WSR 07-11-141



(Health and Recovery Services Administration)

[ Filed May 22, 2007, 11:01 a.m. ]

     Original Notice.

     Preproposal statement of inquiry was filed as WSR 07-04-017.

     Title of Rule and Other Identifying Information: Part 1 of 4: WAC 388-530-1000 Outpatient drug program -- General and 388-530-1050 Definitions.

     Hearing Location(s): Blake Office Park East, Rose Room,

4500 10th Avenue S.E., Lacey, WA 98503 (one block north of the intersection of Pacific Avenue S.E. and Alhadeff Lane. A map or directions are available at or by calling (360) 664-6097), on June 26, 2007, at 10:00 a.m.

     Date of Intended Adoption: Not earlier than June 27, 2007.

     Submit Written Comments to: DSHS Rules Coordinator, P.O. Box 45850, Olympia, WA 98504, delivery 4500 10th Avenue S.E., Lacey, WA 98503, e-mail, fax (360) 664-6185, by 5:00 p.m. on June 26, 2007.

     Assistance for Persons with Disabilities: Contact Stephanie Schiller, by June 19, 2007, TTY (360) 664-6178 or (360) 664-6097 or by e-mail at

     Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The health and recovery services administration (HRSA) is amending chapter 388-530 WAC, Pharmacy services. A complete reorganization of the pharmacy chapter was necessary prior to the implementation of the new ProviderOne point-of-sale system. Changes to WAC 388-530-1000 and 388-530-1050 include:

     • Organizing the sections in a logical order;

     • Clarifying the existing language;

     • Updating WAC references; and

     • Clarifying existing definitions, adding new definitions, and removing unnecessary definitions.

     Reasons Supporting Proposal: See above.

     Statutory Authority for Adoption: RCW 74.08.090.

     Statute Being Implemented: RCW 74.04.050, 74.08.090, 74.09.530, and 74.09.700.

     Rule is not necessitated by federal law, federal or state court decision.

     Name of Proponent: Department of social and health services, health and recovery services administration, governmental.

     Name of Agency Personnel Responsible for Drafting: Wendy Boedigheimer, P.O. Box 45504, Olympia, WA 98504-5504, (360) 725-1306; Implementation and Enforcement: Siri Childs, P.O. Box 45506, Olympia, WA 98504-5506, (360) 725-1564.

     No small business economic impact statement has been prepared under chapter 19.85 RCW. The department has analyzed the proposed rule and concluded that no new costs will be imposed on businesses affected by them. The preparation of a comprehensive SBEIS is not required.

     A cost-benefit analysis is required under RCW 34.05.328. A preliminary cost-benefit analysis may be obtained by contacting Siri Childs, P.O. Box 45506, Health and Recovery Service Administration, Olympia, WA 98504-5506, phone (360) 725-1564, fax (360) 586-9727.

May 16, 2007

Stephanie E. Schiller

Rules Coordinator

AMENDATORY SECTION(Amending WSR 06-24-036, filed 11/30/06, effective 1/1/07)

WAC 388-530-1000   Outpatient drug program--General.   (1) The ((department reimburses)) purpose of the outpatient drug program is to pay pharmacy providers for outpatient prescription drugs, devices, and pharmaceutical supplies according to department rules and subject to the ((exceptions)) limitations and ((restrictions listed)) requirements in this chapter.

     (2) The department reimburses ((only pharmacies that:

     (a) Are department-enrolled providers; and

     (b) Meet the general requirements for providers described under WAC 388-502-0020.

     (3) To be both covered and reimbursed under this chapter, prescription drugs must be)) for outpatient prescription drugs, devices, and pharmaceutical supplies that are:

     (a) ((Medically necessary as defined in WAC 388-500-0005)) Covered. Refer to WAC 388-530-2000 for covered drugs, devices, and pharmaceutical supplies and to WAC 388-530-2100 for noncovered drugs and pharmaceutical supplies;

     (b) ((Within the scope of coverage of an eligible client's medical assistance program. Refer to WAC 388-501-0060 and 388-501-0065 for scope of coverage information)) Prescribed by a provider with presribing authority (see exceptions for family planning in WAC 388-530-2000 (1)(b);

     (c) ((For a medically accepted indication appropriate to the client's condition)) Within the scope of an eligible client's medical assistance program;

     (d) ((Billed according to the conditions under WAC 388-502-0150 and 388-502-0160)) Medically necessary as defined in WAC 388-500-0005 and determined according to the process found in WAC 388-501-0165; and

     (e) ((Billed according to the conditions and requirements of this chapter)) Authorized, as required within this chapter;

     (f) Billed according to WAC 388-502-0150 and 388-502-0160; and

     (g) Billed according to the requirements of this chapter.

     (3) The department may not pay for prescriptions written by healthcare practitioners whose application for a core provider agreement (CPA) has been denied, or whose CPA has been terminated.

     (4) ((Acceptance and filling of a prescription for a client eligible for a medical care program constitutes acceptance of the department's rules and fees. See WAC 388-502-0100 for general conditions of payment)) The department may not pay for prescriptions written by non-CPA healthcare practitioners who do not have a current core provider agreement with the department when the department determines there is a potential danger to the client's health and/or safety.

[Statutory Authority: RCW 74.04.050, 74.08.090, 74.09.530, and 74.09.700. 06-24-036, § 388-530-1000, filed 11/30/06, effective 1/1/07. Statutory Authority: RCW 74.09.080, 74.04.050 and 42 C.F.R. Subpart K, subsection 162.1102. 02-17-023, § 388-530-1000, filed 8/9/02, effective 9/9/02. Statutory Authority: RCW 74.08.090, 74.04.050. 01-01-028, § 388-530-1000, filed 12/7/00, effective 1/7/01. Statutory Authority: RCW 74.08.090. 96-21-031, § 388-530-1000, filed 10/9/96, effective 11/9/96.]

     Reviser's note: The spelling error in the above section occurred in the copy filed by the agency and appears in the Register pursuant to the requirements of RCW 34.08.040.
AMENDATORY SECTION(Amending WSR 05-02-044, filed 12/30/04, effective 1/30/05)

WAC 388-530-1050   Definitions.   ((The following)) In addition to the definitions and abbreviations ((and those)) found in WAC 388-500-0005, Medical definitions, the following definitions apply to this chapter.

     "Active ingredient" ((means)) - The chemical component of a drug responsible for a drug's prescribed/intended therapeutic effect. The ((medical assistance administration (MAA))) department limits coverage of active ingredients to those with an eleven-digit national drug code (NDC) and those specifically authorized by ((MAA)) the department.

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

     (1) Invoice price, including other invoice-based considerations, such as prompt payment discounts;

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

     (3) Membership/participation in purchasing cooperatives;

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

     (5) Transportation or freight allowances)) The ACC includes discounts, rebates, charge backs and other adjustments to the price of the drug, device or supply, but excludes dispensing fees.

     "Administer" ((means)) - The direct application of a prescription drug by injection, inhalation, ingestion, or any other means, to the body of a patient by a practitioner, or at the direction of the practitioner.

     "Appointing authority" ((means,)) - For the evidence-based prescription drug program of the participating agencies in the state-operated health care programs, the following persons acting jointly: The administrator of the health care authority (HCA), the secretary of the department of social and health services (DSHS), and the director of the department of labor and industries (L&I).

     "Automated authorization" - Adjuducation of claims using submitted NCPDP data elements or claims history to verify that the department's authorization requirements have been satisfied without the need for the department to request additional clinical information.

     "Automated maximum allowable cost (AMAC)" ((means)) - The rate established by the ((medical assistance administration (MAA))) department for a multiple-source drug that is not on the maximum allowable cost (MAC) list and that is designated by two or more products at least one of which must be under a federal drug rebate contract.

     "Average Manufacturer Price (AMP)" - The average price paid to a manufacturer by wholesalers for drugs distributed to retail pharmacies.

     "Average Sales Price (ASP) - The weighted average of all non-federal sales to wholesalers net of charge backs, discounts, rebates, and other benefits tied to the purchase of the drug product, whether it is paid to the wholesaler or the retailer.

     "Average wholesale price (AWP)" ((means)) - The average price of a drug product that is calculated from wholesale list prices nationwide at a point in time and reported to the ((medical assistance administration (MAA) by MAA's)) department by the department's drug ((pricing)) file contractor.

     (("Certified average wholesale price (CAWP)" means the price certified by the First Data Bank to be the actual average wholesale price of an infusion, injectable, or inhalation drug marketed by a manufacturer or labeler who is subject to a consent order with the United States Department of Justice regarding the reporting of average wholesale price(s).))

     "Combination drug" ((means)) - A commercially available drug including two or more active ingredients.

     "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" ((means)) - The act of combining two or more active ingredients or adjusting therapeutic strengths in the preparation of a prescription.

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

     "Deliver or delivery" ((means)) - The transfer of a drug or device from one person to another.

     "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.

     "Dispensing fee" ((means)) - The fee the ((medical assistance administration (MAA))) department sets to ((reimburse)) pay pharmacy providers for dispensing ((MAA)) department-covered prescriptions. The fee is ((MAA's)) the department's maximum reimbursement for expenses involved in the practice of pharmacy and is in addition to ((MAA's payment)) the department's reimbursement for the costs of covered ingredients.

     "Drug Evaluation Matrix" - The criteria-based scoring sheet used to objectively and consistently evaluate the food and drug administration (FDA) approved drugs to determine drug coverage status.

     "Drug file" ((means)) - A list of drug products, pricing and other information provided to the ((medical assistance administration's (MAA's) drug data base)) department and maintained by a drug file contractor.

     "Drug file contractor" ((also referred to as "drug pricing file contractor," means the entity which has contracted to provide the medical assistance administration (MAA), at specified intervals, the latest information and/or 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 drugs billed to MAA)) - An entity which has been contracted to provide regularly updated information on drugs and related supplies at specified intervals, for the purpose of pharmaceutical claim adjudication. Information is provided specific to individual national drug codes, including product pricing.

     "Drug rebates" ((means payments)) - Reimbursements provided by pharmaceutical manufacturers to state medicaid programs under the terms of the manufacturers' agreements with the department of health and human services (DHHS).

     "Drug-related supplies" ((means)) - Nondrug items necessary for the administration, delivery, or monitoring of a drug or drug regimen.

     "Drug use review (DUR)" ((means)) - A review of covered outpatient drug((s)) use that assures prescriptions are appropriate, medically necessary, and not likely to result in adverse medical outcomes.

     "Effectiveness" - The extent to which a given intervention is likely to produce beneficial results for which it is intended in ordinary circumstances.

     "Efficacy" - The extent to which a given intervention is likely to produce beneficial effects in the context of the research study.

     "Emergency kit" ((means)) - A set of limited pharmaceuticals furnished to a nursing facility by the pharmacy that provides prescription dispensing services to that facility. Each kit is specifically set up to meet the emergency needs of each nursing facility's client population and is for use during those hours when pharmacy services are unavailable.

     "Endorsing practitioner" ((means)) - A practitioner who has reviewed the Washington preferred drug list (PDL) and has enrolled with the health care authority (HCA), agreeing to allow therapeutic interchange (substitution) of a preferred drug for any nonpreferred drug in a given therapeutic class on the Washington PDL.

     "Estimated acquisition cost (EAC)" ((means the medical assistance administration's)) - The department's estimate of the price providers generally and currently pay for a drug marketed or sold by a particular manufacturer or labeler.

     "Evidence-based practice center" ((means)) - A research organization that has been designated by the Agency for Healthcare Research and Quality (AHRQ) of the U.S. government to conduct systematic reviews of all the evidence to produce evidence tables and technology assessments to guide health care decisions.

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

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

     "Expired drug" means a drug for which the shelf life expiration date has been reached.))

     "Federal upper limit (FUL)" ((means)) - The maximum allowable ((payment)) reimbursement set by the centers for medicare and medicaid services (CMS) (((formerly known as HCFA))) for a multiple-source drug.

     "Four brand name prescriptions per calendar month limit" ((means)) - The maximum number of paid prescription claims for brand name drugs that ((MAA)) the department allows for each client in a calendar month without a complete review of the client's drug profile.

     (("Generic code number sequence number" means a number used by the medical assistance administration's drug file contractor to group together products that have the same ingredients, route of administration, drug strength, and dosage form. It is applied to all manufacturers and package sizes.))

     "Generic drug" ((means)) - A nonproprietary drug that is required to meet the same bioequivalency tests as the original brand name drug.

     "Inactive ingredient" ((means)) - A drug component that remains chemically unchanged during compounding but serves as the:

     (1) Necessary vehicle for the delivery of the therapeutic effect; or

     (2) Agent for the intended method or rate of absorption for the drug's active therapeutic agent.

     "Ingredient cost" ((means)) - The portion of a prescription's cost attributable to the covered drug ingredients or chemical components.

     "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)) - A drug regimen a client receives or will receive continuously through and beyond ninety days.

     (("MAA preferred drug list (PDL)" means the medical assistance administration's (MAA's) list of drugs of choice within selected therapeutic drug classes.))

     "Maximum allowable cost (MAC)" ((means)) - The maximum amount that the ((medical assistance administration pays)) department reimburses for a ((specific dosage form and strength of a multiple-source)) drug ((product)), device, or supply.

     "Medically accepted indication" ((means)) - Any use for a covered outpatient drug:

     (1) Which is approved under the federal Food, Drug, and Cosmetic Act; or

     (2) The use of which is supported by one or more citations included or approved for inclusion in any of the compendia of drug information, as defined in this chapter. The department considers the compendia to support the use only when the use is evidence-based.

     "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:

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

     (2) In quantities for one month's supply, unless the prescriber specifies a shorter period of therapy.

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

     (1) Two or more manufacturers or labelers; or

     (2) The same manufacturer or labeler:

     (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 FDA and manufacturer or labeler assigns to a pharmaceutical product and attaches to the product container at the time of packaging. The NDC is composed of digits in 5-4-2 groupings. The first five digits comprise the labeler code assigned to the manufacturer by the Food and Drug Administration (FDA). The second grouping of four digits is assigned by the manufacturer to describe the ingredients, dose form, and strength. The last grouping of two digits describes the package size.

     "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.

     "Nonpreferred drug" ((means)) - A drug that has not been selected as a preferred drug within the therapeutic class(es) of drugs on the preferred drug list.

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

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

     "Peer reviewed medical literature" ((means)) - A research study, report, or findings regarding the specific use of a drug that has been submitted to one or more professional journals, reviewed by experts with appropriate credentials, and subsequently published by a reputable professional journal. A clinical drug study used as the basis for the publication must be a double blind, randomized, placebo or active control study.

     "Pharmacist" ((means)) - A person licensed in the practice of pharmacy by the state in which the prescription is filled.

     "Pharmacy" ((means)) - Every location licensed by the state board of pharmacy in the state where the practice of pharmacy is conducted.

     "Pharmacy and Therapeutic (P&T) Committee" - The independent Washington state committee created by RCW 41.05.021 (1)(a)(iii) and 70.14.050. At the election of the department, the committee may serve as the drug use review board provided for in WAC 388-530-4000.

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

     "Practice of pharmacy" ((means)) - The practice of and responsibility for:

     (1) Accurately interpreting prescription orders;

     (2) Compounding drugs;

     (3) Dispensing, labeling, administering, and distributing of drugs and devices;

     (4) 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;

     (5) Monitoring of drug therapy and use;

     (6) Proper and safe storage of drugs and devices;

     (7) Documenting and maintaining records;

     (8) Initiating or modifying 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; and

     (9) Participating in drug ((utilization)) use reviews and drug product selection.

     "Practitioner" ((means)) - 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 authorized by state law as a practitioner.

     "Preferred drug" ((means)) - D drug(s) of choice within a selected therapeutic class that are selected based on clinical evidence of safety, efficacy, and effectiveness.

     "Preferred drug list (PDL)" - The department's list of drugs of choice within selected therapeutic drug classes.

     "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 authorized by state law or rule to prescribe drugs or devices, in the course of the practitioner's professional practice, for a legitimate medical purpose.

     "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 a condition of payment, that a drug on MAA's drug file be prior authorized. See WAC 388-530-1200.))

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

     "Reconstitution" ((means)) - The process of returning a single active ingredient, previously altered for preservation and storage, to its approximate original state. Reconstitution is not compounding.

     "Retrospective drug use review (Retro-DUR)" ((means)) -The process in which ((client's)) drug utilization is reviewed on an ongoing periodic basis to identify patterns of fraud, abuse, gross overuse, or inappropriate or ((unnecessary)) not medically necessary care.

     "Risk/benefit ratio" ((means)) - The result of assessing the side effects of a drug or drug regimen 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 Food and Drug Administration (FDA).

     "Substitute" ((means)) - To replace a prescribed drug, with the prescriber's authorization, with:

     (1) An equivalent generic drug product of the identical base or salt as the specific drug product prescribed; or

     (2) A therapeutically equivalent drug other than the identical base or salt.

     "Systematic review" ((means)) - A specific and reproducible method to identify, select, and appraise all the studies that meet minimum quality standards and are relevant to a particular question. The results of the studies are then analyzed and summarized into evidence tables to be used to guide evidence-based decisions.

     "TCS" See "therapeutic consultation service."

     "Terminated NDC" ((means)) - An eleven-digit national drug code (NDC) that is discontinued by the manufacturer for any reason. The NDC may be terminated immediately due to health or safety issues or it may be phased out based on the product's shelf life.

     "Therapeutic alternative" ((means)) - A drug product that contains a different chemical structure than the drug prescribed, but is in the same pharmacologic or therapeutic class and can be expected to have a similar therapeutic effect and adverse reaction profile when administered to patients in a therapeutically equivalent dosage.

     "Therapeutic class" ((means)) - A group of drugs used for the treatment, remediation, or cure of a specific disorder or disease.

     "Therapeutic consultation service (TCS)" ((means the prescriber and a medical assistance administration (MAA) designated clinical pharmacist jointly review prescribing activity when drug claims for a medical assistance client exceed program limitations)) The department's clinical pharmacist consultation service offered to prescribers as a resource for optimizing prescription drug therapy, or required when drug claims for a client exceed designated thresholds.

     "Therapeutic interchange" ((means)) - To dispense a therapeutic alternative to the prescribed drug when an endorsing practitioner who has indicated that substitution is permitted, prescribes the drug. See therapeutic interchange program (TIP).

     "Therapeutic interchange program (TIP)" ((means)) - The process developed by participating state agencies under RCW 69.41.190 and 70.14.050, to allow prescribers to endorse a Washington preferred drug list, and in most cases, ((required)) requires pharmacists to automatically substitute a preferred, equivalent drug from the list.

     "Therapeutically equivalent" ((means)) - Drug products that contain different chemical structures but have the same efficacy and safety when administered to an individual, as determined by:

     (1) Information from the Food and Drug Administration (FDA);

     (2) Published and peer-reviewed scientific data;

     (3) Randomized controlled clinical trials; or

     (4) Other scientific evidence.

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

     "True unit dose delivery" ((means)) - A method in which each patient's medication is delivered to the nursing facility in quantities sufficient only for the day's required dosage.

     "Unit dose drug delivery" ((means)) - True unit dose or modified unit dose delivery systems.

     "Usual and customary charge" ((means)) - The fee that the provider typically charges the general public for the product or service.

     "Washington preferred drug list (Washington PDL)" ((means)) -The list of drugs selected by the appointing authority to be used by applicable state agencies as the basis for purchase of drugs in state-operated health care programs.

[Statutory Authority: RCW 74.08.090, 70.14.050, 69.41.150, 69.41.190, chapter 41.05 RCW. 05-02-044, § 388-530-1050, filed 12/30/04, effective 1/30/05. Statutory Authority: RCW 74.09.080, 74.04.050 and 42 C.F.R. Subpart K, subsection 162.1102. 02-17-023, § 388-530-1050, filed 8/9/02, effective 9/9/02. Statutory Authority: RCW 74.08.090, 74.04.050. 01-24-066, § 388-530-1050, filed 11/30/01, effective ½/02; 01-01-028, § 388-530-1050, filed 12/7/00, effective 1/7/01. Statutory Authority: RCW 74.08.090. 96-21-031, § 388-530-1050, filed 10/9/96, effective 11/9/96.]

     Reviser's note: The spelling error in the above section occurred in the copy filed by the agency and appears in the Register pursuant to the requirements of RCW 34.08.040.

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