Evaluation of Virginia’s Preferred Drug List: 4th Quarter Report

1. Evaluation of Virginia’s Preferred Drug List: 4th Quarter Report Policy and Research Division Department of Medical Assistance Services November 2, 2004

2. Presentation Outline  • Components of Evaluation For This Report • PDL Process: Movement of Prescriptions • PDL Process: Inside Prior Authorization • Preliminary Budget Savings • PDL Study Group and Comparison Group • Next Steps and Conclusions

3. Study Components For This Interim Report • Three issues provide the framework for this 4th quarter interim report: • First Health’s implementation of the PDL program including a focus on the prior authorization process for non-preferred drugs • The impact of the PDL program on the agency’s budget and whether there is early evidence of continued savings in the pharmacy program • Selection of PDL Control Group

4. Presentation Outline • Components of Evaluation For This Report  • PDL Process: Movement of Prescriptions • PDL Process: Inside Prior Authorization • Preliminary Budget Savings • PDL Program Group and Comparison Group • Next Steps and Conclusion

5. The First Health National Drug Code File (With PDL Indicator) and DMAS Claims Data Were Used To Create PDL Analysis File First Health File PRE-PDL Claims File Paid claims with date of service 90 days prior to the Hard Edit Date National Drug Code PDL Claims Analysis File Hard Edit Date Drug Class Drug Name Preferred Indicator Service Date Hard Edit Date Paid/Denied Status Drug Class Drug Name Preferred Indicator Recipient Information National Drug Code DMAS Claims File National Drug Code POST-PDL Claims File Paid or denied claims with a service date after the Hard Edit date Paid/Denied Status Service Dates Recipient Information

6. Drug Claims For This Report Were Selected From Files Containing Over 14 Million Records And Nearly 4.5 Million PDL-Eligible Claims Claims Database (Oct 03 to Sep 04) 14,203,608 PDL Eligible Claims 4,476,739 Pre-PDL Claims 90 Days Prior to Hard Edit Date (multiple claims per recipient and drug) 786,806 Post-PDL Claims 1 to 6 Weeks After Hard Edit Date (multiple claims per recipient and drug) 2,288,568 Pre-PDL By Prescription Single Claim Per Recipient Per Drug 405,539 Post-PDL By Prescription Single Claim Per Recipient Per Drug 691,989

7. DMAS Staff Tracked The Movement Of More Than 400,000 Drug Claims Through The PDL System Post-PDL Pre-PDL Change to Preferred Rx 84,308 Claim Not Yet Submitted Approved as Non-Preferred 19,599 Recent Pre-PDL Rx Non-Preferred Rx 127,279 Walk away Later Refill No New Claim 23,372 No Claim Found 23,372 Total Claims 405,539 No Refill Remained on Preferred Rx 156,020 Recent Pre-PDL Rx 710 Preferred Rx 278,260 No New Claim 122,240 No Claim Found 121,530

8. How The PDL Compliance Rate Is Calculated (Includes Persons Originally Using Preferred Drugs) Bolded black boxes represent PDL compliance Compliance Rate = (Black/(Blue+Black)) Red boxes not used to calculate compliance

9. PDL Compliance Rate Remains High Almost 10 Months After Program Start Date Post-PDL Period (Jan 04 to Sep 04) Pre-PDL Period (Oct 03 to Aug 04) PDL Status 8% Not on PDL 31% 85% Compliance Rate Needed to Achieve Budget Savings PDL Drug (Compliance) 69% 92% Total Claims 405,539 259,927* * Includes only paid claims. .

10. DMAS Is Also Interested In Tracking PDL Results For Only Those Person Who Were On Non-Preferred Drugs In The Pre-PDL Period Bolded black boxes represent PDL compliance Compliance Rate=(Black/(Blue+Black)) Red boxes not used to calculate compliance

11. When Focusing Only On Persons Who Were On Non-Preferred Drugs In The Pre-PDL Period, The Compliance Rate Is Just Over 80 Percent Last Reporting Period (Ending May 2004) Current Reporting Period (Cumulative Ending September 2004) 89% 81% Total Claims 104,884 116,278

12. Using This Method Some Variation In Compliance Rates Across Therapeutic Classes Is Observed(Excluding Persons Originally On Preferred Drugs) Cardiac Medications Central Nervous System 94% Total Asthma/ Allergy 84% 81% Analgesics Gastrointestinal 77% Anti-Biotics 68% 66% 54% 26,870 24,778 Total Claims 84,308 41,402 4,308 3,259 3,133 Notes: The chi-square value of 9720.59 is significant at a .0001 level of significance.

13. Presentation Outline • Components of Evaluation For This Report • PDL Process: Movement of Prescriptions  • PDL Process: Inside Prior Authorization • Preliminary Budget Savings • PDL Study Group and Comparison Group • Next Steps And Conclusions

14. Three Quarters of Requests for Prior Authorization Have Been Granted 1% 2% 3% 3% Denied Prior Authorization Approved 76% 60% 60% 71% 79% 77% 79% 82% 80% 80% Physician Agreed To Change to a Preferred Drug 24% 40% 40% 29% 21% 23% 20% 16% 17% 17% Total Jan Feb Mar Apr May June July Aug Sept n= 34,606 2,393 5,825 5,194 4,430 3,890 3,614 2,770 3,017 3,890

15. Call Center Activity at First Health Remains Level 2800 2600 2400 2200 Total Issues Addressed 1,800 Average 2000 1800 1,755 1600 1400 1200 Total Calls 846 1000 800 894 600 400 198 Calls on Peak Day 200 188 0 January February March April May June July August September

16. Pharmacists Comprise Growing Portion of Callers To The Center Physician 63% 67% 73% 73% 72% 72% 54% 50% 52% 49% Pharmacist 33% 27% 22% 23% 22% 22% 41% 46% 45% 47% Recipient Total Jan Feb Mar Apr May June July Aug Sept n= 68,511 4,641 9,933 8,959 7,847 6,370 8,113 6,580 7,147 8,921

17. Calls Are Handled Expeditously 3:50:24 Average 3:21:36 Average Length of Call 2:41 2:52:48 2:18 2:24:00 1:55:12 1:26:24 0:57:36 Average Speed to Answer 0:16 0:17 0:28:48 0:00:00 January February March April May June July August September

18. Presentation Outline • Components of Evaluation For This Report • PDL Process: Movement of Prescriptions • PDL Process: Inside Prior Authorization  • Preliminary Budget Savings • PDL Study Group and Comparison Group • Next Steps And Conclusions

19. Market Shift Data By Month Go Here Pre-PDL Period Post-PDL Period PDL Status 13% 13% 12% 12% 11% 11% 12% 16% 11% 22% Non-Preferred Drugs 87% 87% 88% 88% 89% 89% 88% 84% 89% 78% 43% 43% 43% 43% 42% 41% 39% Preferred Drugs 57% 57% 57% 57% 58% 59% 61% July Aug Sept Oct Nov Dec Jan Feb Mar Apr Jun July Aug Sept Oct Nov Dec 2003 2004

20. The Cost Per Script Continues to be Below the Projected Amount Since PDL Implementation Pre-PDL Period Post-PDL Period $62 $61 Forecasted Cost Per Script $60 $59 $58 $57 $56 Actual Cost Per Script $55 $54 $53 $52 $51 July Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun July Aug Sept 2003 2004

21. DMAS is On Track to Produce Expected Savings of $24 Million in the Overall Pharmacy Program. PDL Is One Component Of The Savings $550 $24.9 million $500 Official Medicaid Forecast for Pharmacy Expenditures $450 Millions Actual Medicaid Expenditures $400 $350 $300 FY 2001 FY 2002 FY 2003 FY 2004

22. Presentation Outline • Components of Evaluation For This Report • PDL Process: Movement of Prescriptions • PDL Process: Inside Prior Authorization • Preliminary Budget Savings  • PDL Study Group and Comparison Group • Conclusions And Next Steps

23. Several Steps Were Implemented To Identify The PDL Study Group And The Control Group Switched to Preferred Drugs 84,308 Multiple Records (Prescriptions) Per Recipient Total Claims 103,907 Did Not Switch 19,599 59,829 Single Record Per Recipient PDL Group All Drugs Preferred in Post-Period 44,570 All Drugs Non-Preferred in Post-Period 6,387 Control Group Some Drugs Preferred, Some Non-Preferred in Post-Period 8,872 Excluded

24. Number Of Recipients In PDL Group and Control Group Change to Preferred Rx* 44,570 PDL Recipient Group Recipient Control Group Approved as Non-Preferred 6,387 Non-Preferred Rx No New Claim Total Claims Remained on Preferred Rx Recent Pre-PDL Rx Preferred Rx No New Claim

25. Only Minor Differences Exist In The Characteristics of Recipients In The PDL Study Group And Comparison Female 43% Urban 62% White PDL Group 69% 59 Suburban 34% 87% 31% 31% Black 24% Rural Male Average Age Place of Residence* Gender* Race* Control Group Female 47% Urban 67% White 67% 58 13% 32% Suburban 33% 27% Black Male 21% Rural N=50,957 *Chi-square values statistically significant at .0001

26. Substantial Differences Exists In The Medications of Recipients In The PDL Study Group And Comparison Rate of Use for Certain Medications 55% 51% PDL (Study) Group Comparison Group 31% 27% 20% 10% 6% 6% 4% 4% 4% 3% Cardiac * Gastro-intestinal * Central Nervous System * Allergy/ Asthma Anti-biotics* Analgesics * Chi-square values are statistically significant at .0001

27. Presentation Outline • Components of Evaluation For This Report • PDL Process: Movement of Prescriptions • PDL Process: Inside Prior Authorization • Preliminary Budget Savings • PDL Study Group and Comparison Group  • Next Steps And Conclusion

28. 2005 Study Report Schedule

29. Conclusions • After nearly one year of program implementation, Virginia’s PDL program gets high marks: • PDL compliance rate is high and most changes are being made voluntarily • Patients are not being denied drugs • The Call Center continues to operate smoothly • Program is saving money for the Commonwealth