A bill proposed by Rep. Sydnie Mae Durand would allow the Department of Health to include two more classes of drugs on the Medicaid Pharmacy Program’s preferred drug list. This action could save the state $11.1 million while still ensuring recipients’ access to the necessary medications.

Durand’s legislation proposes removing an exemption in existing law and allowing LDH to review drugs for Hepatitis C, as well as for a class of behavioral mental health medications (known as atypical antipsychotics), to determine preferred status for certain drugs. This measure would allow LDH to negotiate additional rebates with drug manufacturers, a process that has been used for nearly three years. Since the Medicaid Pharmacy Program accounts for more than 20 percent of the overall Medicaid budget, additional rebates for Hepatitis C and these mental health medications will result in additional savings to the state.

The preferred drug list is determined by the Pharmaceutical and Therapeutics Committee, a statewide body of physicians, a licensed psychiatrist and other health care stakeholders that reviews all drugs in the Medicaid program for cost effectiveness and clinical efficacy. The Committee identifies certain drugs from each class of medications as “preferred,” meaning physicians can directly prescribe those drugs. If a physician feels a patient would have better results with medication that is not “preferred,” the physician can seek prior authorization from LDH to have Medicaid pay for that medication. This process is used nationwide by most state Medicaid programs as well as private insurers.

The preferred drug list allows LDH to negotiate additional rebates with pharmaceutical drug manufacturers, giving more money back to the state for patient care. In Fiscal Year 03/04, this process resulted in drug companies paying Louisiana $29 million in rebates. In addition, the state saved $46 million that year as physicians’ prescribing practices changed to reflect the preferred drugs.

At the time the preferred drug list was created, medications for Hepatitis C and certain mental health conditions were exempt from being reviewed for preferred status. However, LDH Secretary Dr. Fred Cerise said it would greatly benefit the Medicaid program to allow for review of those two classes of medications.

“As part of health care reform efforts, Gov. Blanco has asked LDH to run the Medicaid program more effectively in terms of both treatment and cost containment,” Cerise said. “We now have three years of experience with the preferred drug list, and we believe there is a great opportunity for savings to the state without compromising safety of the patients by reviewing these medications for the list.”

The pharmaceutical manufacturers oppose this legislation because they do not currently pay rebates to Louisiana Medicaid for non-reviewed drugs. However, mental health drugs such as Geodon, Zyprexa, Seroquil and Risperdal are very expensive for the state, and rebates could help control costs. Cerise said although this class of mental health medications represents only 3 percent of the drugs prescribed in Medicaid, they account for 10 percent of the Medicaid Pharmacy budget. The state paid $88 million for antipsychotic medications in Fiscal Year 03/04. 

“Clearly, including these drugs on the preferred drug list is the only leverage we have to obtain a better price from the drug manufacturers. Since we can do it in a way that does not disrupt patient care, it is the responsible thing to do,” Cerise said.

Some mental health advocates have argued that removing the exemption and allowing preferred drug status for atypical antipsychotics would prevent people with mental illnesses from having access to appropriate medications. However, Cerise said those claims are unjustified.

“As a physician who practiced in the Medicaid program and now acts as administrator of that program, I would never propose including these drugs for preferred status review if I felt that it would in any way result in poor treatment or a decline in quality of life for a recipient,” Cerise said. “The drug list does not replace a doctor’s authority to determine which medications are best. In fact, since the preferred drug list was implemented, we have never had a physician file an administrative appeal to challenge a denial by the prior authorization unit or contact LDH to report on problems with using the prior authorization process.”

Dr. Cheryll Bowers-Stephens, assistant secretary for the Office of Mental Health and a licensed adult, child and adolescent psychiatrist, feels that while the needs of the mental health population are unique, there are appropriate safeguards in place to protect the health and welfare of these patients. Several classes of behavioral drugs are already on the preferred drug list, including medication for depression, attention deficit/hyperactive disorder, sleep disorders and anxiety. For these drug classes, most available medications are on the preferred drug list and there are very few that require prior authorization.

“Some patients are worried about what will happen if their drug does not get preferred status,” Bowers-Stephens said. “However, the ease of the prior authorization process ensures no patient will be denied access to the medication a physician determines is necessary. I am confident this legislation would in no way result in harm to a patient.”

Cerise said Louisiana’s preferred drug list is among the most user-friendly in the country, since prior authorization takes less than two minutes. The program also has a grandfather clause so patients with an outstanding prescription for a non-preferred drug can still have it filled through Medicaid until it expires.

In some states, new drugs entering the market automatically require prior authorization, but in Louisiana new drugs are included as preferred drugs until the Pharmaceutical and Therapeutics Committee has reviewed them. Cerise said this is another example of Medicaid’s commitment to making the prescription process safe and effective for recipients.

For more information on the Medicaid preferred drug list or the proposed legislation, visit www.dhh.louisiana.gov.