Health plans struggling to rein in pharmacy costs are using mail service, disease management programs, financial incentives for generics, member cost sharing, and, increasingly, limited and closed formularies.
In an open formulary, non-formulary drugs are still available but require a higher copayment. Closed formularies, on the other hand, do not cover non-formulary drugs except for medical necessity. In the middle are formularies that offer components of both open and closed models.
To many, the idea of a closed formulary infers that it might have fewer available drugs. But Mary Jo Carden, director of regulatory affairs for the Academy of Managed Care Pharmacy (AMCP), says that isn’t necessarily the case; instead, it could include more drugs at a lower copayment.
As an example, Premera Blue Cross, based in Seattle, Washington, defines its closed formulary in its pharmacy benefit coverage guidelines “as one that routinely covers only formulary (preferred) drugs. A non-formulary drug may be covered when its use has been determined to be medically necessary after a review of the individual clinical case circumstances.”
Jeff Eichholz, senior director of formulary solutions for Express Scripts, a pharmacy benefits manager (PBM) headquartered in St. Louis, Missouri, says there is no standard definition of a closed formulary because there are different degrees of “closed.”
Managed Healthcare Executive editorial advisor David Calabrese, vice president and chief pharmacy officer for Catamaran, a Chicago-based PBM, agrees with Eichholz, pointing out that a formulary could be partially closed, with a select mix of drugs that are identified as warranting exclusion for clinical and financial reasons.