Pharmaceutical Marketplace Reform Act of 1994

TABLE OF CONTENTS:

Title I: Medicare Program

Subtitle A: Covered Outpatient Prescription Drugs and

Rebates

Subtitle B: Drug Use Review

Subtitle C: Effective Date

Title II: Medicaid Program

Title III: Commissions

Title IV: Additions to the Master Agreement

Pharmaceutical Marketplace Reform Act of 1994 - Title I: Medicare Program - Subtitle A: Covered Outpatient Prescription Drugs and Rebates - Amends title XVIII (Medicare) of the Social Security Act (SSA) to cover as medical and other services certain outpatient drugs and biologicals, certain prescription drugs used in immunosuppressive therapy furnished to organ transplant patients, erythropoietin for dialysis patients, anticancer chemotherapeutic oral drugs, as well as other outpatient drugs or biologicals for which payment may be specially allowed.

(Sec. 102) Conditions payment for a covered outpatient drug on the manufacturer's having entered into a rebate agreement containing certain terms with the Secretary of Health and Human Services (HHS). Requires a rebate or discount to Medicare of 17 percent off the average manufacturer's retail price (AMRP). Authorizes negotiation of higher rebates as well as standard or higher rebates for new drugs.

Requires the HHS Secretary to establish a generic-only dispensing policy, subject to a Federal upper limit, for any multiple source (generic) covered outpatient drug for which there are three or more therapeutically and pharmaceutically equivalent brands of the drug sold and marketed in the United States. Requires exclusion from payment of any innovator version of a multiple source (brand name) drug unless the prescription, in the physician's handwriting, contains the phrase "brand medically necessary" and, at the Secretary's option, a medical justification is provided.

Authorizes the Secretary to establish, as a condition of outpatient drug coverage or payment, a system requiring approval of a drug before its dispensing.

Subtitle B: Drug Use Review - Directs the Secretary to: (1) provide for a drug use review program; (2) establish a methodology to provide payment to pharmacists for prospective drug review and certain pharmaceutical care activities; (3) establish standards for counseling by pharmacists of individuals receiving covered outpatient drugs; and (4) a Drug Use Review Board (DUR Board) of physicians and pharmacists.

(Sec. 111) Requires the DUR program to provide for case management of drug therapy for individuals receiving covered drugs who are at high risk for potential medication-related problems.

Subtitle C: Effective Date - Sets the effective date of this title.

Title II: Medicaid Program - Amends SSA title XIX (Medicaid) to deny Federal payment to a State for any brand name drug unless the prescription, in the physicians' handwriting, contains the phrase "brand medically necessary" and, at the Secretary's option, a medical justification is provided.

(Sec. 201) Denies Federal payments for any State expenditures for the dispensing of brand name drugs that exceed 15 percent, for 1995, or ten percent, for 1996 and after, of expenditures for the dispensing of all multiple source drugs, brand name and generic.

(Sec. 202) Provides for an 11 percent rebate to Medicaid for a generic drug if its price is more than half the price of the corresponding brand name drug. Specifies decreasing rebates, from nine to seven to five percent, from 1995 through 1997 and after for generic drugs whose price does not exceed half the price of the corresponding brand name drug.

(Sec. 203) Denies Medicaid payments for any calendar quarter to any State which fails to have in effect regulations requiring each health care plan offered in the State covering outpatient prescription drugs to establish a pharmacy and therapeutics committee or drug use board of physicians and pharmacists which shall make recommendations to the plan to assure that outpatient prescription drugs used by enrollees are medically appropriate and likely to result in positive medical outcomes.

Requires each health care plan to establish a therapeutic formulary of committee- or board-approved outpatient prescription drugs.

Requires each health care plan to establish a pharmaceutical care services program ensuring services by licensed pharmacists and including drug use review, drug therapy and case management, preapproved or protocol-approved interchange of pharmaceutical products, management of patient compliance incentive programs, and other pertinent services.

Requires each health care plan to establish a system under which any pharmacists providing outpatient prescription drugs to enrollees is provided payment for services required to comply with any requirements imposed on the pharmacists by this Act.

Title III: Commissions - Amends SSA title XI (General Provisions and Peer Review), as amended by the Omnibus Budget Reconciliation Act of 1993, to direct the Secretary to provide for the appointment of a Pharmaceutical Marketplace Information Commission, which shall: (1) provide general information about pharmaceutical prices in the U.S. market and in international, industrial-based markets; (2) provide information to buyers about whether the prices of new drugs are reasonable, based on specified factors; (3) monitor the use and prices of generic drugs; and (4) make recommendations to the Congress on the desirability of extending patents on certain pharmaceutical products. Authorizes appropriations.

(Sec. 302) Requires the Director of the Congressional Office of Technology Assessment to provide for the appointment of a Prescription Drug Payment Review Commission to monitor Medicare drug program operations, conduct studies, and make recommendations to the Congress on the operation of the program in general.

Title IV: Additions to the Master Agreement - Amends Federal law with respect to limitations on prices procured by the Department of Veterans Affairs and other Federal agencies. Requires the master agreement between the Secretary of Veterans Affairs and each manufacturer of covered drugs to require each manufacturer of single source and brand name drugs to offer them for sale to every buyer on equal terms and conditions including any rebates, free merchandise, discounts and other similar adjustments. Permits such manufacturers to offer rebates, free merchandise, discounts and other similar adjustments only if the manufacturer experiences savings as a result of specified efficiencies in purchasing.

(Sec. 402) Requires the master agreement also to require each manufacturer of single source and brand name drugs to report certain information to the Pharmaceutical Marketplace Information Commission.