State of Illinois Canadian Drug Study FDA Docket No. 2004N-0115

1. State of IllinoisCanadian Drug StudyFDA Docket No. 2004N-0115 Presented By: Ram Kamath, Pharm.D. Scott McKibbin Special Advocate For Prescription Drugs State Of Illinois Rod R. Blagojevich, Governor FDA Docket No. 2004N-0115

2. Central Policy Issue Can Illinois state employees and retirees safely purchase prescription drugs in Canada at a lower cost to the taxpayers? Rod R. Blagojevich, Governor FDA Docket No. 2004N-0115

3. Study Team • Interdisciplinary • Medical Doctor • Pharm.D. • R.Ph. • Ph.D. • JD Rod R. Blagojevich, Governor FDA Docket No. 2004N-0115

4. Study Team (Continued) • Multi-Agency • Department of Public Health • Department of Professional Regulations • Central Management Services • Governor’s Office Rod R. Blagojevich, Governor FDA Docket No. 2004N-0115

5. Study Locations • CanaRx- Windsor, Ontario • Current Vendor for City of Springfield, MA • “Retail” Pharmacies- Windsor, Ontario • Two Facilities Serving City of Springfield • CanadaDrugs.com- Winnipeg, Manitoba • “Internet” Pharmacy • CanAmerican Drugs, Inc. Winnipeg, Manitoba • “Internet” Pharmacy • ADV-Care Pharmacy, Toronto • “Internet” Pharmacy • Manitoba Deputy Minister Of Health Rod R. Blagojevich, Governor FDA Docket No. 2004N-0115

6. Proposed Plan: Consumer Safety Safeguards: • Patients would be required to submit medical history, current medications, and allergies • The list of drugs that could be imported would be restricted to those deemed clinically appropriate and unlikely to spoil in transit. • No habit-forming pain medications • No antibiotics for acute illnesses • No generics Rod R. Blagojevich, Governor FDA Docket No. 2004N-0115

7. Proposed Plan: Consumer Safety • Patients can import only those drugs prescribed by a physician in the US and first filled in a local pharmacy for one month. • Vendors will supply drugs only in sealed packages obtained from wholesalers supplied directly from manufacturers. • Each patient would select a Primary Care Pharmacist who would coordinate pharmaceutical care; incorporating prescriptions obtained through local retail pharmacies, domestic mail order pharmacy, and Canadian Mail Order Plan. Rod R. Blagojevich, Governor FDA Docket No. 2004N-0115

8. Regulation of Canadian Pharmacies Regulatory systems in Canada and US provide substantially equivalent protection for the health and safety of the public Findings • Methods of ensuring safety and efficacy of prescription drugs are comparable. • Requirements for manufacturing, warehousing and storage of pharmaceuticals are comparable. • Pricing and Distribution of pharmaceuticals is less likely to foster drug counterfeiting. Rod R. Blagojevich, Governor FDA Docket No. 2004N-0115

9. Regulation of Canadian Pharmacies • Pharmaceutical dispensing requirements are substantially equivalent • Educational requirements and professional regulation of pharmacists are equally rigorous • Incident reporting of internal process errors was more rigorous in the Canadian provinces of Manitoba and Ontario than in the State of Illinois Rod R. Blagojevich, Governor FDA Docket No. 2004N-0115

10. Proposed Plan: Summary • Contract with a non-domestic Pharmacy Benefits Manager (PBM) or similar entity • Establish a Primary Care Pharmacist (PCPh) Model • Require the employees and retirees to pay only the shipping cost for drugs obtained from Canadian sources. Rod R. Blagojevich, Governor FDA Docket No. 2004N-0115

11. Proposed Plan: Drugs The program drugs include long term use, brand name drugs approved in the US by the FDA. The following types of drugs are not included: • Antibiotics • Controlled substances • Drugs that are likely spoil during transit • Generics • Over The Counter (OTC) Drugs • Medications otherwise deemed unsuitable for importation. Rod R. Blagojevich, Governor FDA Docket No. 2004N-0115

12. Proposed Plan: Cost Savings Cost savings projections are divided into two major health care programs provided by the State. • Approximately half of the employees and retirees are enrolled in the Quality Care Health Plan (QCHP).Rx Carved out and administered by Caremark, Inc. • The other half are enrolled in one of nine Managed Care Plans administered by seven separate companies Rod R. Blagojevich, Governor FDA Docket No. 2004N-0115

13. Quality Care Health Plan (QCHP) -Caremark, Inc The projected 12-month savings for this group is $55 million. This projection assumes all eligible prescriptions are filled through the proposed Canadian Mail Order Plan (CMOP). • $20.7 million would be savings to the plan members in the form of waived co-payments. • $34.3 million would be the savings to the State due to lower drug costs. At a 33% participation rate savings is projected at $18.3 million for the first full year (without trend) Rod R. Blagojevich, Governor FDA Docket No. 2004N-0115

14. Managed Care Plans The projected 12-month savings for this group is $35.7 million. This projection assumes all eligible prescriptions are filled through the proposed Canadian Mail Order Plan. • The State share of the savings is likely to be higher since the co-payments in Managed Care plans are lower than in the Caremark plan At a 33% participation rate savings is projected at $11.9 million for the first full year (without trend) Rod R. Blagojevich, Governor FDA Docket No. 2004N-0115

15. Employee/Retiree Savings • Proposed Plan design calls for waiving all co-payments • Participants will pay shipping costs estimated at $12 per order Actual amount saved would depend on: • participant’s current plan • where participants buy their prescriptions now • how many prescriptions participants can get from Canada Rod R. Blagojevich, Governor FDA Docket No. 2004N-0115

16. Waiver Request • Governor Blagojevich Waiver Request: • The State of Illinois, Office of Special Advocates for Prescription Drugs, in conjunction with the FDA, will develop a preferred drug list, detailing those drugs that can be safely obtained from Canadian sources.  • The list will be comprised of predominately brand-name drugs for long-term usage. • Only drugs that can be obtained more cost-effectively from Canada than from the United States will be included. • The list will be periodically updated to ensure continued cost-savings. • Only FDA-approved drugs in FDA-approved dosages will be eligible for inclusion on the list. Rod R. Blagojevich, Governor FDA Docket No. 2004N-0115

17. Waiver Request (Continued) • The State will implement the following additional protections to ensure patient safety. • No first-fill.  Plan participants must first have an eligible prescription filled by an Illinois pharmacy with a 30-day supply before obtaining a refill for that drug through the importation program. • Illinois will implement a Primary Care Pharmacist model, whereby every participant in the program would have the opportunity to choose an Illinois pharmacist to coordinate and monitor his or her drug therapy. • In collaboration with the University of Illinois College of Pharmacy, Illinois will implement a monitoring program to evaluate the safety/efficacy of drugs received by plan participants from all sources. • All drugs distributed through the program will be dispensed in manufacturer-sealed containers with child-resistant caps or an equivalent safeguard. • Illinois will contract with a private entity to maintain a toll-free number with a pharmacist available 24 hours a day, 7 days a week, to answer any medication-related questions by plan participants.  • In addition to oversight by the State of Illinois, all wholesalers and pharmacies involved in filling prescriptions under the program will be licensed and regulated either by authorities in Canada or by authorities in the United States. • Prescriptions will be dispensed only pursuant to a valid prescription.  Rod R. Blagojevich, Governor FDA Docket No. 2004N-0115

18. Wavier Request (Continued) • Reporting • Illinois will periodically report to the United States Department of Health and Human Services regarding the effectiveness and cost-savings of the program. Rod R. Blagojevich, Governor FDA Docket No. 2004N-0115

19. Waiver Design Options • Canadian Pharmacy Benefits Manager (PBM) • Mail Order Program • Canadian Sources Imported In Bulk • Illinois Based Pharmacy To Provided Mail Order Services • State would stipulate performance and safety standards for facilities in Canada and in Illinois and would regularly inspect all facilities for adherence to those standards. Rod R. Blagojevich, Governor FDA Docket No. 2004N-0115