Changes in drug formularies can have enormous consequences for patients, providers and payers. It's not just that so much money is at stake, although switching favored drugs can save millions for patients and payers and cut drug compa-
nies out of lucrative sales contracts. There's also the issue of determining whether a drug is safe and effective in a way that survives professional scrutiny and meets ethical standards.
One of the largest government fraud settlements in history emanated from attempts to change a formulary decision made by the pharmacy and therapeutics (P&T) committee of Tufts Health Plan in Boston.
On the eve of the committee's announcement that it planned to drop the prostate cancer drug Lupron (manufactured by TAP Pharmaceuticals) in favor of Zoladex, a competing drug from AstraZeneca, TAP sales representatives offered a $20,000 unrestricted educational grant to Tufts Medical Director Joe Gerstein, M.D.
The offer eventually was upped to $65,000 over three years, but Gerstein called in federal investigators, had his office wired, then filed a qui tam, or whistleblower, suit over the affair.
The case was settled for $875 million in October 2001.
Still, most physician executives who serve on P&T committees that oversee formularies say they feel no pressure from pharmaceutical industry representatives greater than that experienced by other prescribing physicians. The process also is free of influence from colleagues intent on having their personal preferences represented.
"If someone is pushing beyond the literature, there are 20 people on our committee who have reviewed the evidence base, so how could he convince the other members?" explains Robert Scully, M.D., CMO and chairman of the P&T committee at the 235,000-member Health Alliance Medical Plans of Urbana, Ill.
The last word
Physician executives heading P&T committees evaluate typically voluminous information compiled by pharmacists who serve alongside them. While the pharmacists may make recommendations, the physician-members make the final determination about what goes on the formulary.
To determine a drug's place in the formulary, physician leaders use evidence from peer-reviewed journals, information from drug companies and other resources, such the Academy of Managed Care Pharmacy's Format for Formulary Submissions and the Formulary Fix.
Drugs that stand alone therapeutically make it on the formulary, and those with safety and efficacy questions don't, physician leaders say.
The real challenge comes in deciding about the majority of medications that are therapeutically equivalent, like proton pump inhibitors or statins.
Group Health Cooperative in Seattle adds into the mix the quality of published studies and information posted on the FDA Web site, which may not be reported elsewhere, according to Marc Mora, M.D., chair of the co-op's P&T committee. It also uses a value equation--the sum of clinical and service outcomes divided by total cost--to evaluate a drug's overall impact.
The process sometimes puts the plan out of step with national prescribing patterns. For example, there are no COX-2 inhibitors on its formulary, but nationally the drugs account for nearly 42% of antiarthritic drug sales, according to IMS Health.
Economics enters the picture once a class of drugs is deemed therapeutically equivalent.
"We've been very effective in creating competition between drug companies and can move our market share when it produces savings," says Mora. Group Health saved millions of dollars when it changed its favored hormone replacement therapy, which affected about 16,000 female members, he says.
P&T members usually don't have a hand in negotiating prices, but they may inform purchasing decisions.
"We told our doctors, efficacy and safety are your prime--only--concerns, but when two drugs have identical profiles, you can listen to cost information from the pharmacy," says Richard Blakely, M.D., medical director of Memorial Hermann Health Network Providers in Houston and ex-officio member of the P&T committee.
If multiple drugs in a class are therapeutically equivalent, a committee may recommend adding the two or three most economical to the formulary, according to Blakely and other P&T committee members.
Between newly approved drugs, new uses of existing medications and the need to review updated evidence, the work of P&T committees is greater than ever before.
"The state of medical knowledge and clinical literature is such that 10 years ago, it was OK for the P&T to have standing meetings quarterly, but now it has to meet more often," says Glen Stettin, M.D., vice president of clinical products for pharmacy benefits management company Medco Health Solutions in Franklin Lake, N.J.
With a commitment to review each drug class annually, the Medco P&T committee meets for two days each quarter and holds ad hoc meetings nearly every month. The company pays committee members about what they would receive as a board member of a not-for-profit, according to Stettin.
Health Alliance Medical Plans also recently began paying community-based doctors $50 per hour for their efforts, which include bimonthly meetings.
Medco, a subsidiary of pharmaceutical manufacturer Merck & Co., has been sued for allegedly conspiring with drug companies to steer customers toward more costly drugs, including those made by Merck. Merck recently announced plans to distance itself from Medco by turning it into a separate company.
Questions about its actions as a PBM aside, Medco carefully scrutinizes members of its P&T committee for potential conflicts of interest, Stettin says.
"We have a rigorous process to vet for potential members. We look for sources of bias and do a thorough background check," he says, adding the final decision about membership rests with the committee itself.
A fine blend
Mora of Group Health strives for a mix of specialties and experience with drug evaluation. Members serve one- to three-year terms and sign annual conflict-of-interest statements identifying any relationships with drug companies. Most committee members are part of the Group Health practice and are not compensated, but a few in private practice are paid.
Whether acting on behalf of a health plan, hospital or group practice, P&T decisions generally are accepted and appreciated, according to Blakely.
"There's almost no pushback from doctors because they know choices are made on scientific considerations, so it's hard to argue on emotions or beliefs about what they've seen in their practice," Blakely says.
Doctors have less appreciation for dealing with multiple formularies and different health plan benefits.
"They're swamped keeping track of preferred drugs, such that if it's not economically advantageous to the patient, the doctor just writes what he wants," says Richard Fogerty, M.D., an internist in private practice who serves on the P&T Committee of Swedish Medical Center in Seattle.
Health plans and PBMs report that they prefer multiyear contracts with drug manufacturers and switch only a few drugs each year. For example, Medco's most restrictive formulary, which has 860 items, has an annual turnover of just 2%.
"We're very reluctant to make switches and are conservative in our movement within the market. We use four- to five-year contracts to provide stable pricing," explains Group Health's Mora.
Yet even a few changes cause frustration for those in practice, contends Wells Shoemaker, M.D., medical director of Physicians Medical Group of Santa Cruz County, a 200-member IPA in Santa Cruz, Calif.
"One health plan may have 1,000 drugs on its formulary and only change 25, but multiply that across all the different payers and benefit constructs, and the number increases exponentially by the time it reaches the doctor," Shoemaker says. "The shuffling is constant, and there's no rhyme or reason to it."
Shoemaker admits that the ultimate solution-agreement among different health plans on a common formulary-is too far-fetched to even consider. Still, both doctors and payers are exploring ways to ease the pain of formulary changes while increasing compliance.
Gina Rollins is a freelance writer living in Silver Spring, Md.