AIS Newsletter Continues to Find Industry Criticism of PBM Formulary Exclusion Lists
Atlantic Information Services, Inc. (AIS) - September 17, 2014 - Washington, DC

In ongoing coverage of formulary exclusion lists, Atlantic Information Services, Inc.’s Drug Benefit News (DBN) continues to find criticism surrounding the tactic. As first reported in its Aug. 8 issue, CVS Caremark Corp. and Express Scripts Holding Co.’s formulary exclusion lists for 2015 each cut more drugs than ever, but industry consultants questioned just how much savings these exclusions are likely to achieve. Despite finding the strategy problematic, citing concerns their clients have about transparency and communication between PBMs and payers, potential member disruption, and skepticism that the exclusions will result in substantial savings, analysts interviewed for DBN’s Sept. 12 issue agree that the strategy is here to stay.

“Clients are primarily focused on the potential member disruption and cost/benefit analyses,” says Milliman consultant Brian Anderson. “They are asking about what type of communications will be sent to their membership and how much will it ultimately bend the continued increasing costs,” he continues. But it may be too soon to calculate the savings results, especially the impact on overall drug spend.

Arthur Shinn, Pharm.D., founder and president of Managed Pharmacy Consultants, LLC, tells DBN that 85% of his client base has opted out of the standard exclusions in favor of customized formularies. “They do not want to have the yearly task of challenging their membership with formulary deletions,” he says. His clients “don’t mind having products on third tier, but when it comes to having the product deleted from formulary and not available without going through an appeals process, it is challenging to them.” Anderson has heard similar apprehensions. “Overall, payers would like to have more of an opportunity to be involved in the formulary determination process. This would include being presented with the various changes, member impact studies and analyses of cost reductions,” he tells DBN.

David Dross, a partner and national pharmacy practice leader at Mercer, says the tactic makes plan sponsors feel like the PBMs are mandating plan coverage rules, pointing out that plan sponsors feel “that’s not really a choice,” due to the potential “significant financial hit” they might take by losing out on the rebates that PBMs have negotiated for the brand drugs on those formularies.

However, “PBMs are getting more aggressive with this exclusion strategy,” Shinn observes. “[It’s] a big rebate revenue generator and the marketplace is saying, ‘Fine, I’ve got to keep my costs down because of what’s happening with specialty drugs.’ And this gives [payers] an opportunity to decrease drug spend.” He thinks the strategy will one day become common place, like “step therapy and quantity limits and generic mandates.”

Visit http://aishealth.com/archive/ndbn091214-01 to read the article in its entirety, which also includes statements from Express Scripts spokesperson David Whitrap.

About Drug Benefit News
Published biweekly, Drug Benefit News delivers timely news and proven cost management strategies for health plans, PBMs, pharmaceutical companies and employers. Coverage includes up-to-the minute news of industry consolidation, strategies for participation in exchanges, generic promotion tactics, formulary decisions, innovative benefit designs, drug pricing methodologies, PBM contracting, changes in Part D and other federal initiatives, and much more. Visit http://aishealth.com/marketplace/drug-benefit-news for more information.

About Atlantic Information Services
Atlantic Information Services, Inc. (AIS) is a publishing and information company that has been serving the health care industry for more than 25 years. It develops highly targeted news, data and strategic information for managers in hospitals, health plans, medical group practices, pharmaceutical companies and other health care organizations. AIS products include print and electronic newsletters, websites, looseleafs, books, strategic reports, databases, webinars and conferences. Learn more at http://AISHealth.com.

Contact
Jill Brown, Executive Editor
Atlantic Information Services, Inc.
(202) 775-9008, ext. 3058
jbrown@aishealth.com

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