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Executive Summary

VIRGINIA MEDICAID NEW DRUG REIMBURSEMENT COMMITTEE ESTABLISHMENT was opposed by the Pharmaceutical Manufacturers Association in testimony presented at a state legislature subcommittee hearing on Oct. 3. The committee, which would determine whether newly-approved drugs should be reimbursed by Medicaid, would be established under a regulation recently developed by the Virginia Department of Medical Assistance. The reg is scheduled to go into effect Feb. 1. PMA State Government Affairs Regional Director Deborah Kapsa told the legislature that the committee "would have the effect of creating for the first time, in the Commonwealth of Virginia, a restrictive formulary." PMA "believes that restrictive drug formularies, particularly those designed to delay or withhold access to the newest drug therapies, are not good public policy," Kapsa said. The reg contains a provision under which doctors can bypass the review process to get coverage for specific drugs. The regs were developed in response to a directive passed by the state legislature in the 1989 appropriations act. The act called for four initiatives to cut $5.5 mil. from pharmaceutical expenditures by Medicaid. Establishment of the review committee is the subject of one of the regs. PMA pointed to the Catastrophic Care Act's prohibition of a drug formulary to substantiate its position that "restricted drug lists, or formularies, are ineffective as cost containment measures." In order to control costs of drug coverage, the association suggested consideration of drug utilization review and utilization control systems to detect program misuse. The PMA testimony was presented to a joint subcommittee established by a resolution (HJR 403) in the Virginia legislature to study long-term solutions to containing pharmaceutical costs in the Medicaid program. The other three regs developed by the state Department of Medical Assistance were effective in July. One reg limits the reimbursement level to pharmacists to one dispensing fee per prescription drug per month. The second reg raises the copayment level to $1 from 50. The third reg discontinus Medicaid coverage for drugs delivered through transdermal patches. The joint subcommittee is scheduled to hold another public hearing in late November or early December and will develop a report to the legislature on its findings early in 1990. The report may include recommended changes in the Medicaid program. The debate in the Virginia legislature over how to reduce costs of the Medicaid drug program has pitted pharmacy groups against the drug industry over where the reductions should be made. Pharmacy groups, including the Virginia Pharmaceutical Association and the Virginia Association of Drug Chains, are urging consideration by the subcommittee of a therapeutic formulary in the Medicaid program. The formulary would restrict reimbursement of drugs based on therapeutic benefit. At a hearing of the joint subcommittee in August, Purdue professor Stephen Schondelmeyer, PhD, offered data indicating that while pharmacy costs in the Virginia Medicaid program have risen, the pharmacist component of the cost has remained relatively stable.

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