Keep Your Hands Off My Formulary

Pharmacy Practice in Focus: Health SystemsJuly 2019
Volume 8
Issue 4

That is the message that pharmacy leaders must send to payers and pharmacy benefit managers.

The introduction of biosimilar products and generic versions of high-cost drugs represents an important opportunity for lowering the cost of health care for many employers, patients, and payers. However, when these agents are introduced into clinical use, close attention must be paid to maintaining patient safety standards, especially because many of these are high-risk drugs being administered to high-risk patients.

Most health care systems are increasingly being informed that payers or pharmacy benefit managers (PBMs) will only reimburse a health care provider for biosimilar or generic drugs that are on their formulary. This reversal of traditional formulary decision making for hospital clinic—administered drugs has significant patient safety implications, as was recently discussed in an Institute for Safe Medication Practices newsletter.1 It also has practical cost and operational implications for the health care system.

CMS conditions of participation and Joint Commission accreditation standards indicate that deciding to include drug products on a formulary is the responsibility of the health care system, not the payer or PBM.2,3 Although the business objectives of the payer and PBM are obvious, preferential contracting issues with manufacturers should not usurp the authority of the health care system for clinic-administered drugs. In addition, the likelihood that each payer or PBM may have a different negotiated biosimilar could mean that health systems need to have multiple agents available for each therapeutic agent. Although the uptake of biosimilars is delayed in the United States, worldwide there are more than 250 approved products on international markets and close to 200 biosimilars under development.

As has been seen already with bevacizumab, filgrastim, infliximab, pegfilgrastim, rituximab, and trastuzumab, there will be multiple approved biosimilars for each entity. With payers or PBMs dictating which patients can receive which products, the potential for chaos and confusion is significant. This will compromise patient safety.

Health care systems have deployed technology at all levels to improve the safety of high-cost, high-risk drugs being administered in the hospital outpatient department. These systems affect the ordering, compounding, labeling, dispensing, and administration of drugs. And because each drug product must now be built out to the National Drug Code level in the electronic health record (EHR), if multiple biosimilars are used, there needs to be multiple records for each drug.

For many high-risk indications such as cancer, these drug records are incorporated into treatment plans in the EHR that include diagnostic testing, laboratory monitoring, drugs, and other aspects of a complex series or cycles of treatments. The physician needs to know which treatment plan to select for a patient based on which product is preferred by the patient’s payer. And if the preferred agent changes during therapy, a new treatment plan needs to be cautiously initiated.

In addition, patients will typically receive multiple biosimilar products as components of a multiple drug treatment protocol. Given that it is unlikely the payers or PBMs will have the same combinations of biosimilars on their approved formularies, this becomes a problem when considering the different treatment plans that the provider would need to select among when ordering treatment. This could be a huge distraction for the provider, who should be focused on assuring the correct regimen is being ordered, considering patient-specific factors in this era of personalized medicine.

In addition, the pharmacist will be preoccupied with assuring the correct drug is being ordered and prepared based on the patient’s payer, or face the risk of a rejected claim, rather than being attentive to making sure that the regimen is appropriate for the patient. All this chaos in the EHR will not contribute to improved patient safety.

The practical operational issues are potentially significant. Inventory management will be very challenging when every drug has multiple potential manufacturers that need to be stocked when the payers or PBMs are dictating the formulary decisions. Many of these agents will require special storage conditions under USP Chapter <800> standards, which could affect negative pressure storage capacity. In addition, the resources for managing this complex inventory process will be significant, and inventory carrying costs will potentially increase several-fold. Beyond the EHR build and maintenance issues mentioned above, the informatics resources needed to maintain all systems will be substantial. Most institutions have already implemented or are moving toward the introduction of human assist devices and robotics in the clean room to improve compounding safety. Maintaining data files for drug identification (bar code and digital imagery), as well as generating and maintaining specific gravity data for gravimetric confirmation, will be considerably more difficult and expensive.

With payers and PBMs calling the shots for drug selection, the introduction of lower-cost biosimilars and generics for high-cost drugs will, in effect, increase operating costs, staffing requirements, and overall workload, while reducing the revenue and contribution margin for providing these life-saving therapies for our patients. As mentioned above, the inevitable drug selection errors that will occur in this state of operational chaos will result in denied claims for use of a nonapproved biosimilar product and therefore greater financial harm to health system providers.

All health care systems need to push back on the payers and PBMs and refuse to capitulate to their business interests when they are compromising financial well-being, operational competence, and safety standards. It is not in the patient’s best interest to have payers or PBMs dictate to providers how to provide care in the hospital-based clinic setting where the health system remains ultimately responsible for providing effective and safe care. Pharmacy leaders must get engaged in the contract negotiating process at the health-system level to make sure that there is a clear understanding of the risks of surrendering the traditional responsibility of the institution to determine the formulary of drugs to be used within that health care system. Tell the payers and PBMs to keep their hands off your formulary.

Curtis E. Haas, PharmD, FCCP, is the director of pharmacy for the University of Rochester Medical Center in New York.


  • Payer-driven biosimilar requirements: new risks in patients with cancer and chronic diseases. Institute for Safe Medication Practices website. ismp. org/acute-care/medication-safety-alert-may-9-2019. Published May 9, 2019. Accessed June 21, 2019.
  • Formulary guidance. CMS website. html. Updated April 24, 2019. Accessed June 21, 2019.
  • Formulary — adding new medication. The Joint Commission website. FAQId=1076&StandardsFAQChapterId=10&ProgramId=39&ChapterId=0&Is- Featured=False&IsNew=False&Keyword=. Updated June 21, 2019. Accessed June 21, 2019.

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