The 2023 growth may be small, but drug exclusion lists are still growing for the three largest pharmacy benefit managers (PBMs). Handling over 80% of all prescriptions filled in the United States, the exclusion lists for these PBMs are widening the gap between list and net drug prices while affecting patients’ out-of-pocket costs and access to clinically effective therapies.
Dr. David Merritt PharmD, RPh Chief Pharmacist at Prescription Care Management, explains, “Exclusion lists enable PBMs to regulate multiple medications to generate deeper discounts and larger rebates. Twelve years ago, exclusion lists contained less than 100 drugs, with continual increases year to year. Now, the major PBM’s exclude over 1,156 drugs from their standard formularies.”
Exclusion lists are typically built on marketing rather than clinical evidence. With high-rebate drugs more likely to be included than low-rebate generics or therapeutic alternatives. Drug Channel reports that typically excluded drugs include:
- Brand-name drugs with therapeutic alternatives
- Biosimilars and biologics that have biosimilar alternatives
- Non-preferred drugs with very low utilization
- Heavily marketed drugs with multiple generic alternatives across therapeutic classes
- Medicines treating chronic conditions
The report explains. “These criteria have led many single-source, brand-name drugs – those without a generic equivalent or biosimilar alternative – to be excluded from one or more of the PBMs formularies.”
From 2014 to 2022, 1,357 unique drugs were excluded from one PBM for at least one year. Often exclusion of unique medications can leave patients without realistic financial access to vital treatment options.
“Formulary exclusions do not always have the patient’s best interest at hand,” says Dr. Merritt, “We are seeing an increase in patients forced to switch medications for non-medical reasons, which could lead to a reemergence of symptoms, higher medical costs, and higher out-of-pocket costs for patients.”
While PBMs set drug exclusion lists, plan sponsors are ultimately responsible for the formulary provided to their groups, and finding a balance between affordability and access can be challenging.
Affecting Drug Exclusions
An action brief given by the National Business Coalitions on Health gave three recommendations for plan sponsors to affect drug exclusions:
- Plan sponsors should base formulary selection on clinical outcomes to ensure decreased pharmacy costs do not increase medical costs.
- Plan sponsors should align pharmacy and medical benefits, linking data to evaluate costs versus care.
- Plan sponsors should conduct independent evaluations of formulary exclusions and inclusion to ensure the vendor covers necessary medications.
With these suggestions in mind and the proper tools, plan sponsors should select programs with drug exclusion lists that benefit both the benefit plan and the patient.
Drug exclusions are an essential financial and clinical consideration when plan sponsors conduct annual market checks or PBM performance reviews. With a limited formulary, patients lack access to critical therapies and have higher out-of-pocket costs, which may lead to lower adherence. These patient outcomes lead to higher pharmacy and medical costs for plans.
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Prescription Care Management (PCM) is a healthtech company that simplifies pharmacy and medical benefits management for brokers and plan sponsors. With our RFP tools, stakeholders can benchmark rates, rebates, exclusions, discounts, and more to ensure they get the best plan available. To learn more about how PBM can help you, click here.