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Lawyers who won a ruling blocking the Florida Medicaid program from restricting coverage of a popular prescription drug say the state’s recent decision to drop its appeal sets an important precedent for what Florida and other states can and cannot do on drug coverage rules. A key dispute in the case was over whether Congress intended Medicaid programs to cover all prescription drug uses listed in three congressionally approved drug compendia whether they’re approved by the Food and Drug Administration or not. Or, did the lawmakers designate only those drugs listed in the compendia as being supported by research as effective? The issue remains disputed by both sides. In February 2006, U.S. Magistrate Judge Theodore Klein ruled the Florida Agency for Health Care Administration violated federal Medicaid law by barring coverage of most non-FDA-approved uses for the drug Neurontin and its generic gabapentin that are listed in the compendia. A class action was brought on behalf of 6,000 Medicaid beneficiaries who were using the drug, which is prescribed to treat a variety of conditions including nerve pain, seizures and mental illness. The plaintiffs alleged the state violated the Medicaid Act, �1396r-8(k)(6), which requires states that have agreed to provide prescription drug coverage to follow federal requirements. The parties had agreed to let Klein decide the entire case rather than have it go to a district judge. AHCA appealed Klein’s decision to the U.S. Court of Appeals for the 11th Circuit. In June, AHCA withdrew its appeal. Private and legal aid lawyers for the plaintiffs say the state now is complying with Klein’s ruling and covering non-FDA-approved uses of Neurontin and its generic version. “We prevented states from misinterpreting the law in a way that could really deny thousands, if not hundreds of thousands, of Medicaid recipients drugs their doctors believe are beneficial,” says Neil Kodsi, a shareholder at Carlton Fields in Miami who handled the case pro bono. Miriam Harmatz, a staff attorney with Florida Legal Services in Miami, says the state’s effort to restrict Neurontin coverage sparked widespread anger among doctors. “Never have I heard such a consistent uproar from physicians,” she says. “For some people this was the only drug that worked. To deprive them of this was irrational.” But Craig Smith, general counsel for AHCA, says the state withdrew its appeal because a May 2006 letter issued by the federal Centers for Medicare and Medicaid Services, which oversees the two programs, resolved the issue in AHCA’s favor. “The federal government announced, in direct response to [Klein's] decision, that they wanted to be clear that states only have to cover drugs supported [by research] in the compendia,” he says. Therefore, he contends, the state’s appeal was moot. Lawyers for the class of plaintiffs, however, dispute AHCA’s interpretation of the letter. They say the letter supports their arguments and Klein’s ruling, and that AHCA withdrew its appeal because it had no support for its decision to refuse to cover Neurontin and its non-FDA-approved uses. “The letter reiterated the law, it didn’t clarify anything,” Harmatz says. “But that’s what [the state] was hanging their hat on in the appeal. If they felt they had the authority to cover [or refuse to cover] whatever drugs they wanted, they would have pursued the appeal.” STATES LOOK TO LIMIT COSTS The end of the litigation comes at a time when Florida and other states are struggling to control the burgeoning cost of prescription drugs within their Medicaid programs. Florida’s program serves more than 2 million seniors, poor people, and disabled people. Florida paid $1.5 billion for prescription drugs within its Medicaid program in the fiscal year that ended in July 2006, down from $2.6 billion in the previous fiscal year, said Sybil Richard, AHCA’s assistant deputy secretary. AHCA, she said, is working to implement Medicaid cost-saving measures mandated by the Florida Legislature. Richard said the state’s cost-control measures, as well as the implementation of the federal Medicare Part D prescription drug program — which subsidizes drug costs for low-income Medicare recipients — have helped reduce Medicaid prescription drug costs. Still, she said, an aging population and a growing reliance on medication as a therapeutic remedy have placed a heavier drug cost burden on the Medicaid program. As her agency implements cost controls, Richard said, it strives to look out for patients’ medical needs. “Our goal is to get patients the drug products they need,” she says. “We will consider monetary and clinical aspects.” Neurontin is manufactured by Pfizer, while the generic gabapentin is manufactured by Apotex Corp. Both drugs are approved by the FDA to treat the pain that accompanies shingles as well as to help control partial seizures in adults and children. The drug is also prescribed for a variety of other maladies. Federal law requires states to provide coverage for drugs that are either approved under the Federal Food, Drug and Cosmetic Act, or under three congressionally approved drug compendia. State Medicaid programs follow those compendia to determine which drugs and their FDA- and non-FDA-approved uses are to be covered. In July 2004, AHCA began requiring physicians to contact the agency for prior authorization to prescribe Neurontin and gabapentin for Medicaid recipients for most uses that weren’t approved by the FDA. But AHCA began denying coverage of every Neurontin and gabapentin prescription that wasn’t for one of two FDA-approved uses, or the two off-label uses the agency decided to cover. The practice of prescribing non-FDA-approved or off-label uses of prescription drugs is legal and accepted within the medical community. The class action contended that Florida had no right under federal law to decide which non-FDA-approved uses of Neurontin to cover. Klein ruled that Congress intended state Medicaid programs to cover both FDA-approved and non-FDA-approved uses cited in the three compendia. He said Congress did not intend for prescription drugs and their uses to be rated by the compendia according to efficacy. “Plaintiffs also point out that the Medicaid Act does not require a use listed in a compendium to be rated �effective,’” Klein wrote in his ruling. “The statute reads that a use must be �supported by one or more citations included .�.�. in any of the compendia.’ It says nothing about a use having been evaluated in terms of efficacy by the compendia’s editors.” Klein noted the state of Florida has the right under federal law to restrict coverage of certain uses of prescription drugs. But the state, he wrote, failed to properly use any of four legal ways for restricting coverage of non-FDA-approved uses of Neurontin and gabapentin. A CONTINUING DISPUTE Following Klein’s ruling, the Centers for Medicare and Medicaid Services issued a letter stating the federal Medicaid statute “requires coverage of off-label uses of FDA-approved drugs for indications that are supported (as opposed to listed) in the compendia specified in Section 1927(g)(1)(B)(II). Prior approval policies may be put in place, the letter said, but prior authorization cannot be used to deny the off-label indications supported by citations included or approved for inclusion in the above-referenced compendia.” Smith said that since the letter came out, Florida and other states have some discretion in what drugs and their uses they will pay for but that they can’t simply refuse to cover every request. Harmatz argued, however, that Klein found the state has no discretion to determine whether a use is for a medically accepted indication, and the letter in no way changes this. Congress, she said, gave the editors of the compendia, not state Medicaid agencies, the responsibility for reviewing the medical literature and deciding which uses are supported. In a court document filed in 2005, AHCA said Neurontin prescriptions were costing the state nearly $27 million. The state hasn’t calculated the cost of covering Neurontin since then, but AHCA officials don’t expect Klein’s ruling to increase the cost of covering the drug.
Alana Roberts is a reporter for the Daily Business Review , an ALM publication.

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