BILL NUMBER: S3466
SPONSOR: RIVERA
 
TITLE OF BILL:
An act to amend the social services law, in relation to prescription
drugs eligible for Medicaid coverage; to amend the public health law, in
relation to prior authorization under the preferred drug program; to
repeal certain provisions of part FFF of chapter 56 of the laws of 2020
directing the department of health to remove the pharmacy benefit from
the managed care benefit package, relating to restoring such benefits;
and to repeal certain provisions of the social services law, relating to
coverage for certain prescription drugs under Medicaid managed care
programs
 
PURPOSE:
Provides for coverage for prescription drugs under Medicaid
 
SUMMARY OF SPECIFIC PROVISIONS:
Section 1 provides the legislative findings regarding the escalating
costs of many prescription drugs.
Section 2 repeals sections 1 and 1-a of part FFF of chapter 56 of the
laws of 2020 as it relates to prescription drugs under the Medicaid
program.
Section 3 adds a new section 365-i to the social services law as it
relates to prescription drugs under Medicaid. This section provides
language for reimbursement eligibility for prescription drugs and for
drugs under the 340B program.
Section 4 amends paragraph (b) of subdivision 3 of section 273 of the
public health law as it relates to prescription drugs not on the
preferred drug list. When a patient's health care provider prescribes a
prescription drug that is not on the preferred drug list, the prescriber
may submit additional information to the program to justify their deci-
sions. Ultimately, the provider's decision to warrant the use of a
prescription not on the preferred list shall be final unless the
prescription is for a generic medication or the drug is not consistent
with the Food and Drug Administration labeling requirements or supported
by official Compendia references.
Section 5 repeals subdivisions 25, 25-a, 26, and 26-b, and paragraph (u)
of subdivision 4 of section 364-j of the social services law as it
relates to prescription drugs prescribed by managed care providers.
Section 6 provides the severability clause. Section 7 provides the
effective date.
 
JUSTIFICATION:
The Preferred Drug Program (PDP) was established in 2005. Under the PDP,
the clinical Drug Review Board (DRB) evaluates the clinical effective-
ness and safety of drugs, the potential impact on patient care, and the
health of special populations considering the latest peer-reviewed
research. The DRB may place a drug or class of drugs either on the
preferred drug list (PDL) or require prior authorization, which if
declined, may be overcome using "prescriber prevails," so that a pres-
criber can make sure that the patient receives the needed medication.
The PDP initially administered the drug benefit for the whole Medicaid
program, including Medicaid managed care.
During the several years that the PDP operated for all Medicaid
patients, very few prescriptions were for non-preferred drugs because;
(a) prescribers had confidence in the legitimacy of the list, (b) the
required consultation with the system was enough of a "speed bump" that
prescribers stuck to the list unless they felt strongly otherwise, and
(c) drug companies were willing to pay the required rebates to get their
drugs on the list, at an estimated average of $2B per year.
In 2011, the Legislature enacted the Cuomo administration's proposal to
end the carve-out and instead have each Medicaid managed care plan nego-
tiate on its own with drug companies. The administration insisted the
managed care plans could do a better job of negotiating, even though the
State was negotiating for a much larger population than any one managed
care plan. In 2020, the administration reversed course, enacting a plan
to return the drug benefit to the PDP by May of 2021. In the interim,
the administration was to find a solution to the problem faced by
providers in the federal 340B program who would lose operating revenue
from being carved out from managed care. By March of 2021, the 340B
issue was still not resolved and the administration agreed to a delay of
the carve-out plan for two years.
This bill would restore the PDP's power to negotiate drug prices for the
entire Medicaid population, representing over six million "covered lives
," by having the PDP administer the drug benefit, while at the same time
keeping the 340B program intact within managed care. Managed care plan
enrollees would use their plan membership card for drug benefits. Medi-
caid would bill each Medicaid managed care plan for the drugs provided
to its enrollees and return the amount through the premium rate that the
State pays the plans. This would be consistent with integrated care,
care coordination, and "value-based" payment models. It would more
effectively hold the managed care plan or provider network accountable
for the total cost of care, while still giving the health plan (and the
State) the benefit of lower drug prices.
 
LEGISLATIVE HISTORY:
2015-2016: A.9271 - reported to Ways and Means committee
2017-2018: A.4233 - reported to Ways and Means committee
2022: S9043/A7200A Gottfried
 
FISCAL IMPLICATIONS:
Undetermined savings
 
EFFECTIVE DATE:
This act shall take effect immediately, except for sections 1-5 which
shall be effective one hundred and eighty days after becoming law.