GlaxoSmithKline is expanding its formulary position in Florida's Medicaid program by implementing a medication error reduction program in lieu of supplemental rebates.

GSK is designing a program that will "include understanding the causes and consequences of medication errors in Medicaid beneficiaries and developing systems to reduce errors in medication administration," the Florida Agency for Health Care Administration says in a January report to the state legislature.

"The program is the first comprehensive demonstration in the nation addressing the impact of medication errors on Medicaid beneficiaries," AHCA said.

GSK hopes to implement the program in February. The company is also funding a pilot program to improve compliance with asthma medications. The proposal includes compliance monitoring, educational activities and free products.

The company has guaranteed savings to the state of $14.85 mil. over two years from the "value-added" programs.

GSK products added to Florida's preferred drug list since the supplemental rebate law took effect in 2001 include the allergy nasal spray Flonase (fluticasone propionate) and the combination asthma product Advair (fluticasone/salmeterol). Flovent (fluticasone propionate) and Serevent (salmeterol xinafoate) were on the initial formulary (¹ Also see "GSK Florida Medicaid Deal Close; Discounts Are Not "Difficult," Garnier Says" - Pink Sheet, 1 October, 2001., p. 18).

GSK is the latest company to reach agreement with Florida on an alternative approach to the supplemental rebate program.

Pfizer was the first company to set up an experiment with Florida, guaranteeing $33 mil. in savings from disease management programs in exchange for formulary status for all of its products (² Also see "Pfizer Florida Formula: Free Goods In Exchange For Formulary Status" - Pink Sheet, 21 May, 2001., p. 4). Bristol-Myers Squibb entered into a similar agreement, offering $16.3 mil. in savings (³ Also see "Bristol Follows Pfizer Formula For Access To Florida Medicaid" - Pink Sheet, 10 September, 2001., p. 5).

AstraZeneca also has a "value-added" agreement with the state, the January report says. The company is funding five pharmacist positions statewide to perform face-to-face counseling interventions with prescribers.

The pharmacists began counseling visits in March, focusing on (1) patients receiving opiate prescriptions from multiple doctors; (2) a step-therapy approach to osteoarthritis; and (3) encouraging use of ACE inhibitors in congestive heart failure patients. The state estimates first year savings of $800,000 from the interventions.

The Florida Medicaid rebate program will take center stage on Capitol Hill when Gov. Jeb Bush testifies during a Feb. 6 hearing on Medicaid reform.

The hearing, before the House Energy & Commerce/Health Subcommittee chaired by Florida Republican Michael Bilirakis, will kick-off a year-long hearing and legislative effort in the House (⁴ Also see "Medicaid Waivers, State Relief Issues To Be Featured In House Hearings" - Pink Sheet, 13 January, 2003., p. 28).

While the hearing is expected to be broad in scope, the sponsors of the disease management program hope to hear an endorsement of the concept.

Pfizer maintains that its "Healthy State" program is paying off - both in terms of improved outcomes and lower costs for the state, and in higher drug sales for the company. However, Pfizer acknowledges that the data so far are incomplete, noting that Medicaid claims can be filed for up to one year (⁵ Also see "Pfizer’s Sunny Outlook: Florida Medicaid Program Is Paying Off, Firm Says" - Pink Sheet, 27 January, 2003., p. 8).

The ⁶ Florida Medicaid report does not include any data on the performance of the industry disease management programs. It does note the difficulties of analyzing savings from disease management contracts in areas like HIV and hemophilia that predate the Pfizer agreement.

In addition, one line in the report indicates that the manufacturers have made cash payments to meet the minimum savings guarantees: "Pfizer, Bristol-Myers Squibb and GlaxoSmithKline programs have been reconciled for year one and monies due to meet guarantee have been received."

The report does include unambiguous estimates for the savings from the supplemental rebate program. The state agency says it has saved $503 mil. over two years through its preferred drug list policy and a four brand drug monthly limit.

The Florida AHCA fiscal 2002-2003 Medicaid pharmacy budget is $1.88 bil., an increase of 14% over the previous fiscal year. The state believes that compares favorably to 20%-plus budget increases elsewhere in the country.

In addition to supplemental rebates from brand manufacturers, Florida may begin to seek rebates from generic drug companies.

A draft contract is available for negotiation, but Florida has not developed an incentive or mandate for generic drug rebates. The Centers for Medicare & Medicaid Services has notified the state that the agency would need to approve an agreement between generic companies and Florida.

Generic utilization under the Florida Medicaid supplemental rebate program was 47% in 2002, up from 45% in 2001. Utilization of preferred drugs rose to 98% in 2002 from 91% in 2001.

The Pharmaceutical Research & Manufacturers of America is challenging the Florida program in court. The Tallahassee federal court and the Eleventh Circuit Court of Appeals both ruled in favor of Florida's preferred drug list, which was reviewed and granted a waiver by CMS (⁷ 'The Pink Sheet' Sept. 16, 2002, In Brief). PhRMA has petitioned the Supreme Court to review the case.

In its Dec. 5 brief, PhRMA states that the case "involves a state's attempt to restrict Medicaid patients' access to prescription drugs as a means of obtaining rebates from drug manufacturers beyond the rebates specified in the federal Medicaid statute."

PhRMA argues that the case is similar to its challenge of the Maine Rx drug discount program which was reviewed by the Supreme Court Jan. 22 (⁸ Also see "PhRMA v. Maine: Supreme Court Suggests HHS Should Review Maine Rx" - Pink Sheet, 27 January, 2003., p. 7). "At a minimum, the Court should hold this petition for disposition following its decision in" PhRMA v. Maine, the brief states.

Florida's Jan. 8 brief opposing the petition states that "PhRMA challenged Maine's attempt to use its prior authorization power to extract rebates on prescription drugs purchased by non-Medicaid patients" while Florida "seeks only to save money for Medicaid, not for anything else."

Florida also argues that the Supreme Court should allow the issue to develop among the lower courts. "Pointing to the fact that Michigan, Vermont and New Mexico have initiated drug rebate programs similar to Florida's, PhRMA asks this court to review the Eleventh Circuit's decision before any other court of appeals has had a chance to consider the issue."

Florida Medicaid In The Spotlight: GSK Error Program Is Latest Experiment

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