California Code of Regulations › Title 22 - Social Security › Division 3 - Health Care Services › Subdivision 1 - California Medical Assistance Program › Chapter 3 - Health Care Services › Article 7 - Payment for Services and Supplies › Section 51513.6 - Prudent Purchase of Drugs Program

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) Prudent Purchase of Drugs is the
					 designated name of the mechanism through which the Department shall solicit
					 competitive bids or negotiate prices and enter into contracts with principal
					 labelers for generic drug type codes in order to obtain refunds, rebates,
					 guaranteed prices or any other form of preferential price under the Medi-Cal
					 program. The acceptance of a bid or the mutual agreement on a negotiated price
					 followed by the awarding and approval of a contract with a principal labeler to
					 supply a specific drug product shall constitute the identification of a
					 State-designated drug product under the provisions of this Section.
(b) Under the Prudent Purchase of Drugs
					 Program, the Department may:
(1) Review all
					 generic drug type codes marketed, at least annually.
(2) Select those generic drug type codes
					 which represent substantial drug product usage or expenditures under the
					 Medi-Cal program.
(3) For each
					 generic drug type code selected for inclusion under a rebate, discount or
					 guaranteed price contract, (1) negotiate a contract or (2) solicit competitive
					 price bids for multisource drugs in conformance with terms and conditions
					 established by the Invitation for Bid. Prior to accepting any bid or negotiated
					 price, the Department will seek information from the Federal Food and Drug
					 Administration regarding potential drug product bioequivalency, supply or other
					 related problems.
(A) Negotiated contracts
					 may be entered into for drug products marketed under an existing and valid U.S.
					 patent or in those instances where the Department has received an insufficient
					 number of acceptable bidders.
(4) Award a contract to one or more principal
					 labeler(s) to supply the State-designated drug product based on negotiations or
					 on the lowest bid(s) which meet(s) the terms and conditions of the State's
					 solicitation for bid. Terms and conditions for either negotiated or
					 competitively bid contracts shall include, but not be limited to the following:
(A) Acceptable quality, which means:
1. All drug products offered shall be
					 manufactured or compounded, processed, packaged, labeled, and handled in
					 accordance with the provisions of applicable federal and state law.
2. All drug products offered shall conform to
					 standards, where applicable, of the current United States Pharmacopoeia (USP)
					 or National Formulary (NF), including supplements or revisions.
3. The drug product shall be pharmaceutically
					 elegant, i.e., neatly labeled, free of chips, pittings, dye spots, foreign
					 matter, and other defects.
4. All
					 United States Drug Enforcement Agency (DEA) Schedule II-IV products shall
					 comply with the Health and Safety Code Section
					 11919.
5. All multisource drugs products (except
					 those drugs introduced to the U.S. market prior to 1938 or for which the United
					 States Food and Drug Administration has not chosen to issue ratings) shall have
					 an "AA" or "AB" bioequivalency rating for solid oral dosage forms, or an "A"
					 rating for all other dosage forms, from the FDA in its most recent edition of
					 Approved Prescription Drug Products.
(B) Availability, which means that the
					 State-designated drug product shall be available throughout the State to
					 outpatient pharmacies through usual and customary distribution channels in
					 sufficient quantities to meet the needs of the Medi-Cal program.
(C) Conformity with usual and customary
					 distribution channels, which means the use of drug wholesalers or direct orders
					 from principal labelers or any comparable combination or arrangement
					 thereof.
(D) Product liability
					 insurance, the terms of which shall indemnify the State of California, its
					 officers, agents and employees for any liability arising out of a claim when
					 such drug product is dispensed under the Medi-Cal program in accordance with
					 California pharmacy laws, rules and regulations and current professional
					 standards and practices.
(E) An
					 initial contract term of not less than 12 months, subject to the Department's
					 right to terminate the contract. Subsequent contracts may be awarded through
					 solicitation of competitive bids, an extension of the initial competitively bid
					 contract not to exceed 6 months or a renegotiation of contracts for drug
					 products under a U.S. patent.