Section 1121.56. Drug cost determination

(a) The Department will base its drug cost for compensable legend and nonlegend drugs on the lower of:

(1) The EAC established by the Department.

(i) For brand name drugs, the EAC is established by the Department as one of the following:

(A) The lowest WAC listed for the drug in available Nationally recognized pricing services, plus 3.2%.

(B) If WAC data are not available from a Nationally recognized pricing service, the lowest AWP listed for the drug in available Nationally recognized pricing services, minus 14%.

(C) If both WAC and AWP cost data are available for the drug from a Nationally recognized pricing service, the lower of the two amounts.

(ii) For generic drugs, the EAC is established by the Department as one of the following:

(A) The lowest WAC listed for the drug in available Nationally recognized pricing services.

(B) If WAC data are not available from a Nationally recognized pricing service, the lowest AWP listed for the drug in available Nationally recognized pricing services, minus 25%.

(C) If both WAC and AWP cost data are available for the drug from a Nationally recognized pricing service, the lower of the two amounts.

(2) The State MAC established by the Department.

(b) The Department will update the EAC for individual drugs at least on a monthly basis as it appears in available Nationally recognized pricing services.

(c) CMS establishes lists that identify and set Federal upper limits for CMS multisource drugs and provides the listing of these drugs and revisions to the list to the Department through Medicaid manual transmittals on a periodic basis.

(d) The Department will determine the State MAC by one of the following methods:

(1) For multisource drugs, the Department will set the State MAC at the lower of the following:

(i) The upper payment limit established by the CMS.

(ii) Provided that the generic product is available at the price established by the Department from at least two wholesalers:

(A) If the generic product is available from more than one manufacturer, the base price of 150% of the lowest acquisition cost for the generic product, unless 150% of the lowest acquisition cost is not at least 120% of the second lowest acquisition cost, in which case the base price will be set at 120% of the second lowest acquisition cost.

(B) If the generic product is available from only one manufacturer, the base price is 120% of the acquisition cost for the generic product.

(2) For disposable insulin syringes, the Department will set the State MAC at the amount listed in the MA Program Fee Schedule.

(e) The Department will update the State MAC:

(1) If the State MAC for a multisource drug is set at the Federal upper payment limit established by CMS, the Department will apply the Federal upper limits for CMS multisource drugs to be effective on the date established by CMS and will describe the update to each pharmacy enrolled in the MA Program when it is available.

(2) The Department will apply the price for all other State MAC multisource drugs every 3 months, and will distribute the update to each pharmacy enrolled in the MA Program.

(f) With the exception of the CMS multisource drugs, the Department will make further additions to the list of State MAC drugs after consultation with the Medical Assistance Advisory Committee as to whether the application of a State MAC is cost effective to the Department for a particular multisource drug. The Department will add the CMS multisource drugs to the State MAC list effective as of the effective date established by CMS.

(g) With the exception of disposable insulin syringes, the State MAC does not apply if the conditions are met as described in § 1121.53(b)(1) and (2) (relating to limitations on payment).

(h) The most common package size for the purposes of determining the product cost is one of the following:

(1) For capsules, tablets and liquids available in breakable package sizes:

(i) The listed package size if only one package size is listed.

(ii) The 100 or pint package size if more than one package size is listed.

(iii) The next smaller package size from the 100 or pint size, excluding a drug company’s unit-dose package size, if more than one package size is listed other than the 100 or pint package size.

(iv) The package size closest to the 100 or pint package size, excluding a drug company’s unit-dose package size, if the next smaller package is the unit-dose package size.

(2) The listed package size for all dosage forms available for all nonlegend drug products.

(3) The smallest package size for all dosage forms available in nonbreakable packages.

The provisions of this § 1121.56 amended January 16, 1987, effective March 1, 1987, 17 Pa.B. 261; amended December 14, 1990, effective January 11, 1991, 20 Pa.B. 6167; amended September 22, 1995, effective September 23, 1995, 25 Pa.B. 3978; amended August 5, 2005, effective August 10, 2005, 35 Pa.B. 4309; amended August 19, 2005, effective August 22, 2005, 35 Pa.B. 4727; corrected August 26, 2005, effective August 22, 2005, 35 Pa.B. 4309; amended April 13, 2012, effective April 14, 2012, 42 Pa.B. 2015. Immediately preceding text appears at serial pages (312953) to (312954) and (337485).

Notation

Authority

The provisions of this § 1121.56 amended under sections 201, 403, 403.1 and 443.4 of the Public Welfare Code (62 P. S. § § 201, 403, 403.1 and 443.4).

Notes of Decisions

The deduction provisions of section 9413.61 of the MA Manual have been replaced by the current regulations concerning prescription reimbursement to pharmacies, therefore the remedy for improper distribution under the prior scheme is the difference between the amount of reimbursement under that scheme and the amount of reimbursement had it been calculated under the current scheme under this section. Brog Pharmacy v. Department of Public Welfare, 487 A.2d 49 (Pa. Cmwlth. 1985).

(Editor’s Note: This regulation was promulgated under section 6(b) of the Regulatory Review Act (71 P. S. § 745.6(b)).)

Cross References

This section cited in 55 Pa. Code § 1121.51 (relating to general payment policy).