NY Pub Health L § 280 (2021)
2021 New York Laws PBH - Public Health Article 2-A - Prescription Drugs Title 2 - Prescription Drugs; Various Provisions 280 - Medicaid Drug Cap.

§ 280. Medicaid drug cap. 1. The legislature hereby finds and declares that  there is a significant public interest for the Medicaid program to manage drug  costs  in  a  manner  that  ensures  patient  access  while providing financial stability for the state and participating providers. Since  two  thousand  eleven,  the  state has taken significant steps to contain costs in the Medicaid program by imposing a statutory  limit  on annual  growth.  Drug  expenditures,  however, continually outpace other cost components causing significant pressure on  the  state,  providers, and  patient  access  operating  under  the  Medicaid  global cap. It is therefore intended that the department establish a Medicaid drug cap  as a separate component within the Medicaid global cap as part of a focused and sustained effort to balance the growth of drug expenditures with the growth of total Medicaid expenditures.   2.  The  commissioner  shall  establish  a  year to year department of health state funds Medicaid drug expenditure growth target as follows:  (a)  for  state  fiscal  year  two  thousand  seventeen--two  thousand eighteen,  be  limited  to  the  ten-year rolling average of the medical component of the consumer price index plus  five  percent  and  minus  a pharmacy savings target of fifty-five million dollars; and  (b)   for  state  fiscal  year  two  thousand  eighteen--two  thousand nineteen, be limited to the ten-year  rolling  average  of  the  medical component  of  the  consumer  price  index plus four percent and minus a pharmacy savings target of eighty-five million dollars;  (c) for state fiscal year two thousand nineteen--two thousand  twenty, be  limited  to the ten-year rolling average of the medical component of the consumer price index plus four percent and minus a pharmacy  savings target of eighty-five million dollars;  (d)   for   state   fiscal  year  two  thousand  twenty--two  thousand twenty-one, be limited to the ten-year rolling average  of  the  medical component of the consumer price index plus two percent; and  (e)  for  state  fiscal  year  two  thousand  twenty-one--two thousand twenty-two and fiscal years thereafter, be limited  in  accordance  with subdivision one of section ninety-one of part H of chapter fifty-nine of the laws of two thousand eleven, as amended.   3.  The  department  and  the division of the budget shall assess on a quarterly basis the projected total amount to be expended in the year on a cash basis by the Medicaid program for each drug,  and  the  projected annual  amount of state funds Medicaid drug expenditures on a cash basis for all drugs, which shall be a component of the projected department of health state funds Medicaid  expenditures  calculated  for  purposes  of sections  ninety-one  and  ninety-two of part H of chapter fifty-nine of the laws of two thousand eleven. For purposes  of  this  section,  state funds  Medicaid  drug expenditures include amounts expended for drugs in both the Medicaid fee-for-service  program  and  Medicaid  managed  care programs,  minus  the  amount  of  any drug rebates or supplemental drug rebates received  by  the  department,  including  rebates  pursuant  to subdivision  five  of  this  section with respect to rebate targets. The department and the division of the budget shall report  in  December  of each  year, for the prior April through October, to the drug utilization review board  the  projected  state  funds  Medicaid  drug  expenditures including  the  amounts,  in  aggregate thereof, attributable to the net cost of: changes in the utilization of  drugs  by  Medicaid  recipients; changes  in  the  number  of Medicaid recipients; changes to the cost of brand name  drugs  and  changes  to  the  cost  of  generic  drugs.  The information  contained in the report shall not be publicly released in a manner that allows for the  identification  of  an  individual  drug  or manufacturer  or that is likely to compromise the financial competitive, or proprietary nature of the information.  (a) In the event the director  of  the  budget  determines,  based  on Medicaid  drug  expenditures  for the previous quarter or other relevant information, that the total department of health  state  funds  Medicaid drug  expenditure  is  projected  to exceed the annual growth limitation imposed  by  subdivision  two  of  this  section,  the  commissioner may identify  and  refer  drugs  to  the  drug  utilization   review   board established  by  section  three  hundred  sixty-nine-bb  of  the  social services law for a recommendation as to whether  a  target  supplemental Medicaid  rebate  should  be paid by the manufacturer of the drug to the department and the target amount of the rebate.  (b) If the department intends to refer a drug to the drug  utilization review  board  pursuant  to  paragraph  (a)  of  this  subdivision,  the department shall notify the manufacturer of such drug and shall  attempt to  reach agreement with the manufacturer on a rebate for the drug prior to referring the drug to the drug utilization review board  for  review. Such  rebate may be based on evidence-based research, including, but not limited to, such research operated or conducted by or  for  other  state governments,  the  federal government, the governments of other nations, and third party payers or multi-state coalitions, provided however  that the  department  shall  account  for  the  effectiveness  of the drug in treating the conditions for which it is prescribed  or  in  improving  a patient's  health,  quality of life, or overall health outcomes, and the likelihood that use of the drug will reduce the need for  other  medical care, including hospitalization.  (c)  In  the  event  that  the  commissioner and the manufacturer have previously agreed to a  supplemental  rebate  for  a  drug  pursuant  to paragraph  (b) of this subdivision or paragraph (e) of subdivision seven of section three hundred sixty-seven-a of the social services  law,  the drug  shall not be referred to the drug utilization review board for any further supplemental rebate for the  duration  of  the  previous  rebate agreement,  provided  however,  the commissioner may refer a drug to the drug utilization review board if the commissioner determines  there  are significant   and  substantiated  utilization  or  market  changes,  new evidence-based research, or statutory or federal regulatory changes that warrant additional rebates. In such cases, the department  shall  notify the  manufacturer  and  provide evidence of the changes or research that would warrant additional rebates, and shall attempt to  reach  agreement with  the  manufacturer  on a rebate for the drug prior to referring the drug to the drug utilization review board for review.  (d) The department shall consider a drug's actual cost to  the  state, including  current rebate amounts, prior to seeking an additional rebate pursuant to paragraph (b) or (c) of this subdivision.  (e) The commissioner shall be authorized to take the actions described in this section only so long as total  Medicaid  drug  expenditures  are projected  to exceed the annual growth limitation imposed by subdivision two of this section.   4. In determining whether to recommend a  target  supplemental  rebate for  a drug, the drug utilization review board shall consider the actual cost of the drug to the Medicaid program, including  federal  and  state rebates, and may consider, among other things:  (a)  the drug's impact on the Medicaid drug spending growth target and the adequacy of capitation rates of participating Medicaid managed  care plans,  and  the drug's affordability and value to the Medicaid program; or  (b) significant and unjustified increases in the price of the drug; or  (c)  whether  the  drug  may  be  priced  disproportionately  to   its therapeutic benefits.    5. (a) If the drug utilization review board recommends a target rebate amount  on  a  drug  referred  by the commissioner, the department shall negotiate with the drug's manufacturer for a supplemental rebate  to  be paid  by  the manufacturer in an amount not to exceed such target rebate amount. A rebate requirement shall apply beginning with the first day of the  state  fiscal  year  during  which  the rebate was required without regard to the date the department enters into the rebate agreement  with the manufacturer.  (b)  The  supplemental  rebate  required  by  paragraph  (a)  of  this subdivision shall apply to drugs dispensed to enrollees of managed  care providers  pursuant  to section three hundred sixty-four-j of the social services law and to drugs dispensed to Medicaid recipients who  are  not enrollees of such providers.  (c)  If  the  drug utilization review board recommends a target rebate amount for a drug and the department is unable  to  negotiate  a  rebate from the manufacturer in an amount that is at least seventy-five percent of the target rebate amount, the commissioner is authorized to waive the provisions  of paragraph (b) of subdivision three of section two hundred seventy-three  of  this  article  and  the  provisions  of  subdivisions twenty-five  and  twenty-five-a of section three hundred sixty-four-j of the social services law with respect to such drug; however, this  waiver shall  not be implemented in situations where it would prevent access by a Medicaid recipient to a  drug  which  is  the  only  treatment  for  a particular  disease  or  condition.  Under  no  circumstances  shall the commissioner be authorized to waive such provisions with respect to more than two drugs in a given time.  (d) Where the department  and  a  manufacturer  enter  into  a  rebate agreement pursuant to this section, which may be in addition to existing rebate  agreements  entered into by the manufacturer with respect to the same drug, no additional rebates shall be required to  be  paid  by  the manufacturer  to  a  managed  care  provider  or  any  of a managed care provider's agents, including but not limited  to  any  pharmacy  benefit manager,  while the department is collecting the rebate pursuant to this section.  (e) In formulating a recommendation concerning a target rebate  amount for a drug, the drug utilization review board may consider:  (i)  publicly  available  information  relevant  to the pricing of the drug;  (ii) information supplied by the department relevant to the pricing of the drug;  (iii) information relating to value-based pricing  provided,  however, if   the   department  directly  invites  any  third  party  to  provide cost-effectiveness analysis or research related to value-based  pricing, and  the department receives and considers such analysis or research for use by the board, such third party shall disclose any  funding  sources. The  department  shall,  if reasonably possible, make publicly available the following documents in its possession that it relies upon to provide cost effectiveness analyses or research related to value-based  pricing: (A)  descriptions  of  underlying  methodologies;  (B)  assumptions  and limitations of research  findings;  and  (C)  if  available,  data  that presents  results in a way that reflects different outcomes for affected subpopulations;  (iv) the seriousness and prevalence of the disease or  condition  that is treated by the drug;  (v) the extent of utilization of the drug;  (vi)  the  effectiveness  of  the  drug in treating the conditions for which it is prescribed, or in improving a patient's health,  quality  of life, or overall health outcomes;  (vii)  the  likelihood  that  use of the drug will reduce the need for other medical care, including hospitalization;  (viii) the average wholesale price, wholesale acquisition cost, retail price  of  the  drug,  and  the cost of the drug to the Medicaid program minus rebates received by the state;  (ix) in the case  of  generic  drugs,  the  number  of  pharmaceutical manufacturers that produce the drug;  (x) whether there are pharmaceutical equivalents to the drug; and  (xi)  information supplied by the manufacturer, if any, explaining the relationship between the pricing of the drug and the cost of development of the drug and/or the therapeutic benefit  of  the  drug,  or  that  is otherwise  pertinent  to  the  manufacturer's pricing decision; any such information provided shall be considered confidential and shall  not  be disclosed by the drug utilization review board in a form that identifies a   specific   manufacturer   or   prices  charged  for  drugs  by  such manufacturer.   6. (a) If the drug utilization review board recommends a target rebate amount or if the commissioner identifies a drug  as  a  high  cost  drug pursuant  to  subparagraph  (vii)  of  paragraph (e) of subdivision 7 of section three hundred sixty-seven-a of the social services law  and  the department  is  unsuccessful  in entering into a rebate arrangement with the manufacturer of the drug satisfactory to the  department,  the  drug manufacturer  shall  in  that  event  be  required  to  provide  to  the department, on a standard reporting form developed  by  the  department, the following information:  (i) the actual cost of developing, manufacturing, producing (including the cost per dose of production), and distributing the drug;  (ii) research and development costs of the drug, including payments to predecessor  entities  conducting  research  and  development,  such  as biotechnology companies, universities and medical schools,  and  private research institutions;  (iii)  administrative,  marketing, and advertising costs for the drug, apportioned by marketing activities  that  are  directed  to  consumers, marketing  activities  that  are  directed to prescribers, and the total cost of all marketing and advertising  that  is  directed  primarily  to consumers  and  prescribers  in  New  York, including but not limited to prescriber    detailing,    copayment     discount     programs,     and direct-to-consumer marketing;  (iv) the extent of utilization of the drug;  (v)  prices  for  the  drug that are charged to purchasers outside the United States;  (vi) prices charged to typical purchasers in the state, including  but not  limited  to  pharmacies,  pharmacy chains, pharmacy wholesalers, or other direct purchasers;  (vii) the average rebates and discounts provided per payer type in the State; and  (viii) the average profit margin of each drug over the prior five-year period and the projected profit margin anticipated for such drug.  (b) All information  disclosed  pursuant  to  paragraph  (a)  of  this subdivision  shall be considered confidential and shall not be disclosed by the department in a form that identifies a specific  manufacturer  or prices charged for drugs by such manufacturer.   7.  (a)  If,  after  taking  into account all rebates and supplemental rebates received by the department, including rebates received  to  date pursuant  to  this  section,  total Medicaid drug expenditures are still projected to exceed the annual growth limitation imposed by  subdivision two  of  this  section,  the  commissioner  may:  subject  any drug of a manufacturer referred to the drug utilization review  board  under  this  section  to  prior  approval  in  accordance with existing processes and procedures when such manufacturer has not entered  into  a  supplemental rebate  arrangement  as  required by this section; direct a managed care plan  to  limit or reduce reimbursement for a drug provided by a medical practitioner if the drug utilization review board  recommends  a  target rebate  amount  for  such  drug and the manufacturer has failed to enter into a rebate arrangement required by this section; direct managed  care plans  to  remove  from  their  Medicaid  formularies  any  drugs  of  a manufacturer who has a drug  that  the  drug  utilization  review  board recommends a target rebate amount for and the manufacturer has failed to enter  into  a  rebate arrangement required by this section; promote the use of cost effective and clinically appropriate drugs other than  those of  a manufacturer who has a drug that the drug utilization review board recommends a target rebate amount and the  manufacturer  has  failed  to enter  into  a  rebate  arrangement  required  by  this  section;  allow manufacturers  to  accelerate  rebate  payments  under  existing  rebate contracts; and such other actions as authorized by law. The commissioner shall  provide  written  notice  to the legislature thirty days prior to taking action pursuant to this paragraph, unless action is necessary  in the  fourth  quarter  of  a  fiscal  year to prevent total Medicaid drug expenditures from exceeding the limitation imposed by subdivision two of this section, in which case such notice to the legislature may  be  less than thirty days.  (b) The commissioner shall be authorized to take the actions described in paragraph (a) of this subdivision only so long as total Medicaid drug expenditures  are  projected  to  exceed  the  annual  growth limitation imposed by subdivision two of this section. In addition, no such actions shall be  deemed  to  supersede  the  provisions  of  paragraph  (b)  of subdivision  three  of section two hundred seventy-three of this article or the provisions  of  subdivisions  twenty-five  and  twenty-five-a  of section three hundred sixty-four-j of the social services law, except as allowed  by  paragraph (c) of subdivision five of this section; provided further that nothing in this section shall prevent access by a  Medicaid recipient to a drug which is the only treatment for a particular disease or condition.   8.  The  commissioner  shall report by July first annually to the drug utilization review board on savings achieved through the drug cap in the last fiscal year. Such report shall provide data on  what  savings  were achieved  through actions pursuant to subdivisions three, five and seven of this section, respectively, and what savings  were  achieved  through other means and how such savings were calculated and implemented.