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HOUSE MEDICAID FORMULARY PROPOSAL RELIANCE ON DRUG LABELING FAULTED

Executive Summary

HOUSE MEDICAID FORMULARY PROPOSAL RELIANCE ON DRUG LABELING FAULTED by the American Medical Association for using labeling as the key factor in formulary decisions, AMA Executive Committee member Kenneth Viste, MD, advised the House Government Operations/Human Resources Committee June 9. Objecting to a possible reinstatement of Medicaid formularies as proposed by the House, Viste said that a "most troublesome" aspect of the House provision is that it would allow states to restrict prescribing of a drug if it "does not appear to have a significant therapeutic advantage 'based on drug labeling.'" Viste was commenting on the potential repeal of the ban on state Medicaid formularies that was instituted as part of the 1990 Medicaid rebate law (OBRA '90). The budget reconciliation bill passed by the House on May 27 contains a provision to repeal the ban. The Clinton Administration also proposed a repeal. The "problem" with the House's legislative language, Viste contended, "is that the relative merits of drugs cannot be judged simply on the FDA-approved labeling. In fact, the drug of choice for a number of conditions and populations may have nothing on the label to indicate these benefits. Many of the more important drugs for the treatment of children have labels which are silent on pediatric use." He also cited the example of drugs that are frequently used off-label for cancer therapy. The actual proposed statutory language appears to offer some flexibility to state formulary review committees to consider information beyond labeling. The House bill states that a committee "may exclude a covered outpatient drug with respect to the treatment of a specific disease or condition for an identified population (if any) only if the committee finds, based on the drug's labeling (or, in the case of a drug whose prescribed use is not approved under the federal FD&C Act but is a medically accepted indication, based on information from the appropriate medical compendia...) that the excluded drug does not have a significant clinically meaningful therapeutic advantage in terms of safety, effectiveness, or clinical outcome of such treatment for such population over other drugs included in the formulary." Decisions to exclude a drug must either be reached in a public meeting or supported by a publicly available written explanation. Viste argued that "there's no doubt in our view that Congress did the right thing in 1990 by prohibiting Medicaid formularies." He questioned the cost-savings of a repeal and contended that "Medicaid formularies limit Medicaid patients' access to needed medications" as well as physicians' "treatment flexibility." He argued that the overall Medicaid rebate law enacted in 1990 was a "carefully negotiated, balanced measure," and to alter the formulary ban provision would "go back on" the agreement reached with affected groups. The subcommittee session was the first health care hearing held by the subcommittee's new chairman, Rep. Towns (D-N.Y.). Towns succeeded the late Rep. Weiss (D-N.Y.) as the panel's chairman. The subcommittee has seen a major turnover. Six of the eight members joined the subcommittee this year. In addition to Towns, they are Democratic Reps. Barrett (Wis.) and Washington (Tex.) and Republican Reps. Schiff (N.M.), the ranking minority member, Horn (Calif.), and Mica (Fla.). Barrett, Horn and Mica are congressional freshmen. Returning to the subcommittee are Independent Rep. Sanders (Vt.) and Democratic Reps. Payne (N.J.) and Waxman (Calif.). Waxman, who chairs the Commerce/health subcommittee which drafted the formulary provision, was leading a health subcommittee session at the time of the human resources subcommittee hearing. Towns expressed concern that measures such as formularies and Medicaid drug prior authorization result in "second-class medicine" for disadvantaged groups, pose administrative obstacles for physicians and patients in obtaining permission for needed exceptions to formularies and have questionable overall cost- savings. It "appears we're hustling backwards" by allowing formularies to be reinstated, he maintained. Some of Towns' comments as well as those of some of the hearing witnesses reprised the original debate on the Medicaid rebate law when organizations representing minority populations and patient groups joined with manufacturers to oppose formularies and prior authorization.
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