HOUSE COMMITTEE ON

AUDIT & HUMAN SERVICES BUDGET REFORM

 

April 10, 2003 Hearing Room 50

3:15 PM Tapes92 - 93

 

MEMBERS PRESENT:††††††††††† Rep. Ben Westlund, Chair

Rep. Steve March, Vice-Chair

Rep. Jeff Kruse

Rep. Jeff Merkley

Rep. Alan Bates

 

MEMBERS EXCUSED:††††††††††† Rep. Randy Miller

Rep. Susan Morgan, Vice-Chair

 

GUEST MEMBERS:†† ††††††††††† Rep. Laurie Monnes Anderson

 

STAFF PRESENT:††††† ††††††††††† Rick Berkobien, Committee Administrator

Kelly Fuller, Committee Assistant

 

 

ISSUES HEARD:†††††††† ††††††††††† Invited Testimony

 

††††††††††††††††††††††† ††††††††††† ††††††††††† Informational Meeting

Pharmacy Benefit Management: RegenceRx

David Clark, The Regence Group

Patty Church, The Regence Group

 

Pharmacy Benefit Administration and Multi-State Purchasing Pool

Scott Allocco, First Health Services Corporation

 

These minutes are in compliance with Senate and House Rules.Only text enclosed in quotation marks reports a speakerís exact words.For complete contents, please refer to the tapes.

 

TAPE/#

Speaker

Comments

TAPE 92, A

003

Chair Westlund

Calls the meeting to order, introduces David Clark and Patty Church our guests here for invited testimony and opens the informational meeting.

INFORMATIONAL MEETING

015

David Clark

Introduces himself and presents his testimony (EXHIBIT A) and begins presentation.

132

Rep. March

Asks what kind of weight do you give un published studies, like the one you are referring to.

138

Clark

Elaborates how un published studies benefit them and continues presentation.

164

Chair Westlund

Comments that he assumes the pharmaceutical companies welcome that.

169

Clark

Comments that yes they welcome that to an extent, elaborates, and continues.

278

Chair Westlund

What percent do those usually run.

280

Clark

Responds that it is up to twenty five percent of the total dollars available from the manufacturer.

282

Chair Westlund

Asks if that discount is from savings and rebates etc.

285

Clark

Responds yes and continues.

292

Rep. Merkley

Asks is the reason that Regence can contract directly with their manufactures because of your size.

198

Clark

Responds that there is two major factors that drive discounts from pharmaceutical manufactures and elaborates.

308

Rep. Merkley

Comments that this is why bulk purchasing is a feasible strategy for the State of Oregon.

310

Chair Westlund

Comments that they donít have access to the Medicaid drugs that we do and asks how many lives they represent.

315

Clark

They cover 3 million lives.

326

Rep. Bates

Asks what it their usual discounts or rebates compared to AWP.

328

Clark

Makes comments about reimbursement to pharmacies.

336

Rep. Bates

Asks do you run any Medicaid programs.

342

Clark

Current no, they do not run any Medicaid programs and makes additional comments.

358

Rep. Bates

In order to get the brand name discount do you have to hit a certain market share or certain number of prescriptions or do you have a formulary or preferred drug list you use.

367

Clark

Yes, they do have a preferred drug list and elaborates.

376

Rep. Bates

Those on SSI, other than Prozac which is generic would the physician look at a choice of drugs there or a single drug that was preferred first.

382

Clark

Comment that he thinks he is referring to SSRIís which are Select Serotonin Reuptake Inhibitors and elaborates.

TAPE 93, A

001

Rep. Bates

On the brand names on those anti-depressants how do you make the selection of one to the other of which ones are on the formularies and the ones that are off.

005

Clark

Comments that this is one of the challenges currently and elaborates.

015

Rep. Monnes Anderson

Would like at the slide on key strategies (EXHIBIT A) on restrain costs and promote quality and asks who is paying for this.

024

Clark

Clarifies by re-asking her question as who pays for doing all of this review and comments that the reviews are funded by the Regence group and elaborates.

030

Rep. Monnes Anderson

Asks and is this a significant piece of your budget or a small percentage.

037

Clark

Comment that the largest percentage of the budget is doing customer service work, elaborates and continues presentation.

070

Chair Westlund

Asks how that compared to the rest of the population.

074

Clark

Comments that it is about the same or a little bit lower.

076

Chair Westlund

So these trend grew at lower than the commercial population.

080

Clark

Comments at that time yes, and comments what they would like to see with the new Oregon Health Plan recommendations.

087

Chair Westlund

Asks how they manage their own pharmacy network.

089

Clark

Explains how they manage their own pharmacy network.

095

Chair Westlund

Asks if they have utilization throughout the entire state.

097

Clark

Responds that they have about ninety five percent of the pharmacies.

100

Chair Westlund

Makes comments and asks them to keep doing what they are doing.

116

Clark

Makes closing comments and states what they believe in.

123

Rep. March

Asks when the states lists have come out, how did ours look.

128

Clark

Responds that as far as preferred medications and preferred drugs, there are a lot of similarities and elaborates.

144

Chair Westlund

Thanks the witness for their testimony and introduces Scott Allocco from First Health Services Corporation.

168

Scott Allocco

Introduces himself, presents his testimony and begins his presentation.

263

Rep. Bates

On the rebate that you get on the Medicaid fee for service, is it not true that sixty percent of that goes back to the Federal Government and forty percent comes to the State.

267

Allocco

Responds yes, that is correct and elaborates.

272

Rep. Bates

Comment that with the fee for service the real discount to the State if only eight percent.

275

Allocco

Responds that you need to compare apples to apples and elaborates.

286

Chair Westlund

That is why we were asking if this was a gross number so sixty percent of this fee for service has to go back to the Federal Government.

290

Allocco

Responds yes, that is correct.

294

Rep. Bates

Comments that is point is the real discount to the state in not the twenty four percent it is the forty percent.

296

Allocco

Responds and elaborates.

305

Chair Westlund

Comments that sixty percent you have to pay back to the Federal Government.

308

Allocco

Comment that that is correct and the net difference is fourteen percent of which for every hundred million dollars forty percent of that is State and sixty percent is Federal.

321

Chair Westlund

Makes comments to help clarify the discussion and comments that we are just looking at net numbers.

328

Allocco

Elaborates to help the members understand the process with the key issues.

345

Chair Westlund

Comments that the important thing here is the net to the State and not net rebates, we care about adding populations, providing more services and adding benefits and elaborates.

354

Allocco

Appreciates the difference and the importance in the members having to come up with the state money to fund these programs and elaborates.

373

Chair Westlund

Comments that he is talking about these larger numbers of rebates and supplemental rebates and that is accurate, but for our purposes it distorts reality, because we are not getting those kind of rebates nor are we entitled to them and elaborates.

390

Allocco

Comments that one of the issues that he wanted to address today was one of the bullet points in the Oregon Health Plan recommendations about auditing First Health Services and elaborates.

TAPE 92, B

104

Rep. Bates

Asks what percent of the market in Michigan and Ohio is generic drugs.

115

Allocco

Responds that the last page of his handout will give an explanation of generic drugs. (EXHIBIT B)

125

Rep. Bates

Asks in the generic market with the supplemental savings are the costs of the brand names getting pretty close to the generic cost or is there still a significant difference.

130

Allocco

Comments about one issue that has been debated is when a brand name drug goes to generic and answers in more detail.

140

Rep. Bates

Using an example of Clariton, you said it is common that twenty percent of the drug cost is being deposited right back in as a rebate to the state of Oregon, asks if Oregon is going to have to split that with the Federal Government.

146

Allocco

Responds yes, that is correct and elaborates.

149

Rep. Bates

Asks, so the twenty percent that goes back to the State has to be split with the Federal Government.

151

Allocco

Explains the process.

158

Rep. Bates

The process of getting the list of what the state bought, you send them the invoice and then they cut the check based off of that, it seems that this is a place for an audit it is a very complex situation.

169

Allocco

Responds that the Federal OIG is investigating the manufactures prices that the rebates are based on and elaborates.

218

Chair Westlund

Comments that he feels Pharmacy Benefit Managers are doing a great job and as far as the auditing we are talking about, good prudence would say, we audit people that handle that kind of money and elaborates.

221

Allocco

Again, lets talk about how we can do that.

241

Rep. Bates

Comments that he is basically saying he can given the tools you believe you can recover for us the supplemental rebates.

252

Allocco

Respond yes, if the legislature were to give OMAP the authority.Give his general recommendation of what pooling that each state individually can do before looking at multi-state pooling.

320

Chair Westlund

Disagrees with his comment about giving the state the tools and makes comments about how he feels.

362

Rep. Bates

Share the same concern, but is still intrigued and asks have you approach in any of your market, where you have these tools a generic market that seventy five or eighty percent, have you ever reached that level anywhere as an agency working for the entire state.

371

Allocco

Responds and elaborates.

386

Rep. Bates

Reiterates what he just heard him was that even if we gave you the tools the Federal Government is not going to allow you to have the kind of formulary and MCO would and thatís a tool that is pretty important if you want to get that generic level up.

393

Allocco

Responds by saying he feel the state is planning on implementing an enhanced process to require physician to provide justification when wanting to supply a generic name drug instead of a brand name and elaborates.

TAPE 93, B

009

Chair Westlund

Asks what level of generic usage have you guys achieved.

015

Clark

Comments that they are almost at just under fifty percent for generic utilization and asks Rep. Bates for clarification on his question because it would make a difference in his answer.

019

Rep. Bates

Comment that he will go back and find out if his figures are correct.

023

Chair Westlund

Comment that, that floats between sixty and one is actually up to eighty.

026

Allocco

Respond yes, there is actually a difference and elaborates with detail.

033

Rep. Bates

In reality, my question would be have you been able to achieve that, do you have any place you have the tools to do that and if you do have you ever achieved anything above fifty percent.

036

Allocco

Talks about what was just said by Regence and elaborates his comments on the issue.

041

Rep. Bates

All he cares about is which drugs are being dispensed as generic verses brand names and as I understand it is fifty one percent in Michigan.

044

Allocco

Comments that the Medicaid fee for services programs because they have stronger mandatory generic substitution laws generally have slightly higher generic drug utilization than non-Medicaid programs.

051

Chair Westlund

Asks Tom Holt, Oregon Pharmaceutical Association from the audience if this is substitution or total utilization.

054

Tom Holt

Responds from the audience.

060

Chair Westlund

Comments and asks if they both are talking about total psychotropic and seven eleven drugs and comments that that was Tom Holt from the audience and he indicated that some of the carve out drugs Cancer, AIDS and seven eleven drugs would bring the total utilization down.

062

Berkobien

Could you explain how the State of Michigan does with their Mental Health drugs.

065

Allocco

Comments that the Mental Health drugs seem to be the most costly and gives more detail about what the State of Michigan is doing.

103

Berkobien

Asks about different litigation around drug programs happening in the states and asks if Michigan and Florida were involved in those.

108

Allocco

Responds to the different litigations in the country.

177

Chair Westlund

Thanks the witnesses for the testimony and calls the meeting to a close and adjourns 4:57 PM

 

 

EXHIBIT SUMMARY

 

A Ė Informational, prepared testimony, David Clark, 5 pp

B Ė Informational, prepared testimony, Scott Allocco, 21 pp