January 28, 2005


Senate Bill 1167 permits PACE to continue reimbursing for brand name products if the brand name drug is determined to be “less expensive to the Program” than the newly introduced A-Rated generically equivalent drug.


This legislation defines “Less Expensive to the Program” to include not only the reimbursement price to the pharmacy but also the rebate received from the manufacturer.


When a new A-Rated generically equivalent drug is introduced, the Department will decide, on a case-by-case basis based on this definition, whether or not to mandate substitution. If a review of the data shows that a newly introduced A-Rated generic is slightly less expensive based on provider reimbursement, but is actually more expensive to the Program based on the rebate dollars lost versus cost savings gained, substitution will not be mandated.


Providers need only be aware that this may occur and realize that:





·        Note: Although the Program may not mandate substitution for certain products when an A-rated product becomes available, claims will be adjudicated for the generic upon its addition to the Program’s drug file.



Questions may be directed to PACE Provider Services at: