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A look at the communication disconnect between contracting with managed care plans and pharmaceutical benefit managers (PBMs) and the imposition and implications of prior authorization (PA) requirements.
When considering whether a health plan will actually pay for a pharmaceutical product that has been prescribed for a patient, it is important to understand that a product that is “covered” under contracts with the various plans and pharmacy benefit managers (PBMs) may not be readily available to their insured patient members. All too often, it is difficult for patients to obtain a product that is covered by insurers and PBMs because of the imposition of prior authorization (PA) requirements, which have practical, real-world implications for health care providers and their staff.
As a case in point, a product manager recently stated that “we don’t have a PA problem, since we are under contract with 96% of the marketplace.” While there is some comfort in being on the approved formulary for a health plan or PBM, providers may still face significant market access restrictions when they prescribe the product, often resulting in lost product sales.
Being under contract means that a manufacturer has negotiated a position on the plan’s formulary, which no doubt is better than “Product Not Covered” or “Benefit Exclusion.” However, with multi-tiered formularies being the norm today, branded products will more likely be placed in a second, third or more undesirable tier position, which will prompt a prior authorization or step edit before the plan or PBM adjudicators will pay for the medication.
PA is the requirement by a patient’s pharmacy benefit plan that providers must seek-and get-approval before a prescription product can be reimbursed for dispensing. In many instances, this requires that the provider enter specific clinical information or test results justifying the PA request and/or provide confirmation that one or more preferred formulary alternatives have been tried.
From the perspective of a pharmaceutical brand, there are factors to keep in mind.
Simply put, brand contracting for market access is not a “one and done” strategy. In today’s reality, market access is a two-step process wherein contracting gets you into the game, but usually with the restrictions related to step therapy or other clinical documentation requirements mentioned earlier. To not be benched, it is also necessary to have strategies and tactics that motivate practices to submit PA requests-and that facilitate their efforts to secure PA approvals-in order to maximize the number of patients who receive the originally prescribed product.
For brand teams and product managers, it is critical to think about PA requirements from the provider’s point of view.
Product contracting for pharmaceutical products is important, but it is usually not sufficient by itself to assure broad market access. In some ways, it can be likened to buying a ticket to a major sporting event-it does get you inside the doors of the arena, but the price can be high (think rebates) and you might be up in the rafters and maybe have an obstructed view. If you can see the scoreboard at all, it may not show the results that you desire.
2. Point of Care Partners. Electronic Prior Authorization for Medications: The Time is Right for Plans, PBMs and Other Payers. February 2012, Hanson KA. Journal of Managed Care Pharmacy. An Analysis of Anti-Hypertensive Use Following Initially Rejected Pharmacy Claims for Aliskiren. September 2009. Vol. 15, No. 7. pp. 573-574
Dan Rubin is president and CEO of PARx Solutions