Tuesday, October 22, 2013

Express Scripts and the Inevitability of Formulary Exclusion

Here’s a pre-Halloween scare for pharmaceutical manufacturers. Pharmacy benefit manager (PBM) Express Scripts (NASDAQ: ESRX) will drop 48 brand-name drugs from its 2014 standard national preferred formulary. View the Express Scripts 2014 Preferred Drug List Exclusions.

Steve Miller, Express Scripts’ chief medical officer, gave an enlightening interview in which he explained the changes and exclusion criteria. Links and my highlights below.

Express Scripts is following CVS Caremark’s example, so manufacturers should be unsurprised by another inevitable consequence of the generic wave. Brand-name drugs in highly genericized therapeutic classes face enormous pressure for price and rebate concessions. Tier 3 formulary position no longer guarantees cost-effective patient access. And scariest of all: your pricing actions and marketing tactics increase the risk of formulary exclusion.

Here’s the publicly available background:
Here's a concise list of the excluded drugs. Click to enlarge.

Formulary exclusion is closely connected to other option-limiting payer strategies, such as narrow pharmacy networks. Here's why Express Scripts says the drugs got bumped, along with corresponding comments from Dr. Miller's interview:
  • Therapeutic interchangeability (“…clinical data shows there are other products effective in the marketplace.”)
  • Rapid price increases (“Brand inflation is really problematic for both patients and payers.”)
  • Payers’ willingness to trade off choice for cost savings (“There is more tolerance for this by both patients and payers to narrow choices.”)
  • Copay cards (“By excluding these products – and 93 percent of the (drugs) we excluded had co-pay cards - this strategy renders those cards useless.”)
Does this describe your products? Feel free to weep if one of your company’s drugs is on the list. Note the two marketing-related criteria—copay cards and price increases.

Battles over formulary exclusion and co-pay cards have been building for years. From the Drug Channels archives, check out 2011’s More Formulary Exclusions for Many Drug Therapies and PBMs Launch a New Attack on Copay Cards.

CVS Caremark proved exclusion could be done with minimal beneficiary disruption. Starting in the January 2012 plan year, CVS Caremark removed 34 brand-name drugs from its standard national formulary. (WSJ story from November 2011) Emboldened by its success, CVS Caremark added 17 more brand-name drugs to its exclusion list for the 2013 plan year. (WSJ story from November 2012) CVS Caremark claims great success with its programs, which it reports affected fewer than two percent of its plan members. Update: View CVS Caremark's 2014 formulary removal list.

Who’s the boss? We all know the answer.

1 comment:

  1. The only they thing they did differently this year than previous years is adopted Medco's PDST program and made it part of the annual bidding process. The author of the Forbes article published yesterday said "not surprisingly, 93% of the products had copay cards". Thanks for the insight; nearly every drug on the market has a copay card. You could have picked 48 different drugs and had the same outcome.