Quality Care Midterm Dr. Purnell- Introduction to drug formularies and utilization management

What is a drug formulary?

a list of drugs approved for use in a given setting

What settings utilize drug formularies?

Hospitals/Health Systems

Managed Care Organizations (MCOs)

Pharmacy Benefit Managers (PBMs)

Government agencies (Medicare/Medicaid)

What is the goal of a formulary?

to encourage the use of safe and effective medications at the most reasonable cost

What is the goal of drug formularies (why are they necessary)?

to encourage the use of safe and effective medications at the most reasonable cost

How are drugs classified/ranked in a formulary?

the level of coverage- a system known as tiering

What does a formulary dictate

1. level of coverage (tiering)

2. drug coverage itself (copay/coinsurance)

what needs to happen in order for a drug to be added to a formulary?

1. drug needs to be FDA approved

2. Clincal Review of efficacy and safety (we have this approved drug but is it safe to add it?)

3. Cost of drug review (is it cost-effective for the clinical implication)

4. P&T committee review of the drug (our final reviewers of a drug)

What is the P&T committee?

Pharmacy and Therapeutics Committee

Who makes up a P&T committee?

physician, pharmacists, and other healthcare professionals

What are the roles of the P&T comittee?

1. meets to review newly available drug therapies, treatment options, and drug classes

2. Administers (develops and maintains) the formulary

3. Establishes, implements, and approves utilization management strategies for drugs.

What information does a P&T committee review?

1. Clinical literature (trials, guidelines)

2. FDA-approved prescribing information (package inserts)

3. Healthcare provider recommendations

4. Economic information (PE studies, drug costs)

What type of formulary design do most formularies utilize?

tiering design

What does a tiering design give information about?

cost-effectiveness and cost for the member

What does a lower tier (eg tier 1) tell you about a drugs cost-effectiveness?

it's the MOST cost-effective and LOWEST cost for the member.

these are usually your generics

What does a higher tier (eg. tiers 2- 4) tell you about drug cost-effectiveness

it's the LEAST cost-effective and MORE out of cost for the member

these are generally brand names

as you increase in tier, cost effectiveness_________

DECREASES

this means that its very expensive and not the preferred first-line drug to treat a given condition

T/F drug formularies can be open or closed

TRUE

Properties of an open formulary

BROAD selection of drugs

HIGHER COST to payers and patients

Properties of a closed formulary

LIMITED drug selection

LOWER cost to patients and payers

Non-formulary drugs require formulary exemption request (it's closed so anything not in the formulary needs to be authorized)

A flat fee that a patient pays for a healthcare service/prescription is called

copay

the amount a patient pays which is a percentage of the cost of a healthcare service/prescription is called

coinsurance

the amount of money a patient must pay before insurance will cover the prescription is called

Deductible

CASE: TJ recieves a new prescription at the pharmacy. The technician informs him he must pay $15 out of pocket. the $15 is an example of what type of payment?

copay

CASE: TJ recieves a new prescription at the pharmacy. The pharmacist informs him he is resonsible to pay 25% of the cost of this drug. 25% is an example of what type of payment?

coinsurance

CASE: TJ recieves a new prescription. He recently switched insurances. Although the copay is $10 he has to pay $100 today. The $100 is an example of what type of payment?

deductible

What are additional tiers of a formulary design?

1. zero-copay medications (not tiered because there's no cost)

2. Specialty medications (special population medications)

3. High cost generics (not tiered with general generic tier 1 due to high cost)

What are the three primary focuses for utilization management

1. Safety

2. Efficacy

3. Cost