The Academy of Managed Care Pharmacy's Concepts in Managed Care Pharmacy: Prior Authorization and the Formulary Exception Process

In the supplement for the May 2005 issue of JMCP, Drs.Kleinke, Malone, and Urick review the origin of evidence-based medicine, its implications for access to care for patients, and how use of medical evidence applies to the formulary decisionmaking process. 1 The articles by Drs.Kleinke and Malone seem to encapsulate one of the key ethical dilemmas of optimizing patient care in the managed care setting.That is, within the constraints of limited health care resources, how do health systems balance the ever expanding needs of individuals with the resource needs of an entire population?F o rmularies derived from the best available medical evidence can facilitate this balance by promoting more efficient selection and use of pharmaceuticals.There is, however, a feature of the formulary decision-making process that warrants recognition to the extent it can undermine the medical evidence and recommendations of Pharmacy & Therapeutic (P&T) committees.This is the contractual arrangement process between pharmacy benefit managers (PBMs) and pharm a c e u t i c a l manufacturers.As acknowledged by Dr. Urick, nonclinical features such as the "business value" of a product may also enter the form u l a ry decisionmaking process.This value is generally created through "pre f e rre d " pricing based on a promise for form u l a ry status, pro p o rtion of market share, or other factors.The incentive may take the form of a value-added service or rebate paid to the PBM by the product m a n u f a c t u rer and is intended to motivate the PBM to promote a p a rticular product either through tier placement or within a tier via p romotions such as a "perf o rmance drug list."In addition to potentially conflicting with the re c o m m e n d a t i o n s of P&T committees, it is unknown to what extent the revenue generated from rebates is passed along to plan sponsors.For example, p re f e rred form u l a ry positioning of a less cost-eff e c t i v e d rug (higher cost not justified by greater clinical benefit-such as esomeprazole versus omeprazole) could be argued for only if the following two conditions were met: (1) the rebate generated f rom use of the more costly product results in a lower net cost than the alternative and (2) the savings generated by the rebate w e re passed along to the plan' s sponsor in the form of lower p remiums.Clearly, contractual arrangements have the potential to create incentives that may conflict with what the medical evidence would dictate as the most appropriate selection and use of pharmaceuticals.Without greater scrutiny and transparency of these arrangements, one can only wonder if, and how often, recommendations of P&T committees are overstepped by the hidden incentives within a contract.