Managed Care Confidential

A panel of medical directors from managed care organizations discuss how they make formulary decisions.
Feb 01, 2005

With Medicare Part D looming in the industry's immediate future, formulary placement is high on product managers' list of priorities. A brand's formulary status with current health plans may well affect its placement with new Medicare prescription drug plans. So the central question for pharma is "How do managed care organizations make formulary decisions?"

A panel of eight MCO medical directors recently convened to answer that question and evaluate the influence of consumers, physicians, pull-through programs, and outcomes studies. MedPanel, Inc., an online market intelligence company, asked eight US medical directors to comment on the influences that affect whether a drug is included on a typical formulary and what criteria are used to evaluate a new drug entry.

The panel was convened online over a two-week period, and participant identities were concealed from each other to foster more candid responses and maximize the interaction. (See "Panelist Profile," ) This article highlights the study group's findings—which may come as a bit of a surprise to some product managers.

What manufacturers do you rank as the top five in terms of flexibility, knowledge, and services?
Consumers Lack Clout The panelists unanimously asserted that consumers have little impact on decisions relating to a single drug. This lack of influence is, in large part, a result of the difference between what direct-to-consumer (DTC) advertising focuses on and what drives pharmacy and therapeutics (P&T) committee decisions. "Efficacy, safety, and cost drive the formulary decision process," one panelist said. "Consumer demand is likely based on DTC or another source that does not consider the critical decision points of the P&T committee."

Although DTC advertising may be what influences consumers most, health plans tend to dismiss the information provided in consumer advertising and focus on science.

Consumers also lack a unified means of asserting pressure, panelists emphasized. That's why some medical directors view employer groups, rather than individuals, as the real consumers. Although most participants expected little change in consumers' influence over formulary decisions, there were a few interesting exceptions. One medical director said, "Organizations such as AARP may be able to affect the consumer voice in the future," because they are an organized and powerful group with a public agenda. Taking on formulary decision making seems like a natural next step for AARP. As other groups form—or wake up to the formulary issue—consumers will find their influence growing. Another participant asserted that escalating costs will lead to increased consumer involvement over drug availability. Still another stated that although individuals have almost no impact, "High demand may push an earlier determination of a drug's placement than would have otherwise occurred."

"There will be more activity from the consumer, related to influencing the drugs/treatments available," said one participant.

What are your top five criteria for determining if a product will be available on the formulary?
Through DTC, manufacturers are encouraging consumers to take the selection of medicines into their own hands. That empowerment is leading consumers to examine more closely the claims pharmaceutical companies make about their products and how those drugs are being managed by insurance companies. As consumers increasingly coalesce into groups, their voices will be a more powerful force than they currently are in their splintered state. Taken as a whole, the data suggest that a concerted, unified effort on the part of consumers might well influence formulary decisions in the future.

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