Formulary Management Techniques for Balancing Clinical, Financial Outcomes

Formulary management tools can seem daunting or frustrating, but are ultimately effective ways to control costs without compromising clinical outcomes, said Patty Taddei-Allen, PharmD, MBA, BCACP, BCGP, in a session—“Strategies to Optimize Clinical and Financial Outcomes: The Payer Perspective”—Sunday at the ASHP (American Society of Health-System Pharmacists) 54th Midyear Clinical Meeting & Exhibition in Las Vegas.

Taddei-Allen, senior director of clinical analytics for WellDyneRx, reviewed some of the more traditional formulary management tools as well as some more innovative tools, such as digital wellness solutions, and apps.

When managing formularies, it’s a balancing act, Taddei-Allen said. Plan sponsors and payers want to provide the most benefit richness possible, patients want to be able to afford their prescriptions and obtain the highest value, and providers want to help patients while avoiding increased costs.

There are a range of strategies to balance clinical and financial outcomes, Taddei-Allen said. While most strategies’ objectives are to manage cost and use, formularies instead manage the cost and use of “best” clinical drug options.

“It’s important to keep in mind that best is a relative term,” she said. “It’s defined differently by many different entities.”

Taddei-Allen quickly reviewed several management strategies: defined benefits by contract, contracted pharmacy provider network, pharmaceutical manufacturer contracting, and clinical and quality programs.

She then turned to formulary management tools, of which there are several types, she said. Open formularies don’t want to have drug exclusions, and thus only include “preferred” and “nonpreferred” drugs. Closed formularies, on the other hand, include preferred, nonpreferred, and excluded drugs.

When a new drug is entering the market, Pharmacy and Therapeutics Committees make 1 of 3 decisions: to not add the drug, to add the drug to the formulary, or to postpone the decision. If they decide to add the drug, it can either be a mandatory addition, or an optional addition. At that point, the pharmacy department of another value committee determines coverage access and reimbursement.

When considering what drugs to add to a formulary, Taddei-Allen said, decision makers must first consider clinical drug attributes, then economic, and humanistic factors.

Utilization management tools are some of the most common techniques for formulary management, and include quantity level limits, step therapy, and prior authorization. Taddei-Allen said these 3 options exist on a spectrum of restriction.

Quantity level limits is the least restrictive tool, she said, and plans may use it to provide coverage on a limited basis, such as providing only a certain number of epinephrine pens per year.

Step-therapy is moderately restrictive, and encourages members to try a step-1 drug before coverage is provided for a step-2 drug. Typically, Taddei-Allen said, step-1 drugs are generic and step-2 drugs are branded, although this is not always the case. Some PBMs are beginning to incorporate clinical pathways using step therapy, she said, and this technique typically works in conjunction with a plan’s formulary.

Finally, the most restrictive utilization management tool is prior authorization. It can be time consuming and some PBMs may place a lot of hurdles, but Taddei-Allen added that, “Making it easier isn’t always better.” Ensuring that guidelines are clinical appropriate is the key, she said.

Best practices for formulary drug considerations include monitoring the pipeline for up to 18 months down the road; considering clinical effectiveness first, before economic and humanistic factors; and considering any unintended consequences for utilization management requirements.

While traditional formulary management tools are still at the core of optimization strategies, Taddei-Allen said, technology is bringing more innovative tools, such as digital health, and wellness solutions; diabetic test strips and continuous glucose monitoring; medical devices; and smartphone apps. Some digital therapeutics do require a prescription, she added, such as an app for patients dealing with addiction.

Finally, Taddei-Allen concluded, while there are differing priorities in the multiple stakeholders within the health care continuum, it’s vital that they all work together to bring the best benefits to patients. Balancing clinical outcomes, benefit richness, and cost is necessary to achieve the best outcomes for patients.

REFERENCE

Taddei-Allen P. Strategies to Optimize Clinical and Financial Outcomes: The Payer Perspective. Presented at: ASHP (American Society of Health-System Pharmacists) 54th Midyear Clinical Meeting & Exhibition; Las Vegas, NV: December 8, 2019.