RD344 - Report on Specialty Drug Program - November 2014


Executive Summary:
Specialty drugs are a category of prescription medications that have grown out of advances in drug development research, technology, and design. These drugs are used to treat specific chronic or genetic conditions. Specialty drugs include biological drugs, blood-derived products, complex molecules, and select oral and injectable medications. They typically require tailored patient education for safe and cost-effective use, patient-specific dosing, close patient monitoring, and refrigeration or other special handling. All of the above factors contribute to the high cost of specialty drugs and therefore have a direct impact on DMAS’ prescription drug expenditures. National cost trends suggest that specialty drugs and injectables are the fastest growing category of Medicaid-covered drugs. This trend is expected to continue as more injectable and specialty drugs receive FDA approval to address chronic diseases, such as Multiple Sclerosis, Cancer, Arthritis and others.

The DMAS Specialty Drug Program (SMAC) was implemented in July of 2008 to address issues of cost effectiveness and appropriate utilization of specialty drugs. The drug classes priced under the DMAS SMAC program include: (1) hematopoietic agents (Anemia); (2) anti-tumor necrosis factor agents (Rheumatoid Arthritis); (3) immunomodulator agents (used to regulate or normalize the immune system); (4) agents to treat Muscular Sclerosis; (5) growth hormones; and, (6) interferon agents for hepatitis C. The classes of drugs priced under the SMAC program have remained unchanged since the program’s inception. As of the date of this report, the SMAC reimbursement amount is the lesser of: (1) the SMAC rate of Wholesale Acquisition Cost (WAC) + 4.75%; (2) the Federal Upper Payment Limit; (3) the estimated acquisition cost of Average Wholesale Price – 13.1%; or (4) the pharmacy’s usual and customary charge.