CMS Pub. 100-02, ch. 1, § 30.2

A3-3101.3.B, HO-210.3.B

A pharmacy and drug therapeutics or equivalent committee is a medical staff committee

that confers with the hospital pharmacist in the formulation of policies pertaining to

drugs. Drugs and biologicals approved for use in the hospital by such a committee are

covered only if the committee develops and maintains a formulary or list of drugs

accepted for use in the hospital. The committee need not function exclusively as a

pharmacy and drug therapeutics committee but may also carry on other medical staff

functions.

Drugs and biologicals are considered approved for use in the hospital if selected for

inclusion in the hospital drug list of formulary under the procedure of the committee

established for that purpose. Express approval is required; the fact that a drug or

biological has not been specifically determined to be unacceptable for use in the hospital

does not constitute approval.

Drugs and biologicals are covered if approved for general use in the hospital, or if

approved for use by a particular patient or group of patients. Approval by a pharmacy

and drug therapeutics committee is an alternative to approval for inclusion of the drug or

biological in an approved drug compendium (see §30.1 above); such approval does not

preclude the need for a determination of medical necessity. An investigational drug is

not considered to meet the reasonable and necessary test since its efficacy has not yet

been established.

The decision of individual hospitals should not transcend the determinations of the Food

and Drug Administration and Public Health Service in respect to the safety and

effectiveness of drugs. Therefore, even if approved by an appropriate hospital

committee, the reasonable cost of an investigational or other nonapproved drug or

biological (e.g., Laetrile) cannot be reimbursed. This exclusion from payment applies

whether or not the drug or biological is administered during the course of an otherwise

covered hospital stay, since payment may not be made for items and services that are not

reasonable and necessary. A hospital stay solely for the purpose of administering a drug

or biological that is not reasonable and necessary, including an investigational drug or

biological, is not covered and the drug or biological itself is not covered.