1.1                          A bill for an act 
  1.2             relating to human services; modifying requirements for 
  1.3             medical assistance coverage of prescription drugs; 
  1.4             amending Minnesota Statutes 2001 Supplement, section 
  1.5             256B.0625, subdivision 13.  
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  Minnesota Statutes 2001 Supplement, section 
  1.8   256B.0625, subdivision 13, is amended to read: 
  1.9      Subd. 13.  [DRUGS.] (a) Medical assistance covers drugs, 
  1.10  except for fertility drugs when specifically used to enhance 
  1.11  fertility, if prescribed by a licensed practitioner and 
  1.12  dispensed by a licensed pharmacist, by a physician enrolled in 
  1.13  the medical assistance program as a dispensing physician, or by 
  1.14  a physician or a nurse practitioner employed by or under 
  1.15  contract with a community health board as defined in section 
  1.16  145A.02, subdivision 5, for the purposes of communicable disease 
  1.17  control.  The dispensed quantity of a prescribed drug must not 
  1.18  exceed a 34-day supply unless prior authorization is obtained.  
  1.19  The commissioner, after receiving recommendations from 
  1.20  professional medical associations and professional pharmacist 
  1.21  associations, shall designate a formulary committee to advise 
  1.22  the commissioner on the names of drugs for which payment is 
  1.23  made, recommend a system for reimbursing providers on a set fee 
  1.24  or charge basis rather than the present system, and develop 
  1.25  methods encouraging use of generic drugs when they are less 
  2.1   expensive and equally effective as trademark drugs.  The 
  2.2   formulary committee shall consist of nine members, four of whom 
  2.3   shall be physicians who are not employed by the department of 
  2.4   human services, and a majority of whose practice is for persons 
  2.5   paying privately or through health insurance, three of whom 
  2.6   shall be pharmacists who are not employed by the department of 
  2.7   human services, and a majority of whose practice is for persons 
  2.8   paying privately or through health insurance, a consumer 
  2.9   representative, and a nursing home representative.  Committee 
  2.10  members shall serve three-year terms and shall serve without 
  2.11  compensation.  Members may be reappointed once.  
  2.12     (b) The commissioner shall establish a drug formulary.  Its 
  2.13  establishment and publication shall not be subject to the 
  2.14  requirements of the Administrative Procedure Act, but the 
  2.15  formulary committee shall review and comment on the formulary 
  2.16  contents.  The formulary committee shall review and recommend 
  2.17  drugs which require prior authorization.  The formulary 
  2.18  committee may recommend drugs for prior authorization directly 
  2.19  to the commissioner, as long as opportunity for public input is 
  2.20  provided.  Prior authorization may be requested by the 
  2.21  commissioner based on medical and clinical criteria before 
  2.22  certain drugs are eligible for payment.  The commissioner shall 
  2.23  request prior authorization for prescription drugs within a drug 
  2.24  category that are not cost effective and for which a therapeutic 
  2.25  equivalent exists.  Before a drug may be considered for prior 
  2.26  authorization at the request of the commissioner:  
  2.27     (1) the drug formulary committee must develop criteria to 
  2.28  be used for identifying drugs; the development of these criteria 
  2.29  is not subject to the requirements of chapter 14, but the 
  2.30  formulary committee shall provide opportunity for public input 
  2.31  in developing criteria; 
  2.32     (2) the drug formulary committee must hold a public forum 
  2.33  and receive public comment for an additional 15 days; and 
  2.34     (3) the commissioner must provide information to the 
  2.35  formulary committee on the impact that placing the drug on prior 
  2.36  authorization will have on the quality of patient care and 
  3.1   information regarding whether the drug is subject to clinical 
  3.2   abuse or misuse.  Prior authorization may be required by the 
  3.3   commissioner before certain formulary drugs are eligible for 
  3.4   payment.  The formulary shall not include:  
  3.5      (i) drugs or products for which there is no federal 
  3.6   funding; 
  3.7      (ii) over-the-counter drugs, except for antacids, 
  3.8   acetaminophen, family planning products, aspirin, insulin, 
  3.9   products for the treatment of lice, vitamins for adults with 
  3.10  documented vitamin deficiencies, vitamins for children under the 
  3.11  age of seven and pregnant or nursing women, and any other 
  3.12  over-the-counter drug identified by the commissioner, in 
  3.13  consultation with the drug formulary committee, as necessary, 
  3.14  appropriate, and cost-effective for the treatment of certain 
  3.15  specified chronic diseases, conditions or disorders, and this 
  3.16  determination shall not be subject to the requirements of 
  3.17  chapter 14; 
  3.18     (iii) anorectics drugs used for weight loss, except that 
  3.19  medically necessary anorectics drugs used for weight loss shall 
  3.20  be covered for a recipient previously diagnosed as having 
  3.21  pickwickian syndrome and currently diagnosed as having diabetes 
  3.22  and being morbidly obese; 
  3.23     (iv) drugs for which medical value has not been 
  3.24  established; and 
  3.25     (v) drugs from manufacturers who have not signed a rebate 
  3.26  agreement with the Department of Health and Human Services 
  3.27  pursuant to section 1927 of title XIX of the Social Security Act.
  3.28     The commissioner shall publish conditions for prohibiting 
  3.29  payment for specific drugs after considering the formulary 
  3.30  committee's recommendations.  An honorarium of $100 per meeting 
  3.31  and reimbursement for mileage shall be paid to each committee 
  3.32  member in attendance.  
  3.33     (c) The basis for determining the amount of payment shall 
  3.34  be the lower of the actual acquisition costs of the drugs plus a 
  3.35  fixed dispensing fee; the maximum allowable cost set by the 
  3.36  federal government or by the commissioner plus the fixed 
  4.1   dispensing fee; or the usual and customary price charged to the 
  4.2   public.  The pharmacy dispensing fee shall be $3.65, except that 
  4.3   the dispensing fee for intravenous solutions which must be 
  4.4   compounded by the pharmacist shall be $8 per bag, $14 per bag 
  4.5   for cancer chemotherapy products, and $30 per bag for total 
  4.6   parenteral nutritional products dispensed in one liter 
  4.7   quantities, or $44 per bag for total parenteral nutritional 
  4.8   products dispensed in quantities greater than one liter.  Actual 
  4.9   acquisition cost includes quantity and other special discounts 
  4.10  except time and cash discounts.  The actual acquisition cost of 
  4.11  a drug shall be estimated by the commissioner, at average 
  4.12  wholesale price minus nine percent, except that where a drug has 
  4.13  had its wholesale price reduced as a result of the actions of 
  4.14  the National Association of Medicaid Fraud Control Units, the 
  4.15  estimated actual acquisition cost shall be the reduced average 
  4.16  wholesale price, without the nine percent deduction.  The 
  4.17  maximum allowable cost of a multisource drug may be set by the 
  4.18  commissioner and it shall be comparable to, but no higher than, 
  4.19  the maximum amount paid by other third-party payors in this 
  4.20  state who have maximum allowable cost programs.  The 
  4.21  commissioner shall set maximum allowable costs for multisource 
  4.22  drugs that are not on the federal upper limit list as described 
  4.23  in United States Code, title 42, chapter 7, section 1396r-8(e), 
  4.24  the Social Security Act, and Code of Federal Regulations, title 
  4.25  42, part 447, section 447.332.  Establishment of the amount of 
  4.26  payment for drugs shall not be subject to the requirements of 
  4.27  the Administrative Procedure Act.  An additional dispensing fee 
  4.28  of $.30 may be added to the dispensing fee paid to pharmacists 
  4.29  for legend drug prescriptions dispensed to residents of 
  4.30  long-term care facilities when a unit dose blister card system, 
  4.31  approved by the department, is used.  Under this type of 
  4.32  dispensing system, the pharmacist must dispense a 30-day supply 
  4.33  of drug.  The National Drug Code (NDC) from the drug container 
  4.34  used to fill the blister card must be identified on the claim to 
  4.35  the department.  The unit dose blister card containing the drug 
  4.36  must meet the packaging standards set forth in Minnesota Rules, 
  5.1   part 6800.2700, that govern the return of unused drugs to the 
  5.2   pharmacy for reuse.  The pharmacy provider will be required to 
  5.3   credit the department for the actual acquisition cost of all 
  5.4   unused drugs that are eligible for reuse.  Over-the-counter 
  5.5   medications must be dispensed in the manufacturer's unopened 
  5.6   package.  The commissioner may permit the drug clozapine to be 
  5.7   dispensed in a quantity that is less than a 30-day supply.  
  5.8   Whenever a generically equivalent product is available, payment 
  5.9   shall be on the basis of the actual acquisition cost of the 
  5.10  generic drug, unless the prescriber specifically indicates 
  5.11  "dispense as written - brand necessary" on the prescription as 
  5.12  required by section 151.21, subdivision 2.  The commissioner 
  5.13  shall require prior authorization of all brand name 
  5.14  prescriptions for which the prescription indicates "dispense as 
  5.15  written - brand medically necessary" when a generically 
  5.16  equivalent product is available.  
  5.17     (d) For purposes of this subdivision, "multisource drugs" 
  5.18  means covered outpatient drugs, excluding innovator multisource 
  5.19  drugs for which there are two or more drug products, which: 
  5.20     (1) are related as therapeutically equivalent under the 
  5.21  Food and Drug Administration's most recent publication of 
  5.22  "Approved Drug Products with Therapeutic Equivalence 
  5.23  Evaluations"; 
  5.24     (2) are pharmaceutically equivalent and bioequivalent as 
  5.25  determined by the Food and Drug Administration; and 
  5.26     (3) are sold or marketed in Minnesota. 
  5.27  "Innovator multisource drug" means a multisource drug that was 
  5.28  originally marketed under an original new drug application 
  5.29  approved by the Food and Drug Administration. 
  5.30     (e) The basis for determining the amount of payment for 
  5.31  drugs administered in an outpatient setting shall be the lower 
  5.32  of the usual and customary cost submitted by the provider; the 
  5.33  average wholesale price minus five percent; or the maximum 
  5.34  allowable cost set by the federal government under United States 
  5.35  Code, title 42, chapter 7, section 1396r-8(e), and Code of 
  5.36  Federal Regulations, title 42, section 447.332, or by the 
  6.1   commissioner under paragraph (c).