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CLOZARIL MEDICAID COVERAGE IN STATES

Executive Summary

CLOZARIL MEDICAID COVERAGE IN STATES should be provided as soon as that nonexclusive distribution becomes available for the anti-schizophrenia drug, Health Care Financing Administration Medicaid Bureau Director Christine Nye instructed HCFA regional administrators in a May 20 letter. Sandoz completed the switch from the proprietary Clozaril Patient Management System to nonexclusive distribution on May 31. While the Medicaid drug price rebate law generally requires that states cover all products of a manufacturer that has signed a rebate agreement -- as has Sandoz -- the company's earlier Clozaril exclusive distribution arrangement with Caremark and Roche Labs excluded the product from that requirement. Some states balked at covering the $ 8,944 annual package of drug and patient monitoring services. "Because Sandoz has entered a rebate agreement with the secretary and because Sandoz will no longer distribute the drug under exclusive arrangements, states which elect to provide prescription drug coverage must cover Clozaril effective with the date of the conversion to the nonexclusive distribution system in the state," Nye directed. Prior to Nye's directive, Sandoz said, 48 states had decided to cover Clozaril under their Medicaid or other mental health programs. Clozaril and its "unique bundle of component services" will be divided into three pieces for reimbursement purposes: the drug itself, the blood test to detect development of the potentially fatal condition agranulocytosis, and remaining services such as phlebotomy and case management. Nye said HCFA plans to issue "soon" more detailed guidance in Medicaid coverage manual instructions. Because "FDA approval of Clozaril was granted on the condition that a weekly blood test and monitoring be performed, individuals can receive the drug only if they receive the associated services," the HCFA letter directs. To fit the Clozaril-related services into Medicaid's benefit structure, phlebotomy and case management will be covered using a provision of the Medicaid statute that permits payment for "any other remedial care recognized under state law, specified by the secretary." Sandoz said in April that about 60 wholesalers had registered with the manufacturer to distribute Clozaril and about 250 health care organizations had registered to monitor patient's white blood cell counts and dispense the medication on a weekly basis ("The Pink Sheet" April 15, T&G-5). The manufacturer's median price for the drug is about $ 4,160 per year for a 400 mg per day dosage regimen.
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