Transcript Drug Formulary Development & Management

Drug Formulary Development &
Management
Presentation Developed for the
Academy of Managed Care Pharmacy
Updated: February 2015
Objectives
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Definition of Formulary
Evolution of the Formulary System
Formulary Designs
Formulary Development and Maintenance
Future Direction
Definition
• A list of drugs approved for use in a given setting
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Hospitals and Health Systems
Employer Groups
Managed Care Organizations (MCO)
Pharmacy Benefit Managers (PBM)
Government agencies (Medicaid, VA system)
• Dictates prescription drug/class coverage and/or the
level of coverage (i.e. patient copayment)
Evolution of the Formulary
• Originally used in the early 20th century as a
method to manage and control inventory
– Offer clinically sound treatment options by disease
category
– Reduce duplication
– Manage cost
– Facilitate the purchasing process
• Evolved into a negotiating tool with drug
manufacturers
Evolution of the Formulary
• Financial incentives from drug manufacturers
– Drug manufacturers offer discounts (i.e. rebates) for drugs
that are placed on the formulary
– Products with favorable formulary positions gain market
share driven by
• Different copay tiers
• Prescriber incentives
– Drug review and formulary placement decisions are based
first on clinical safety and efficacy.
• All else equal, cost and rebates are considered
Evolution of the Formulary
• A substantial number of patent expirations in recent
years means generics available for a wide variety of
conditions
• Rebates are less important
• Innovation now focuses primarily on high cost
biopharmaceuticals and pharmacogenomics
• Cost containment for these agents is difficult
• Rebates may come into play
• Formularies provide a tool to help manage these challenging agents
Evolution of the Formulary
• Quality and value in pharmaceutical care
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National Committee for Quality Assurance (NCQA)
Centers for Medicare & Medicaid Services (CMS)
Academy of Managed Care Pharmacy (AMCP)
Joint Commission on Accreditation of Healthcare
Organizations (JCAHO)
• Utilization management strategies
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Prior authorization to assure appropriate use
Quantity limits to assure appropriate dosing
Duration of use limits
Channel management
Formulary Benefit Design
• Formularies are distinguished as open or
closed
– Closed: limited drug selection, lower cost
– Open: broader drug selection, higher cost
A continuum of formulary options between completely
closed and completely open, gives plans the flexibility
to achieve the right balance between cost and choice
for their members.
Open Formulary and Benefit Design
– Two tier formularies
• Tier 1 = generics, Tier 2 = all brands
–Three tier formularies
• Tier 1 = generics, Tier 2 = non-preferred, Tier 3 = preferred brands
– Four tier formularies
• Tier 1 = generics, Tier 2 = non-preferred, Tier 3 = preferred brands
• Tier 4 – specialty or high cost tier
Formulary Benefit Design
• Formularies may include extra tiers to drive higher
member contributions for targeted drug
classes/categories
– Examples:
• Specialty Injectables
• Lifestyle Medications
• Value based copay structures
• High cost generic tiers
• Percentage copays
Pharmacy & Therapeutics (P&T) Committee
• Comprised of physicians, specialists, and
pharmacists, and lay members
• Meets regularly to review newly available drug
therapies/ treatment options
• Stays abreast of developments in the pharmacy
market including new drugs, new warnings, recalls,
etc.
• Develops, manages, updates, and administers the
formulary
• May also be involved in quality/cost initiatives
Formulary Development and Maintenance
• Formulary - evaluated at a therapy class level,
clinically complete and up-to-date
• Drug selection – Efficacy and safety first based
on evidence and current standards of care
• All things equal, net cost is considered
• Pharmacoecomonic models often used
Future Designs
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Pharmacogenomics and biopharmaceuticals
Biosimilars
Outcomes Studies
Lifestyle Drugs
Higher Tiers/Multiple Tiers
Co-Insurance
Health Savings Accounts
Reference
• Navarro, R. 1999. Managed Care Pharmacy Practice. 2nd
edition. Gaithersburg, MD: Aspen Publications.
• Kongstvedt, P. 2001. Essentials of Managed Health Care. 4th
edition. Gaithersburg, MD: Aspen Publications.
• Foundation for Managed Care Pharmacy. The AMCP Format
for Formulary Submissions. Version 2.1. A format for support
of the formulary considation by health care systems in the
United States. Alexandria, VA: Academy of Managed Care
Pharmacy; April 2005. Available at
http://www.fmcpnet.org/data/resource/Format~Version_2_1
~Final_Final.pdf
Thank you to AMCP member
Carly Rodriguez for updating
this presentation for 2015.