NOTICES
Pharmacy Services
[35 Pa.B. 3268] This notice provides advance public notice of the Department of Public Welfare's (Department) intent to revise its payment method for brand name and generic drugs dispensed on or after July 1, 2005. These revisions will affect pharmacies enrolled in the Medical Assistance (MA) Program and dispensing drugs in the fee-for-service delivery system.
The Department proposes to change its payment methodology for pharmaceuticals as follows.
Payment
Effective July 1, 2005, the Department will pay for pharmaceuticals dispensed in the MA fee-for-service delivery system as follows:
(1) For brand name drugs. The lowest wholesale acquisition cost as established by the Department using available Nationally recognized pricing services plus 6%. If the wholesale acquisition cost information is not available from the National pricing services, the Department will pay the average wholesale price minus 15%.
(2) For generic drugs. The lowest of one of the following:
(i) The upper payment limit as established by the Centers for Medicare and Medicaid Services.
(ii) The lowest wholesale acquisition cost as established by the Department using available Nationally recognized pricing services plus 66%. If the wholesale acquisition cost information is not available from the National pricing services, then the Department will pay the average wholesale price minus 25%.
(iii) The State maximum allowable cost as determined by the Department: provided, however, that the generic product must be available at the price established by the Department from at least two wholesalers.
For both brand name and generic drugs the current $4 dispensing fee will not change.
The Nationally recognized pricing services previously described include First Data Bank, Medi-Span and Micromedix. These services provide drug specific information such as actual wholesale price (AWP) and actual wholesale acquisition costs (WAC) to the Department.
The change in payment methodology to revise the AWP pricing will align the Department's payment methodology with other third-party payors, including the Department's contracted managed care organizations. The WAC is based on the cost at which a wholesaler purchases drugs from the manufacturer as opposed to the AWP, which is the price assigned to a drug by its manufacturer. By replacing the AWP payment rate with the corresponding WAC payment rate the Department's drug pricing will reflect a more accurate gauge of actual costs since the WAC is based on the cost at which a wholesaler purchases drugs from the manufacturer as opposed to the AWP, which is the price assigned to a drug by its manufacturer.
Fiscal Impact
These changes are estimated to result in savings totaling $77.348 million ($35.569 million in State funds) in the MA Outpatient Program in Fiscal Year (FY) 2005-2006. Savings are estimated at $61.418 million ($28.315 million in State funds) in FY 2006-2007.
Public Comment
A copy of this notice in available at the local county assistance office. Interested persons are invited to submit written comments regarding this notice to the Department of Public Welfare, Office of Medical Assistance Programs, c/o Deputy Secretary's Office, Attention: Regulations Coordinator, Room 515, Health and Welfare Building, Harrisburg, PA 17120. Comments received by June 24, 2005, will be reviewed and considered before establishing the final payment methodologies for brand name drugs and generic drugs.
Persons with a disability who require an auxiliary aid or service may submit comments using the AT&T Relay Service at (800) 654-5984 (TDD users) or (800) 654-5988 (voice users).
ESTELLE B. RICHMAN,
SecretaryFiscal Note: 14-NOT-427. No fiscal impact; (8) recommends adoption. As a result of this change, the General Fund will realize a savings of approximately $35.5 million in 2005-2006.
[Pa.B. Doc. No. 05-1098. Filed for public inspection June 3, 2005, 9:00 a.m.]
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