When your drug is not on formulary

June 1, 2002
Paul Pinsonault
Pharmaceutical Representative

Dealing with prior authorization.

As a pharmaceutical sales representative, you face many prescribing obstacles in today's healthcare marketplace. Among the greatest challenges facing you is the fact that your products are unlikely to be on formulary at every managed care organization impacting your territory. Does this automatically mean that you cannot drive up sales and market share for your non-formulary products? No! But it does mean that you need to launch an effective educational campaign in order to have your drugs written by physicians who participate in plans where access to your products is restricted. Perhaps the most effective way to do this is by making a concerted effort to have physicians request prior authorizations for your products, as this can drive up demand, boost sales and increase the likelihood that your brands will be added to restrictive MCO formularies in the near future. Let's take a look at how the prior authorization process works, and how you can leverage this obstacle to your advantage.

The provider and patient perspective

Prior authorization is the process by which a medical provider can obtain a non-formulary product for a patient at the branded formulary co-pay (usually the "preferred" or "second-tier" co-pay) rather than having the patient pay the full cost out-of-pocket. If a physician believes that your company's non-formulary drug is the most effective course of therapy and does not feel the patient should have to pay for it out-of-pocket, then the doctor can provide clinical reasons why the drug is necessary via a prior authorization request to the MCO handling the pharmacy claim. Health plans and pharmacy benefit managers usually require the provider to complete this prior authorization request via phone, fax or computer before a non-formulary product is dispensed when it is to be covered for reimbursement under these special circumstances. Otherwise, the claim will not be covered under a patient's prescription drug benefit and the full retail cost will have to be paid out-of-pocket.

Naturally, without reimbursement coverage, patients are usually unwilling to pay the full cost of a non-formulary medication when alternative therapies are available to them at a nominal co-pay. In these instances, patients will usually accept whatever drug the physician, pharmacist and MCO recommend as a therapeutic substitution - as long as it's covered for reimbursement and available with just a small co-pay. For this reason, it is critical that you make providers throughout your territory aware of the prior authorization process for your products at the major health plans where access is restricted. This way, you can minimize therapeutic substitution and increase sales and market share for your company's non-formulary brands.

Why do MCOs implement prior authorization?

Managed care organizations use prior authorization as a means to control their pharmacy benefit costs, and they do this for a number of reasons. Sometimes MCOs implement prior authorization barriers to discourage the use of agents that do not meet their criteria for inclusion on formulary, and these criteria can pertain to a variety of clinical and pricing issues. Managed care organizations may also use this cost control mechanism to discourage the use of products that are deemed to have questionable efficacy, or that demonstrate no significant clinical advantages over existing agents of equal price, or that raise significant safety issues. However, the primary reason that MCOs use prior authorization is to restrict utilization of "budget-buster" drugs with particularly high demand and/or particularly high cost that would exceed the pharmacy budget if uncontrolled access and unlimited reimbursement were permitted.

Keep in mind that MCOs want prescribers to utilize the most appropriate and cost-effective products available to treat their patients' conditions - but they strongly prefer that providers use less-costly formulary products first. For this reason, MCOs like the prior authorization mechanism because it reinforces "step-therapy" protocols, prescribing guidelines and utilization of the most appropriate and cost-effective products by permitting access to expensive, non-formulary drugs only if certain pre-determined criteria are met (when they are truly necessary and/or when less-expensive therapeutic equivalents on the MCOs' formularies have been tried first but have been unsuccessful in treating the patient's condition).

It is important to remember that although MCOs usually make their prior authorization determinations very quickly, the initial request can be time-consuming for the prescriber, especially if he or she is unfamiliar with the process. Therefore, prior authorization acts as a deterrent as long as the fear and hassle factors loom large in the minds of prescribers - and this is where your sales and education efforts can make all the difference!

Why does your company want to educate physicians about prior authorization?

Your company cares about pushing through its non-formulary products because your brands may offer therapeutic, cost-saving or other benefits above and beyond those that are available with existing formulary agents. Therefore, an integral part of your job each day is to raise awareness of your company's non-formulary products and create demand for them. In addition, if you drive demand at the physician level, MCOs will be more likely to consider the value of including your products on their formularies in the near future. Why? Because MCOs care about member satisfaction in order to maintain enrollment levels, so they will consider including products that patients want. Also, the prior authorization process is expensive and time-consuming for the MCO to administer. In fact, it can sometimes be less expensive for an MCO to add an agent with high demand to its formulary than to keep the product under costly prior authorization review. For this reason, it is critical for you to be an active catalyst in driving up demand for your company's non-formulary products each day, and thereby increase the likelihood that they will be added on formulary in the near future.

What is your role in the process?

Once you have created demand for your product, the best way to help ensure utilization is by demonstrating the various MCO prior authorization procedures to physicians and their office staff members so that their patients can have access to the non-formulary medication with only a nominal co-pay. Providing all of the necessary information in a clear, concise and easy-to-use fashion is the key to ensuring that the brand prescribed is the brand that will be dispensed in the pharmacy.

If one of your products is not on a specific formulary and one of your physicians is an avid prescriber, find out if the doctor is willing to request a prior authorization for the product for those patients belonging to the MCO that restricts the drug's use. This may set the groundwork for your product being prescribed continually by the physician, whether it is on formulary or off, and the increased demand that results may encourage future formulary inclusion at MCOs where the drug is currently restricted. Remember - if the physician has taken the time to correctly submit a prior authorization request using the proper coding, verbiage and clinical reasoning, the request is almost always approved. In fact, research shows that over 88% of prior authorizations are approved by health plans, if done correctly (Scott-Levin 1999 Formulary Audit).

In your pre-call analysis, determine the formulary status of your products, especially with the top three health plans throughout your territory, since these plans may control the majority of your product prescriptions. If your products are not on formulary at some or all of the major plans, create demand for them, promote their therapeutic benefits to physicians and their office staff, and demonstrate how to quickly and easily request prior authorizations for your brands at MCOs that restrict their usage. However, keep in mind that you need to sell the physician on the clinical efficacy and safety of your product first. Physicians will be unlikely to request a prior authorization for a product unless they are strong advocates of it, so always be certain to create demand before asking a practice to commit to making any prior authorization requests.

Nuts and bolts of prior authorization

Managed care organizations usually have a prior authorization system that allows providers to request a non-formulary agent by voice authorization over the telephone, by written authorization using a fax machine transmission or via a computer system. The prior authorization process begins when a physician (either knowingly or unknowingly) writes a prescription for a non-formulary product based upon a patient's condition and treatment history. Next, the patient goes to a local pharmacy to have the prescription filled. If the prescription is not on formulary, the pharmacist will be alerted electronically by the MCO (the health plan or PBM, whichever administers the pharmacy benefit). At that point, the pharmacist calls the physician to discuss the issue, and the physician has two choices: agree to an alternative formulary medication, in which case a generic or therapeutic substitution occurs, or provide the MCO with appropriate reasons why the patient needs that particular non-formulary medication.

If the physician agrees to an alternative formulary medication, then generic or therapeutic substitution occurs with the formulary product, and you've lost a sale. If the physician chooses to provide appropriate reasoning why the patient needs the non-formulary medication, then a prior authorization request is made via the MCO's required method, and you've likely gained a stronger advocate for your product as well as higher market share. For this reason, educating the physician about prior authorization is extremely important. If the physician knows how the MCO requires a prior authorization for your product, the physician can make a successful request before the patient goes to the pharmacy and ensure that the prescription is filled with your brand, rather than substituted for an alternative formulary therapy.

Keep in mind that physicians must abide by the drug usage guidelines in place at their patients' MCOs when making prior authorization requests. The prior authorization form they usually complete lists the patient's name, date of birth, insurance plan, drug requested, dosage schedule, duration of therapy and diagnosis/medical justification, as well as any previous therapy or outcome. And although physicians are responsible for making prior authorization requests on behalf of their patients, it is often the office staff or a nurse who will actually make the call, write the letter, send the fax or use the computer system to initiate the procedure. For that reason, you will need to find out who processes the prior authorization requests in your physicians' offices for products not on formulary.

It is critical that you educate the appropriate office staff members on the prior authorization process in a simple and concise manner, and this would include:


•Â Supplying phone and fax numbers, e-mail addresses or access codes for the various MCOs.


•Â Demonstrating how to fill out prior authorization request forms (provide blank samples for reference if possible).


•Â Listing acceptable clinical reasons that can be used when requesting prior authorizations for your product.


•Â Knowing the appropriate verbiage to use when requesting a prior authorization for your product.


•Â Having the ICD-9 or ICD-10 code(s) for your product's therapeutic category.


•Â Discussing MCOs' guidelines for approving prior authorizations for your product.

Be prepared to demonstrate these procedures in a simple, concise manner. This is very important, because once physicians, office staff members or nurses have successfully written a prior authorization for a product, they are more likely to request the product again because they are familiar with the process. Remember that physicians and their staff often view prior authorization as a time-consuming nuisance. Therefore, it is vital that you make the process quick and hassle-free for them.

As sales representatives, you have unlimited influence in leveraging prior authorizations. Keep in mind that MCOs allow physicians to write prior authorization requests because they serve as a barometer to determine the needs of providers and patients. They also ensure the controlled use of newer agents and help to reduce overall costs by allowing a mechanism for the best and most effective agents to be used for each particular patient.

Make it part of your job to learn the formulary status of your company's drugs within each major MCO impacting your territory. If your product is not on a major formulary, be sure to explain the prior authorization request procedures to physicians and their office staff members whose practices are affected by this restrictive MCO. Ask yourself questions such as: "Which MCOs require prior authorization for my products?" "What percentage of requests is approved for my products?" "What are the prior authorization requirements for each of my products?" Your knowledgeable answers to these questions will help you respond effectively when you encounter this MCO prescribing obstacle throughout your territory and will provide you with all the resources you need to assist the physician who raises the objection, "Your drug is not on formulary." PR