Florida Medicaid's supplemental rebate negotiations have produced agreements that guarantee savings of $66 mil. thus far, the state said in its response to PhRMA's lawsuit against the program.

Should the Pharmaceutical Research & Manufacturers of America "ultimately prevail in the litigation, Florida would lose approximately $66 mil. in savings guaranteed by the supplemental rebate agreements currently in effect with the manufacturers," the state's Aug. 31 response brief states.

PhRMA filed a complaint Aug. 7 in Tallahassee federal court against the supplemental rebate program. A hearing on PhRMA's preliminary injunction request is expected in mid-September (¹ Also see "Florida Medicaid Formulary Challenged By PhRMA Lawsuit" - Pink Sheet, 13 August, 2001.).

Florida warned that enjoining use of the preferred drug list and supplemental rebate program would force the state to "pursue other budget restrictions that would negatively affect Florida's Medicaid recipients."

The Florida Agency for Health Care Administration's fiscal year 2001-2002 Medicaid appropriations include "$214 mil. in savings that were to be affected by the [preferred drug list], prior authorization and rebate program."

If PhRMA's request for a preliminary injunction is granted, Florida maintains that the trade association should be required to post a bond to cover the state's potential losses.

"At a minimum, PhRMA should be required to post a bond in the amount of $214 mil., the projected first year Medicaid savings under the Florida [Preferred Drug List] Program, plus an additional amount to cover the costs incurred by the state in temporarily shutting down the program and restarting it upon dissolution of the injunction, plus interest on the $214 mil.," the filing maintains.

PhRMA is pursuing the litigation as its members continue to try to reach alternative deals with the state. Bristol-Myers Squibb and Florida announced an agreement Sept. 5, which gives all of the company's products on-formulary status in exchange for funding a disease management program. The agreement follows a model established by Pfizer in June.

A decision by the court in favor of PhRMA, but siding with Florida on the need for a large bond, would test the association's commitment to the case.

Florida suggests that the case can be resolved by recognizing the intent of its supplemental rebate program. "The crux of PhRMA's complaint simply misconstrues the Florida Preferred Drug List Program as a drug formulary," the filing states.

The list "is a prior authorization program rather than a formulary...because it does not negatively impact the covered drugs available to Medicaid recipients," Florida contends.

"The key difference is that those drugs not on Florida's PDL are still 'covered' drugs under the Medicaid program in that a Medicaid beneficiary can still obtain a prescription for drugs not on the PDL by following a 5-10 minute prior authorization process."

Florida "can recommend alternative medications, but it is the physician who has the ultimate authority to determine which drug is prescribed." Prior authorization programs are explicitly authorized in the Medicaid rebate law, Florida adds.

PhRMA also argued that Florida did not follow proper formulary procedures in issuing its interim drug list when the supplemental rebate program took effect.

Although Florida maintains that the program is not a formulary, it notes that the interim drug list was formally adopted by the state pharmacy and therapeutics committee Aug. 25.

Florida has also begun the process of rolling out the prior authorization program by disease category. Proton pump inhibitors and H2-blockers were the first category addressed (on July 16), followed by antihistamines, leukotrienes and migraine drugs (Aug. 6) and ACE inhibitors and lipotropics (Aug. 20).

On Sept. 17, the program will begin prior authorization for antidiabetics. Antibiotics, angiotensin II inhibitors and nasal steroids will be subject to prior authorization beginning Oct. 1, followed by bone resorption drugs, estrogens and urinary antispasmodics on Oct. 8. Effective Oct. 15, all classes of drugs will be subject to prior authorization.

Florida Medicaid Has Negotiated $66 Mil. In Supplemental Rebates

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