WSR 07-11-142



(Health and Recovery Services Administration)

[ Filed May 22, 2007, 11:02 a.m. ]

     Original Notice.

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

     Title of Rule and Other Identifying Information: Part 2 of 4: WAC 388-530-2000 Covered -- Outpatient prescription drugs, devices, and pharmaceutical supplies, 388-530-2100 Noncovered -- Outpatient drugs and pharmaceutical supplies, 388-530-3000 When the department requires authorization, 388-530-3100 How the department determines when a drug requires authorization, 388-530-3200 The department's authorization process, 388-530-4000 Drug use review (DUR) board, 388-530-4050 Drug use and claims review, 388-530-4100 Washington preferred drug list (PDL), and 388-530-4150 Therapeutic interchange program (TIP).

     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

     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 include:

     • Organizing the sections in a logical order;

     • Removing redundant or outdated sections;

     • Clarifying the existing language;

     • Eliminating circular references;

     • Clarifying department coverage and authorization rules;

     • Updating WAC references.

     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

WAC 388-530-2000   Covered--Outpatient prescription drugs, devices, and pharmaceutical supplies.   (1) The department covers:

     (a) Outpatient drugs, including over-the-counter drugs, as defined in WAC 388-530-1050, subject to the limitations and requirements in this chapter, when:

     (i) The drug is approved by the Food and Drug Administration (FDA);

     (ii) The drug is for a medically accepted indication as defined in WAC 388-530-1050;

     (iii) The drug is not excluded from coverage under WAC 388-530-2100; and

     (iv) The manufacturer has a signed drug rebate agreement with the federal department of health and human services (DHHS). Exceptions to the drug rebate requirement are described in WAC 388-530-7500 which describes the drug rebate program.

     (b) Family planning drugs, devices, and supplies per chapter 388-532 WAC and as follows:

     (i) Over-the-counter (OTC) family planning drugs, devices, and supplies without a prescription when the department determines it necessary for client access and safety.

     (ii) Family planning drugs that do not meet the federal drug rebate requirement in WAC 388-530-7500 on a case-by-case basis; and

     (iii) Contraceptive patches, contraceptive rings, and oral contraceptives, only when dispensed in at least a three-month supply, unless otherwise directed by the prescriber (emergency contraceptive pills are not subject to the at-least-three-month supply limitation).

     (c) Prescription vitamins and mineral products, only as follows:

     (i) When prescribed for clinically documented deficiencies;

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

     (iii) Fluoride varnish for children under the early and periodic screening, diagnosis, and treatment (EPSDT) program.

     (d) Drug related devices and pharmaceutical supplies as an outpatient pharmacy benefit when:

     (i) Prescribed by a provider with prescribing authority;

     (ii) Essential for the administration of a covered drug;

     (iii) Not excluded from coverage under WAC 388-530-2100; and

     (iv) Determined by the department, that a product covered under Chapter 388-543 Durable medical equipment and supplies should be available at retail pharmacies.

     (e) Preservatives, flavoring and/or coloring agents, only when used as a suspending agent in a compound.

     (2) Coverage determinations for the department are decided by:

     (a) The department in consultation with federal guidelines; or

     (b) The drug use review (DUR) board; and

     (c) The department's medical consultants and the department's pharmacist(s).

     (3) The department does not reimburse for any drug, device, or pharmaceutical supply not meeting the coverage requirements under this section.


WAC 388-530-2100   Noncovered--Outpatient drugs and pharmaceutical supplies.   (1) The department does not cover:

     (a) A drug that is:

     (i) Not approved by the Food and Drug Administration (FDA);

     (ii) Prescribed for non-medically accepted indication;

     (iii) Prescribed for indication or dosing unproven for efficacy or safety; or

     (iv) Prescribed for a dose or dosage schedule that is not evidenced-based.

     (b) A drug prescribed:

     (i) For weight loss or gain;

     (ii) For infertility, frigidity, impotency;

     (iii) For sexual or erectile dysfunction;

     (iv) For cosmetic purposes or hair growth; or

     (v) To promote tobacco cessation, except as described in WAC 388-533-0345 (3)(d) tobacco cessation for pregnant women.

     (c) Drugs used to treat sexual or erectile dysfunction, in accordance with section 1927 (d)(2)(K) of the Social Security Act, unless such drugs are used to treat a condition other than sexual or erectile dysfunction, and these uses have been approved by the Food and Drug Administration.

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

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

     (f) A product:

     (i) With an obsolete national drug code (NDC) for more than two years;

     (ii) With a terminated NDC;

     (iii) Whose shelf life has expired; or

     (iv) Which does not have an eleven-digit NDC.

     (g) Any drug regularly supplied by other public agencies as an integral part of program activity (e.g., immunization vaccines for children).

     (h) Free pharmaceutical samples.


WAC 388-530-3000   When the department requires authorization.   Pharmacies must obtain authorization for covered drugs, devices, or pharmaceutical supplies in order to receive reimbursement when:

     (1) The department's pharmacists and medical consultants:

     (a) Have determined that authorization for the drug, device, or pharmaceutical supply is required, as described in WAC 388-530-3100; or

     (b) Have not yet reviewed the manufacturer's dossier of drug information submitted in the Academy of Managed Care Pharmacy (AMCP) format.

     (2) The drug, device, or pharmaceutical supply is in the therapeutic drug class on the Washington Preferred Drug List and the product is one of the following:

     (a) Nonpreferred as described in WAC 388-530-4100; and

     (i) The prescriber is a non-endorsing practitioner; or

     (ii) The drug is designated as exempt from the therapeutic interchange program per WAC 388-530-4100(6) or WAC 388-530-4150 (2)(c);

     (b) Preferred for a special population or specific indication and has been prescribed by a non-endorsing practitioner under conditions for which the drug, device, or pharmaceutical supply is not preferred; or

     (c) Determined to require authorization for safety.

     (3) The department designates specific:

     (a) Clients or groups of clients as requiring authorization to safeguard their health and to promote safety, efficacy, and effectiveness of drug therapy; or

     (b) Prescribers as requiring authorization because the prescriber is under department review or is sanctioned for substandard quality of care.

     (4) Utilization indicates there is a client health and safety concern or the potential of misuse and abuse. Examples of utilization concerns include:

     (a) Multiple prescriptions filled of the same drug in the same calendar month;

     (b) Prescriptions filled earlier than necessary for optimal therapeutic response;

     (c) Therapeutic duplication;

     (d) Therapeutic contraindication;

     (e) Excessive dosing, excessive duration of therapy, or sub-therapeutic dosing as determined by FDA labeling or the compendia of drug information;

     (f) Number of brand prescriptions filled per calendar month; and

     (g) Number of prescriptions filled per month in total or by therapeutic drug class.

     (5) The pharmacy requests reimbursement in excess of the maximum allowable cost and the drug has been prescribed with instructions to dispense as written.


WAC 388-530-3100   How the department determines when a drug requires authorization.   (1) The department's pharmacists and medical consultants evaluate new covered drugs, new covered indications, or new dosages approved by the Food and Drug Administration (FDA) to determine the drug authorization requirement.

     (a) The clinical team uses a drug evaluation matrix to evaluate and score the benefit/risk assessment and cost comparisons of drugs to similar existing drugs based on quality evidence contained in compendia of drug information and peer-reviewed medical literature.

     (b) In performing this evaluation the clinical team may consult with other department clinical staff, financial experts, and program managers. The department may also consult with an evidence-based practice center, the drug use review (DUR) board, and/or medical experts in this evaluation.

     (c) Information reviewed in the drug evaluation matrix includes, but is not limited to, the following:

     (i) The drug, device, or pharmaceutical supply's benefit/risk ratio;

     (ii) Potential for clinical misuse;

     (iii) Potential for client misuse/abuse;

     (iv) Narrow therapeutic indication;

     (v) Safety concerns;

     (vi) Availability of less costly therapeutic alternatives; and

     (vii) Product cost and outcome data demonstrating the drug, device, or pharmaceutical supply's cost effectiveness.

     (d) Based on the clinical team's evaluation and the drug evaluation matrix score, the department may determine that the drug, device, or pharmaceutical supply:

     (i) Requires authorization;

     (ii) Requires authorization to exceed department established limitations; or

     (iii) Does not require authorization.

     (2) Drugs in therapeutic classes on the Washington Preferred Drug list are not subject to determination of authorization requirements through the drug evaluation matrix. Authorization requirements are determined by their preferred status according to WAC 388-530-4100.

     (3) The department periodically reviews existing drugs, devices, or pharmaceutical supplies and reassigns authorization requirements as necessary according to the same provisions as outlined above for new drugs, devices, or pharmaceutical supplies.

     (4) For any drug, device, or pharmaceutical supply with limitations or requiring authorization, the department may elect to apply automated authorization criteria according to WAC 388-530-3200.


WAC 388-530-3200   The department's authorization process.   (1) The department may establish automated ways for pharmacies to meet authorization requirements for specified drugs, devices, and pharmaceutical supplies, or circumstances as listed in WAC 388-530-3000(4) including, but are not limited to:

     (a) Use of expedited authorization codes as published in the department's prescription drug program billing instructions and numbered memoranda;

     (b) Use of specified values in National Council of Prescription Drug Programs (NCPDP) claim fields;

     (c) Use of diagnosis codes; and

     (d) Evidence of previous therapy within the department's claim history.

     (2) When the automated requirements in subsection (1) of this section do not apply or cannot be satisfied, the pharmacy provider must request authorization from the department before dispensing. The pharmacy provider must:

     (a) Ensure the request states the medical diagnosis and includes medical justification for the drug, device, pharmaceutical supply, or circumstance as listed in WAC 388-530-3000(4); and

     (b) Keep documentation on file of the prescriber's medical justification that is communicated to the pharmacy by the prescriber at the time the prescription is filled. The records must be retained for the period specified in WAC 388-502-0020 (1)(c).

     (3) When the department receives the request for authorization:

     (a) The department acknowledges receipt:

     (i) Within twenty-four hours if the request is received during normal State business hours; or

     (ii) Within twenty-four hours of opening for business on the next business day if received outside of normal State business hours.

     (b) The department reviews all evidence submitted and takes one of the following actions within fifteen business days:

     (i) Approves the request;

     (ii) Denies the request if the requested service is not medically necessary; or

     (iii) Requests the prescriber submit additional justifying information.

     (A) The prescriber must submit the additional information within ten days of the department's request.

     (B) The department approves or denies the request within five business days of the receipt of the additional information.

     (C) If the prescriber fails to provide the additional information within ten days, the department will deny the requested service. The department sends a copy of the request to the client at the time of denial.

     (4) The department's authorization may be based on, but not limited to:

     (a) Requirements under this chapter and 388-501-0165;

     (b) Client safety;

     (c) Appropriateness of drug therapy;

     (d) Quantity and duration of therapy;

     (e) Client age, gender, pregnancy status, or other demographics; and

     (f) The least costly alternative between two or more products of equal effectiveness.

     (5) The department evaluates request for authorization of covered drugs, devices, and supplies that exceed limitations in this chapter on a case-by-case basis in conjunction with subsection (4) of this section and WAC 388-501-0169.

     (6) If a provider needs authorization to dispense a covered drug outside of normal state business hours, the provider may dispense the drug without authorization only in an emergency. The department must receive justification from the provider within seventy-two hours of the fill date, excluding weekends and Washington state holidays, to be paid for the emergency fill.

     (7) The department may remove authorization requirements under WAC 388-530-3000 for, but not limited to, the following:

     (a) Prescriptions written by specific practitioners based on consistent high quality of care; or

     (b) Prescriptions filled at specific pharmacies and billed to the department at the pharmacies' lower acquisition cost.

     (8) Authorization requirements in WAC 388-530-3000 are not a denial of service.

     (9) Rejection of a claim due to the authorization requirements listed in WAC 388-530-3000 is not a denial of service.

     (10) When a claim requires authorization, the pharmacy provider must request authorization from the department. If the pharmacist fails to request authorization as required, the department does not consider this a denial of service.

     (11) Denials that result as part of the authorization process will be issued by the department in writing.

     (12) The department's authorization:

     (a) Is a decision of medical appropriateness; and

     (b) Does not guarantee payment.


WAC 388-530-4000   Drug use review (DUR) board.   In accordance with 42 CFR 456.716, the department establishes a drug use review (DUR) board.

     (1) The DUR board:

     (a) Includes health professionals who are actively practicing and licensed in the state of Washington and who have recognized knowledge and expertise in one or more of the following:

     (i) The clinically appropriate prescribing of outpatient drugs;

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

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

     (iv) Medical quality assurance.

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

     (2) The department may appoint members of the pharmacy and therapeutics committee established by the health care authority (HCA) under chapter 182-50 WAC or other qualified individuals to serve as members of the DUR board.

     (3) The DUR board meets periodically to:

     (a) Advise the department on drug use review activities;

     (b) Review provider and patient profiles;

     (c) Review scientific literature to establish evidence-based guidelines for the appropriate use of drugs, including the appropriate indications and dosing;

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

     (e) Recommend interventions targeted toward correcting drug therapy problems; and

     (f) Produce an annual report.

     (4) The department has the authority to accept or reject the recommendations of the DUR board in accordance with 42 CFR 456.716(c).


WAC 388-530-4050   Drug use and claims review.   (1) The department's drug use review (DUR) consists of:

     (a) A prospective drug use review (Pro-DUR) that requires all pharmacy providers to:

     (i) Obtain patient histories of allergies, idiosyncrasies, or chronic condition(s) which may relate to drug utilization;

     (ii) Screen for potential drug therapy problems; and

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

     (b) A retrospective drug use review (Retro-DUR), in which the department 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) The department reviews 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, the department may implement corrective action that includes, but is not limited to:

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

     (b) Requiring the provider to maintain specific documentation in addition to the normal documentation requirements regarding the provider's dispensing or billing actions;

     (c) Recouping the payment for the drug(s); and/or

     (d) Terminating the provider's core provider agreement (CPA).


WAC 388-530-4100   Washington preferred drug list (PDL).   Under RCW 69.41.190 and 70.14.050, the department, and other state agencies cooperate in developing and maintaining the Washington preferred drug list.

     (1) Washington state contracts with evidence-based practice center(s) for systematic reviews of drug(s).

     (2) The pharmacy and therapeutics (P&T) committee reviews and evaluates the safety, efficacy, and outcomes of prescribed drugs, using evidence-based information provided by the evidence-based practice center(s).

     (3) The P&T committee makes recommendations to state agencies as to which drug(s) to include on the Washington PDL, under chapter 182-50 WAC.

     (4) The appointing authority makes the final selection of drugs included on the Washington PDL.

     (5) Drugs in a drug class on the Washington PDL, that have been studied by the evidence-based practice center(s) and reviewed by the P&T committee, and which have not been selected as preferred are considered nonpreferred drugs and are subject to the therapeutic interchange program (TIP) and dispense as Written (DAW) rules under WAC 388-530-4150.

     (6) Drugs in a drug class on the Washington PDL that have not been studied by the evidence-based practice center(s) and have not been reviewed by the P&T committee will be treated as nonpreferred drugs not subject to the dispense as written (DAW) or the therapeutic interchange program (TIP).

     (7) A nonpreferred drug, which the department determines as covered, is considered for authorization after the client has:

     (a) Tried and failed or is intolerant to at least one preferred drug; and

     (b) Met department established criteria for the nonpreferred drug.

     (8) Drugs in a drug class on the Washington PDL may be designated as preferred drugs for special populations or specific indications.

     (9) Drugs in a drug class on the Washington PDL may require authorization for safety.

     (10) Combination drugs are not on the Washington PDL and are considered for authorization according to WAC 388-530-3100.


WAC 388-530-4150   Therapeutic interchange program (TIP).   This section contains the department's rules for the endorsing practitioner therapeutic interchange program (TIP). TIP is established under RCW 69.41.190 and 70.14.050. The statutes require state-operated prescription drug programs to allow physicians and other prescribers to endorse a Washington preferred drug list (PDL) and, in most cases, requires pharmacists to automatically substitute a preferred, equivalent drug from the list.

     (1) The therapeutic interchange program (TIP) applies only to drugs:

     (a) Within therapeutic classes on the Washington PDL;

     (b) Studied by the evidence-based practice center(s);

     (c) Reviewed by the P&T committee; and

     (d) Prescribed by an endorsing practitioner.

     (2) TIP does not apply:

     (a) To drugs that require authorization;

     (b) To drugs with specific limitations;

     (c) When the pharmacy and therapeutics (P&T) committee determines that TIP does not apply to the therapeutic class on the PDL; or

     (d) To a drug prescribed by a nonendorsing practitioner.

     (3) A practitioner who wishes to become an endorsing practitioner must specifically enroll with the health care authority (HCA) as an endorsing practitioner, under the provisions of chapter 182-50 WAC.

     (4) When an endorsing practitioner writes a prescription for a client for a nonpreferred drug, or for a preferred drug for a special population or indication other than the client's population or indication, and indicates that substitution is permitted, the pharmacist must:

     (a) Dispense a preferred drug in that therapeutic class in place of the nonpreferred drug; and

     (b) Notify the endorsing practitioner of the specific drug and dose dispensed.

     (5) When an endorsing practitioner determines that a nonpreferred drug is medically necessary, all of the following apply:

     (a) The practitioner must indicate that the prescription is to be dispensed as written (DAW);

     (b) The pharmacist dispenses the nonpreferred drug as prescribed; and

     (c) The department does not require prior authorization to dispense the nonpreferred drug in place of a preferred drug except when the drug requires authorization for safety.

     (6) In the event the following therapeutic drug classes are on the Washington PDL, pharmacists will not substitute a preferred drug for a nonpreferred drug in these therapeutic drug classes when the endorsing practitioner prescribes a refill (including the renewal of a previous prescription or adjustments in dosage, and samples):

     (a) Antipsychotic;

     (b) Antidepressant;

     (c) Chemotherapy;

     (d) Antiretroviral;

     (e) Immunosuppressive; or

     (f) Immunomodulator/antiviral treatment for hepatitis C for which an established, fixed duration of therapy is prescribed for at least twenty-four weeks but no more than forty-eight weeks.


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