Aggressive formulary management will continue to play a key role in containing pharmaceutical costs, especially those related to specialty products, in 2015. No better example exists than the rise of formulary exclusions, or the concept of blocking from coverage select brand-name drugs rather than relegating them to higher cost tiers, in order to achieve better manufacturer discounts.

CVS Caremark Corp. and Express Scripts Holding Co. have both grown their exclusion lists for 2015, while Catamaran Corp. in mid-2014 launched its optional Value Formulary that does not exclude any specialty drugs. And despite public debate about member disruption and the potential impact of exclusions on pharmacy trend and greater medical spend, more payers and PBMs are going ahead with exclusionary strategies for 2015.

“At this point, most of my clients are grudgingly accepting the ‘new world order’ of exclusion-based formularies,” Josh Golden, practice leader, employer consulting, at Pharmaceutical Strategies Group LLC, tells AIS. “And while specialty drug classes used to be off limits for aggressive formulary management, that old rule really no longer applies for a number of specialty disease states.”

Craig Oberg, R.Ph., managing consultant at The Burchfield Group, estimates that about two-thirds of clients have adopted formulary exclusions for 2015. “The savings generated through exclusions is less about reductions in ingredient cost and more about preserving manufacturer rebates,” he observes.” The number of opportunities to exclude products has and will continue to decline with each successive year. The use of exclusions as a cost management [tool] for traditional medications will lose importance in the future. The opportunities for exclusions in the area of specialty medications will be limited due to the necessity of having a minimum of two products that can deliver nearly identical clinical results.”

“There’s no doubt that the PBMs’ specialty formulary maneuvers are driving significant manufacturer incentives behind the scenes,” adds Golden. “The crucial question is whether those incentives flow back to the plan sponsor, or get pocketed by the PBM. And the answer to that question depends on the client’s contract terms.”

Here are a few of the exclusionary options new to the marketplace for 2015:

• Prime Therapeutics LLC, which has not “advocated heavily” for formulary exclusions in the past, in late 2014 introduced three options for its Blue Cross and Blue Shield plan owners and clients as well as self-insured employer groups. The first is a basic option that identifies four categories for utilization management without grandfathering and offers the lowest amount of cost reduction at 75 cents per prescription; the other two are “true exclusion options” and can result in net savings to the plan of up to $1.15 per prescription (generics-focused option) or up to $2.80 per prescription (enhanced).

• Independent Health in 2014 moved from an open to a closed three-tier formulary design and will increase the number of drugs that are non-formulary, including multi-source brand drugs, for 2015. Martin Burruano, R.Ph., vice president for pharmacy at the Western New York insurer, which operates its own PBM, explains this change was partly in response to “manufacturer coupons…negating the positive effects of a tiered formulary design.” Moreover, the insurer has moved high-cost generics into higher tiers across multiple therapeutic categories. “For the drugs that are excluded, formulary alternatives are available,” he adds. The savings associated with these changes are expected to result in an approximate 3% decrease in overall drug spend.
  Envision Pharmaceutical Services (EnvisionRxOptions) in late 2014 unveiled the Performance Formulary, in which clients must “opt in” to use the drug list that “integrates formulary exclusion logic with step therapy.” The formulary features 10 step therapies and 11 exclusions; categories subject to exclusion are acne, diabetes testing supplies, insulins, injectable diabetes medications, overactive bladder medications and androgens. Envision estimates that clients can achieve an additional 5% to 10% in savings, while expected member disruption is typically less than 1.5% of utilizing members.

• In addition to existing formulary options that exclude drugs used for cosmetic purposes, weight loss, erectile dysfunction, and smoking cessation, Navitus Health Solutions, LLC’s new SelectPlus Formulary further excludes approximately 45 agents in categories and classes deemed therapeutically interchangeable by the Navitus Pharmacy and Therapeutics Committee. These include topical testosterone, nasal steroids, long-acting opioids, diabetic test strips and insulin; some specialty agents are also subject to exclusions. Navitus anticipates savings anywhere from 6% to 10% with the new formulary product, which is offered on an opt-in basis.

Contact Burruano via Frank Sava at frank.sava@independenthealth.com, EnvisionRx spokesperson Josh Paulen at jpaulen@rxoptions.net, Golden at jgolden@psgconsults.com, Navitus spokesperson Chantel Soumis at chantel.soumis@navitus.com, Oberg via Christine Hanson-Ehlinger at chanson-ehlinger@burchfieldgroup.com and Prime spokesperson Laura Aumann at laumann@primetherapeutics.com.
Excerpted from the 1/9/2015 issue of AIS’s Drug Benefit News