Michigan Department of Community Health Releases Changes to the Pharmaceutical Product List

December 7, 2001

Michigan Department of Community Health Director, James K. Haveman, Jr., today released the changes to the Michigan Pharmaceutical Product List for the classes of drugs that have been under review as a step towards enhancing the management of Michigan's state-funded prescription drug programs.

"Using taxpayer funds, the Department spends approximately $1 billion a year on pharmaceuticals for Medicaid and other health care programs. Pharmaceutical expenditures for the 350,000 people in the Medicaid fee-for-service program alone have doubled in only three years," said Haveman. "The Michigan Pharmaceutical Best Practices Initiative was created to maintain and improve the safety and high quality of the pharmaceutical program while prudently managing costs. This will allow us to continue to offer high levels of health care to Michigan citizens, and taxpayers will not have to shoulder the entire burden of rising drug costs."

"Through the Michigan Pharmaceutical Best Practices Initiative, beneficiaries will receive the best drugs available," said David R. Johnson, M.D., Chairman of the Michigan Pharmacy and Therapeutics Committee. "The dedicated physicians and pharmacists on the committee conducted a thorough review of these classes of pharmaceuticals to examine the safety and effectiveness of each specific drug. This careful, professional review was based on medical and scientific data and it allowed us to make sound, clinical recommendations as to what drugs should be considered the preferred drugs in a class."

In order to provide comprehensive health care to low-income individuals and families, Michigan has included the optional Medicaid benefit of pharmaceutical coverage since the Medicaid program began in 1966.

Virtually all individuals currently covered by private insurance such as Blue Cross Blue Shield of Michigan or Health Maintenance Organizations and the nearly 800,000 Medicaid beneficiaries enrolled in managed-care plans have a prior authorization process in place for certain prescription drugs. However, there are 350,000 Medicaid beneficiaries in the fee-for-service program without a sufficient prior authorization process in place to promote efficient drug utilization.

By implementing a more complete prior authorization process for the 350,000 Medicaid beneficiaries in fee-for-service, the Michigan Pharmaceutical Best Practices Initiative will ensure that all Medicaid beneficiaries have the same comprehensive pharmacy coverage available to them, while reducing the cost of pharmaceutical products to the state. Physicians and patients will continue to have access to the same FDA approved drugs as they have had in the past.

The prior authorization process is now scheduled to be implemented on January 14, 2002. All persons currently receiving certain specialized anti-psychotic drugs will be "grand-fathered" into the new pharmacy initiatives and will not have these drugs subject to prior authorization.

The physicians and pharmacists on the gubernatorial appointed Michigan Pharmacy and Therapeutics Committee have completed their careful review of the classes of drugs that account for the majority of the increased drug spending in the Medicaid Program. They reviewed scientific and clinical information concerning these drugs and have recommended multiple drugs in each class as the preferred drugs. This designation means that based on clinical effectiveness, safety, outcomes and cost they should be offered without the need for prior authorization. Manufacturers of drugs not on the preferred list had the opportunity to offer supplemental rebates to bring the state's cost in line with the preferred drugs and avoid prior authorization.

"Not all of the preferred drugs are the least expensive in their class," said Johnson. "There are a number of examples where the committee deemed medications to have distinctive clinical value and therefore recommended that they remain on the preferred list."

The prior authorization process is a simple one commonly used today by physicians and pharmacists for nearly all insured individuals in the state. If the prescribed drug requires prior authorization, the prescribing physician's office will be asked by a pharmacy benefits manager technician a set of questions, approved by the Michigan Pharmacy and Therapeutics Committee. If the answers to these questions meet the established criteria, prior authorization will be granted immediately. If not, it can be further pursued through a prompt, straightforward process to determine the drug's medical necessity.

"This will allow us to continue to honor our long-standing commitment to provide a high-quality pharmacy program to Medicaid and other state health care beneficiaries," said Haveman. "If we were not able to proceed with this initiative, our current fiscal year budget would have to be reduced an additional $42 million, which could have a direct impact on services."

The Department of Community Health will work closely with physicians, pharmacists and beneficiaries who receive prescription drug coverage through the Medicaid fee-for-service program, the State Medical Program, Children's Special Health Care Services, the Elder Prescription Insurance Coverage program (EPIC) and the refugee program, to educate them on the Michigan Pharmaceutical Best Practices Initiative.

The changes to the Michigan Pharmaceutical Product List, indicating which drugs in will require prior authorization, can be viewed on the Michigan Department of Community Health website at www.mdch.state.mi.us and by clicking on "Michigan Pharmaceutical Best Practices."