Formulary Additions: The Big Picture - Pharmaceutical Executive

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Formulary Additions: The Big Picture


Pharmaceutical Executive


Pharma rarely provides estimates of a drug's total budget impact. At best, the cost of introducing a new drug is summarized by its affect on the pharmacy budget alone. This approach misses the impact in other areas of healthcare expenditure, such as hospital in-patient days or physician office visits.

Pharmacoeconomic information presented by pharmaceutical companies often compares a new drug to a placebo or to one other drug. Plans need comparisons with all other important treatment options, including the other drugs or procedures against which the new drug will actually compete.

Health-plan decision makers need to know how a particular drug is going to affect their own population. This is one of the big reasons why pharmacoeconomic models are not heavily used. Plans worry about transferring the model to their own populations. The cost impact of a drug may be much different when the average age of the covered population is older (see General Motors) rather than younger (Microsoft).

Jill Van Den Bos is a consultant in the Denver health practice of Milliman, Inc. She can be reached at


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