§ 280 — Medicaid drug cap

§ 280. Medicaid drug cap. 1. The legislature hereby finds and declares\nthat there is a significant public interest for the Medicaid program to\nmanage drug costs in a manner that ensures patient access while\nproviding financial stability for the state and participating providers.\nSince two thousand eleven, the state has taken significant steps to\ncontain costs in the Medicaid program by imposing a statutory limit on\nannual growth. Drug expenditures, however, continually outpace other\ncost components causing significant pressure on the state, providers,\nand patient access operating under the Medicaid global cap. It is\ntherefore intended that the department establish a supplemental rebate\nprogram as part of a focused and sustained effort to balance the growth\nof drug expenditures with the growth of total Medicaid expenditures.\n 2. The commissioner shall review at least annually the department of\nhealth state funds Medicaid drug expenditures to identify drugs in the\neightieth percentile or higher of total spend, net of rebate or in the\neightieth percentile or higher based on cost per claim, net of rebate.\n 3. (a) The commissioner may identify and refer drugs in the eightieth\npercentile or higher of total spend, net of rebate or in the eightieth\npercentile or higher based on cost per claim, net of rebate, to the drug\nutilization review board established by section three hundred\nsixty-nine-bb of the social services law for a recommendation as to\nwhether a target supplemental Medicaid rebate should be paid by the\nmanufacturer of the drug to the department and the target amount of the\nrebate.\n (b) If the department intends to refer a drug to the drug utilization\nreview board pursuant to paragraph (a) of this subdivision, the\ndepartment shall notify the manufacturer of such drug and shall attempt\nto reach agreement with the manufacturer on a rebate for the drug prior\nto referring the drug to the drug utilization review board for review.\nSuch rebate may be based on evidence-based research, including, but not\nlimited to, such research operated or conducted by or for other state\ngovernments, the federal government, the governments of other nations,\nand third party payers or multi-state coalitions, provided however that\nthe department shall account for the effectiveness of the drug in\ntreating the conditions for which it is prescribed or in improving a\npatient's health, quality of life, or overall health outcomes, and the\nlikelihood that use of the drug will reduce the need for other medical\ncare, including hospitalization.\n (c) In the event that the commissioner and the manufacturer have\npreviously agreed to a supplemental rebate for a drug pursuant to\nparagraph (b) of this subdivision or paragraph (e) of subdivision seven\nof section three hundred sixty-seven-a of the social services law, the\ndrug shall not be referred to the drug utilization review board for any\nfurther supplemental rebate for the duration of the previous rebate\nagreement, provided however, the commissioner may refer a drug to the\ndrug utilization review board if the commissioner determines there are\nsignificant and substantiated utilization or market changes, new\nevidence-based research, or statutory or federal regulatory changes that\nwarrant additional rebates. In such cases, the department shall notify\nthe manufacturer and provide evidence of the changes or research that\nwould warrant additional rebates, and shall attempt to reach agreement\nwith the manufacturer on a rebate for the drug prior to referring the\ndrug to the drug utilization review board for review.\n (d) The department shall consider a drug's actual cost to the state,\nincluding current rebate amounts, prior to seeking an additional rebate\npursuant to paragraph (b) or (c) of this subdivision.\n (e) If the commissioner is unsuccessful in entering into a rebate\narrangement with the manufacturer of the drug satisfactory to the\ndepartment, the drug manufacturer shall, in that event be required to\nprovide to the department, on a standard reporting form developed by the\ndepartment, the following information:\n (i) the actual cost of developing, manufacturing, producing (including\nthe cost per dose of production), and distributing the drug;\n (ii) research and development costs of the drug, including payments to\npredecessor entities conducting research and development, such as\nbiotechnology companies, universities and medical schools, and private\nresearch institutions;\n (iii) administrative, marketing, and advertising costs for the drug,\napportioned by marketing activities that are directed to consumers,\nmarketing activities that are directed to prescribers, and the total\ncost of all marketing and advertising that is directed primarily to\nconsumers and prescribers in New York, including but not limited to\nprescriber detailing, copayment discount programs, and\ndirect-to-consumer marketing;\n (iv) the extent of utilization of the drug;\n (v) prices for the drug that are charged to purchasers outside the\nUnited States;\n (vi) prices charged to typical purchasers in the state, including but\nnot limited to pharmacies, pharmacy chains, pharmacy wholesalers, or\nother direct purchasers;\n (vii) the average rebates and discounts provided per payer type in the\nstate; and\n (viii) the average profit margin of each drug over the prior five-year\nperiod and the projected profit margin anticipated for such drug.\n (f) All information disclosed pursuant to paragraph (e) of this\nsubdivision shall be considered confidential and shall not be disclosed\nby the department in a form that identifies a specific manufacturer or\nprices charged for drugs by such manufacturer.\n 4. In determining whether to recommend a target supplemental rebate\nfor a drug, the drug utilization review board shall consider the actual\ncost of the drug to the Medicaid program, including federal and state\nrebates, and may consider, among other things:\n (a) the drug's impact on Medicaid drug spending, and the adequacy of\ncapitation rates of participating Medicaid managed care plans, and the\ndrug's affordability and value to the Medicaid program; or\n (b) significant and unjustified increases in the price of the drug; or\n (c) whether the drug may be priced disproportionately to its\ntherapeutic benefits.\n 5. (a) If the drug utilization review board recommends a target rebate\namount on a drug referred by the commissioner, the department shall\nnegotiate with the drug's manufacturer for a supplemental rebate to be\npaid by the manufacturer in an amount not to exceed such target rebate\namount.\n (b) The supplemental rebate required by paragraph (a) of this\nsubdivision shall apply to drugs dispensed to enrollees of managed care\nproviders pursuant to section three hundred sixty-four-j of the social\nservices law and to drugs dispensed to Medicaid recipients who are not\nenrollees of such providers.\n (c) Where the department and a manufacturer enter into a rebate\nagreement pursuant to this section, which may be in addition to existing\nrebate agreements entered into by the manufacturer with respect to the\nsame drug, no additional rebates shall be required to be paid by the\nmanufacturer to a managed care provider or any of a managed care\nprovider's agents, including but not limited to any pharmacy benefit\nmanager, while the department is collecting the rebate pursuant to this\nsection.\n (d) In formulating a recommendation concerning a target rebate amount\nfor a drug, the drug utilization review board may consider:\n (i) publicly available information relevant to the pricing of the\ndrug;\n (ii) information supplied by the department relevant to the pricing of\nthe drug;\n (iii) information relating to value-based pricing provided, however,\nif the department directly invites any third party to provide\ncost-effectiveness analysis or research related to value-based pricing,\nand the department receives and considers such analysis or research for\nuse by the board, such third party shall disclose any funding sources.\nThe department shall, if reasonably possible, make publicly available\nthe following documents in its possession that it relies upon to provide\ncost effectiveness analyses or research related to value-based pricing:\n(A) descriptions of underlying methodologies; (B) assumptions and\nlimitations of research findings; and (C) if available, data that\npresents results in a way that reflects different outcomes for affected\nsubpopulations;\n (iv) the seriousness and prevalence of the disease or condition that\nis treated by the drug;\n (v) the extent of utilization of the drug;\n (vi) the effectiveness of the drug in treating the conditions for\nwhich it is prescribed, or in improving a patient's health, quality of\nlife, or overall health outcomes;\n (vii) the likelihood that use of the drug will reduce the need for\nother medical care, including hospitalization;\n (viii) the average wholesale price, wholesale acquisition cost, retail\nprice of the drug, and the cost of the drug to the Medicaid program\nminus rebates received by the state;\n (ix) in the case of generic drugs, the number of pharmaceutical\nmanufacturers that produce the drug;\n (x) whether there are pharmaceutical equivalents to the drug; and\n (xi) information supplied by the manufacturer, if any, explaining the\nrelationship between the pricing of the drug and the cost of development\nof the drug and/or the therapeutic benefit of the drug, or that is\notherwise pertinent to the manufacturer's pricing decision; any such\ninformation, including the information on the standard reporting form\nrequirement in paragraph (e) of subdivision three of this section,\nprovided shall be considered confidential and shall not be disclosed by\nthe drug utilization review board in a form that identifies a specific\nmanufacturer or prices charged for drugs by such manufacturer.\n 6. (a) After taking into account all rebates and supplemental rebates\nreceived by the department, including rebates received to date pursuant\nto this section, the commissioner may: subject any drug of a\nmanufacturer referred to the drug utilization review board under this\nsection to prior approval in accordance with existing processes and\nprocedures when such manufacturer has not entered into a supplemental\nrebate arrangement as required by this section; direct a managed care\nplan to limit or reduce reimbursement for a drug provided by a medical\npractitioner if the drug utilization review board recommends a target\nrebate amount for such drug and the manufacturer has failed to enter\ninto a rebate arrangement required by this section; direct managed care\nplans to remove from their Medicaid formularies any drugs of a\nmanufacturer who has a drug that the drug utilization review board\nrecommends a target rebate amount for and the manufacturer has failed to\nenter into a rebate arrangement required by this section; promote the\nuse of cost effective and clinically appropriate drugs other than those\nof a manufacturer who has a drug that the drug utilization review board\nrecommends a target rebate amount and the manufacturer has failed to\nenter into a rebate arrangement required by this section; allow\nmanufacturers to accelerate rebate payments under existing rebate\ncontracts; and such other actions as authorized by law. The commissioner\nshall provide written notice to the legislature at least thirty days\nprior to taking action pursuant to this paragraph.\n (b) The commissioner shall be authorized to take the actions described\nin paragraph (a) of this subdivision. In addition, no such actions shall\nbe deemed to supersede the provisions of paragraph (b) of subdivision\nthree of section two hundred seventy-three of this article or the\nprovisions of subdivisions twenty-five and twenty-five-a of section\nthree hundred sixty-four-j of the social services law; provided further\nthat nothing in this section shall prevent access by a Medicaid\nrecipient to a drug which is the only treatment for a particular disease\nor condition.\n 7. The commissioner shall provide a report by July first annually to\nthe drug utilization review board, the governor, the speaker of the\nassembly, and the temporary president of the senate on savings achieved\nthrough the supplemental rebate programs in the last fiscal year. Such\nreport shall provide data on what savings were achieved through actions\npursuant to subdivisions three, five and six of this section,\nrespectively, and what savings were achieved through other means and how\nsuch savings were calculated and implemented.\n