Tuesday, January 5, 2021

Tuesday Tip of the Week: Expanded Drug Lists are an Excessive Pharmacy Cost Driver

There is disagreement around the watercooler whether or not the prescription drugs presented on a PBM's expanded drug list are required by law. Here is a link to the IRS notice which explains that HDHP expanded list of drugs are permissible and not required. Furthermore, if a pharmacy benefit manager offers a separate expanded drug list or EDL they are usually very careful to use phrases such as 'may be covered' or 'if your plan covers.' This a clear signal that coverage for these prescription drugs is optional and that the plan design ultimately determines if a patient gets access to these drugs. 

It's also important to note that the IRS notice specifies only the therapeutic categories (e.g. diabetes) which are treated as preventive care. The PBMs themselves are then left to decide which drugs to sell, within these categories, to their clients as part of an EDL. PBMs who profit from poor product mix or overutilization have done a masterful job making the EDL look like something that is going to add incremental value to its groups and help patients.

Consumer Reports wrote, "If you’re like most Americans, you probably start your day with a hot shower, a cup of coffee—and a handful of pills." Plan sponsors who design benefits that require neither a copayment nor a deductible for drugs listed on an EDL are subsidizing a crisis similar to the opioid epidemic. When drugs are free to members a role reversal occurs, for instance. Instead of the physician diagnosing then prescribing a medication based upon that diagnosis, members self-diagnose then go into the PCPs office and ask for a medication they know is free to them. Many times patients will leave with the medication they came for.

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Things can get much worse from there. Almost 1.3 million people went to U.S. emergency rooms due to adverse drug effects in 2014, and about 124,000 died from those events. That’s according to estimates based on data from the Centers for Disease Control and Prevention and the Food and Drug Administration. Today, those numbers are likely far higher. Other research suggests that up to half of those events were preventable. The amount of harm stemming from inappropriate prescription medication is staggering. 

All of that bad medicine is costly, too. An estimated $200 billion per year is spent in the U.S. on the unnecessary and improper use of medication, for the drugs themselves and related medical costs, according to the market research firm IMS Institute for Healthcare Informatics. In short, plan sponsors will do more harm than good when you create an environment where the relationship between physician and patient becomes transactional.

It is TransparentRx's position that the formulary should not be circumvented to accommodate EDL drugs. Simply put, there should not be a separate drug list. Inappropriate prescription medication aside, what about rebates? If your contract calls for full pass-through of formulary rebates, are you paid rebates on a drug listed on the EDL but not on the formulary? The PBM is getting those rebate dollars from drugmakers just as sure as the sun will rise every morning in the East. 

TransparentRx's formulary is designed to provide our clients with a choice of pharmacy products that meet all of the essential clinical conditions while addressing economic needs, and providing quality of care, affordability and choice. Circumvention of our formulary or any really good formulary is likely to result in wasteful and/or duplicative spending. 

If a drug is approved by the P&T committee to be placed on the formulary and also happens to be on the EDL, the benefit is fully applied. Moreover, when the deductible is waived for prescription drugs on the EDL and this same drug is also on the ACA drug list the member pays zero out of pocket. This is a loophole. Close the loophole it will save your company money and possibly a life.

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