Monday, July 9, 2012

Connecticut Gets Drug Repackaging Right: Removing the Financial Incentive

I just reviewed the proposed language for Connecticut's rule change on repackaged drugs.  Excellent piece of regulatory work, specifically because it includes all of the elements of an effective approach to mitigating the issue (and a road map for other states to follow):

1) The rule doesn't ban physician dispensing.  There are legitimate reasons a doctor may need to dispense medications to a patient and this rule allows for those limited circumstances.

2) The rule focuses on the financial remuneration tied to physician dispensing and fixes such fees at the Average Wholesale Price (AWP) of the medication plus a reasonable dispensing fee ($5 for brand and $8 for generics).

3) The rule clearly specifies the source for the AWP (Medi-Span).  Many states are silent to the AWP source and this creates a lot of noise in the system. 

4) The rule specifies that fees are determined by "a) the NDC for the underlying drug product from the original manufacturer, or b) the therapeutic equivalent drug product from the original manufacturer/labeler NDC."  This leaves no room for physicians or other agents to create new NDC codes as a result of repackaging.

5) If the underlying NDC isn't known or isn't shared, discretion rests with the payer to determine the most appropriate NDC code.  There is a dispute resolution process outlined if the provider disagrees. 

6) Perhaps most importantly, this is a regulatory change, not a statutory change.  The laws of the state of CT allow the Work Comp Commission Chairman John Mastropietro to enact this rule change without legislative approval.  This won't be possible in all states, but where it is, it's the way to go. 

These are the five (and six, where possible) central tenants of an effective regulatory approach to repackaged drugs.  Hopefully, we'll see this loophole closed state by state as soon as possible. 

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