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Executive Summary

TENNESSEE MEDICAID LOSEC COVERAGE RECOMMENDED by the state's formulary advisory committee May 30. The committee urged that Merck's Losec (omeprazole) be added to the Medicaid formulary for its current indications, gastroesophageal reflux disease and Zollinger-Ellison syndrome. FDA's Gastrointestinal Drugs Advisory Committee recently advised that the drug also should be approved for the treatment of acute and refractory duodenal ulcers ("The Pink Sheet" May 28, p. 3), but the Medicaid program is unlikely to consider adding these indications to the formulary until FDA approval is given. Adding Losec to Tennessee's formulary is complicated by the state's decision in October to remove Glaxo's Zantac from the formulary due primarily to expense. With the anticipation that Losec will be more costly, officials said they are trying to come up with a policy that is fair to both products. The recommendation in favor of Losec may be good news for Zantac (ranitidine), in that the state agency's formulary decision is likely to apply to both products: if the state adds Losec to the formulary, it may also consider bringing back Zantac. The formulary committee's recommendations are advisory, although the state adopts most of them. Tennessee Medicaid already has approved the panel's recommendations to list Pfizer's oral antifungal Diflucan, Ciba-Geigy's Anafranil for obsessive-compulsive disorders, Searle's beta-blocker Kerlone, and Syntex' Synarel nasally delivered endometriosis treatment. The state already is reimbursing Lilly's Prozac for both depression and obsessive-compulsive disorders. Based on product costs and dosages being used, the state estimates that Anafranil could cost the state as little as one-fifth as much as Prozac for this indication, an official said. Tennessee also has been looking at Sandoz' anti-schizophrenia drug Clozaril but plans to hold off on coverage until it gets a breakdown of drug costs compared to patient monitoring costs under Sandoz' special distribution system (see related item, T&G-10).

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