What You Wanted to Know About Formularies Emmanuelle Mirsakov Pharm.D. Candidate 2007 USC School Of Pharmacy

Purpose of a Formulary To manage costs and improve quality of care Goal of Formulary review process: To provide a quality pharmaceutical benefit, determined through an evidence based decision- making process, taking into account the reality of constrained health care budgets.

Who is Behind the Formulary Process? P+T Committee (Pharmaceutical and Therapeutics Committee) Physicians Pharmacists Nurses Economists And more…

Types of Formularies TypeStructurePositiveNegative Open *Self Funded plan Covers any prescription Flexibility/Freedom of choice Liked by patients/Drs Large amount of choices, no direction by P+T committee Expensive Closed *Strict HMO; Hospital Will not cover non- formulary drugs Minimizes Costs Direction in choices made by P+T committee No Flexibility Patients Pay more out of pocket Preferred *Self Funded plan Use of formulary or preferred drugs for a reduced co-pay (e.g. 3-tier co-pay) Flexible Patient pays less out of pocket for non- formulary drugs Minimizes costs P+T committee direction

Example of Preferred Tiered Copay Tier 1 copay: $10 (generics) Tier 2 copay: $25 (branded, formulary) Tier 3 copay: $40-$100 (covered, nonformulary, branded or generic) Tier 4 copay: 100% of price (not covered medications)

Pros and Cons of a Preferred List ProCon Flexible More access to medications than closed structure Cost saving for plans and members Helps educate members about drug costs Not an all inclusive list Higher member out of pocket costs/ drug therapy compliance More effective+ more costly drugs might not be chosen in lieu of cheaper drugs

Decisions of a Formulary List 1. Clinical: Based on strength of scientific evidence and standards of practice Clinical trials Published practice guidelines Comparing efficacy Equivalent drugs: dose, clearance, dose adjustments… Usually 2-3 drugs per therapeutic class

Decisions of a Formulary List 2. Economic: Equivalency Assumption = cost Drug therapy impact on health costs Incentives/ rebates Generics

Decisions of a Formulary List 3. Other: Demographics of patient population Bias of the organization (Christian Foundation, Jewish organization…)

Cost Saving Techniques Prior Authorization Quantity Limitation Mail Order Step therapy Generics

Prior Authorizations Restricts Coverage of certain drugs based on the patients conditions Usually need to try an alternative first Usually for drugs in the range of $250- $2,000/month

Quantity Limits Pre-defined maximal quantities (restrict dosage units for an X amt of days) Established to decrease abuse and overuse Improve compliance Lower costs

Mail Order Automation and high volume purchasing, allows filling of prescriptions at a lower fee structure than a retail facility Other benefits of mail service include provision of patient education materials on the products dispensed, "24/7" pharmacist consultation availability, success in moving patients to more cost-efficient treatment choices, successful compliance programs Dont be fooled, they have to make up the difference somewhere

Step Therapy Step therapy: The practice of beginning drug therapy for a medical condition with the most cost-effective and safest drug therapy and progressing to other more costly or risky therapy, only if necessary. The aims are to control costs and minimize risks.

Commonly Excluded Drugs Prenatal vitamins Fertility agents Sexual Dysfunction Agents Oral Contraceptives Cosmetic Drugs OTC Experimental/ Off-label Use

Checks and Balances Quality Control Accreditation programs (Joint Commission on Accreditation of Health care organizations; National Committee for Quality Assurance) Outcomes Cost/ Are the savings real?

Fidelis Preferred Drug list NY Medicaid Formulary Quantity Limits Covers all generics/ Generic bias Step-Therapy Prior Authorization Includes classes for major disease states Excludes erectile dysfunction and OC (Fideles is a Catholic organization); Includes pre-natal vitamins and OTC

Fidelis A Medicaid HMO 2 Components: Managed care coverage for low income who do not qualify for Medicaid NY State Medicaid Benefits must be at the level of the state fee-for- service programs Contracting out to managed care entities relieves govt

Medicaid Coverage Free services and medications Covers non prescription medications and products Prosthetics Durable medical equipment Diapers Pre-natal and childrens vitamins

Thanks! Thank you for listening Okay… I am ready for your questions