N.Y. Pub. Health Law § 280

§ 280. Medicaid drug cap. 1. The legislature hereby finds and declares\nthat there is a significant public interest for the Medicaid program to\nmanage drug costs in a manner that ensures patient access while\nproviding financial stability for the state and participating providers.\nSince two thousand eleven, the state has taken significant steps to\ncontain costs in the Medicaid program by imposing a statutory limit on\nannual growth. Drug expenditures, however, continually outpace other\ncost components causing significant pressure on the state, providers,\nand patient access operating under the Medicaid global cap. It is\ntherefore intended that the department establish a Medicaid drug cap as\na separate component within the Medicaid global cap as part of a focused\nand sustained effort to balance the growth of drug expenditures with the\ngrowth of total Medicaid expenditures.\n 2. The commissioner shall establish a year to year department of\nhealth state-funds Medicaid drug spending growth target as follows:\n (a) for state fiscal year two thousand seventeen--two thousand\neighteen, be limited to the ten-year rolling average of the medical\ncomponent of the consumer price index plus five percent and minus a\npharmacy savings target of fifty-five million dollars; and\n (b) for state fiscal year two thousand eighteen--two thousand\nnineteen, be limited to the ten-year rolling average of the medical\ncomponent of the consumer price index plus four percent and minus a\npharmacy savings target of eighty-five million dollars.\n 3. The department and the division of the budget shall assess on a\nquarterly basis the projected total amount to be expended in the year on\na cash basis by the Medicaid program for each drug, and the projected\nannual amount of drug expenditures for all drugs, which shall be a\ncomponent of the projected department of health state funds Medicaid\nexpenditures calculated for purposes of sections ninety-one and\nninety-two of part H of chapter fifty-nine of the laws of two thousand\neleven. For purposes of this section, state funds Medicaid drug\nexpenditures include amounts expended for drugs in both the Medicaid\nfee-for-service and Medicaid managed care programs, minus the amount of\nany drug rebates or supplemental drug rebates received by the\ndepartment, including rebates pursuant to subdivision five of this\nsection with respect to rebate targets.\n (a) In the event the director of the budget determines, based on\nMedicaid drug expenditures for the previous quarter or other relevant\ninformation, that the total department of health state funds Medicaid\ndrug expenditure is projected to exceed the annual growth limitation\nimposed by subdivision two of this section, the commissioner may\nidentify and refer drugs to the drug utilization review board\nestablished by section three hundred sixty-nine-bb of the social\nservices law for a recommendation as to whether a target supplemental\nMedicaid rebate should be paid by the manufacturer of the drug to the\ndepartment and the target amount of the rebate.\n (b) If the department intends to refer a drug to the drug utilization\nreview board pursuant to paragraph (a) of this subdivision, the\ndepartment shall notify the manufacturer of such drug and shall attempt\nto reach agreement with the manufacturer on a rebate for the drug prior\nto referring the drug to the drug utilization review board for review.\n (c) In the event that the commissioner and the manufacturer have\npreviously agreed to a supplemental rebate for a drug pursuant to\nparagraph (b) of this subdivision or paragraph (e) of subdivision seven\nof section three hundred sixty-seven-a of the social services law, the\ndrug shall not be referred to the drug utilization review board for any\nfurther supplemental rebate for the duration of the previous rebate\nagreement.\n (d) The department shall consider a drug's actual cost to the state,\nincluding current rebate amounts, prior to seeking an additional rebate\npursuant to paragraph (b) or (c) of this subdivision and shall take into\nconsideration whether the manufacturer of the drug is providing\nsignificant discounts relative to other drugs covered by the Medicaid\nprogram.\n (e) The commissioner shall be authorized to take the actions described\nin this section only so long as total Medicaid drug expenditures are\nprojected to exceed the annual growth limitation imposed by subdivision\ntwo of this section.\n 4. In determining whether to recommend a target supplemental rebate\nfor a drug, the drug utilization review board shall consider the actual\ncost of the drug to the Medicaid program, including federal and state\nrebates, and may consider, among other things:\n (a) the drug's impact on the Medicaid drug spending growth target and\nthe adequacy of capitation rates of participating Medicaid managed care\nplans, and the drug's affordability and value to the Medicaid program;\nor\n (b) significant and unjustified increases in the price of the drug; or\n (c) whether the drug may be priced disproportionately to its\ntherapeutic benefits.\n 5. (a) If the drug utilization review board recommends a target rebate\namount on a drug referred by the commissioner, the commissioner shall\nrequire a supplemental rebate to be paid by the drug's manufacturer in\nan amount not to exceed such target rebate amount. With respect to a\nrebate required in state fiscal year two thousand seventeen--two\nthousand eighteen, the rebate requirement shall apply beginning with the\nmonth of April, two thousand seventeen, without regard to the date the\ndepartment enters into the rebate agreement with the manufacturer.\n (b) The supplemental rebate required by paragraph (a) of this\nsubdivision shall apply to drugs dispensed to enrollees of managed care\nproviders pursuant to section three hundred sixty-four-j of the social\nservices law and to drugs dispensed to Medicaid recipients who are not\nenrollees of such providers.\n (c) If the drug utilization review board recommends a target rebate\namount for a drug and the department is unable to negotiate a rebate\nfrom the manufacturer in an amount that is at least seventy-five percent\nof the target rebate amount, the commissioner is authorized to waive the\nprovisions of paragraph (b) of subdivision three of section two hundred\nseventy-three of this article and the provisions of subdivisions\ntwenty-five and twenty-five-a of section three hundred sixty-four-j of\nthe social services law with respect to such drug; however, this waiver\nshall not be implemented in situations where it would prevent access by\na Medicaid recipient to a drug which is the only treatment for a\nparticular disease or condition. Under no circumstances shall the\ncommissioner be authorized to waive such provisions with respect to more\nthan two drugs in a given time.\n (d) Where the department and a manufacturer enter into a rebate\nagreement pursuant to this section, which may be in addition to existing\nrebate agreements entered into by the manufacturer with respect to the\nsame drug, no additional rebates shall be required to be paid by the\nmanufacturer to a managed care provider or any of a managed care\nprovider's agents, including but not limited to any pharmacy benefit\nmanager, while the department is collecting the rebate pursuant to this\nsection.\n (e) In formulating a recommendation concerning a target rebate amount\nfor a drug, the drug utilization review board may consider:\n (i) publicly available information relevant to the pricing of the\ndrug;\n (ii) information supplied by the department relevant to the pricing of\nthe drug;\n (iii) information relating to value-based pricing;\n (iv) the seriousness and prevalence of the disease or condition that\nis treated by the drug;\n (v) the extent of utilization of the drug;\n (vi) the effectiveness of the drug in treating the conditions for\nwhich it is prescribed, or in improving a patient's health, quality of\nlife, or overall health outcomes;\n (vii) the likelihood that use of the drug will reduce the need for\nother medical care, including hospitalization;\n (viii) the average wholesale price, wholesale acquisition cost, retail\nprice of the drug, and the cost of the drug to the Medicaid program\nminus rebates received by the state;\n (ix) in the case of generic drugs, the number of pharmaceutical\nmanufacturers that produce the drug;\n (x) whether there are pharmaceutical equivalents to the drug; and\n (xi) information supplied by the manufacturer, if any, explaining the\nrelationship between the pricing of the drug and the cost of development\nof the drug and/or the therapeutic benefit of the drug, or that is\notherwise pertinent to the manufacturer's pricing decision; any such\ninformation provided shall be considered confidential and shall not be\ndisclosed by the drug utilization review board in a form that identifies\na specific manufacturer or prices charged for drugs by such\nmanufacturer.\n 6. (a) If the drug utilization review board recommends a target rebate\namount and the department is unsuccessful in entering into a rebate\nagreement with the manufacturer of the drug satisfactory to the\ndepartment, the drug manufacturer shall in that event be required to\nprovide to the department, on a standard reporting form developed by the\ndepartment, the following information:\n (i) the actual cost of developing, manufacturing, producing (including\nthe cost per dose of production), and distributing the drug;\n (ii) research and development costs of the drug, including payments to\npredecessor entities conducting research and development, such as\nbiotechnology companies, universities and medical schools, and private\nresearch institutions;\n (iii) administrative, marketing, and advertising costs for the drug,\napportioned by marketing activities that are directed to consumers,\nmarketing activities that are directed to prescribers, and the total\ncost of all marketing and advertising that is directed primarily to\nconsumers and prescribers in New York, including but not limited to\nprescriber detailing, copayment discount programs, and\ndirect-to-consumer marketing;\n (iv) the extent of utilization of the drug;\n (v) prices for the drug that are charged to purchasers outside the\nUnited States;\n (vi) prices charged to typical purchasers in the state, including but\nnot limited to pharmacies, pharmacy chains, pharmacy wholesalers, or\nother direct purchasers;\n (vii) the average rebates and discounts provided per payer type in the\nState; and\n (viii) the average profit margin of each drug over the prior five-year\nperiod and the projected profit margin anticipated for such drug.\n (b) All information disclosed pursuant to paragraph (a) of this\nsubdivision shall be considered confidential and shall not be disclosed\nby the department in a form that identifies a specific manufacturer or\nprices charged for drugs by such manufacturer.\n 7. (a) If, after taking into account all rebates and supplemental\nrebates received by the department, including rebates received to date\npursuant to this section, total Medicaid drug expenditures are still\nprojected to exceed the annual growth limitation imposed by subdivision\ntwo of this section, the commissioner of health may: subject drugs to\nprior approval in accordance with existing processes and procedures,\nwhich may include all drugs of a manufacturer that has not entered into\na supplemental rebate agreement required by this section; directing\nmanaged care plans to remove from their Medicaid formularies those drugs\nwith respect to which a manufacturer has failed to enter into a rebate\nagreement required by this section; promoting the use of cost effective\nand clinically appropriate drugs other than those of a manufacturer who\nhas failed to enter into a rebate agreement required by this section;\nallowing manufacturers to accelerate rebate payments under existing\nrebate contracts; and such other actions as authorized by law. The\ncommissioner shall provide written notice to the legislature thirty days\nprior to taking action pursuant to this paragraph, unless action is\nnecessary in the fourth quarter of a fiscal year to prevent total\nMedicaid drug expenditures from exceeding the limitation imposed by\nsubdivision two of this section, in which case such notice to the\nlegislature may be less than thirty days.\n (b) The commissioner shall be authorized to take the actions described\nin paragraph (a) of this subdivision only so long as total Medicaid drug\nexpenditures are projected to exceed the annual growth limitation\nimposed by subdivision two of this section. In addition, no such actions\nshall be deemed to supersede the provisions of paragraph (b) of\nsubdivision three of section two hundred seventy-three of this article\nor the provisions of subdivisions twenty-five and twenty-five-a of\nsection three hundred sixty-four-j of the social services law, except as\nallowed by paragraph (c) of subdivision five of this section; provided\nfurther that nothing in this section shall prevent access by a Medicaid\nrecipient to a drug which is the only treatment for a particular disease\nor condition.\n