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Monday, June 5, 2023

Impact of formulary exclusion on healthcare costs, outcomes for patients with certain chronic conditions

 Delaying, changing, or stopping therapy for a medicine due to a formulary exclusion can impact a patient’s health. This issue brief employs a claims-based approach to evaluate the impact on adverse events and out-of-pocket (OOP) costs for patients who were previously stable on therapy but whose plan stopped coverage due to a formulary exclusion by their pharmacy benefit manager (PBM).a This brief focuses on 2 therapeutic areas as case studies to compare the change in a patient’s health before and after the formulary exclusion was implemented. This brief also assesses whether the impact of formulary exclusions is equitably distributed or if the outcomes disproportionately affect certain population segments. The brief highlights the negative impact formulary exclusion has on patients and shows that PBMs have cause to reconsider their formulary exclusion methodology to ensure health outcomes are prioritized, and patients previously stable on therapy can remain on therapy.

Conclusion 

The case studies on the cardiovascular and gastrointestinal therapies indicate that on average, patients with chronic illnesses who are stable on a therapy experience an increase in both adverse health outcomes and OOP costs after a PBM excludes the therapy from their plan formulary. Patients with moderate to severe clinical risk are especially vulnerable to an increase in hospitalizations and ED visits, as are patients living in the southern and midwestern regions of the US.

The findings are limited to the top 3 PBMs and the additional patient inclusion criteria detailed in the analysis. As a result, the sample size is limited in comparison to the total number of patients on cardiovascular and gastrointestinal therapies in the US. Lastly, the study tracked hospitalizations and ED visits for patients 6 months pre- and post-PBM exclusion date and, as a result, any long-term adverse events that lead to hospitalizations and ED visits may not be captured.

Formulary exclusions implemented by the 3 largest PBMs have increasingly affected commercially insured patients, with a 34% per-year increase in the number of medicines excluded since 2014. With the potential for Medicare Part D reforms under the IRA to induce plans to offer more narrow formularies, the negative consequences of formulary exclusions, particularly in terms of impacts on patient health outcomes, may become even more widespread. 

To address these adverse impacts to patients, both Congress and the Centers for Medicare & Medicaid Services (CMS) can take actions to counteract PBM formulary exclusions and, thereby, reduce the negative consequences of treatment disruption. Congressional oversight into PBM practices, including formulary exclusions, can lead to enforcement actions to safeguard patient access to therapies and provider choice. CMS’s continued review of Medicare Part D formularies to ensure that beneficiaries have access to a broad range of medically appropriate drugs will be a critical factor to mitigating potentially tighter formulary management resulting from increased plan liabilities under the IRA. 

PBM formulary exclusions have important real-word implications. Not only do they inhibit provider choice and increase patient OOP costs for certain chronic illnesses, but they are also associated with an increased rate of hospitalizations and ED visits, particularly for patients with higher clinical risk. Counteracting PBM formulary exclusions is critical to safeguarding patient access and affordability, and maintaining health outcomes.

https://www.xcenda.com/-/media/assets/xcenda/english/content-assets/white-papers-issue-briefs-studies-pdf/formulary_excl_issue_brief.pdf

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