On November 5, 2015, the Center for Medicaid and CHIP Services, a division of the Centers for Medicare & Medicaid Services (CMS), issued a Medicaid Drug Rebate Program notice (the Notice) to state Medicaid contacts emphasizing appropriate access to, and coverage of, direct-acting antiviral (DAA) drugs used to treat individuals with the hepatitis C virus (HCV).

CMS reminded the States that they are required to cover all “covered outpatient drugs” manufactured by entities that maintain a Medicaid Drug Rebate Program agreement with CMS.  In addition, the law requires that state Medicaid programs cover such “covered outpatient drugs” for their FDA-approved uses, as well as the uses supported by American Hospital Formulary Service Drug Information, the United States Pharmacopeia-Drug Information, and the DRUGDEX Information System.  (See 42 U.S.C. § 1396r-8(k)(6), (g)(1)(B)).   States may only exclude coverage for a “covered outpatient drug” when the excluded drug does not have a significant, clinically meaningful therapeutic advantage in terms of safety, effectiveness or clinical outcome of such treatment for such populations over other drugs included in the formulary and there is a written explanation of the basis for the exclusion.  

Citing concern that some state Medicaid programs may be violating the law by subjecting DAA HCV drugs to “conditions for coverage that may unreasonably restrict access,” the Notice urges states to “exercise sound clinical judgment and utilize available resources to determine their coverage policies” regarding DAA HCV drugs.  The Notice reminds states that while they are permitted by law to establish certain drug coverage limitations, the impact of any such restrictions may not deny patients access to appropriate and necessary treatments.  

The Notice also cautions states to evaluate the practices of their Medicaid managed care organizations (MCOs) to ensure that the conditions for payment of DAA HCV drugs under a MCO are no more restrictive than the conditions applicable to those same drugs under fee-for-service (FFS) Medicaid.  CMS reiterated that while MCOs are allowed to apply utilization controls to DAA HCV drugs, “the managed care plan may not use a standard for determining medical necessity that is more restrictive than is used in the state plan,” and that appropriate access to therapies must be maintained.