Date of Adoption: December 7, 2000.

Purpose: To update and clarify MAA's prescription drug program policy to reflect current department practice. The amended sections reflect clearly written and updated policy that is consistent with federal regulations and agency goals.

Citation of Existing Rules Affected by this Order: Amending WAC 388-530-1000, 388-530-1050, 388-530-1100, 388-530-1150, 388-530-1200, 388-530-1250, 388-530-1850, 388-530-1900, 388-530-1950, and 388-530-2050.

Statutory Authority for Adoption: RCW 74.08.090, 74.04.050.

Adopted under notice filed as WSR 00-17-080 on August 14, 2000.

Changes Other than Editing from Proposed to Adopted Version: (Text additions are indicated by underlining and deletions are indicated by strikeouts.)

WAC 388-530-1050:

DESI" or "Less than effective drug" or "DESI" means a drug for which:... (changed order of terms being defined and moved to correct alphabetical order)

"Drug file" means a list of drugs provided to the medical assistance administration's (MAA's) drug data base and maintained by a drug file contractor.

"Drug pricing file contractor," also referred to as "drug pricing file contractor, means the entity which....

"Drug formulary" means a list of MAA-covered outpatient drugs not requiring prior authorization.

"Prior authorization program" means a medical assistance administration (MAA) program, subject to the requirements of 42 U.S.C. 1396r-8 (d)(5), that may require, as condition of payment, that a drug on MAA's drug file be prior authorized.

"Risk/benefit ratio" means the result of assessing the risk of therapy side effects compared to the benefits positive therapeutic outcome of therapy.

"Therapeutic alternative" means a drug product that contains a different therapeutic agent than the drug in question, but is the same pharmacological or therapeutic class and can be expected to have a similar therapeutic effect when administered to patients in a therapeutically equivalent dosage.

"Therapeutically equivalent" means chemically dissimilar prescription drugs with the same efficacy and safety when administered to an individual, as determined by: (1) Information from the FDA; (2) Published and peer-reviewed scientific data; (3) Randomized controlled clinical trials; and (4) Other scientific evidence.

WAC 388-550-1100:

(1) …Covered drugs and supplies include:

(b) Over-the-counter (OTC) drugs when the drug is:

(i) Is a less costly therapeutic alternative; and

(ii) Formulary Does not require prior authorization.

(c) Nonformulary drugs Drugs requiring prior authorization when: …

(ii) They meet MAA's published expedited prior authorization criteria and follow the process described defined in WAC 388-530-1250(4) 1050.

(2) MAA determines if certain drugs are medically necessary and covered with or without…

WAC 388-530-1150:

(1)(c) The medical assistance administration (MAA) does not cover: … (c) OTC drugs/supplies, unless approved for formulary use, described under WAC 388-530-1100 (1)(b), or for family planning as described under chapter 388-532 WAC.

(1)(e) A drug prescribed for an indication that is not medically accepted evidence based as determined by:

(1)(h)(ii) Prescribed for non-FDA approved indications or dosing unless prior authorized; or

WAC 388-530-1200:

Drug formulary. Prior authorization program.

(1) The medical assistance administration (MAA) pharmacy research specialist, medical consultants, and an advisory board evaluate drugs for formulary inclusion, MAA's drug utilization review team evaluate drugs to determine prior authorization status on the drug file, and may consult with the Drug Utilization and Education (DUE) Council, and/or participating MAA providers.

(2) To request consideration to include a drug product in MAA's drug formulary, a drug manufacturer must send the To facilitate the evaluation process for a drug product, a drug manufacturer may send the pharmacy research specialist a written request and the following supporting documentation:

(3) The criteria used to determine whether to include or exclude a drug from MAA's formulary include, but are not limited to, an evaluation of whether: Evaluation of a drug includes, but is not limited to, the following criteria:

(a) There is a federal drug rebate contract agreement signed by the manufacturer;

(b) There are like drugs already on the formulary The drug is a less-than-effective drug;

(c) The drug has a favorable risk/benefit ratio;

(d) The drug is a less-than-effective drug The drug file status of:

(i) Like drugs; and

(ii) Less costly therapeutic alternative drugs;

(a) The drug falls into one of the categories authorized by federal law to be excluded from coverage; and

(f) There are less costly therapeutic alternative drugs already on the formulary; and The drug has a potential for abuse.

(g) The drug has a potential for abuse.

(4) MAA does not require prior approval for drug preparations listed in the MAA drug formulary. MAA updates and reviews the formulary list drug file list as necessary, and publishes the list periodically publishes a list of drugs not requiring prior authorization.

(5) Manufacturers may seek review of formulary decisions the drug file status by writing to the MAA medical director.

WAC 388-530-1250:

Prior authorization process.

(1)(a) MAA requires pharmacies to obtain prior authorization for: (a) Nonformulary drugs; Drugs with a prior authorization indicator on the drug file;

(6) MAA provides a response to a request pays for drugs requiring prior authorization by telephone or other telecommunication device within twenty-four hours if the request is received during normal state business hours. If a provider needs prior authorization to dispense a drug during a weekend or Washington state holiday, the provider may dispense the drug that are dispensed without prior authorization only when:

(a) Given in an emergency;

(b) MAA receives justification within seventy-two hours of the fill date, excluding weekends and Washington state holidays; and

(c) MAA agrees with the justification and approves the request.

WAC 388-530-1850:

Drug Utilization and Education (DUE) Council.

MAA establishes a Drug Utilization and Education (DUE) Council (DUEC) and determines membership rotations.

(1) The DUEC DUE Council must:

(2) The DUEC DUE Council meets periodically to:

Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.

Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.

Number of Sections Adopted on the Agency's Own Initiative: New 0, Amended 10, Repealed 0.

Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 10, Repealed 0.

Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 10, Repealed 0. Effective Date of Rule: Thirty-one days after filing.

December 7, 2000

Marie Myerchin-Redifer, Manager

Rules and Policies Assistance Unit

(4) The pharmacy shall bill the department and its clients according to WAC 388-87-010 and 388-87-015)) and pharmaceutical supplies according to department rules and subject to the exceptions and restrictions listed in this chapter.

(2) MAA reimburses only pharmacies that are MAA-enrolled providers and meet the general requirements for providers described under WAC 388-502-0020.

(3) Prescription drugs must be:

(a) Medically necessary as defined in WAC 388-500-0005;

(b) Billed according to the conditions under WAC 388-502-0150 and 388-502-0160; and

(c) Within the scope of an eligible client's medical care program. Refer to chapter 388-529 WAC.

(4) Acceptance and filling of a prescription for a client eligible for a medical care program constitutes acceptance of MAA's rules and fees. See WAC 388-502-0100 for general conditions of payment.

[Statutory Authority: RCW 74.08.090. 96-21-031, 388-530-1000, filed 10/9/96, effective 11/9/96.]

"Actual acquisition cost (AAC)" means the actual price a provider paid for a drug marketed((,)) in the package size of drug purchased, or sold by a particular manufacturer or labeler. Actual acquisition cost ((shall be)) is calculated based on factors ((such as)) including, but not limited to:

(((a))) (1) Invoice price, including other invoice-based considerations;

(((b))) (2) Order quantity and periodic purchase volume discount policies of suppliers (wholesalers and/or manufacturers);

(((c))) (3) Membership/participation in purchasing cooperatives;

(((d))) (4) Advertising and other promotion/display allowances, free merchandise deals; and

(((e))) (5) Transportation or freight allowances.

(((2))) "Administer" means the direct application of a ((legend)) prescription drug ((whether)) by injection, inhalation, ingestion, or any other means, to the body of a patient ((or research subject)) by a practitioner, or ((to the patient or research subject)) at the direction of the practitioner.

(((3) "Authorized prescriber" means a physician, osteopath, osteopathic physician/surgeon, dentist, nurse, physician assistant, optometrist, pharmacist, or other person duly authorized by law or rule in the state of Washington to prescribe drugs. See WAC 246-863-100 for pharmacists.

(4))) "Automated maximum allowable cost (AMAC)" means the ((cost)) rate established for all multiple-source drugs designated by three or more products at least one of which must be under a federal drug rebate contract and which are not on the maximum allowable cost (MAC) list.

(((5))) "Average wholesale price (AWP)" means the average price of a drug product from wholesalers nationwide at a point in time. ((MAA determines AWP as reported by a drug pricing file contractor.

(6) "Brand name" means the proprietary or trade name selected by the manufacturer and placed upon a drug, its container, label or wrapping at the time of packaging.

(7) "Bulk drug delivery system" means the method in which the prescribed amount of a drug product is packaged and dispensed to the patient in one bulk container.

(8))) "Compendia of drug information" includes the following:

(1) The American Hospital Formulary Service Drug Information;

(2) The United States Pharmacopeia Drug Information; and

(3) DRUGDEX Information System.

"Compounding" ((is the professional practice)) means the act of combining two or more ((drugs, as defined in subsection (20)(a) and (b) of this section,)) active ingredients or adjusting therapeutic strengths in the preparation of a prescription.

(((9))) "Contract drugs" ((are)) means drugs manufactured or distributed by manufacturers/labelers who signed a drug rebate agreement with the federal Department of Health and Human Services (DHHS).

(((10) "Controlled substance" means a drug or substance, or an immediate precursor of such drug or substance, as designated by chapter 69.50 RCW.

(11) "Covered outpatient drug" means a drug approved for safety and effectiveness as a prescription drug under the federal Food, Drug, and Cosmetic Act, which is used for a medically accepted indication, and is not subject to the exceptions under WAC 388-530-1150, Noncovered drugs and pharmaceutical supplies.

(12))) "Deliver or delivery" means the ((actual, constructive, or attempted)) transfer of a drug or device from one person to another ((of a drug or device whether or not there is an agency relationship)).

(((13))) "Department" means the department of social and health services (DSHS).

(((14) "DESI" or "less than effective drugs" are drugs for which:

(a) Effective approval of the drug application has been withdrawn by the Food and Drug Administration (FDA) for safety or efficacy reasons as a result of the drug efficacy study implementation (DESI) review; or

(b) The secretary of the department of health and human services (DHHS) has issued a notice of an opportunity for a hearing under section 505(e) of the federal Food, Drug, and Cosmetic Act on a proposed order of the secretary to withdraw approval of an application for such drug under such section because the secretary has determined the drug is less than effective for some or all conditions of use prescribed, recommended, or suggested in its labeling.

(15) "Device" means instruments, apparatus, and contrivances, including their components, parts and accessories, intended:

(a) For use in the diagnosis, cure, mitigation, treatment, or prevention of human disease; or

(b) To affect the human structure or any human function.

(16) "Dispense" means the interpretation of a prescription or order for a legend drug and, pursuant to that prescription or order, the proper selection, measuring, compounding, labeling, or packaging necessary to prepare that prescription or order for delivery.

(17))) "Dispense as written (DAW)" means an instruction to the pharmacist forbidding substitution of a generic drug or a therapeutically equivalent product for the specific drug product prescribed.

(((18))) "Dispensing fee" means the fee ((the department)) MAA sets to reimburse pharmacy providers in addition to ingredient costs, for ((provider administrative costs estimated by the department and, including)) expenses that include but are not limited to, information provided to the client as required by state laws and federal regulations, compounding time, and overhead expenses incurred in filling medical assistance prescriptions.

(((19) "Distribute" means to deliver other than by administering or dispensing a legend drug.

(20) "Double-blind drug study" is a randomized trial in which a single patient undergoes a series of pairs of treatments, consisting of one active and one placebo per pair, with the order determined by random allocation. Appropriate treatment targets (signs, symptoms, or laboratory tests) are used as the measure of efficacy, and the trial is continued until efficacy is established or disproved.

(21) "Drug" means a substance:

(a) Recognized as a drug in the official United States pharmacopoeia, official homeopathic pharmacopoeia of the United States, or official national formulary, or any supplement to any of the above publications;

(b) Intended for use in the diagnosis, cure, mitigation, treatment, or prevention of human disease;

(c) (Other than food, minerals, or vitamins) intended to affect the structure or any function of the human body; and

(d) Intended for use as a component of any article specified in clause (a), (b) or (c) of this subsection, excluding devices or their components, parts or accessories.

(22) "Drug formulary" means a list of outpatient drugs not requiring prior authorization except as listed in 388-530-1250(2), as developed by an appropriate committee or the drug use review (DUR) board.

(23))) "Drug file" means a list of drugs provided to the medical assistance administration's (MAA's) drug data base and maintained by a drug file contractor.

"Drug ((pricing)) file contractor" also referred to as "drug pricing file contractor," means the entity which has contracted to provide ((the department)) MAA, at specified intervals, the latest information and/or ((database)) data base on drugs and related supplies produced, prepared, processed, packaged, labeled, distributed, marketed, or sold in the marketplace. Contractor-provided information includes, but is not limited to, identifying characteristics of the drug (national drug code, drug name, manufacturer/labeler, dosage form, and strength) for the purpose of identifying and facilitating payment for ((the)) drugs billed to MAA.

(((24))) "Drug rebates" means payments provided by pharmaceutical manufacturers to state Medicaid programs under the terms of the manufacturers' agreements with the Department of Health and Human Services.

(((25))) "Drug-related supplies" means nonpharmaceutical items necessary for administration or delivery of a drug.

(((26))) "Drug ((use)) utilization review (DUR) ((program))" means a quality ((assurance program)) review for covered outpatient drugs ((which)) that assures ((that)) prescriptions are appropriate, ((are)) medically necessary, and ((are)) not likely to result in adverse medical outcomes.

(((27))) "Emergency kit" means a set of limited pharmaceuticals furnished to a nursing facility by the ((primary)) pharmacy ((which)) that provides prescription dispensing services to that facility. Each kit is specifically set up to meet the ((individual)) emergency needs of ((each)) an individual nursing facility.

(((28))) "Estimated acquisition cost (EAC)" means ((the department's best)) MAA's estimate of the price providers generally and currently pay for a drug marketed or sold by a particular manufacturer or labeler ((in the package size most frequently purchased by providers)).

(((29))) "Expedited prior authorization" means the process for authorizing selected drugs in which providers use a set of numeric codes to indicate to ((the department which)) MAA the acceptable indications/conditions/diagnoses/criteria that are applicable to a particular request for drug authorization.

(((30))) "Experimental drugs" means drugs the FDA has not approved, or approved drugs when used for medical indications other than those listed by the FDA.

(((31))) "Federal upper limit (FUL)" means the maximum allowable payment set by the Health Care Financing Administration (HCFA) for a multiple source drug.

(((32) "Formulary" means a drug formulary. See subsection (22) of this section for a definition of drug formulary.

(33) "Generic code number" means a number MAA uses regardless of manufacturer or package size to identify the generic formulation of a drug.

(34) "Generic name" means the official title of a drug or drug ingredients published in the latest edition of a nationally recognized pharmacopoeia or formulary.

(35))) "Ingredient cost" means the portion of a prescription's cost attributable to the drug ingredients, chemical components, and/or substances.

(((36) "Label" means a display of written, printed or graphic matter upon the immediate container of any article.

(37) "Labeling" means all labels and other written, printed, or graphic matter:

(a) Upon any article or any of its containers or wrappers; or

(b) Accompanying such article.

(38) "Legend or prescription drugs" means any drugs required by any applicable federal or state law or regulation to be dispensed by prescription only or which are restricted to use by practitioners only.

(39))) "Less than effective drug" or "DESI" means a drug for which:

(1) Effective approval of the drug application has been withdrawn by the Food and Drug Administration (FDA) for safety or efficacy reasons as a result of the drug efficacy study implementation (DESI) review; or

(2) The secretary of the department of health and human services (DHHS) has issued a notice of an opportunity for a hearing under section 505(e) of the federal Food, Drug, and Cosmetic Act on a proposed order of the secretary to withdraw approval of an application for such drug under such section because the secretary has determined the drug is less than effective for some or all conditions of use prescribed, recommended, or suggested in its labeling.

"Long-term therapy" means treatment a client receives or will receive continuously through and beyond ninety days.

(((40) "Manufacture" means:

(a) The production, preparation, propagation, compounding, or processing of a drug or other substance or device; or

(b) The packaging or repackaging of such substance or device; or

(c) The labeling or relabeling of the commercial container of such substance or device.

"Manufacture" does not include the activities of a practitioner who, as an incident to the practitioner's administration or dispensing such substance or device in the course of professional practice, prepares, compounds, packages, or labels such substance or device.

(41) "Manufacturer" means a person, corporation, or other entity engaged in the manufacture of drugs or devices.

(42))) "Maximum allowable cost (MAC)" means the maximum amount that MAA will pay for a specific dosage form and strength of a multiple source drug product.

(((43))) "Medically accepted indication" means any indicated use for a covered outpatient drug:

(1) Approved under the federal Food, Drug, and Cosmetic Act((,));

(2) Which appears in peer-reviewed medical literature; or

(3) Which is accepted by one or more of((:

(a) The American Hospital Formulary Service Drug Information;

(b) The American Medical Association Drug Evaluations; or

(c) The United States Pharmacopoeia Drug Information)) the references listed in the compendia of drug information.

(((44) "Medicine cart system" is a patient-specific set of pharmaceuticals prearranged in a medicine cart, for administration over a specified time period.

(45))) "Modified unit dose delivery system" (also known as blister packs((,)) or "bingo/punch cards") means a method in which each patient's medication is delivered to a nursing facility:

(((a))) (1) In individually sealed, single dose packages or "blisters((;"

(b) Usually on one card; and

(c)))"; and

(2) In quantities for one month's supply, unless the prescriber specifies short-term therapy.

(((46))) "Multiple-source drug" means a drug marketed or sold by:

(((a))) (1) Two or more manufacturers or labelers; or

(((b))) (2) The same manufacturer or labeler:

(((i) Under two or more different proprietary names; or

(ii) Both under a proprietary name and without such a name.

(47))) (a) Under two or more different proprietary names; or

(b) Under a proprietary name and a generic name.

"National drug code (NDC)" means the eleven-digit number the manufacturer or labeler assigns to a pharmaceutical product and attaches to the product container at the time of packaging ((which)) that identifies the product's manufacturer, dose form and strength, and package size.

(((48))) "Noncontract drugs" are drugs manufactured or distributed by manufacturers/labelers who have not signed a drug rebate agreement with the federal Department of Health and Human Services.

(((49))) "((Nonlegend or)) Nonprescription drugs" means ((any)) drugs ((which)) that may be lawfully sold without a prescription.

(((50) "Nursing home pharmacy" means a pharmacy serving primarily clients residing in nursing facilities.

(51))) "Obsolete NDC" means a national drug code replaced or discontinued by the manufacturer or labeler.

(((52) "On-line receipt of claims" means claims information received from a switching vender in a National Council for Prescription Data Processing-approved format.

(53) "Outpatient pharmacy" means a pharmacy serving primarily outpatient clients.

(54))) "Over-the-counter (OTC) drugs" means drugs that do not require a prescription before they can be dispensed.

(((55))) "Pharmacist" means a person ((duly)) licensed in the practice of pharmacy by the ((Washington State Board of Pharmacy to engage in the practice of pharmacy)) state in which the prescription is filled.

(((56) "Pharmacist consultant")) "Pharmacy research specialist" means a ((registered)) licensed pharmacist employed by MAA.

(((57))) "Pharmacy" means every ((site, properly)) location licensed by the ((Washington)) State Board of Pharmacy((, in which)) in the state where the practice of pharmacy is conducted.

(((58))) "Point-of-sale (POS)" means a pharmacy claims processing system capable of receiving and adjudicating claims on-line.

(((59))) "Practice of pharmacy" means the practice of and responsibility for:

(((a))) (1) Accurately interpreting prescription orders;

(((b))) (2) Compounding, dispensing, labeling, administering, and distributing of drugs and devices;

(((c))) (3) Providing drug information to the client that includes, but is not limited to, the advising of therapeutic values, hazards, and the uses of drugs and devices;

(4) Monitoring of drug therapy and use;

(((d))) (5) Proper and safe storage of drugs and devices;

(6) Documenting and maintaining records;

(7) Initiating or modifying ((of)) drug therapy in accordance with written guidelines or protocols previously established and approved for a pharmacist's practice by a practitioner authorized to prescribe drugs;

(((e))) and

(8) Participating in drug utilization reviews ((and drug product selection;

(f) Proper and safe storing and distribution of drugs and devices and maintenance of proper records thereof; and

(g) Providing legend drug information which includes, but is not limited to, the advising of therapeutic values, hazards, and the uses of drugs and devices)).

(((60))) "Practitioner" means ((one)) an individual who has met the professional and legal requirements necessary to provide a health care service, such as a physician, nurse, dentist, physical therapist, pharmacist or other person ((duly)) authorized by ((Washington)) state law as a practitioner.

(((61))) "Prescriber" means a physician, osteopathic physician/surgeon, dentist, nurse, physician assistant, optometrist, pharmacist, or other person authorized by law or rule to prescribe drugs. See WAC 246-863-100 for pharmacists' prescriptive authority.

"Prescription" means an order for drugs or devices issued by a practitioner ((duly)) authorized by ((Washington)) state law or rule to prescribe drugs or devices in the course of the practitioner's professional practice for a legitimate medical purpose.

(((62))) "Prescription drugs" means drugs required by any applicable federal or state law or regulation to be dispensed by prescription only or that are restricted to use by practitioners only.

"Prior authorization program" means a medical assistance administration (MAA) program, subject to the requirements of 42 U.S.C. 1396r-8 (d)(5), that may require, as condition of payment, that a drug on MAA's drug file be prior authorized. See WAC 388-530-1200.

"Prospective drug ((use)) utilization review (Pro-DUR)" means a process in which a request for a drug product for a particular patient is screened, before the product is dispensed, for potential drug therapy problems.

(((63))) "Reconstitution" means the process of returning a ((substance)) single active ingredient, previously altered for preservation and storage, to its approximate original state.

(((64))) "Retrospective drug ((use)) utilization review (Retro-DUR)" ((is)) means the process in which patient drug ((use)) utilization is reviewed on a periodic basis to identify patterns of fraud, abuse, gross overuse, or inappropriate or unnecessary care.

(((65))) "Risk/benefit ratio" means the result of assessing the side effects compared to the positive therapeutic outcome of therapy.

"Single source drug" means a drug produced or distributed under an original new drug application approved by the FDA((, including a drug product marketed by any cross-licensed producers or distributors operating under the new drug application)).

(((66) "Standard package size" means MAA's designated standard package or container size for a drug dosage form and/or strength for reimbursement purposes.

(67))) "Substitute" means to ((dispense)) replace, with the prescriber's authorization:

(((a) With the practitioner's authorization, a therapeutically)) (1) An equivalent generic drug product of the identical base or salt as the specific drug product prescribed; or

(((b) With the practitioner's prior consent,)) (2) A therapeutically equivalent drug((s)) other than the identical base or salt.

(((68))) "Terminated drug product" ((is)) means a product ((whose)) for which the shelf life expiration date has been met, per manufacturer notification.

(((69))) "Therapeutic alternative" means a drug product that contains a different therapeutic agent than the drug in question, but is the same pharmacological or therapeutic class and can be expected to have a similar therapeutic effect when administered to patients in a therapeutically equivalent dosage.

"Therapeutically equivalent" means ((of essentially)) chemically dissimilar prescription drugs with the same efficacy ((and toxicity)) and safety when administered to an individual ((in the same dosage regimen)), as determined by:

(1) Information from the FDA;

(2) Published and peer-reviewed scientific data;

(3) Randomized controlled clinical trials; and

(4) Other scientific evidence.

(((70))) "Tiered dispensing fee system" means a ((method)) system of paying pharmacies different dispensing fee rates, based on the individual pharmacy's total annual prescription volume and/or drug delivery system used.

(((71))) "True unit dose delivery" means a ((drug delivery system)) method in which each patient's medication is delivered to the nursing facility in quantities sufficient only for the day's required dosage. ((If a medication cart system is used, the pharmacy may deliver the medication cart to the nursing facility every other day, and provide for daily service as needed.

(72))) "Unit dose drug delivery ((systems))" means true unit ((and)) dose or modified unit dose ((or blister packs, also known as "bingo" or punch cards)) delivery systems.

(((73))) "Usual and customary charge" means the ((amount)) fee that the provider typically charges the general public for the product or service((. For any given product, the amount charged by the pharmacy to fifty percent or more of its non-Medicaid clients shall be deemed its usual and customary charge.

(74) "Wholesaler" means a corporation, individual, or other entity which buys drugs or devices for resale and distributes the drugs or devices to corporations, individuals, or entities other than consumers)).

[Statutory Authority: RCW 74.08.090. 96-21-031, 388-530-1050, filed 10/9/96, effective 11/9/96.]

(9) Drugs and supplies administered or provided under unusual and extenuating circumstances to clients by authorized providers who request and receive department approval. The secretary or secretary's designee shall review such requests on a case-by-case basis)) (1) The medical assistance administration (MAA) covers medically necessary prescribed drugs and pharmaceutical supplies, subject to the restrictions described in this section and other published WAC, except for those excluded under WAC 388-530-1150. MAA reimburses a provider for drugs listed in subsection (1)(a) through (e) of this section only when the manufacturer has a signed rebate agreement with the federal Department of Health and Human Services. Refer to WAC 388-530-1125 for information on the drug rebate program. Covered drugs and supplies include:

(a) Outpatient drugs, generic or brand name.

(b) Over-the-counter (OTC) drugs when the drug:

(i) Is a less costly therapeutic alternative; and

(ii) Does not require prior authorization.

(c) Drugs requiring prior authorization when:

(i) Prior authorized by MAA; or

(ii) They meet MAA's published expedited prior authorization criteria and follow the process defined in WAC 388-530-1050.

(d) Oral, topical and/or injectable drugs, vaccines for immunizations, and biologicals, prepared or packaged for individual use.

(e) Drugs with obsolete national drug codes (NDCs) for up to two years from the date the NDC is designated obsolete, if the drug is not a terminated drug product as defined in WAC 388-530-1050.

(f) Drug-related supplies as determined in consultation with federal guidelines.

(g) Family planning supplies used in conjunction with family planning under chapter 388-532 WAC, including nonprescribed OTC supplies.

(h) Drugs and supplies provided under unusual and extenuating circumstances to clients by providers who request and receive MAA approval.

(2) MAA determines if certain drugs are medically necessary and covered with or without restrictions based on evidence contained in compendia of drug information and/or peer-reviewed medical literature.

(a) Decisions regarding restrictions are based on, but are not limited to:

(i) Client safety;

(ii) FDA-approved indications;

(iii) Quantity;

(iv) Client age and/or gender; and

(v) Cost.

(b) Restrictions apply to, but are not limited to:

(i) Drugs covered in the nursing facility per diem rate;

(ii) Number of refills within a calendar month; and

(iii) Refills requested before seventy-five percent of the therapy days' supply has elapsed.

[Statutory Authority: RCW 74.08.090. 96-21-031, 388-530-1100, filed 10/9/96, effective 11/9/96.]

(18) Terminated drug products))

(1) The medical assistance administration (MAA) does not cover:

(a) Noncontract drugs, brand or generic, when the manufacturer has not signed a rebate agreement with the federal Department of Health and Human Services. Refer to WAC 388-530-1125 for information on the drug rebate program.

(b) A drug prescribed:

(i) For weight loss or gain;

(ii) For infertility, frigidity, impotency, or sexual dysfunction;

(iii) For cosmetic purposes or hair growth; or

(iv) To promote smoking cessation.

(c) OTC drugs/supplies, unless described under WAC 388-530-1100 (1)(b), or for family planning as described under chapter 388-532 WAC.

(d) Prescription vitamins and mineral products, except:

(i) When prescribed for clinically documented deficiencies;

(ii) Prenatal vitamins only when prescribed and dispensed to pregnant women; or

(iii) Fluoride preparations for children under the early and periodic screening, diagnosis, and treatment (EPSDT or "healthy kids") services.

(e) A drug prescribed for an indication that is not evidence based as determined by:

(i) MAA in consultation with federal guidelines; or

(ii) The Drug Utilization and Education (DUE) Council; and

(iii) MAA medical consultants and pharmacy research specialist.

(f) Drugs listed in the federal register as "less-than-effective" ("DESI" drugs) or which are identical, similar, or related to such drugs.

(g) Outpatient drugs for which the manufacturer seeks to require as a condition of sale that associated tests or monitoring services be purchased exclusively from the manufacturer or manufacturer's designee.

(h) Drugs that are:

(i) Not approved by the FDA; or

(ii) Prescribed for non-FDA approved indications or dosing unless prior authorized; or

(iii) Unproven for efficacy or safety.

(i) Drugs requiring prior authorization for which MAA authorization has been denied.

(j) Preservatives, flavoring and/or coloring agents.

(k) Less than a one-month supply of drugs for long-term therapy.

(l) A drug with an obsolete NDC more than two years from the date the NDC is designated obsolete.

(m) Products or items that do not have an eleven-digit NDC.

(2) MAA does not reimburse enrolled providers for:

(a) Outpatient drugs, biological products, insulin, supplies, appliances, and equipment included in other reimbursement methods including, but not limited to:

(i) Diagnosis-related group (DRG);

(ii) Ratio of costs-to-charges (RCC);

(iii) Nursing facility per diem;

(iv) Managed care capitation rates;

(v) Block grants; or

(vi) Drugs prescribed for clients who are on the MAA hospice program when the drugs are related to the terminal condition.

(b) Any drug regularly supplied as an integral part of program activity by other public agencies.

(c) Prescriptions written on pre-signed prescription blanks filled out by nursing facility operators or pharmacists. MAA may terminate the core provider agreement of pharmacies involved in this practice.

(d) Drugs used to replace those taken from nursing facility emergency kits.

(e) Drugs used to replace a physician's stock supply.

(f) Free pharmaceutical samples.

(g) Terminated drug products.

(3) MAA evaluates a request for a drug that is listed as noncovered in this section under the provisions of WAC 388-501-0160 which relates to noncovered services. The request for a noncovered drug is called exception to rule. See WAC 388-501-0160 for information about exception to rule.

[Statutory Authority: RCW 74.08.090. 96-21-031, 388-530-1150, filed 10/9/96, effective 11/9/96.]

(b) MAA shall update the formulary list as necessary and shall publish the list periodically)) pharmacy research specialist, medical consultants, and drug utilization review team evaluate drugs to determine prior authorization status on the drug file, and may consult with the Drug Utilization and Education (DUE) Council, and participating MAA providers.

(2) To ((request inclusion of)) facilitate the evaluation process for a drug product ((in MAA's drug formulary)), a drug manufacturer ((shall)) may send ((to)) the ((pharmacist consultant)) pharmacy research specialist a written request and the following supporting documentation:

(a) Background data about the drug ((as requested by MAA));

(b) Product package information ((as requested by MAA));

(c) Any pertinent clinical studies; and

(d) Any additional information the manufacturer ((feels)) considers appropriate.

(3) ((MAA's pharmacist consultants and an advisory board shall evaluate drugs for formulary inclusion. The consultants and board may include MAA's medical consultants, the drug utilization and education council (DUEC), and/or participating MAA pharmacy providers.

(4) The criteria for evaluating whether to include or exclude a drug from MAA's formulary include, but are not limited to the following:

(a) The manufacturer has signed a federal drug rebate contract agreement;

(b) Like drugs are already on the formulary;

(c) The drug is a less-than-effective drug, or is identical, similar, or related to a less-than-effective drug;

(d) The drug falls into one of the categories authorized by federal law to be excluded from coverage;

(e) There are already less costly therapeutic alternatives in the formulary; and

(f) The drug has a potential for abuse.

(5) The MAA shall determine whether a drug should be covered with or without restrictions in a manner similar to how formulary status is determined.

(6) The department shall ensure decisions made in subsections (3) and (5) of this section are subject to review by the MAA assistant secretary or his/her designee. Manufacturers may seek review of adverse decisions by writing to the medical director.

(7) The department may require double blind drug studies to be performed when there is a question of medical necessity or efficacy and the medical literature on the issue is inconclusive. MAA may use the double blind study when:

(a) Considering addition or deletion of a drug to the formulary;

(b) Evaluating the relative merits of two drugs for general use or for a specific individual;

(c) Evaluating requests for prior authorization; or

(d) For whatever purpose the department deems necessary)) Evaluation of a drug includes, but is not limited to, the following criteria:

(a) There is a federal drug rebate contract agreement signed by the manufacturer;

(b) The drug is a less-than-effective drug;

(c) The drug has a favorable risk/benefit ratio;

(d) The drug file status of:

(i) Like drugs; and

(ii) Less costly therapeutic alternative drugs;

(e) The drug falls into one of the categories authorized by federal law to be excluded from coverage; and

(f) The drug has a potential for abuse.

(4) MAA updates and reviews the drug file list as necessary and periodically publishes a list of drugs not requiring prior authorization.

(5) Manufacturers may seek review of formulary decisions by writing to the MAA medical director.

[Statutory Authority: RCW 74.08.090. 96-21-031, 388-530-1200, filed 10/9/96, effective 11/9/96.]

(6) The department)) MAA requires pharmacies to obtain prior authorization for:

(a) Drugs with a prior authorization indicator on the drug file;

(b) Drugs that have specific per-month dose or unit limits as indicated by the FDA; and

(c) Additional fills in a calendar month for drugs dispensed for a less than thirty-four day supply when:

(i) Two fills for the same prescription have been dispensed, except for:

(A) Compounded prescriptions;

(B) OTC contraceptives; or

(C) Drugs prescribed to a suicidal patient or a patient at risk for potential drug abuse; or

(ii) Four fills in the same calendar month for the same prescription have been dispensed for any of the following:

(A) Antibiotics;

(B) Anti-asthmatics;

(C) Schedule II and III drugs;

(D) Antineoplastic agents;

(E) Topical preparations; or

(F) Propoxyphene, propoxyphene napsylate, and all propoxyphene combinations.

(2) The pharmacy provider must make a request to MAA for a drug requiring prior authorization before dispensing the drug. The pharmacy provider must:

(a) Ensure the request states the medical diagnosis and includes medical justification for the drug; and

(b) Keep on file the medical justification communicated to the pharmacy by the prescriber.

(3) MAA evaluates a request for prior authorization based on, but not limited to:

(a) Requirements in this section;

(b) Requirements under WAC 388-530-1000, 388-530-1150, and 388-501-0165; and

(c) The least costly alternative between two or more preparations of equal effectiveness.

(4) MAA authorizes certain prescribed drugs through a process called "expedited prior authorization." MAA determines which drugs can be authorized through the expedited prior authorization process by establishing specific utilization criteria which include, but are not limited to:

(a) High cost;

(b) Potential for clinical misuse;

(c) Narrow therapeutic indication; and

(d) Safety.

(5) MAA may authorize reimbursement at the brand name estimated acquisition cost (EAC) for a brand name multiple-source drug that would have been reimbursed at the ((established upper limit)) maximum allowable cost (MAC) for that multiple-source drug, if:

(a) The pharmacist calls for prior authorization; and

(b) The prescriber ((writes)) indicates:

(i) "Dispense as written" ((on)) for the prescription ((form, or certifies in the prescriber's own handwriting)); and

(ii) That a specific brand is "medically necessary" for a particular client; or

(c) The availability of generics in the marketplace is severely curtailed and the price disparity between the brand name EAC and the generic ((maximum allowable cost ())MAC(())) is such that clients would ((be effectively)) be denied the medication.

(((7) The department may pay))

(6) MAA provides a response to a request for drugs requiring prior authorization ((which are dispensed)) by telephone or other telecommunication device within twenty-four hours if the request is received during normal state business hours. If a provider needs prior authorization to dispense a drug during a weekend or Washington state holiday, the provider may dispense the drug without prior authorization only when:

(a) Given in an ((acute)) emergency;

(b) ((The department)) MAA receives justification within seventy-two hours of the fill date, excluding weekends and Washington state holidays; and

(c) ((The department)) MAA agrees with the justification and approves the request.

(((8) The pharmacy shall obtain prior authorization from the department for any and all prescription fills in excess of the limits specified under WAC 388-530-1800, Requirements for pharmacy claim payment.

(9) The department shall ensure))

(7) MAA's prior authorization:

(a) Is limited to a decision of medical appropriateness for a drug; and

(b) ((Shall)) Does not guarantee payment.

[Statutory Authority: RCW 74.08.090. 96-21-031, 388-530-1250, filed 10/9/96, effective 11/9/96.]

(1) The DUE council must:

(a) Have a minimum of eight and a maximum of ten members, representing ((the state professional associations of medicine, pharmacy, and nursing. The board shall:

(a))) actively practicing health care professionals who have recognized knowledge and expertise in one or more of the following:

(i) The clinically appropriate prescribing of covered outpatient drugs;

(ii) The clinically appropriate dispensing and monitoring of covered outpatient drugs;

(iii) Drug use review, evaluation, and intervention;

(iv) Medical quality assurance; and

(v) Disease state management.

(b) Be made up of at least one-third but not more than fifty-one percent physicians, and at least one-third but not more than fifty-one percent pharmacists; and

(((b))) (c) Include an advanced registered nurse practitioner and a physicians assistant((. The department shall determine membership rotation)).

(2) ((Meet)) The DUE council meets periodically to:

(a) Advise ((the department on DUR)) MAA on drug utilization review activities;

(b) Review provider and patient profiles;

(c) Recommend adoption of standards and treatment guidelines for drug therapy;

(d) Provide interventions targeted toward therapy problems; and

(e) Produce an annual report.

[Statutory Authority: RCW 74.08.090. 96-21-031, 388-530-1850, filed 10/9/96, effective 11/9/96.]

(((1))) (a) A prospective drug ((use)) utilization review (Pro-DUR)((, wherein)) that requires all ((prescription drug)) pharmacy providers ((shall)) to:

(((a))) (i) Obtain ((a)) patient ((history)) allergies, idiosyncracies, or chronic condition which may relate to drug utilization. See WAC 246-875-020 (1)(h)(i);

(((b))) (ii) Screen for potential drug therapy problems; and

(((c))) (iii) Counsel the patient in accordance with existing state pharmacy laws and federal regulations((.

(2))); and

(b) A retrospective drug ((use)) utilization review (Retro-DUR), ((wherein the department shall provide)) in which MAA provides for the ongoing periodic examination of claims data and other records in order to identify patterns of fraud, abuse, gross overuse, or inappropriate or medically unnecessary care among physicians, pharmacists, and individuals receiving benefits.

(2) MAA performs a periodic sampling of claims to determine if drugs are appropriately dispensed and billed. If a review of the sample finds that a provider is inappropriately dispensing or billing for drugs, MAA may implement corrective action that includes, but is not limited to:

(a) Educating the provider regarding the problem practice(s);

(b) Recouping the payment for the drug; and/or

(c) Terminating the provider's core provider agreement.

[Statutory Authority: RCW 74.08.090. 96-21-031, 388-530-1900, filed 10/9/96, effective 11/9/96.]

(2) ((MAA shall ensure)) All pharmacy drug claims processed through the POS system undergo a system-facilitated prospective drug utilization review (Pro-DUR) screening((. The system-facilitated Pro-DUR screening shall be performed by the MAA POS computer system at the time a drug claim is received and shall be intended)) as a complement to the Pro-DUR screening required of pharmacists.

(3) ((For the purposes of this section, the following definition applies: "MAA-approved)) MAA selects national council for prescription data processing (NCPDP) codes((" means those NCPDP codes appearing in the MAA prescription drug program billing instructions which MAA has approved)) for pharmacy provider use in overriding MAA POS system alert messages.

(4) If the MAA POS((/Pro-DUR)) system identifies a potential drug therapy problem during ((system-facilitated)) Pro-DUR screening, ((MAA may deny the claim with)) ((an alert)) a message ((indicating)) will alert the pharmacy provider indicating the type of potential problem((, including but not limited to:)).

(a) Alerts to possible drug therapy problems include, but are not limited to:

(i) Therapeutic duplication;

(((b))) (ii) Duration of therapy exceeds maximum;

(((c) Serious)) (iii) Drug-to-drug interaction;

(((d) Overdosage;

(e))) (iv) Drug disease precaution;

(v) High dose;

(vi) Ingredient duplication;

(((f))) (vii) Drug-to-client age conflict; ((or

(g))) (viii) Drug-to-client gender conflict; or

(ix) Refill too soon.

(b) The dispensing pharmacist evaluates the potential drug therapy conflict.

(i) If the conflict is resolved, the pharmacy may process the claim using the applicable NCPDP code.

(ii) If the conflict is not resolved, MAA requires prior authorization for claims when an alert message is triggered in the POS system and NCPDP code is not appropriate.

(5) ((MAA may deny claims:

(a) Which trigger an alert message in the POS system; or

(b) For drugs for which the department has established specific utilization criteria to address MAA concerns over the drug's high cost, potential for clinical misuse, narrow therapeutic indication or safety:

(i) For which prior authorization has not been received; or

(ii) Which do not include an appropriate MAA-approved expedited prior authorization code or MAA-approved NCPDP code.

(6) If the MAA POS/Pro-DUR system identifies a potential drug therapy problem as described in subsection (4) of this section and the claim is denied for this reason, the dispensing pharmacist shall attempt to resolve the issue through professional utilization review. If upon further investigation a therapy problem is found not to exist, the pharmacist may dispense the drug product and:

(a) Request MAA authorization for payment as specified in WAC 388-530-1250, prior authorization; or

(b) Resubmit the claim using an applicable MAA-approved NCPDP override code as listed in the prescription drug program billing instructions.

(7) The department shall determine)) POS/Pro-DUR screening is not applicable to pharmacy claims included in the managed care capitated rate.

[Statutory Authority: RCW 74.08.090. 96-08-018 (Order 3960), 388-530-1950, filed 3/26/96, effective 4/26/96.]

(a) ((Washington state residents)) Contracts with MAA to be an enrolled provider; and

(b) ((Located temporarily outside the state subject to the provisions of WAC 388-501-0180)) Meets the same criteria MAA requires for in-state pharmacy providers.

(2) ((Border areas, as described under WAC 388-501-0175, are considered in-state and not subject to out-of-state rules. Pharmacies in border areas are eligible to apply to the department to be enrolled as providers of medical services in the state of Washington.

(3) Out-of-state pharmacies must meet the same criteria as in-state pharmacies)) MAA considers pharmacies located in bordering areas listed in WAC 388-501-075 the same as in-state pharmacies.

[Statutory Authority: RCW 74.04.050 and 74.08.090. 00-01-088, 388-530-2050, filed 12/14/99, effective 1/14/00. Statutory Authority: RCW 74.08.090. 96-21-031, 388-530-2050, filed 10/9/96, effective 11/9/96.]

Washington State Code Reviser's Office