By Mari Edlin
The concept of a drug formulary developed alongside the emergence of managed care in the 1970s as a means of describing which drugs are covered by health plans and their costs to members. But as specialty drugs consume more and more of total healthcare costs, today’s traditional three-tier formulary might become a thing of the past.
Specialty drugs are expected to account for 50% of all drug costs by 2018, according to a study by Prime Therapeutics, a pharmacy benefits manager (PBM) based in St. Paul, Minnesota.
Bob Taketomo, president of Ventegra, a Pharmacy Care Management (“PCM, the next generation PBM”) firm in Glendale, California, says that formularies will hold more relevance and impact as the number of older adults and insured individuals through the Affordable Care Act increases. Federal and state governments will exert more influence due to the growth in numbers of Medicare and Medicaid members, and payers will continue to consolidate as margins are squeezed.
Formularies will reflect the perspective and interests of each payer and their level of sophistication, from integrated health systems such as Kaiser Permanente, to commercial entities that might turn to a PBM for pharmacy services, Taketomo says. He is concerned, however, that the societal perspective is often missing in formulary planning and, instead, financial considerations are driving decisions more frequently.
“I think vertically integrated health systems have a different formulary focus than, for example, PBMs that are simply administering a pharmacy benefit for an at-risk entity,” he says.
Taketomo notes that large health plans will have a variety of formularies depending on the patient population—Medicare, Medicaid and commercial—and needs such as oncology or specialty formularies. He says the fragmentation is viable if it is consistent with a business model, but not advisable from a societal perspective because “continued fragmentation of the healthcare delivery system only drives more administrative inefficiency and costs.” On the other hand, it may also create new revenue streams, he says.