12:00 AM
 | 
Dec 16, 2013
 |  BioCentury  |  Strategy

Out in the cold

How PBMs are adding excluded drugs lists as cost control tools

New excluded drugs lists devised by pharmacy benefits managers are raising the hurdle for reimbursement of drugs the PBMs' pharmacy and therapeutics committees consider to be clinically equivalent to cheaper drugs. Drugs that are not sufficiently differentiated will not receive low reimbursement - they will receive none at all.

PBMs have always made decisions about what drugs will be included in formularies with higher cost-sharing and which will be available with lower cost-sharing. But excluded drugs lists take this one step further by not providing any cost-sharing for some drugs.

Excluded drugs lists are a response to the growth in the number of approved specialty drugs, co-pay coupons used by drug companies to lower costs for patients, and requirements for drug coverage under the Affordable Care Act that are increasing pressure on PBMs to contain drug outlays for their clients.

PBMs control the drug spend for large private payers as well as large and small self-funded employer plans. Between them, Express Scripts Holding Co., CVS Caremark LLC, UnitedHealth Group's OptumRx Inc., Catamaran Corp. and Prime Therapeutics LLC manage more than 95% of pharmacy benefits for employers in the U.S.

CVS Caremark was the first to institute an excluded drugs list in plan year 2012. This October, Express Scripts announced its first excluded drugs list, which will take effect in January (see "Missing the Cut," A6).

The two lists had 11 of the same drug classes, but each PBM also targeted a handful of drug classes that the other did not.

Within the 11 classes both PBMs targeted, they excluded 19 of the same drugs, but each PBM also excluded about a dozen drugs that the other did not.

CVS would not provide details on how its list was devised, but the drugs on the excluded list "are high-cost, non-preferred drugs with very low utilization," said Troyen Brennan, EVP and CMO.

Express Scripts told BioCentury it used a two-step process based first on clinical equivalency as determined by the P&T committee, and then on cost.

More specifically, drugs the P&T committee concluded did not offer a meaningful benefit over other treatments - in some cases regardless of MOA - were determined to be "clinically optional" and put out to bid. The lowest one or two bidders were placed on formulary, and all others were excluded.

There is an appeals process for cases when a patient is not adequately served by covered drugs, which Express Scripts expects to happen rarely, and the PBM said it would re-evaluate excluded drugs if manufacturers can provide additional data on outcomes.

Drug companies would be better off in the first place if they can avoid a determination of "clinically optional" by developing data that show superiority on clinical outcomes over other treatments.

"Exclusion doesn't exist if you have the data we need," said Steven Miller, CMO and SVP at Express Scripts.

The PBM declined to tell BioCentury what specific outcomes measures it would like to see and how large the difference needs to be. The available evidence suggests a traditional superiority trial may not do the trick, as at least one drug that will be excluded from the 2014 formulary showed superiority over an included competitor in Phase III testing.

Catamaran and Prime Therapeutics told BioCentury they are considering creating excluded drugs lists. Additionally, Prime is ramping up its more traditional cost-containment practices, with a focus on specialty drugs.

Building the list

For Express Scripts, the excluded drugs list adds a new wrinkle to its historical formulary design process.

The PBM relies on an external P&T committee to build its national preferred formulary each year. The committee includes 18 doctors and one pharmacist from community- and academic-based practice centers.

The committee meets several times a year to consider new drugs as they come to market, and annually to design the national formulary.

The group looks at dossiers for each marketed drug, excluding the price, and groups them into three buckets: clinical exclude, clinical include or clinically optional.

"Clinical excludes" are drugs that are still on the market but are considered obsolete. For example, Miller said, "a really old antihypertensive that you have to take three times per day is no longer appropriate in the marketplace in 2013."

Less than 1% of drugs evaluated by the Express Scripts committee fall into this category.

The "clinical include" bucket contains drugs that "have to be on the formulary that are truly unique and have clinical data that show clinically relevant benefit for patients for which there may be no other treatment," Miller said.

Many cancer drugs and rare disease drugs fall into this group.

"Clinical includes" also contain drugs that achieve "significantly greater health outcomes for the vast majority of patients within that therapy class," he said.

Clinical includes make up about 15% of the national formulary.

The P&T committee determines the remaining 85% to be "clinically optional" because they result in clinical outcomes that are similar to outcomes achieved by other drugs in a class or for...

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