Legislators Weighing Laws that Could Roll Back PBM Tools

COMMENTARY
August 29, 2017
Senior Vice President, Government and Public Affairs, CVS Health

Pharmacy benefit management (PBM) tools such as formulary and utilization management help payors provide a robust pharmacy benefit, in part by ensuring the right drug is available to the patient, at the right time and at the lowest possible cost. As state legislatures reconvene, they’ll consider dozens of bills aimed at restricting payors’ ability to ensure proper utilization.

Some proposed legislation encourages or incentivizes plan members to use more expensive brands, even when lower-cost, equally effective therapies are available. Such legislation would increase costs without significantly improving access, quality of care or health care outcomes.

The emergence of bills that attempt to limit the use of PBM tools coincides with a tactical shift by drug makers

We are increasingly seeing manufacturers broaden their efforts at the state level by working with patient groups in the nation’s statehouses. This collaboration could lead legislators to think the measures align with patient needs and overshadows their potential, harmful consequences.

And even with increased media coverage of rising drug prices, at least one manufacturer-funded website, PrescriptionProcess.com, promotes the use of branded medications that typically, are more expensive than generic medications. The website, run by the Alliance for Patient Access, asks consumers to “Take Action: Protect Your Right to Access Medicines You Need,” and describes utilization and formulary management tools such as prior authorization and step therapy, as “barriers to access.”

Utilization and Formulary Management Take Center Stage

Looking ahead to 2018, we expect to see significant debate and potential legislative action designed to limit the use of these utilization and formulary management tools. The attention we’ve previously seen on restricting maximum allowable cost pricing, capping member copays and requiring state departments of insurance licensure for PBMs is shifting toward restrictions on:

Checkmark Pill Bottle

Prior Authorization

Prior authorization (PA) requires that before a prescription for a high-cost branded medication to treat a chronic condition is filled, the prescriber must obtain plan approval. Legislation weakening the ability to utilize prior authorization requirements could interfere with a plan’s ability to ensure safe, effective and appropriate use of selected drugs. PA can ensure that drugs are used for the most appropriate patients, and at appropriate dosage, mode of administration, and duration.

Generic Pill Bottles

Step Therapy

A drug’s therapeutic effectiveness isn’t always reflected in its price. With step therapy, patients may begin treatment with a lower-cost generic before proceeding to preferred brands and, finally, non-preferred brands, based on clinical outcomes. Legislation that impedes the effective use of step therapy would supersede evidence-based guidelines developed and continuously maintained by doctors, pharmacists, and other clinical experts who are the best informed about drug efficacy and clinically appropriate, lower-cost therapy alternatives.

Pill Information

Frozen Formulary/Continuity of Care

Frozen formulary legislation would prohibit payors, during the current plan year, from removing a drug from the formulary or moving it to a higher cost-share tier. One potential impact could be when a therapeutically equivalent branded drug enters the market to compete with an existing single-source brand, the plan would be unable to take advantage of the competition to get a lower price for formulary placement. Plans would instead have to cover the existing, more expensive branded drug through the end of the plan year.

For instance, PCSK9 inhibitors are a class of biologic cholesterol-lowering drugs for certain patients with atherosclerotic disease or with a certain genetic mutation that results in higher levels of low-density lipoprotein. PCSK9 inhibitors came to market with an annual price tag of $14,000, which is significantly more expensive than the statins commonly used to lower cholesterol. However, PCSK9 inhibitors provide an important treatment option for patients with the right condition profile and risk factors. As soon as more than one PCSK9 inhibitor was available, we as a PBM were able to negotiate better pricing and rebates with the manufacturers, substantially lowering the cost to payors by giving preferential placement to clinically appropriate, cost-effective options. A frozen formulary would have prevented us from implementing such cost savings for clients because it would not have allowed for any formulary changes except at the end of the plan year.

Such legislation would also prevent clients from taking advantage of new generics or biosimilars entering the market during the course of a plan year. It would prohibit PBMs from moving the brand drug to a higher formulary tier and encouraging patients to take the lower-cost generic option until the end of that plan year.

Some of the frozen formulary bills also do not allow for formulary exceptions, even if patient safety is at issue. For example, when Vioxx was shown to increase the risk of adverse cardiovascular events, PBMs were able to remove the drug from their formularies before the U.S. Food and Drug Administration asked the manufacturer to remove it from the market. If a frozen formulary law was in effect, we as a PBM would not have been able to take such action to help ensure patient safety.

What We’re Doing

At CVS Health, the Government Affairs team:

1

Monitors specific legislative and public policy activity at the municipal, state and federal levels.

2

Advocates on behalf of plan sponsors so they can retain their ability to provide high-quality care at the lowest possible cost through the use of formulary and utilization management tools.

3

Defends the PBM tools our clients use by educating legislators and policymakers about the bills and regulatory proposals they’re considering.

1

Monitors specific legislative and public policy activity at the municipal, state and federal levels.

2

Advocates on behalf of plan sponsors so they can retain their ability to provide high-quality care at the lowest possible cost through the use of formulary and utilization management tools.

3

Defends the PBM tools our clients use by educating legislators and policymakers about the bills and regulatory proposals they’re considering.

You Can Help: Raising Payor Voices

As with any other constituent, plan sponsors bring a critical voice to the ongoing health care debate. Communicating with legislators is one way for payors to share their opinion and help elected officials understand the direct effects of proposed bills on their bottom line and on the people they employ. Absent feedback from payors, legislators may think they are sincerely acting in the best interests of patients when they enact legislation.

Remaining silent could undermine an organization’s ability to provide a cost-effective pharmacy benefit. Payor voices must join the discussion.

Formulary and utilization management are foundational to cost control. We stand ready to collaborate with payors to defeat onerous bills that work against their ability to implement such strategies, without improving patient care or helping control drug costs.

Want to learn more about advocating against legislation that may raise costs to your plan and members? Ask Us
COMMENTARY
August 29, 2017
Senior Vice President, Government and Public Affairs, CVS Health

This document contains references to brand-name prescription drugs that are trademarks or registered trademarks of pharmaceutical manufacturers not affiliated with CVS Health.

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