Change We Can Believe In: Requiring Better Evidence for Formulary Coverage

The American Journal of Pharmacy Benefits, Fall 2009, Volume 1, Issue 3

P&T committees should implement more rigorous formulary restrictions that stimulate manufacturers to meet a higher standard when bringing new therapies to market.

In this issue of The American Journal of Pharmacy Benefits, Ganguli and Hong contributed a provocative piece evaluating the relationship between initiating newly approved antihypertensive medications and outcomes.1 As expected, newer medications were associated with increased medication costs. More interestingly, use of new medications also was associated with greater overall healthcare costs. Although some important limitations in this research must be acknowledged, these results contribute to a growing body of literature that warns us of both the safety risks and cost implications of adopting new medication therapies for diseases that already have highly effective options. The main policy question we must grapple with now is this—how should insurers develop and implement formulary restrictions for new medications that will promote cost-effective and safe prescription drug use without restricting effective and necessary care?

Ganguli and Hong evaluated medication-related and non—medication-related healthcare costs captured in the Medical Expenditure Panel Survey in patients with hypertension who received newly approved antihypertension medications and medications that were not newly approved. Only 63 patients (5.8% of the sample) were prescribed newly approved antihypertensives. After controlling for sociodemographic characteristics as well as comorbidity in multivariate analyses, the total healthcare expenditures of new drug adopters were found to be 1.63 (P = .019) times and the nondrug healthcare expenditures 1.79 (P = .013) times higher than the expenditures of non–new drug adopters.

As the authors acknowledge, they used a very blunt measure of comorbidity—the number of unique medications used—and were unable to fully account for the severity of patients’ hypertension, their response to other medications, or their previous healthcare spending. As a result, some of the differences they found may have been due to unmeasured confounding. However, the results are consistent with a multitude of studies that show that patients frequently are not prescribed guideline-recommended hypertension therapies. These patients often receive more expensive treatments, many of which have been shown to be less effective in head-to-head trials, leading to unnecessary healthcare spending without clinical benefit.2,3

Not only are our healthcare dollars at risk. A perusal of the lay press reveals repeated evidence of medications that were newly approved to great fanfare and broadly adopted, only to find later that they caused unexpected harm (eg, rofecoxib, rosiglitazone) or had disappointing efficacy (eg, ezetimibe). The US Food and Drug Administration (FDA) approval requires demonstration of efficacy compared only with a placebo control rather than the standard of care, and efficacy may be demonstrated by using surrogate outcomes. The data used to gain FDA approval are generally uninterpretable for those who hope to compare the efficacy of newly approved therapies with that of medications that have been proven to work. Moreover, the trials needed for approval are not of sufficient size or scope to evaluate unexpected risk. Such data usually become evident only after widespread marketing of the drug.

Many countries have implemented policies that require consideration of cost, safety, and comparative efficacy before making drugs available to their citizens.4 In the United States, approval to market a drug is based only on efficacy, and we rely on the marketplace to encourage use of the most effective and cost-effective medications. For the majority of patients who have prescription drug insurance, this responsibility lies squarely on the shoulders of those who create formularies. The costs and safety risks inherent in covering newly approved medications are well known to all pharmacy and therapeutics (P&T) committees that determine coverage. In the case of hypertension, virtually all insurers have implemented some financial incentive to initiate therapy with a generic thiazide, angiotensin-converting enzyme inhibitor, or beta-blocker.5 Many have implemented administrative barriers such as prior authorization or step therapy to reduce unnecessary use of angiotensin II receptor blockers or other brand-only options.6 Some insurers educate prescribers about evidence-based care.7 However, without more formidable coverage restrictions, unnecessarily costly and potentially unsafe medications are commonly prescribed despite the availability of safe, effective, and less costly options.8

Ganguli and Hong call for more pharmacoeconomic studies to support coverage decisions. We all can agree that this would be helpful. But these data are rarely available when a drug first comes to market, because approval is based on ungeneralizable and imperfect data.9

What can P&T committees do in the absence of better outcome and economic data? They must lead—and restrict coverage in the absence of convincing data that indicate a new medication offers meaningful benefits over existing options. They must require manufacturers to provide the necessary data to make thoughtful decisions about efficacy and safety before covering medications on any tier. They must abandon the myth that educated prescribers and consumers will consistently make informed decisions about the most effective, safe, or cost-effective medications. They must make these decisions for their beneficiaries to protect them from harm, to reduce their costs and the costs to the healthcare system, and to enhance the likelihood that patients will be able to afford and adhere to their medications.8 This approach must include an education component for prescribers and consumers (preferably developed in collaboration with prescribers) to instill trust in the mechanisms and metrics used in such evaluations, and to quell any misunderstanding that this approach is solely a financially motivated one.

Making the argument for greater formulary restrictions coherently and clearly can be challenging, especially in the face of compelling stories from sympathetic patients who believe they have been denied access to needed treatments. More strict guidelines for formulary development could be generated by consensus, under the auspices of the Academy of Managed Care Pharmacy or another convening body, and adopted broadly. Insurers should identify clear principles that will be adhered to in formulary development. The recipe is not a new one. Medications that have been shown to be superior to existing therapies, offer a meaningful additive benefit to existing therapy, or are more safe for even a select patient population will be granted formulary coverage. New drugs must be compared with active comparators when other effective options exist. Surrogate outcomes are not sufficient for broad formulary coverage. Active postmarketing surveillance data are essential and must be updated regularly to maximize safety. Pharmacoeconomic analyses are needed to support placement on formularies and levels of coverage once medications have been demonstrated safe and effective. None of these concepts are novel—yet they often are not required by P&T committees.

As the health reform debate evolves, it seems increasingly likely that market forces and private insurers will be relied on to stem the rising costs of healthcare. Doing so will require hard decisions and forming a relationship of trust with prescribers and patients. Limiting coverage of new medications will be unpopular to a vocal group of patients and providers who will argue that limitations are based on profit motives and disregard for patient health. Insurers must take control of this argument publicly and educate the skeptics to demonstrate that limiting coverage for new medications would raise the bar for the quality of trials and evidence that manufacturers would need to bring a medication to market. These actions would help protect patients from potential harm and limit unnecessary costs to patients and to the health system.

The path of least resistance will lead to continued broad formulary coverage, use of steeper financial incentives to influence medication choice, and continued prayer that those financial incentives will be stronger than the marketing acumen of the manufacturers selling their newest medications—a strategy that has led to our current predicament. The most effective fix will require leadership from P&T committees in the form of more rigorous formulary restrictions that stimulate manufacturers to meet a higher standard when bringing new therapies to market, especially when effective alternatives exist. Such an approach would meaningfully reduce costs and improve safety, resulting in health and financial benefits to both individual patients and the healthcare system as a whole.