Navigating the world of formularies
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How tiers for generics and brands are determined — and how dermatologists can help their patients get the medications they need

Ensuring that patients get the most appropriate medications to treat their conditions while keeping costs down is not an easy task with today’s pharmacy formularies that encourage the use of generics. Formularies often only allow the use of branded products after prior authorization and step therapy. Higher co-pays are often charged.

Dermatologists understand the importance of managing prescription drug expenditures, which represent 10 percent of national health care spending. They also appreciate that the use of generics saves billions of dollars annually. However, certain practices by some insurance plans are making it increasingly difficult to get the right medication into the right patient’s hands. Dermatologists have adopted a variety of approaches. Some choose a “path of least resistance” prescribing pattern. Others have hired staff to navigate prior authorizations, passed along coupons and rebate cards to patients, and solicited free medications from pharmaceutical companies and foundations. Some have even resorted to contacting the states attorney’s office.

“It’s a very delicate balancing act for all of us who want to get the best medications in our patients’ hands and yet keep costs down and maintain access to our patients,” noted Mary Maloney, MD, chief of the division of dermatology at the University of Massachusetts. [pagebreak]

Ordering drugs formulary-style

Many dermatologists have resorted to prescribing medications determined by which ones are covered on the insurance companies’ formularies. This can be a daunting task in itself as one dermatologist may be dealing with dozens of insurance companies that may offer several different plans. “It’s impossible to keep up with all of the formularies from the different insurers,” said Mark Lebwohl, MD, Sol and Clara Kest professor and chair of the department of dermatology at Icahn School of Medicine at Mount Sinai in New York. “You end up learning which drugs are covered by most of the formularies and that’s what you use,” he said. (Such knowledge can also be facilitated by many EHR systems.)

The path of least resistance prescribing pattern is echoed by Joel Bain Herron, MD, in private practice in Gahanna, Ohio. “We change a lot of prescriptions to generics or other brands based on what the formularies will or will not cover,” he said, adding, “I don’t think we can be rigid about our choices these days.” Dr. Herron tends to avoid medication choices that have historically resulted in telephone calls from the patient and/or insurance plan, requests to complete prior authorizations, and the need to coordinate care among the office, pharmacy, and insurance company. “Conversely, we migrate to the medication choice that goes through without hassles as we have become conditioned, almost like Pavlovian dogs.” [pagebreak]

Perhaps one of the more common examples of this occurs with doxycycline, Dr. Herron said. There are branded doxycyclines that offer certain advantages to patients, such as providing a slow release, sub-antimicrobial dose to reduce the chances of yeast infections or development of resistance. Others are enteric coated to help reduce GI side effects. Requests to change from these branded doxycyclines to generic “equivalents” that do not provide the same benefits are a daily occurrence, he said. “Consequently, many times we will start with the generic doxycycline to avoid the additional coordination of care, and choose to only fight the battle for those patients who complain of or experience side effects.”

Before prescribing a drug of choice, Jacquelyn Garrett, MD, a dermatologist in private practice in St. Louis, typically pauses to check the formulary. “It’s sad that sometimes you are not allowed to prescribe a drug of choice, which will give the patient the best results, the soonest,” she said. Instead, patients may have to try and fail therapy with a less expensive generic or branded medication before the insurer will pay for a more expensive branded option. This practice, widely known as step therapy, can prolong a patient’s treatment. For example, she said, branded retinoids often require step therapy with generic tretinoin or adapalene. Branded drugs that combine benzoyl peroxide and clindamycin frequently require prior failure with clindamycin plus over-the-counter benzoyl peroxide. And getting a prescription for clobetasol propionate spray filled may require failure of two generic class 1 steroid creams in some instances, she said. [pagebreak]

Equivalent or not

Because many dermatologic generic drugs are considered therapeutically equivalent to the innovator products, many dermatologists are comfortable prescribing generics. In Massachusetts, where Dr. Maloney practices, and in 13 other states, the law mandates that generic drugs be substituted unless the prescribing physician indicates “brand name only.” Thirty-six states allow pharmacists to substitute generics if “brand only” is not indicated by the prescribing physician. “That means the pharmacist can substitute a generic and I won’t know,” she said. “Most of the time, that’s okay.” Patients, too, can usually specify that they want the brand: All but three states allow the pharmacist to dispense brand name products if patients specifically ask for them.

Sometimes generic substitution can cause problems. It’s not acceptable, for example, when a patient develops a contact allergy to inactive components used in the vehicle of the generic that are not used in the brand name product. Patients prone to contact allergies should be prescribed the branded medication that is free of the allergen, Dr. Maloney suggested, or else the patient will have side effects that require additional treatment. A slow response to therapy and patient complaints, particularly about topical steroids, also prompt Dr. Maloney to prescribe a brand name product. “Particularly for topical treatments, the vehicle can make the difference in how the active ingredients are absorbed or spread,” she said. One reason for the difference is that many generics are produced overseas where the Food and Drug Administration has less jurisdiction, Dr. Maloney explained. “With 50 different companies making the same generic topical steroid, we don’t know where the generic is made or the quality of it,” she added. “The company only has to show that it’s a bioequivalent.” To show this, according to the FDA, a generic manufacturer must demonstrate “the absence of a significant difference in the rate and extent to which the active ingredient or active moiety in pharmaceutical equivalents or pharmaceutical alternatives becomes available at the site of drug action when administered at the same molar dose under similar conditions in an appropriately designed study.” [pagebreak]

Although prescribing “brand name only” products seems like it may better serve patients, Dr. Maloney pointed out the unintended negative consequences. In addition to co-pays increasing four- to six-fold, depending on the medication, it is possible that the prescribing provider will be dropped from the patient’s health plan or designated to a higher tier — which will make seeing the provider more expensive and deter some patients from continuing treatment. “Either way, you will be locking your door to these patients because you will no longer be a provider they are allowed to see or their co-pay will go up so much that they can’t afford to see you,” she said.

Complying with formularies gets more complicated when a branded product has advantages over the generic. For example, a generic ointment can be prescribed under the formulary, but a branded version of the same medication in a spray or lotion, which is not covered, is easier to use and thereby increases adherence to the treatment regimen. “Patients like the spray because it goes on well and is convenient to use, which means they are more likely to use it,” Dr. Lebwohl said. Or twice-a-day application of two generic ointments may be equivalent therapeutically to once-a-day application of a branded combination product. On the other hand, if the branded product is really expensive, then prescribing the generics may be the best option for the patient. [pagebreak]

When no generic equivalent exists, as is the case for biologics, patients are required to go through step therapy. Even then, they are faced with large co-pays as biologics are placed in higher tiers in the formulary. In recent years, Dr. Garrett has seen more and more drugs move to the third and fourth tier. “Patients used to have $10 and $15 co-pays for branded drugs and now they start at $15 for generics and $45 for branded drugs,” she said. “Some drugs in the third tier have co-pays in the three digits.” Some plans may require patients to pay a percentage of the drug’s price rather than a flat co-pay, exposing them to potentially enormous expenses.

Patients savvy

Patients are more price-sensitive in this economy, as well. Many times, they will ask if a generic is suitable for them, Dr. Garrett said. Pharmacists may steer patients toward generics as well; sometimes the pharmacist tells the patient the full price of a brand name drug, but not the reduced price with the insurance coverage. The patient thinks that he or she has to pay the full amount, which either deters the patient from fulfilling the prescription or prompts a call to the office.

Dr. Lebwohl can relate. “We get calls on a daily basis by patients who say they can’t afford their prescription,” he said. Dr. Lebwohl recently wrote a prescription for a vitamin D ointment to be used on the face. He prescribed the branded product as it is safer for use on the face and less irritating than the generic. “The patient called to tell me that the branded product is not on the formulary, so I had to find her something else to use.” Another patient may be able to pay the difference, but this one couldn’t. When discussing treatment options, Dr. Lebwohl always tells patients what he thinks is the best drug for them. “But the factor that determines what I give them the most is what the insurance company will pay for,” he said. [pagebreak]

Patients have a few responses, most of which result in a call to the office, Dr. Maloney noted. Some patients ask upfront if there is a generic option, explaining that they can’t afford a branded drug. Some patients take the prescription to the pharmacy, but then call the office asking for another medication because the prescribed one is too expensive. Some patients insist on a brand-new drug that they heard about on television, but when they find out at the pharmacy the medication has a $25 co-pay, they call asking if there is a cheaper option. On occasion, a patient will go to the pharmacy and not buy the drug because it’s too expensive, then wait until the follow-up appointment to explain. She called the latter case “a tragedy,” because the patient could have been helped if steered to a different treatment option.

Dr. Herron has noticed that patients are increasingly less willing to try different treatments because of the higher expense. “In years past, patients were more willing to try a medication when it had a $4 or $6 co-pay,” he said. “Now when patients have to put out $40 or $60 in co-pays, they are much more selective in what they’re willing to try or how many alternatives they’re willing to go through to find the right combination for them.” [pagebreak]

Using coupons

Every patient has a threshold for a prescription co-pay, Dr. Herron noted. “I’m confident that a patient can fill a prescription with a $10 or $20 co-pay, but in our practice that threshold is $40 to $50.” A $60 co-pay will trigger a high rate of telephone calls to the practice in which patients ask for an alternative. “That’s where the rebate cards come in incredibly handy,” he said.

Coupons, rebate cards, and co-pay assistance cards are variations on a theme that reduces or eliminates the cost of a more expensive branded product to the patient. However, they have been criticized as creating incentives for patients to use more expensive brand name drugs by shifting the cost to health insurance companies and, ultimately, to an already-stressed health care system.

“We really need to be in the ethical sweet spot of not choosing a medication because there’s a co-pay card, but using a co-pay card for the medication a patient needs,” Dr. Maloney said. “Ninety percent of all dermatologists are in the sweet spot. We are working very hard to help patients pay as little as possible for medications they need.” Until this year, coupons were banned in Massachusetts because the state legislature believed they were a coercive way to get people to use more expensive drugs, Dr. Maloney explained. But then the legislature determined that people who needed the more expensive drugs were the ones suffering. [pagebreak]

“They improve patient access to prescription drugs,” Dr. Garrett said, adding, “That’s a good thing.” Some patients may be taking more than one drug to treat their condition or are taking other medications to treat other medical problems. “Every little bit helps,” she said. However, it’s important to educate patients regarding how to use these cards similar to a secondary insurance to help defray costs. Medicare and Medicaid, however, don’t honor the rebate cards and some insurance plans have stopped accepting coupons for specialty drugs.

Helping patients get medications

What’s worse is that many pharmacy staff don’t know how to use rebate cards correctly, resulting in false denials, Dr. Herron noted. “I tell my staff all the time, it should not be this hard to get a prescription filled.”

But it is. Say the patient’s co-pay is $45 and he has a co-pay assistance card for up to $50 off, which would result in the patient paying nothing for the prescription. The problem is that the pharmacist quotes the patient $1,000 for the medication. Four calls later, the patient can return to the pharmacy to pick up the prescription with no out-of-pocket expense. “This is an everyday occurrence,” Dr. Garrett said. Three years ago, she had to hire a staff person just to handle these types of phone calls and help assist patients in getting medications. [pagebreak]

Dr. Garrett is not alone in having to delegate these responsibilities to staff members. Two full-time nurses do the same for Dr. Herron and the three dermatologists who practice with him. Similarly, a couple staff members are trained at Dr. Maloney’s office to assist patients and handle prior authorizations and denials, saving the physicians a significant amount of time. Every time a new drug comes out, the doctor has to help with the first few rounds, but then the calls get turned over to a staff member, she said.

Also on the list of tactics to help patients get the drugs they need is soliciting free medications from pharmaceutical companies, many of which are generous about seeing that people who can’t afford their prescriptions get them. As an example, approximately half of the prescriptions Dr. Lebwohl writes for bexarotene gel, a treatment for mycosis fungoides, are filled by the pharmaceutical company for free. There is no alternative treatment. Dr. Herron tends to be very selective when soliciting pharmaceutical companies, but has had a high success rate in obtaining certain medications, such as biologics and imiquimod. “At least once or twice a week, we are able to give a medication provided by a pharmaceutical company to a patient,” he said, adding that he has more success in the first quarter of the year when funds are more readily available. [pagebreak]

When all else fails, Dr. Lebwohl has resorted to contacting the attorney general’s office, as he did when one insurance company denied a whole class of drugs, calcineurin inhibitors. One patient, who needed to use a steroid chronically on his face, was told by his insurance company that he had to first use a topical steroid as a step therapy before it would approve the branded drug. Dr. Lebwohl contacted the insurer explaining that the treatment is for a chronic condition on the eyelid and chronic use of a steroid in that area causes cataracts and glaucoma. At that point, he threatened to contact the attorney general’s office and was told to submit an appeal letter for approval. Sometimes, Dr. Lebwohl writes the insurance company and copies the attorney general’s office, which is also an effective tactic. It helps to have a state attorney general with an aggressive reputation. “The bottom line is that you are your patient’s advocate and you have to do what’s best for your patient,” he concluded. 

Costs of brand names vs. generics

A review of the role of generic drugs in dermatology (JAAD 2012;66:353.e1-15) found that generics can offer significant cost savings for the health system compared to brand name medications. The study found that:

  • The average cost of brand-name dermatologic medications is $115.72 compared to $55.84 for generics.
  • The average cost savings attained by switching from a brand-name dermatologic medication to a generic is $59.58 (54.85 percent).

An app for that

In addition to the other methods described in the article, another way that Joel Bain Herron, MD, is trying to increase patient access to medications is by making co-pay cards accessible digitally and on mobile apps. That way, they can be accessed at the point of purchase either by the patient or the pharmacist. Last spring, Dr. Herron hired a computer consultant to develop a website called Rx_Rebates, which is currently in the testing phase. He is soliciting pharmaceutical companies to sign up for the free service that would eliminate the need to print and distribute the cards.

How drugs land on a formulary

The vast majority of health plans use a pharmacy formulary to manage drug benefits. Many have similar processes in place to determine which medications are placed on the formulary and in which tier they will appear. The higher the tier, the more costly the drug is.

The Pharmacy and Therapeutics Committee oversees the process, explained Laurie Amirpoor, staff vice president of clinical and specialty pharmacy at Wellpoint, Inc. The committee consists of two subcommittees: the Clinical Review Committee and the Value Assessment Committee. Pharmacy and Therapeutics Committee members conduct a literature review of each drug, evaluate the studies to determine their validity, determine if the drug is safe and effective, and compare it to other available treatment options. The committee uses this information to develop a drug monograph, which includes a recommendation as to whether the drug should be covered. This clinical designation is forwarded to the Value Assessment Committee, which includes the chief pharmacy officer and chief medical officer, among others. The latter committee assesses the clinical designation along with cost and utilization to determine whether the drug should be on the formulary, and if so, which tier the drug should be placed on, and if it requires any “step edits.”

Examples of step edits include medical necessity criteria or prior authorization. In the case of adalimumab, for example, it is not a first-line agent for the treatment of psoriasis, Amirpoor explained. Members are expected to first try traditional therapies, which she said have fewer side effects and a longer track record, before using a biologic. While this might be controversial, Amirpoor said that biologics are associated with toxic side effects that could potentially cause other medical problems for the patient. “So the edit requires a newly diagnosed patient to try other therapies before the biologic.”

If a drug has been approved by the FDA, it will have some type of coverage. What that will be is dependent on the type of benefits covered for a particular member, she said. Specialty and non-specialty drugs are tiered differently, Amirpoor noted. Typically, a generic topical steroid will be available on tier one, whereas a branded product with preferred formulary status will be on tier two. Specialty drugs — a term whose meaning varies by health plan, but which typically means high-cost medications, including biologics and other complex medicines — are either on tier three or four.

Another perspective

Drug formularies in the Veterans Affairs (VA) system date back to 1956, noted Mike Valentino, chief consultant for Pharmacy Benefits Management (PBM) Services for the VA. In the 1990s, the VA began combining the more than 170 individual drug formularies used across the Veterans Integrated Service Networks (VISN) into one formulary and began implementing a standardized process for reviewing drugs for its national formulary. The review effort is coordinated at the national level by its PBM Services. Most drug reviews are initiated when the FDA approves a drug for use in the marketplace.

After conducting a literature review, an evidence-based drug monograph that includes information on safety, efficacy, and cost is developed. For dermatology drugs, input is sought from the Dermatology Field Advisory Committee. Once the monograph is complete, PBM sends it to its Medical Advisory Panel and the VISN Pharmacist Executive Committee, both of which review the monograph and decide whether to add the drug to the national formulary or treat it as a non-formulary drug. Monographs are also sent to front-line providers for input.

Just because a drug is not on the formulary doesn’t mean it’s not covered, Valentino stressed. Virtually any drug that is FDA-approved and commercially available is covered. A new drug that isn’t expected to be widely prescribed or has the potential for inappropriate prescribing will be deemed a non-formulary drug. Its use sometimes requires prescribing criteria, which is a similar process to prior authorization in the private sector, he explained. The panel,committee, and other subject matter experts are responsible for developing the criteria. The prescribing physician will have to provide documentation that the drug is medically necessary.

Prescription co-pays range from $8 to $9 for a 30-day or less supply for veterans. There are no tiers in the VA formulary, and the VA does not accept coupons. The PBM doesn’t have a hard and fast rule that requires veterans to try every formulary alternative before getting approval to use a non-formulary drug, Valentino said. “Those decisions are adjudicated at the local level.” However, there is a general policy mandating the use of generic products whenever a good quality one is available. On the occasion that the veteran doesn’t respond well to the generic product, allowances are made via the prescribing criteria process. “It’s a reasonable, rational, and well-accepted process, and folks get what they need,” he said.



Costs of brand names vs. generics
An app for that
How drugs land on a formulary