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B-RATED GENERIC PRODUCTS SHOULD NOT BE EXCLUDED FROM MEDICAID

Executive Summary

B-RATED GENERIC PRODUCTS SHOULD NOT BE EXCLUDED FROM MEDICAID coverage, if brandname counterparts also carry "B" FDA therapeutic equivalency ratings, the Senate Special Committee on Aging said in May 1 comments on the Health Care Financing Administration's rebate contract. "It would be inconsistent policy for Medicaid to pay for more expensive B-rated innovator multiple-source [products] when the less-expensive generics are rated 'B' as well," the committee maintained. The comments point out that the statute bars coverage of generic products that are not both "therapeutically and pharmaceutically" equivalent to their reference drugs. However, "it was the intent [of Congress] to prohibit coverage of any B- rated generics where the innovator was rated 'A' by FDA." The committee said, "many branded multiple-source products are B- rated" -- including anti-asthma drugs and aerosols such as Ventolin and Proventil and "certain topical creams and ointments" -- and "it was not the intent to prohibit coverage of these commonly used brandname 'B' products or their generic versions, if such versions exist." The committee comments were submitted to HCFA Administrator Gail Wilensky, PhD, just over one week after most drug manufacturers filed their comments on the rebate contract ("The Pink Sheet" April 29, p. 12). A cover letter to the committee comments was signed by Staff Director Portia Porter Mittelman. The letter notes that committee Chairman Pryor (D-Ark.) "will be away from his official duties over the next few weeks," while he convalesces from a heart attack ("The Pink Sheet" April 22, T&G-1). However, Mittelman urged Wilensky to "be assured of [Pryor's] continued interest in the Medicaid drug rebate program and in assuring that all Americans have access to affordable prescription drugs." The comments assert that the legislation "essentially made no change in a state's ability to use prior authorization or prior approval." States retain the discretionary ability under the act to "place a drug on prior authorization for either clinical or economic reasons. There is no basis in the statute for saying that [prior authorization] can be used for one reason but not the other." Nonetheless, the committee emphasized that a key feature of the legislation is "access" to medicines. "State Medicaid programs must now cover all medically accepted indications of drug products for which an acceptable rebate agreement is in effect, including all off-label uses" listed in national medical compendia, the comments state. "This provision insures that Medicaid patients have access not only to all approved indications of drugs and biologicals, but also the most up-to-date treatments which may have not yet been officially approved by the FDA but have been recognized as acceptable medical therapy by the medical community." Prior authorization allows states to follow "the example of many hospitals and managed care plans" and "encourage a prescriber to use an alternative therapy before approving the therapy [initially] sought by the prescriber," the committee continued. "Such a procedure would be permissible as long as the state approves the use of the drug if prescribed for an approved or medically accepted indication upon receiving appropriate medical justification from the physician." The comments point out the law's requirement that prior authorization be studied "to answer the questions of whether the states' use of [it] actually impedes access to needed drugs and reduces quality of care to Medicaid patients." The committee also explained that the statute's provision of a six-month freedom from restrictions for new drugs applies to prior authorization restrictions, but not to exclusion of drug categories. "States will have to cover any new drug without [prior authorization] restrictions for six months after the date of FDA approval," the comments state. However, "new drugs that are members of the 'excludable' drug classes do not have to be covered from the date of approval without restrictions." The committee explained that "it would be inconsistent and unfair to provide coverage for a new hair replacement therapy when those that are currently on the market are not covered."
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