AN ACT IMPLEMENTING THE GOVERNOR'S RECOMMENDATIONS WITH RESPECT TO SOCIAL SERVICES PHARMACY PROGRAMS.

AN ACT IMPLEMENTING THE GOVERNOR'S RECOMMENDATIONS WITH RESPECT TO SOCIAL SERVICES PHARMACY PROGRAMS.

This bill seeks to ensure that the state maximizes its receipt of rebates from drug manufacturers whose drugs are dispensed to individuals participating in Department of Social Services (DSS) pharmacy assistance programs. It requires the manufacturers to provide rebates for (1) nonformulary drugs DSS covers for Medicare Part D participants who are also eligible for Medicaid (dually eligible) and (2) drugs dispensed under the HUSKY and State-Administered General Assistance (SAGA) medical assistance programs.

Nonformulary Drugs Provided to Medicare Part D Recipients who are Eligible for Medicare and Medicaid

The bill requires drug manufacturers to provide rebates for those drugs that (1) are provided to people participating in Medicare Part D and (2) DSS pays for because they are not on the beneficiary's Part D plan formulary and the plan will not pay for them. This applies both to individuals who are ConnPACE-eligible and those eligible for both Medicare and Medicaid (dually eligible), and is applicable to drugs for which DSS paid beginning January 1, 2007. Nonformulary drugs provided to Connecticut Pharmaceutical Assistance Contract for the Elderly and Disabled (ConnPACE) recipients are already eligible for rebates under the ConnPACE rebate agreements.

The bill also requires manufacturers of any prescription drug that DSS covers under any other “state medical assistance programs” it administers to provide rebates for drugs for which DSS has paid back to February 1, 2008. These programs include Medicaid fee-for-service (FFS), HUSKY A and B, and SAGA. (DSS already collects rebates for Medicaid FFS drugs. )

DSS also runs the Connecticut AIDS Drug Assistance Program and has collected rebates for this program for years. These rebates go directly to the Department of Public Health. The bill gives DSS the authority to collect these rebates.

The federal Centers for Medicare and Medicaid Services (CMS) recently told DSS that it cannot require manufacturers to provide rebates on nonformulary drugs under Medicare Part D based on existing Medicaid rebate agreements. CMS asserted that these individuals receive drug assistance from Medicare not Medicaid. Consequently, DSS had to return $ 3 million in rebates it had collected. DSS intends to establish separate rebate agreements with manufacturers for these nonformulary drugs. DSS pays for these nonformulary drugs from a state-funded Supplemental Needs Fund established in 2005 (PAs 05-280, 05-2, November 2 Special Session, and 06-188).

Beginning February 1, 2008, DSS “carved out” pharmacy benefits from the HUSKY A, HUSKY B, and SAGA medical assistance programs. The managed care organizations and federally qualified health centers with which DSS contracted to run these programs had previously negotiated rebates for drugs that they covered and DSS factored this revenue into the capitation rates that it paid them for providing medical services. DSS expects to receive much higher rebates through direct agreements with the manufacturers.

By law, pharmaceutical manufacturers must provide rebates for any ConnPACE drugs DSS pays for as a condition of participating in that program (CGS § 17b-491 (e)).

The only other provision in law regarding rebates is included in the establishment of a Medicaid preferred drug list. That law permits DSS to negotiate supplemental rebate agreements above those required by federal Medicaid law with manufacturers whose drugs are on those lists. Federal Medicaid law requires manufacturers to provide rebates as a condition of participating in state Medicaid programs (42 USC § 1396r).

Although state law does not explicitly authorize DSS to seek general rebates under the Medicaid program, it could be argued that the above-cited federal law grants this authority.

Yea

Nay

(02/28/2008)

Yea

Nay

(03/05/2008)