Tracing the DOAC Formulary Process Across Different Organization Types

Goals

To understand the formulary decision-making process (see Definitions, below) across the commercial insurance landscape, focusing on direct oral anticoagulant drugs (DOACs). Specifically, we will address the following questions:

  • How are formulary decisions made when multiple entities--insurers, pharmacy benefit managers (PBMs), pharmaceutical companies, and health systems--are necessarily involved? How do they interact and relate to each other in this process and what are the most common job titles involved?
  • What ongoing trends are likely to shift how formulary decisions are made over the next several years?
  • What systemic biases, if any, have been identified that the formulary/payor sector must and/or is currently dealing with to improve the process?

Definitions

  • In this context, "formulary" refers to "a list of prescription drugs covered by a health insurance plan," including the reimbursement schedules (pricing) of said drugs.
  • "Formulary decisions" and "formulary management" are near-synonyms that refer to the process by which the various stakeholders (insurers, healthcare providers, pharmaceutical companies, et al.) develop a formulary that each will agree to.

Early Findings

Our initial research indicates that the formulary decision-making landscape is both complex and constantly shifting due to a lack of any centralization in the process, governmental or otherwise.

  • The study of formulary decisions falls under, and may dominate, the category of pharmacoeconomics and has been the subject of numerous peer reviewed papers. This will allow for following the "conversation" of the experts on the subject across several years, or even decades, as needed to develop a complete picture.
  • As one doctor recently explained in an interview, "formulary decisions have ideally been chosen carefully by multi-disciplinary teams who consider all these factors in the hope to help drive the ecosystem toward more safe, cost-effective care... On appropriateness, many studies continue to demonstrate that drug choices are not always applied optimally to specific care settings, so restricted formulary choices can help to sharpen decision-making. And finally, on safety, constrained formulary helps organizations to be familiar with the existing complements of drugs, potentially helping to make sure that they’re used safely."
This indicates major inefficiencies in our current formulary management landscape. Our initial research suggests that this is due to a lack of coordinated effort, with the various stakeholders acting largely on their own to protect their interests and those of their clients. For a few examples:
  • Not all commercial insurers provide their formularies to their customers, leaving it to the patient to take their prescription needs into their own hands. This often requires additional work by both the patient and the physician.
  • CVS Health acts as a pharmacy benefit manager (PBM) and describes its role in controlling spiraling costs by giving preference "to lower-cost, clinically appropriate alternatives leading to cost savings for clients," and identifying and targeting "specific drugs with excessive year-over-year price increases when there are clinically appropriate, cost-effective alternatives available."
  • Lumere is an organization of clinicians, researchers, pharmacists, and strategic thought leaders which focuses on helping health systems eliminate unwarranted clinical variation and cut unnecessary costs via the application of clinical evidence and analytics.

Though our initial sweep did not find any direct examples of trends in the formulary process that directly impact DOACs, there were some trends within the use and cost of DOACs that, with additional research, will likely yield more information pertinent to this project:

  • A five-and-a-half year study completed in 2018 found that DOACs accounted for one-third of anticoagulant prescription claims and more than 90% of total oral anticoagulant prescription expenditures, with the mean cost per prescription 30 times higher for DOACs than warfarin.
  • This has led to cost/benefits analyses for DOACs vs. other drugs in peer-reviewed journals.

Our initial sweep did not immediately identify any systemic biases specific to the drug formulary process. However, claims of systemic biases in healthcare in general are common (example), so it seems likely that a deeper dive will provide, at the least, examples and discussions that are salient to this project even if direct examples prove elusive.

Due to the scale of the proposed project, the above findings are extremely high-level, as our initial research time frame is too short to drill down. Nevertheless, they have guided the scoping of further research into each of the questions raised in the initial request.

Proposed next steps:

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