Legislature(2003 - 2004)
04/29/2004 09:10 AM RLS
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 543-MEDICAID AND PRESCRIPTION DRUGS CHAIR ROKEBERG announced that the final order of business would be HOUSE BILL NO. 543, "An Act relating to medical assistance coverage for prescription drugs; and providing for an effective date." Number 306 REPRESENTATIVE KOTT moved to adopt CSHB 543, Version 23- LS1835\Q, Mischel, 4/27/04, as the working document. REPRESENTATIVE BERKOWITZ objected for discussion purposes. Number 313 REPRESENTATIVE PEGGY WILSON, Alaska State Legislature, chair of the House Health, Education and Social Services Standing Committee, sponsor of HB 543, explained that HB 543 was introduced because the Department of Health and Social Services is currently in the process of implementing a preferred drug list (PDL). This limitation on medical assistance coverage is being done as a cost containment measure. Representative Wilson related that she has received numerous complaints with regard to how the procedure is going and the [Pharmacy and Therapeutics] committee was accepting testimony. Therefore, this legislation establishes procedures with regard to how the committee should conduct its business. As the session has progressed, the department has reviewed and addressed many of the concerns. CHAIR ROKEBERG asked if it would be a fair characterization to say that Version Q is the result of the effort and work done with the department. He also asked if Representative Wilson believes that the provisions [eliminated] from Version Q aren't particularly necessary. REPRESENTATIVE WILSON commented that a lot of hard work and compromise has resulted in this legislation. Number 340 CHAIR ROKEBERG asked if the committee provided for in CSHB 543(HES) is no longer necessary. REPRESENTATIVE WILSON explained that changes made to the original legislation were conforming changes to provide structure and guidelines to the committee. There was no intention to slow the committee. CHAIR ROKEBERG surmised that the committee to which Representative Wilson is referring is the Pharmacy and Therapeutic Committee of the Alaska Division of Health Care Services. REPRESENTATIVE WILSON added that as part of the process of reviewing each classification of drug, there was concern that most states wait until the end to do the drugs for mental health patients because those patients are a more fragile clientele. Therefore, the idea was to wait a year and allow the drug list to be used before implementing it with mental health patients. REPRESENTATIVE McGUIRE asked if Representative Wilson was comfortable with the legislation before the committee now. REPRESENTATIVE WILSON specified that she feels much better with regard to the mental health drugs because the commissioner has decided to suspend the committee until this fall in order to allow time for it to work. The mental health drugs will be put on the list in January, which is what she wanted. Representative Wilson said she feels comfortable with most of the legislation, save the cost containment aspect of this. Cost containment was the primary purpose of the PDL to begin with, and therefore she was concerned with regard to how tight to tie the commissioner's hands. At this point, much of this is in the hands of the physicians. She indicated that the physicians can determine that the more expensive drugs are necessary. Number 402 REPRESENTATIVE McGUIRE asked if under the "medically necessary" provision, the physician would have the discretion to prescribe a brand name drug. REPRESENTATIVE WILSON replied yes, specifying that as the bill stands the physician has the ability to do whatever he or she feels is necessary. However, she highlighted that the legislature will have to address this again next year because the current language doesn't provide any "wiggle room" for the commissioner. REPRESENTATIVE McGUIRE recalled discussions last year regarding timelines that seemed to shift and change. One of the difficulties with a part-time legislature is that legislators aren't around for the bulk of the year. Therefore, she said she feels most comfortable with this method and readdressing it later. Representative McGuire highlighted that cost containment includes a variety of things. For instance, if someone isn't successfully treated, the noneconomic and economic damages to communities are profound. Therefore, she expressed the need for that to be considered in regard to cost containment. CHAIR ROKEBERG surmised that the tension is between the ability for a physician to prescribe what he or she feels is in the best interest of the patient and the cost containment measures. REPRESENTATIVE WILSON agreed. CHAIR ROKEBERG pointed out that the legislation only speaks to the ability of the physician [to prescribe] and doesn't really contain any cost containment measures. Number 437 PAT LUBY, Advocacy Director, AARP Alaska, announced that AARP is in total support of the PDL the way it's currently operating in Alaska. "Alaska is doing everything right," he said. Physicians, pharmacists, and nurse practitioners are developing the PDL. Just last week Alaska became one of the first states to participate in bulk purchasing of pharmaceuticals, which will save some money. Mr. Luby emphasized that this isn't just about saving money, it's also about good pharmacology. Alaska has also signed on to participate in an evidence-based research project at the University of Oregon. There are three of these projects throughout the nation, and AARP is encouraging every state to sign on to them. In the [evidence-based research project], scientists, free of pharmaceutical company sales representatives and advertising, are reviewing what are the best drugs for people to use in particular categories of illness. Therefore, good scientific information can be used with regard to therapeutic effectiveness. Mr. Luby acknowledged that cost savings are great, but pointed out that therapeutic effectiveness is really what is being looked. MR. LUBY said, "Alaska is doing this right, we don't need this bill. We should just continue with what we're doing. We will save more money if we don't have this bill, there's no doubt about that." Mr. Luby stated that the intent of HB 543 is to slow the PDL. He characterized HB 543 as a pharmacy bill, an industry bill, and related his belief that those in the pharmaceutical industry are calling Representative Wilson to complain. He guaranteed the committee that AARP members aren't calling and complaining. Mr. Luby encouraged the committee not to forward HB 543 to the House floor. REPRESENTATIVE McGUIRE cautioned Mr. Luby with regard to relating motives of the sponsor, which she knew to be a person who wouldn't introduce legislation for one particular interest group. Furthermore, Representative McGuire indicated that members of the legislature, the penal system, and the health care community share concerns [which led to the introduction of this legislation]. MR. LUBY acknowledged that everyone has his or her own view of this issue. However, those voicing concern in the House Health, Education and Social Services Standing Committee were the pharmaceutical companies. The pharmaceutical companies don't believe they have a fair shot at the Pharmacy and Therapeutic Committee, and AARP doesn't believe they should because an individual working for a pharmaceutical company tries to represent that company and get that company's drugs on the list. What [the state] needs is a Pharmacy and Therapeutic Committee that operates independently based on scientific research, not based on marketing strategies for pharmaceutical companies. Number 473 CHAIR ROKEBERG posed an example in which an individual takes Lipitor. If the PDL formulary didn't provide for that and there were other less effective [drugs] available, he surmised that the individual would be restricted from taking Lipitor. MR. LUBY clarified that physicians are still in the driver's seat. If a physician says that a particular medication is the best for a particular condition in a particular individual, it's permissible under the PDL. CHAIR ROKEBERG interjected that the aforementioned is allowed in the legislation. MR. LUBY reiterated that such is already allowed [under the current PDL]. Number 484 CHIP WAGONER, Lobbyist for Alaska Association of Homes for Children, informed the committee that the Alaska Association of Homes for Children passed a resolution in support of the Department of Health and Social Services' cost containment effort with regard to the PDL. The competing interests are the health of the patient and controlling state costs. Because Alaska has an aging population, Alaska has an escalating population that needs drugs. He related his belief that in terms of growth, the senior and/or disability population is the highest area of growth for Medicaid. Mr. Wagoner turned to the fiscal note, and expressed concern that if the fiscal note remains the same with Version Q, what was intended to be a $20 million savings will turn into a $10 million savings for the state. To make up that $10 million difference would result in cuts to the Department of Health and Social Services' budget. Those who would be impacted by such would be those served by the Alaska Association of Homes for Children, which serves children in state custody who are in residential homes. MR. WAGONER said he didn't believe the solution is to give the physicians carte blanche because that would blow a hole in the concept of cost savings. The solution is in the provision, which address administrative procedures. If the administrative procedures are fair, that is provide adequate notice and an opportunity to be heard by the drug companies, businesses, and physicians, the proper cost containment could be achieved while being fair and taking into account the health of the patient. Number 508 JOEL GILBERTSON, Commissioner, Department of Health and Social Services, explained that Version Q would restrict the department's ability to adjust the authorization system for the PDL. He noted that the committee packet should include information with regard to the growth trends. The current growth trend for fiscal year (FY) 2005 is $134 million for prescription drug expenditures in the Medicaid program. The aforementioned is the uninterrupted, nonpreferred drug list growth rate. With the PDL, the growth rate for FY 05 would be about $114 million. COMMISSIONER GILBERTSON informed the committee that the department will begin implementing a PDL at the end of May, although the mental health drugs have been delayed until the beginning of next year. Version Q speaks to one portion of the PDL, the authorization system. The authorization system allows a prescriber to prescribe a nonpreferred drug, which is a drug that has been peer reviewed to be a drug that is not the most effective or the most safe in that drug class. Commissioner Gilbertson explained that currently, the department is requiring that physicians document that it's medically necessary for the nonpreferred drug to be prescribed. He noted that the authorization systems vary across the nation, with Alaska's being one of the least intrusive on a provider's practice. The higher the hurdle, the more likely the preferred drug will be prescribed versus the nonpreferred. COMMISSIONER GILBERTSON pointed out that the savings lay in providing and prescribing more effective drugs that are more cost efficient. Savings also lay in supplemental rebates with the pharmacy manufacturers. As Mr. Luby testified, Alaska is joining the first ever multi-state prescription drug purchasing pool. Alaska will be joining Nevada, New Hampshire, Vermont, and Michigan in forming this Medicaid prescription drug purchasing pool. There will be about one million lives in that pool, and therefore the state will be able to negotiate better prices with the manufacturer. The authorization system in the CS would restrict the state and require, by statute, that the state must always maintain the lowest level of authorization, which is simply a documentation on the prescription that the drug is medically necessary. The state intends to begin the program with the aforementioned. Physicians and the Alaska State Medical Association have been notified that the PDL is beginning and the first 14 drug classes that will be included as well as the override system. Commissioner Gilbertson said but [the department] believes in working with the prescribing community that [the department] needs the ability to increase the authorization system going into the future if there is noncompliance with the PDL. The aforementioned ability provides [the department] the ability to work with the physicians and prescribers in order to ensure compliance. He pointed out that if [the physicians, prescribers, and department] don't work constructively together, the authorization system will have to be increased. Cost containment, he emphasized, is the money that will be used to continue care for the children, seniors, and disabled who receive services from the department. He noted that the department has submitted a fiscal note for Version Q. Number 557 COMMISSIONER GILBERTSON turned to Representative McGuire's earlier comment and said [the department] agrees with reviewing other areas of cost containment rather than just one. Last year the legislature included language directing the department to analyze other cost containment measures before rushing to a PDL. In fact, the implementation of the program has been delayed to address concerns, such as those with regard to mental health drugs. Commissioner Gilbertson highlighted that the department is expanding provider "lock-in" to ensure that individual Medicaid beneficiaries go to one physician and one pharmacy rather than to multiple providers with the potential of receiving conflicting prescriptions. Furthermore, case management services have been expanded such that a much larger segment of the Medicaid population [is covered]. He specified that the Medicaid population is comprised largely of those with chronic conditions and mental illness; these individuals use multiple services from the department and a high utilization of prescription drugs. Commissioner Gilbertson said, "Cost containment is going on across the department, this is one piece of it. And we think it's a responsible piece, and for that reason we do have concerns with the CS." Number 570 REPRESENTATIVE COGHILL expressed his interest in cost containment while allowing the physician to prescribe the proper medication for the patient. He inquired as to how the "medically necessary" language requirement would impact the department. He further inquired as to the increased authorization anticipated if [Version Q] didn't pass. COMMISSIONER GILBERTSON explained that [Version Q] would lock-in the initial authorization system [requiring that every prescription outside the PDL would simply specify] "medically necessary" as the sole override system. Noncompliance means a higher number of prescriptions of less effective and less cost efficient drugs. Commissioner Gilbertson noted that the department has reviewed the possibility of continuing "medically necessary" on the prescription while requiring the provider to document the reason the prescription is medically necessary. The department has provided suggestions of valid reasons, such as contra indications, allergies, failure of the preferred drug, or an already existing regime on a nonprefered drug that is effective. Commissioner Gilbertson noted that if, in the future, the department sees continued prescribing of less therapeutically efficient drugs, physicians may be asked to specify the reason the drug is medically necessary on the drug. The aforementioned isn't very burdensome and there is no actual review done by the state. He mentioned that some states have been strong with regard to the authorization system. For example, Michigan has over 95 percent compliance with its PDL. TAPE 04-3, SIDE B COMMISSIONER GILBERTSON remarked that there are a broad range of authorization systems and Alaska is starting at the simple end. The desire is to work with the prescribers in good faith in order to have preferred drugs prescribed and work efficiently. However, [Version Q] doesn't provide the [department] the ability to increase "it" if there is noncompliance. CHAIR ROKEBERG asked if, under Version Q, the department could provide the regulations to require the medical justifications. COMMISSIONER GILBERTSON explained that the language "medically necessary" alone and undefined, without the cause of the medical necessity, is all that's required to override the PDL. He acknowledged that in regulation the terms "medical necessity" could be defined. However, the only way to review that would be to review patient files, which the department isn't proposing. CHAIR ROKEBERG surmised that the department doesn't believe it has the authority under Version Q to [require] the justification [be written on the prescription]. COMMISSIONER GILBERTSON replied no, not on the prescription pad itself. CHAIR ROKEBERG recalled that there is an issue with regard to what a "brand name" drug is. He asked if the language in [Version Q] would be harmful and disallow a prescription for a generic drug that isn't on the formulary. COMMISSIONER GILBERTSON confirmed that as currently drafted the override system is restricted to brand name drugs, and therefore a physician couldn't override with a generic drug. There is statute which mandates that when a generic drug is available prescribers must prescribe it unless a medically necessary override is provided. The aforementioned was a cost containment measure. This legislation would continue that mandate, although not in the situation in which there is a generic override of the PDL. However, he noted that most generics will be on the PDL. CHAIR ROKEBERG asked if additional language to address the [generic override of the PDL] would be appropriate. COMMISSIONER GILBERTSON indicated that the language would need to clarify that an override for the PDL could be for a generic or a brand name drug. Number 565 CHAIR ROKEBERG turned to the April 16, 2004, letter from Dr. Brodsky, which is in the committee packet. The letter specifies that effective May 19, 2004, prescribers will be required to provide the terms "medically necessary" or "allergic to the preferred drug" as medical justification. Chair Rokeberg related his understanding that the department wants to start that way, but have the flexibility to change that. COMMISSIONER GILBERTSON opined that the department has worked in good faith with the provider community and the drug industry. When concerns have been raised, the department has tried its best to accommodate those concerns. One concern raised by the physicians was having everyone well versed in the override system at the start of the program. He explained that the override system proposed by the department was such that the terms "medically necessary" would be written on the prescription itself as well as the reason, such as specifying "medically necessary, adverse reaction to X." However, some prescribers expressed concern that getting to that step now, which is different than the current override system for generic drugs, isn't something that the entire provider community can be educated on in day one, and furthermore it isn't something that the entire provider community supports up front. Therefore, the department agreed to accommodate the provider community and work with it in good faith to ensure compliance with the PDL. As dialogue continues with the physician and prescriber community, the department believes it should retain the authority to increase the authorization system if there is noncompliance. Otherwise, Alaska will experience what has been experienced when statutorily restricted to medically necessary language. For example, in Oregon the aforementioned statutory restriction resulted in a 75 percent decline in expected savings. Number 546 REPRESENTATIVE McGUIRE inquired as to the percentage of physicians in Alaska who accept Medicaid patients. COMMISSIONER GILBERTSON answered between 55-60 percent. REPRESENTATIVE McGUIRE reminded committee members that the ["medically necessary" language] was what she offered to the senior care legislation that passed. She further reminded committee members that [prescribing a drug outside the PDL was allowed] if the medical reason fell into four categories. The physicians are concerned because they believe the ["medically necessary" language requiring the reason to fall within four categories] is overly onerous and puts their medical license on the line. Representative McGuire announced her support of the legislation as it is [Version Q], which she characterized as a good starting point. She highlighted that every legislature is free to change this. REPRESENTATIVE McGUIRE returned to the issue of cost containment, and said that within the PDL, one has to review experiments in other states as well. She highlighted that those who take psychotropic drugs are the poorest in the community. Therefore, if such individuals are prescribed the wrong drug, it could result in an emergency room visit for which the hospital or other [insureds] pick up the tab. Furthermore, if such an individual commits a crime, many others are picking up the tab. Representative McGuire encouraged the committee to keep the language [in Version Q] as it is. REPRESENTATIVE COGHILL noted that he will support the language [in Version Q], although he would also support the physicians providing an explanation or justification [for prescribing a drug not on the PDL]. CHAIR ROKEBERG remarked that he tended to agree with Representative Coghill. Chair Rokeberg requested that Commissioner Gilbertson review Version Q and perhaps bring forth some amendments in response to some of the issues brought forward by the committee. Number 498 REPRESENTATIVE BERKOWITZ withdrew his objection. There being no further objection, CSHB 543, Version 23-LS1835\Q, Mischel, 4/27/04, was before the committee. Number 496 REPRESENTATIVE McGUIRE moved to report CSHB 543, Version 23- LS1835\Q, Mischel, 4/27/04, out of committee with individual recommendations and the accompanying zero fiscal note. There being no objection, CSHB 543(RLS) was reported from the House Rules Standing Committee.