • 6/7 - 6/21: Proposal review • 6/21: Initial recommendations • 6/26: Final review of recommendations • 7/1: Preferred List implementation begins

28. Formulary Drug Selection Process(Phase I & II) • Considerations • Efficacy (does it work?) • Safety (do benefits outweigh risks?) • Potential for abuse • Side effects (is it tolerated?) • Dosing (frequency and forms) • Indications • Net cost (includes all discounts/rebates)

29. Formulary Drug Selection Process(Phase I) • Process begins 6/1 • Financials completed by 6/21 • Implementation of preferred list: 7/1 • Participating manufacturers • P&T review process July, August, September & continue as needed

30. Formulary Drug Selection Process(Phase II) • Clinical information to Provider Synergies • Our clinical area will contact you as needed for information • Reviews done by therapeutic class • Marriage of clinical & financial information • Value added services

31. Summary • Step 1: Email information from handout to Lbrown@ProviderSynergies.com by no later than 6/1, 5 p.m. EST • Step 2: Provider Synergies will email proposal forms to you by 6/5 • Step 3: Proposals are due to Provider Synergies by 6/12, 5 p.m. EST

32. Summary (continued) • Step 4: 6/7-6/21, proposal reviews and meetings as needed by invitation only • Step 5: 6/21, initial recommendations • Step 6: 6/26, P&T Committee review • Step 7: Preferred List to Consultec/ACS for 7/1 implementation

33. Summary (continued) • Step 8: • 7/1, begin phase II • Implementation begins for Preferred List from phase I • Clinical reviews begin for participating manufacturers • New P&T Committee formed in July • Class reviews July/August/September and continue as needed

35. Formulary Management and Support George Kitchens, R. Ph.Chief, Medicaid Pharmacy Services Agency for Health Care Administration

36. Prior Authorization • Hard edit at pharmacy for non-formulary drugs • Messaging with formulary alternatives • Pharmacy alerts physician of non-formulary status and provides alternatives if available • Physician calls handled by ACS/Consultec pharmacists

37. Therapeutics Consultation Program (TCP) • Currently handles calls from physicians concerning 4 brand cap • Will also review for formulary compliance during these calls

38. Therapeutic Academic Intervention (TAI) • ACS/Consultec Pharmacists and AHCA field Pharmacists • Reviewing prescribing patterns/ protocols

39. Intensified Benefit Management (IBM) • Complete review of drug therapy and coordination with TAI and PCN

40. Expanded DUR Pharmaceutical Care Network (PCN) • Network of 150 - 200 community pharmacists • Supporting physicians in providing clinically appropriate, cost effective drug therapy

41. Pharmacy Integrated Care (PIC) Committee IBM TAI Patient TCP PCN Formulary PA Heritage/Program Integrity DUR/PrescriberPanel Physicians Program Development Disease Management AHCA Prior Authorizations P&T Committee