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

2. 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. 3 Study Components For This Interim Report n Three issues provide the framework for this 4th quarter interim report: 1.First Health’s implementation of the PDL program including a focus on the prior authorization process for non-preferred drugs 2.The impact of the PDL program on the agency’s budget and whether there is early evidence of continued savings in the pharmacy program 3.Selection of PDL Control Group

4. 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. 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 National Drug Code Hard Edit Date Drug Class Drug Name Preferred Indicator DMAS Claims File National Drug Code Paid/Denied Status Service Dates Recipient Information PDL Claims Analysis File Service Date Hard Edit Date Paid/Denied Status Drug Class Drug Name Preferred Indicator Recipient Information National Drug Code PRE-PDL Claims File Paid claims with date of service 90 days prior to the Hard Edit Date POST-PDL Claims File Paid or denied claims with a service date after the Hard Edit date

6. 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. 7 DMAS Staff Tracked The Movement Of More Than 400,000 Drug Claims Through The PDL System Total Claims 405,539 Non-Preferred Rx 127,279 Preferred Rx 278,260 Change to Preferred Rx 84,308 Approved as Non-Preferred 19,599 No New Claim 23,372 Remained on Preferred Rx 156,020 No New Claim 122,240 Recent Pre-PDL Rx 710 No Claim Found 121,530 Recent Pre-PDL Rx No Claim Found 23,372 Later Refill No Refill Pre-PDL Post-PDL Walk away Claim Not Yet Submitted

8. 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 Pre-PDL Post-PDL Prescription ActivityOutcome Status of Drug Claim 1 Patient was on non-preferred drug Doctor changes prescription to preferred drug Prescription is filledDrug claim paid 2 Patient was on non-preferred drug Prescription written for non- preferred drug and doctor requests PA First Health or DMAS appeals officer approves the non-preferred drug Drug claim paid 3 Patient was on non-preferred drug Doctor requests prior authorization for approval of non-preferred drug Request denied and no prescription filled at time data are analyzed No drug claim found 4 Patient was on non-preferred drug No denial or approval found in systemNo prescription filledNo drug claim found 5 Patient was on preferred drug Prescription written for preferred drug Prescription is filledDrug claim paid 6 Patient was on preferred drug No denial or approval found in systemNo prescription filledNo drug claim found

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

10. 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 Pre-PDL Post-PDL Prescription ActivityOutcome Status of Drug Claim 1 Patient was on non-preferred drug Doctor changes prescription to preferred drug Prescription is filledDrug claim paid 2 Patient was on non-preferred drug Prescription written for non- preferred drug and doctor requests PA First Health or DMAS appeals officer approves the non-preferred drug Drug claim paid 3 Patient was on non-preferred drug Doctor requests prior authorization for approval of non-preferred drug Request denied and no prescription filled at time data are analyzed No drug claim found 4 Patient was on non-preferred drug No denial or approval found in systemNo prescription filledNo drug claim found 5 Patient was on preferred drug Prescription written for preferred drugPrescription is filledDrug claim paid 6 Patient was on preferred drug No denial or approval found in systemNo prescription filledNo drug claim found

11. 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 104,884Total Claims116,278 Last Reporting Period (Ending May 2004) Current Reporting Period (Cumulative Ending September 2004) 81% 89%

12. 12 Using This Method Some Variation In Compliance Rates Across Therapeutic Classes Is Observed (Excluding Persons Originally On Preferred Drugs) 81% 94% 84% 77% 68% 54% 66% Total Cardiac Medications Gastrointestinal Asthma/ Allergy Central Nervous System Anti-Biotics Analgesics Notes: The chi-square value of 9720.59 is significant at a.0001 level of significance. Total Claims 84,30841,402 26,870 24,778 4,308 3,2593,133

13. 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. 14 Three Quarters of Requests for Prior Authorization Have Been Granted TotalJan Prior Authorization Approved Physician Agreed To Change to a Preferred Drug Feb 76% 24% 60% 40% 60% 40% MarApr 71% 29% 79% 21% 77% 23% May n=34,6062,393 79% 20% 82% 16% 80% 17% 80% 17% 5,8255,1944,4303,890 June 3,614 July 2,770 Aug 3,017 Sept 3,890 Denied 1%2%3%

15. 15 Call Center Activity at First Health Remains Level 0 200 400 600 800 1000 1200 1400 1600 1800 2000 2200 2400 2600 2800 Average JanuaryFebruaryMarchAprilMay 188 894 1,755 JuneJulyAugustSeptember Total Issues Addressed Total Calls Calls on Peak Day 1,800 846 198

16. 16 Pharmacists Comprise Growing Portion of Callers To The Center TotalJan Physician Pharmacist FebMarAprMay n=68,5114,6419,9338,9597,8476,370 June 8,113 July 6,580 Aug 7,147 Sept 8,921 Recipient 63%67%73% 72% 54%50%52%49% 33%27%22%23%22% 41%46%45%47%

17. 17 Calls Are Handled Expeditously 0:00:00 0:28:48 0:57:36 1:26:24 1:55:12 2:24:00 2:52:48 3:21:36 3:50:24 JanuaryFebruaryMarchAprilMayJuneJulyAugustSeptember 0:17 2:41 Average Speed to Answer Average Length of Call 0:16 2:18 Average

18. 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. 19 Market Shift Data By Month Go Here Preferred Drugs Non-Preferred Drugs PDL Status 57% 88%87% 78% 61%59%58% 43% 42%41%39% 22% 13% 12% JulyAugSeptOctNovDecJanFebMarAprJun 2003 2004 84%88%89% 88% 12%11% 12%16% July 89% 11% AugSeptOctNovDec Pre-PDL Period Post-PDL Period

20. 20 The Cost Per Script Continues to be Below the Projected Amount Since PDL Implementation $51 $52 $53 $54 $55 $56 $57 $58 $59 $60 $61 $62 Forecasted Cost Per Script Actual Cost Per Script JulyAugSeptOctNovDecJanFebMarAprMay 2003 2004 JunJulyAugSept Pre-PDL Period Post-PDL Period

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

22. 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. 23 Excluded Control Group All Drugs Non-Preferred in Post-Period 6,387 PDL Group All Drugs Preferred in Post-Period 44,570 Several Steps Were Implemented To Identify The PDL Study Group And The Control Group Switched to Preferred Drugs 84,308 Did Not Switch 19,599 Total Claims 103,907 59,829 Some Drugs Preferred, Some Non-Preferred in Post-Period 8,872 Multiple Records (Prescriptions) Per Recipient Single Record Per Recipient

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

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

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

27. 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. 28 2005 Study Report Schedule

29. 29 Conclusions n 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