CALIFORNIA, ILLINOIS PASS LEGISLATION TO SPEED UP Rx PLACEMENT ON FORMULARIES

Executive Summary

California and Illinois have both enacted legislation in 1985 to speed up placement of new drugs on their state Medicaid formularies. Both state laws, which went into effect this fall, provide for more frequent meetings of the respective state formulary cmtes., as well as time limits for formulary decisions and for notification of firms filing petitions. In addition, both laws provide mfrs. with an appeal mechanism when a drug product is not recommended for placement on the formulary. PMA considers the two laws major achievements for the drug industry at the state level. PMA Director of State Govt. Affairs Woodrow Allen told a Nov. 8 press briefing that the legislation is very important to efforts to streamline the Medicaid approval procedures for new products. The California changes, Allen said, could reduce MediCal approved time from three years to one year. Under the new California statute, which went into law on Sept. 18, the state's MediCal Therapeutics and Drug Advisory Cmte. will have to meet at least every four months, or three times a year, instead of the semiannual meetings previously required. In addition, the law requires the state Dept. of Health Services "to schedule and conduct a public regulatory hearing to consider the addition of a drug, to, or the deletion from, the MediCal drug formulary five working days subsequent to each formulary cmte. meeting. In addition, the dept. of Health Services in California is also required to make available, 45 days before the public hearing, its estimate of anticipated costs or savings to the state from the addition or deletion of a drug product. The new law requires the state Health Services director to issue a final decision and act on it within seven months after the public hearing. If a petition to either place or delete a drug from the MediCal formulary is rejected, the director, under the new law, is required to "notify the petitioner directly and in writing indicating the reason and specifying the criteria utilized in reaching the decision." The new Illinois law, described as "a basis format for the consideration of drugs for provider reimbursement," provides for the creation of an expert panel to consult with the state Dept. of Public Aid on formulary issues that meets four times annually. Upon receipt of each panel meeting agenda, the Dept. of Public Aid will "review materials and literature supplied by drug mfrs." as well as "additional literature," and make written recommendations to the panel. The panel reviews and comments on the dept. recommendations, and then transmit its own recommendations back to the dept. The new law states that "upon receipt of this transmittal letter, the dept. shall notify within 15 working days all interested parties, including the pharmaceutical mfrs. of the products, all recommendations of the consulting organization accepted or rejected by the director. Within 45 days from receipt of the transmittal letter, the dept. shall make effective for reimbursement those products accepted by the director for additions" to the state formulary, known in Illinois as the "Drug Manual." The Illilnois Dept. of Public Aid is also required to give mfrs. 30 days notice before deleting a drug from the formulary. The expert panel will also consider appeals of dept. final decisions from mfrs. at its scheduled meetings.