Michigan Department of Community Health Moving Forward with Medicaid Pharmacy Plan

Michigan Department of Community Health Director, James K. Haveman, Jr., today announced plans to move forward with efforts to enhance the management of Michigan's state-funded prescription drug programs.

"The safety and quality of the pharmaceutical program have been top priorities as we developed improvements to the system and I thank Michigan's legislative leadership for their efforts to move this program forward," said Haveman. "Through the Michigan Pharmaceutical Best Practices Initiative, Medicaid beneficiaries will receive the best drugs available and Michigan taxpayers will not have to shoulder the entire burden of rising drug costs."

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. The Department of Community Health will spend over $1 billion this fiscal year in pharmaceutical costs, with costs rising 98% since 1999 for the Medicaid fee-for-service population.

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 commonly used prior authorization process in place for 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.

"With expected continued increases in the costs of pharmaceuticals, new products and direct to consumer advertising, the state's prescription drug programs must be prudently managed in order to protect the state's ability to continue to offer high levels of health care to its citizens," said Haveman.

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 at the same time reducing the cost of pharmaceutical products to the state. The Medicaid drug list will remain unchanged and Medicaid recipients and doctors will have access to the same FDA approved drugs.

The prior authorization process for the 350,000 Medicaid beneficiaries in fee-for-service is scheduled to be implemented January 1, 2002. All persons currently receiving certain specialized anti-psychotic drugs will be grandfathered into the new pharmacy initiatives and will not have these drugs subject to prior authorization. The number of drugs that will require prior authorization will depend on the pharmaceutical manufacturers willingness to participate in the new pharmacy initiatives.

The physicians and pharmacists on the gubernatorial appointed Michigan Pharmacy and Therapeutics Committee are completing their careful review of the top 40 classes of drugs which account for the majority of the increased drug spending in the Michigan Medicaid Program. The Pharmacy and Therapeutics Committee has reviewed the scientific and clinical information concerning these drugs and will be recommending at least two drugs in every class as "best in class." This designation means that based on clinical effectiveness, safety, outcomes and cost they should be offered without the need for prior authorization. Manufacturers of those drugs not meeting "best in class" requirements can offer supplemental rebates to bring Medicaid's cost in line with the "best in class" drugs and avoid prior authorization.

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.

"This initiative will allow us to continue to honor our long standing commitment to provide a high-quality pharmacy benefit program to Medicaid beneficiaries," said Haveman. "Without this initiative our current fiscal year budget would have to be reduced an additional $42 million, which could have a direct impact on services."