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MEDICAID FORMULARY PROHIBITION SOUGHT IN TENNESSEE LEGISLATION

Executive Summary

MEDICAID FORMULARY PROHIBITION SOUGHT IN TENNESSEE LEGISLATION introduced Jan. 25 in both the state Senate and House of Representatives. It would direct that the state "shall not establish a drug formulary that restricts by any prior or retroactive approval process a licensed prescriber's ability to treat a patient with a prescription drug that has been approved by the federal Food and Drug Administration." The formulary can be retained for cosmetic and diet drugs. Tennessee Medicaid has had a restrictive formulary for outpatient prescription drugs since 1981, and has begun adding "prior approval" requirements for certain drugs on the formulary. The bill's sponsors include the chairmen of the Senate and House committees that have jurisdiction over the measure. It is being promoted by a coalition entitled "Tennesseans for Sensible Medicine," organized in October to fight the formulary and prior approval program. Members include the Pharmaceutical Manufacturers Association, the Tennessee Academy of Family Physicians, the Tennessee Association of Business, and patient advocacy groups such as the Arthritis Foundation and Leukemia Society. As part of its strategy, the coalition is publicizing a PMA-funded study, conducted by Vanderbilt University researcher Frank Sloan, which contends that formularies raise net Medicaid spending due to increased costs for hospital care and other services. Coalition members and Sloan met with Gov. Ned McWhirter Jan. 10 to review the study. The group also held six "citizens forums" across the state Jan. 16-18. While McWhirter has not taken a position on the issue, a Medicaid official said his agency disagrees with the report's conclusions and opposes any change to the formulary. During 1989, Tennessee Medicaid drug spending was reduced by about $20 mil., split between cuts in pharmacist fees and drug reimbursement levels. This year, officials are trying to hold the drug budget to $108 mil., which reflects about a 5% to 7% cut the governor has imposed on most state agencies. About one-tenth of Tennessee's Medicaid monies go to outpatient prescription drugs. The prior approval program, begun in October, is targeted at categories of drugs that account for large Medicaid expenditures. Prior approval is required for most nonsteroidal anti-inflammatory drugs (NSAIDs), except in the first year of treatment for chronic arthritis. The state will implement prior approval for ulcer patients receiving Marion's Carafate or histamine H[2] antagonists such as SmithKline's Tagamet, Merck's Pepcid, and Lilly's Axid for more than eight weeks, and also for Lilly's Prozac, for depression. To obtain approval, a physician must certify that a patient meets specified clinical criteria and that other therapies have been tried.
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