State of the Industry: ACO Formulary

October 1, 2013

Anticipate larger ACOs eventually opting for formularies

Although ACOs are growing, their member populations still remain small-too small for most to consider developing their own formularies, says Brian Solow, MD, chief medical officer for OptumRx, a pharmacy benefits manager (PBM) based in Irvine, Calif.

“Instead, it makes more sense for them to look to PBMs to create drug lists appropriate for both ACO management and members,” he says.

Only a limited number of pharmacy directors contracting with an ACO say their organizations have their own formularies, but 72% of the 40 in a survey conducted by Decision Resources Group’s Physician & Payer Forum expect that to change-developing a formulary distinct from that of a managed care organization-in the next three years. The survey respondents also anticipate that already existing ACO-driven formularies will become more restrictive or adopt similar restrictions already imposed on MCO formularies.

Only 13% of the pulmonologists surveyed, who currently participate in an ACO, report having a distinct formulary, limited by the shortage of lives they cover. These physicians, serving an average of 10,000 patients in their ACOs, estimate they would need 30,000 members to justify their own formulary.

Dr. Solow says that the objectives of PBMs in creating a formulary are the same as those of ACOs-achieving quality, good outcomes, and cost savings-and that PBMs and their pharmaceutical and therapeutic committees have more experience in looking at drugs clinically, not just at cost, and selecting the right medications to achieve the right outcomes.

He also emphasizes a PBM’s ability to apply utilization management techniques, especially to high-cost specialty drugs prescribed on and off label.   

“In the past, physicians have not had much responsibility for developing formularies but as part of an ACO, they need to assume more responsibility,” Dr. Solow says.

He doesn’t anticipate that formularies developed by ACOs would differ much from those created by a PBM, that plans would likely adopt formularies similar to those they used outside of an ACO.  

On the other hand, Dr. Solow says that if ACOs prepare their own drug lists, they can target their specific populations, identify gaps in care and provide the right incentives.