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Drug Formulary Development and Management PowerPoint Presentation

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Description : This presentation on Drug Formulary Development and Management was created by the School of Pharmacy Relations Committee for AMCP. The objective of this presentation is to enable students define the concept of a formulary, generalize common formulary designs, explain principles of formulary development and maintenance.

Tags : Drug Formulary, healthcare, drug development, pharma, pharmaceutical

Published on : Jul 01, 2020 | Views : 3610 | Downloads : 6

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Slide 1-

Drug Formulary Development & Management Created by the School of Pharmacy Relations Committee for AMCP Updated: January 2020
Slide 2-

Objectives Upon review of this module, the student will be able to: Define the concept of a formulary Generalize common formulary designs Explain principles of formulary development and maintenance
Slide 3-

Definition A formulary is a list of drugs approved for use in a given setting, such as within: Hospitals and Health Systems Employer Groups Managed Care Organizations (MCO) Pharmacy Benefit Managers (PBM) Government agencies (Medicaid, VA system) Dictates prescription drug/class coverage and/or the level of coverage (i.e. patient copayment)
Slide 4-

Development of the Formulary The formulary generally: Offers one or more therapeutic options per disease category Facilitates purchasing and prescribing Helps manage cost by reducing duplication Formularies are often used as a negotiating tool with drug manufacturers Drug manufacturers may offer discounts (i.e. rebates) for drugs that are placed on the formulary
Slide 5-

Development of the Formulary Several organizations provide guidance, standards, and tools related to formulary development and management: National Committee for Quality Assurance (NCQA) Utilization Review Accreditation Commission (URAC) Centers for Medicare & Medicaid Services (CMS) Academy of Managed Care Pharmacy (AMCP) Joint Commission on Accreditation of Healthcare Organizations (JCAHO) Institute for Clinical and Economic Review (ICER)
Slide 6-

Formulary Benefit Design Drug review and formulary placement decisions are typically based first on clinical evidence supporting both safety and efficacy, by indication(s) Once safety and efficacy are evaluated and determined to be similar between multiple drugs within a drug class, costs may then be considered Formularies direct to the preferred drugs using various methods: Different copay tiers (e.g., copays, co-insurance) Utilization management strategies (e.g., prior authorizations, step therapies) Prescriber incentives
Slide 7-

Formulary Benefit Design Common utilization management strategies: Prior authorization: Allows clinical review ensuring appropriate use Step therapies: Requires lower-cost, first-line therapies Quantity limits: Assures appropriate dosing Duration limits: Limits how long a therapy can be used Channel management: Limit to specific pharmacies or providers
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Formulary Benefit Design Formularies are typically distinguished as open or closed: Closed: limited drug selection, lower cost to patients and payers (e.g., insurers, health systems) Open: broader drug selection, higher cost to patients and payers Most managed care organizations have closed (i.e., restricted) formularies
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Formulary Benefit Design Managed care organizations often have various regulations and rules around formulary design, for example: Medicare Part D plan formularies must offer two distinct products per disease category and class Medicare Part D formularies must be approved by CMS prior to use Plans compliant with the Affordable Care Act must offer certain preventative care products
Slide 10-

Formulary Benefit Design Formularies are often designed with multiple tiers with different cost shares: Two tier formularies Example: Tier 1 (low copay) = generics and/or preferred drugs, Tier 2 (high copay) = brands and/or non-preferred drugs Three tier formularies Example: Tier 1 (low copay) = generics, Tier 2 (medium copay) = preferred brands, Tier 3 (highest copay) = non-preferred brands Four tier formularies Example: Tier 1 = generics, Tier 2 = preferred brand, Tier 3 = non-preferred brands, Tier 4 = specialty cost tier
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Formulary Benefit Design Formularies may include extra tiers to drive higher member contributions for targeted drug classes/categories Examples: Zero-copay medications Specialty medications Lifestyle medications Value-based copay structures High-cost generics Percentage copays (i.e., coinsurance)
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Formulary Development and Maintenance A Pharmacy & Therapeutics (P&T) Committee typically contribute to the development, management, updating and maintenance of the formulary Committee is commonly comprised of physicians, specialists, and pharmacists, and general population members Meets regularly to review newly available drug therapies, treatment options, and drug classes May also be involved in quality/cost initiatives such as Medication Use Evaluation (MUE) programs
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Formulary Development and Maintenance Formulary - generally evaluated at a therapeutic class level; review includes new clinical evidence, if available, for all drugs in a therapeutic class Drug selection – Based primarily on clinical efficacy and safety given current evidence and standards of care All things equal, net cost is considered Pharmacoecomonic models are often used
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Additional Considerations Outcomes-Based Agreements/Contracts Pharmacogenomics and Biopharmaceuticals Biosimilars Lifestyle Drugs Higher Tiers/Multiple Tiers Co-Insurance Health Savings Accounts
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Reference Navarro, R. 1999. Managed Care Pharmacy Practice. 2nd edition. Gaithersburg, MD: Aspen Publications. Kongstvedt, P. 2001. Essentials of Managed Health Care. 4th edition. Gaithersburg, MD: Aspen Publications. Foundation for Managed Care Pharmacy. The AMCP Format for Formulary Submissions. Version 2.1. A format for support of the formulary consideration by health care systems in the United States. Alexandria, VA: Academy of Managed Care Pharmacy; April 2005. Available at http://www.fmcpnet.org/data/resource/Format~Version_2_1~Final_Final.pdf Centers for Medicare & Medicaid Services (U.S.),, & United States. (2016). Centers for Medicare & Medicaid Services - Formulary Guidance. Available at https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/downloads/FormularyGuidance.pdf
Slide 16-

Thank you to AMCP member Sital Patel for updating this presentation for 2020
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To improve patient health by ensuring access to high-quality, cost-effective medications and other therapies. Mission & Vision

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