The formulary decision-making process ranges from a relatively simple administrative process to a complex review of the efficacy and economics of a therapeutic class, depending on the payer type and the individual benefit package.
The pharmaceutical manufacturers interviewed indicated that several factors impede the pace of formulary review. The most frequently cited barriers to formulary approval included effectiveness and cost. The relative importance of each of these factors depends on the class of drugs and particular interest of an individual health plan. One manufacturer indicated that for a therapeutic area with no clearly effective options, such as Alzheimer's Disease, any new drug that shows efficacy would be approved almost immediately. This is not the case in a crowded therapeutic area such as depression where none of the new agents have been demonstrated to be clearly superior to any of the others.
- Public Programs
In Medicaid, any drug for which the manufacturer has entered into a rebate agreement with HCFA(now known as CMS) is eligible for inclusion on Medicaid formularies. There are only 10 exceptions, mostly barbiturates and benzodiazepines. Most States have open formularies and immediately reimburse any agent approved for reimbursement by HCFA(now known as CMS) on the basis of a rebate agreement.
Medi-Cal, on the other hand, has a more complex method of approving drugs for formulary inclusion. Medi-Cal revises its formulary either when it elects to undertake a complete therapeutic class review, or when a pharmaceutical manufacturer petitions for addition to the formulary between review cycles. Medi-Cal conducted a complete review of the antidepressant therapeutic class in mid 1990s with assistance from Eli Lilly. These criteria were published in a journal article describing the information needs for this purpose.6 In addition, Medi-Cal makes available its criteria for formulary review.
The DoD maintains a Pharmaceutical and Therapeutics (P&T) Committee comprised of 13 members, which meets quarterly. P&T Committees also exist in individual Military Treatment Facilities (MTFs). These must meet at least quarterly to consider new drugs; most meet once per month. New drugs are added to the formulary based on efficacy, side effects, and cost of the particular drug. Consumer need also influences the decision-making process.
The VA convenes a Medical Advisory Panel (MAP) monthly via telephone phone basis to discuss new pharmaceuticals. The MAP also convenes in person every quarter. Furthermore, the 22 Veterans Integrated Service Networks (VISNs) maintain individual formulary committees to review new drugs. Effectiveness, safety, and experience in the VA system are the primary factors upon which the formulary decision-making process is based. New drugs can be added at any time and the criteria for evaluating antidepressants and antipsychotics does not differ from those applied to other drug classes.
- Private Payers
In the private sector, health care payers maintain pharmacy and therapeutics committees that review formularies on a regular basis. These committees are made up of physicians, pharmacists, and administrators. The physician group may or may not include a psychiatrist. In general other mental health professionals are not included on P&T committees. Employers do not maintain their own P&T committees, but work with their MCOs and PBMs to design a formulary suitable to their needs. One employer reported that it was more likely for his company to want to expand a PBM's "national formulary" than shrink it.
The private payers interviewed differed on the most important pieces of information necessary to make formulary decisions. Employers, PBMs and MCOs all ranked safety and efficacy first. However, they differed on the relative importance of cost and choice. Summary rankings are shown in Exhibit IV-2 below.
- Public Programs
Exhibit IV-2. Relative Importance of Issues Affecting Formulary Decisions
|Issue||PBM Rank||MCO Rank||Employer Rank|
|Consumer And Provider Choice||6||3||4|
MCOs and PBMs often work together in designing formularies. Formal reviews of the literature are the most common method for determining drug suitability for formulary inclusion. However, these payers may revise their formularies in the response to provider requests. These payers indicated that it is unlikely that psychotherapeutics receive either faster or slower review than other therapeutic classes. Expedited review is utilized only when the product is approved by the FDA and designated as first-in-class innovator drugs. This designation indicates that the drug represents a marked change or improvement in therapeutic strategy.