Issued and entered December 19th, 2002 by Frank M. Fitzgerald, Commissioner

ORDER

I
PROCEDURAL BACKGROUND

On May 30, 2002, XXXXXXXXXXXX (Petitioner) filed a request for external review with the Commissioner of Financial and Insurance Services (Commissioner) under the Patient’s Right to Independent Review Act (PRIRA), MCL 550.1901et seq. After a review of the material submitted, the Commissioner accepted the request on May 31, 2002.

It was originally thought the case required a determination of medical issues because the Petitioner raised the issue of medical necessity for the use of a brand name prescription drug over a generic brand prescription drug. However, the actual issue was determined to be the difference in co-pay between a brand name prescription versus a generic brand prescription. Since the case had been assigned to Permedion, an independent review organization (IRO), the IRO provided its recommendation to the Commissioner. The IRO determined the issue to be contractual in nature concerning the issue of the co-payment. The IRO completed its review and sent a copy to the Commissioner on June 14, 2002. XXXXXXXXXXXXXXXXXXX.

II
FACTUAL BACKGROUND

Petitioner is a XXXXXXX old female member of M-CARE, Inc. (M-CARE) under its Subscriber Certificate sponsored by her employer XXXXXXXXXXXX. Petitioner has been on hormone replacement therapy since XXXX. In her request, Petitioner seeks authorization and coverage of Estrace, a brand name estrogen, at the generic co-pay rate. Petitioner bases her request on medical necessity. She states that her primary care physician prescribed Estrace as the drug of choice. Estrace is the brand name for the generic estrogen, Estradiol.

M-CARE denied Petitioner’s request on the basis of the prescription drug rider purchased by her employer. The M-CARE Member Assurance Committee upheld the adverse determination at a hearing on April 16, 2002. M-CARE’s final adverse determination letter is dated April 18, 2002.

III
ISSUE

Whether M-CARE may properly charge Petitioner the co-pay difference between a brand name prescription and a generic prescription?

IV
ANALYSIS

Petitioner’s Position

Petitioner states she has been on hormone replacement therapy since XXXX. In her request, Petitioner requests that she be allowed an exception in order to be treated with the brand name estrogen, Estrace. Petitioner claims that she should be allowed to receive Estrace because of her needs and medication tolerances. She specifically requests that M-CARE allow her to pay for Estrace at the generic brand co-pay rate instead of at the brand name rate.

Petitioner indicated that prior to M-CARE implementing its generic mandate policy upon her employer’s group contract, she personally spoke with a M-CARE marketing representative who assured her that an override would be allowed for her medication needs, just as it had been in the past. Petitioner said the procedures outlined by M-CARE’s representative were followed, and, as a result, she believed the standard name brand co-pay would be charged. However, when she filled a prescription, she was “…charged the entire cost because the generic brand was available…”

On XXXXXXXXXX, Petitioner’s primary care physician, Dr. XXXXXXXXXXXXX, of XXX XXXXX XXXXXX XXXXXXXX, wrote a letter requesting that Petitioner be allowed to continue on Estrace because of her successful tolerance. The co-payment issue was not mentioned. He indicated in the letter dated XXXXXXXX as follows:

My patient, Ms. XXXXXXXXXXXXXX, had TAH/BSO in XXXX and has been on HRT since. She has been tried on many combinations of oral and topical estrogen. She did not tolerate Premarin initially. Subsequently she was tried on generic Estradiol. She developed headaches, nausea, and difficulty with disequilibrium. Subsequently she was then treated with Estraderm. This caused significant inflammation of the skin and other patches were not tried. Finally, brand name Estrace was used which has been well tolerated. We would like to continue brand name Estrace indefinitely.

M-CARE’s Position

M-CARE’s June 10, 2002, position statement to OFIS indicates that the request for external review did not involve an issue of medical necessity nor was clinical review required. M-care claims that the only issue involved was the co-pay rate of coverage.

M-CARE indicates in its April 18, 2002, final adverse determination letter that on April 16, 2002, its Member Assurance Committee voted to deny Petitioner’s request on the basis that her new prescription drug rider purchased by her employer states that a member will be charged the difference between the generic and the brand name prescription.

M-CARE argued its denial was based on the provisions of prescription drug Rider A$05F (“A Rider”). One provision known as the “cost differential”, provides that a member is responsible for the payment of the difference between the cost of a brand-name drug and the cost of its generic equivalent. M-CARE indicated it previously covered the cost of the prescription drugs under a different rider X$05F (“X Rider”), which allowed for an exception to the Cost Difference provision when a physician specified “Dispense As Written” (DAW). This exception, however, was withdrawn by M-CARE on January 1, 2002, with implementation of the A Rider.

M-CARE’s final adverse determination letter was issued April 18, 2002. It stated, in part:

…Upon review, the committee voted to deny your request on the basis that your new prescription drug rider, which was purchased by your employer, states that a member will be charged the difference between the generic and the brand name prescription…

M-CARE pointed out the new A Rider was approved by OFIS on June 1, 2001, and was formally implemented by M-CARE on January 1, 2002. Petitioner appealed the Cost Differential through its grievance process on March 8, 2002. M-CARE noted during the appeals process it reversed an earlier adverse determination that the Cost Differential was Petitioner’s responsibility as of the effective date of the A Rider. M-CARE determined Petitioner would not be held responsible for the Cost Differential through XXXXXXXXXXXXXX.

M-CARE also indicated that at no time during the utilization review or the appeals process did any affiliate of M-CARE make any determination concerning the medical necessity (or lack thereof) of the brand-name prescription versus the generic brand prescription. M-CARE said it made its final adverse determination solely based on the Certificate of Coverage and Rider.

The A Rider states the following under “Limitations”:

If a brand name prescription drug is dispensed for which there is a generic drug equivalent on the formulary, the member must pay the difference in cost between the brand-name drug and the price of its generic equivalent, in addition to the applicable copayment.

IRO Review:

The IRO recommended the M-CARE denial be upheld. The IRO pointed out that the updated A Rider as well as the proposed 2002-2002 HMO Rates for the Medicare Wrap, and the M-CARE Renewal Policy signed by Petitioner, all indicate that an M-Care member is responsible for paying the price difference, between generic and brand name products, whenever a generic equivalent is available.

It was noted that the reason for Petitioner’s request for Estrace is that she has demonstrated an ability to tolerate Estrace without any difficulties, and the medication was provided under the provisions of the prior health plan—before the policy change in 2001-2002. However, Petitioner agreed to the A Rider when she signed the M-CARE renewal policy. It specifically states M-CARE had adopted a generic drug substitution policy. This means that the member is responsible for paying the price difference, including co-payments, between generic and brand name products, whenever a generic equivalent is available. Therefore, the IRO found that Petitioner is responsible for paying the price difference, including co-payments.

The IRO referenced Petitioner’s primary care physician’s letter of XXXXXXXX, which outlined complaints Petitioner had in using other oral estrogens. These complaints included headaches, nausea, and difficulty with disequilibrium. The IRO indicated these types of complaints are associated with the initial use of Estradiol by many patients. The IRO indicated that Estrace manufacturer’s literature pointed out that it is common during the initial phase of use for patients to experience headaches, dizziness, nausea, and vomiting. However, with ongoing use of the estrogen, the symptoms and adverse affects will often dissipate.

The IRO concluded that since Estrace is a brand name Estradiol, there is no basis to select the use of the brand name drug when the medicinal value is equivalent to the generic drug. Also, the symptoms described in the use of other estrogen products are also attributed to the use of Estrace in the manufacturer’s literature. The IRO stated that since Estrace is a brand name for Estradiol, it is appropriate to conclude that the substitution of Estradiol for Estrace will cause no increased adverse effects to Petitioner. Therefore, the IRO concluded that M-CARE’s adverse determination denying reimbursement or coverage of the brand name drug Estrace should be upheld.

Commissioner’s Review

Based on the following facts, The Commissioner concurs with the IRO’s recommendation to uphold M-CARE’s final adverse determination dated April 18, 2002: On June 1, 2001, OFIS approved a change in M-CARE’s Pharmacy A Rider that allowed for a cost difference between brand name drugs and their generic equivalents. New 2002-2002 HMO rates were effective January 1, 2002. In March 2002, Petitioner filed her grievance with M-CARE regarding the co-payment. In order to ensure Petitioner was properly notified by M-CARE of the change in policy and cost differentiation between brand name and generic equivalents, M-CARE allowed Petitioner until XXXXXXX, to pay for the brand name drug at the generic pay rate.

Petitioner signed a new Subscriber Contract with M-CARE effective January 1, 2002, which contract contained the new Pharmacy Rider provisions and notification. Petitioner is not being denied use of the prescription Estrace. However, if Petitioner wishes to continue with the brand name Estrace rather than the generic drug equivalent Estradiol, she must pay the Cost Differential as outlined in her Pharmacy A Rider. Therefore, The Commissioner supports M-Care’s decision.

V
ORDER

Therefore, the Commissioner ORDERS that M-Care, Inc. may require Petitioner to pay the Cost Differential between the brand name prescription estrogen (Estrace) and the equivalent generic prescription drug (Estradiol), as outlined in her M-CARE Pharmacy A Rider and Subscriber Certificate. The Petitioner’s effective date to begin paying this Cost Differential has been modified by M-CARE to begin XXXXXXXXXXX.

This is a final decision of an administrative agency. Under MCL 550.1915, persons aggrieved by this Order may seek judicial review no later than sixty days from the date of this Order in the Circuit Court for the county where the covered person resides or in the Circuit Court of Ingham County. A copy of the petition for judicial review should be sent to the Commissioner of the Office of Financial and Insurance Services, Health Plans Division, Post Office Box 30220, Lansing, MI 48909-7720.