Medicaid Drug Cap

Frequently Asked Questions – #6 – State Fiscal Year 2018-19

  • FAQs also available in Portable Document Format (PDF)

General Questions

Q1. Of the products currently identified on the newest drug cap legislation, could you provide the percentage of drugs that are Part B vs Part D? Or what the state would consider physician administered drugs vs. oral medications?

The Department considers physician administered drugs to be claims/encounters that were not billed by pharmacies. All 42 drugs that were identified for potential DURB referral were billed by pharmacies.

Q2. If a manufacturer received a letter of notification, does that mean that the “manufacturer credit” was NOT applied?

No, manufacturers who received a notification may have had a credit applied. However, the amount of the credit was not substantial enough to remove a drug from potential DURB referral. Refer to FAQ #5, question 17 for more information regarding the methodology for applying the credit, and how it reduced the number of drugs and manufacturers that were identified for potential DURB referral.

Q3. Can a manufacturer submit for the Department’s consideration an alternative agreement (e.g., value-based arrangement, alternative financing model, etc.) in place of a supplemental rebate amount? Is the Department able to accept such agreements, and if so, would it be considered by the Department as having satisfied their attempt to obtain a voluntary agreement, pursuant to PHL §280?
While the Department is interested in value-based payment and alternative financing models, only supplemental rebate agreements under a CMS approved contract template are applicable to and considered under PHL §280. Additional discussion and evaluation of specific alternative arrangements would be required in order for the Department to consider and accept such an agreement, but the Department is willing to consider such alternatives if they meet the savings goals identified.
Q4. Would you be able to confirm if PHL §272 11(c) does or does not have bearing on the Department’s ability to accept non-supplemental rebate arrangements that are offered with respect to the expenditure cap excess and intended to fulfill NY PHL §280 3(b)? If it does, can you inform of the specific impact on prescription drugs for which the Department attempts to reach agreement, but which are not listed on the PDL?
PHL §272 11(c) applies to the Medicaid FFS Preferred Drug Program and does not have bearing on the Department’s ability to accept rebates that are offered under PHL §280.
Q5. Would the program consider rebates on other drugs, in place of the targeted drugs?

The focus of the Drug Cap is to obtain rebates for drugs that have been identified as contributing to the piercing of the Drug Cap. However, rebates on other drugs could be considered.

Q6. Would the state consider contracts that are inclusive only of state administered Medicaid (i.e. do not include Managed Medicaid plan utilization)?

The Drug Cap was established to ensure patient access to medically necessary drugs while providing financial stability to the state and participating providers. Given that the majority of drug spend is in Medicaid Managed Care, the state’s is to obtain rebates on both MC and FFS utilization.

Q7. Would the state consider using the current supplemental rebate framework already in place for the requested rebates under the New York Medicaid Drug Cap program?
Yes, depending on the circumstance the Department would consider using the current supplemental rebate framework already in place with a specific manufacturer.
Q8. Has NY taken into account whether the net prices of the targeted drugs have increased more or less than the net prices of other drugs?


Q9. On slide 4 of NY State’s 9/17/2018 presentation, are the managed care expenditures referred to basically Managed Medicaid (MMC) premiums or something else? Since 9.7% of the 11.5% overspend was from rises in MMC premiums, Manufacturer would like to better understand how MMC plans justified their increases. Were the increases based on increases in drug spend or medical spend? If based on drug spend, were there particular drugs driving that increase?

The State’s actuary develops an all-inclusive pharmacy rate by region and rate cell which is not specifically delineated by drug. Aggregate assumptions are used to capture the projected experience of drug mix and utilization. Medicaid Managed Care plans submit claim encounter data to the State which is utilized as the historical base data in developing the pharmacy rate which is further adjusted for supplemental rebates, program policy changes, data completion factors, and trend. Although trends are rolled up by region and rate cell, they are specifically analyzed for the impact of high cost specialty drugs, new emerging therapies, and drugs exiting the market. Plan reported encounter data during the rate period allows for continued monitoring of actuarial assumptions within the capitated rate. The driver of the projected excess above the Medicaid Drug Cap target (shown on slide 5 of the September 17, 2018 Webinar) is a combination of the statutory savings target, Managed Care pharmacy premium increases related to specialty drugs (e.g. rheumatoid arthritis, new HIV therapies, and antipsychotic agents), as well as unanticipated drug mix changes from SFY 17-18, which reduced overall rebate collections (i.e. new drugs with spend but low rebate levels). Please see FAQ 5, questions 1,2, and 20 for more information on this question

Q10. What counts as a “claim”, in the “>$13K per claim” criterion used to filter out the targeted drugs for SFY 18-19?
If the net cost per claim for a drug exceeded $13,000, which is the top 3 percent of net cost per claim for all drugs, it was counted. The claim criterion used to filter out targeted drugs first removed any drug whose net spend was less than or equal to $0. Of those drugs with a net spend greater than $0, those in the top 3 percent of net cost per claim for all drugs and a minimum spend of $1 million (net of rebates) were identified for potential DURB referral.
Q11. Were generics included in the targeted drugs (slide 7 of 9/17/2018 deck)?

Generic drugs were included in the analysis for initial identification of new drugs, however it was determined that generic drugs did not contribute to the piercing of the Cap (see slide 6 of the September 17, 2018 Webinar).

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January 8, 2019