A Brief History of Drug Formularies And What to Expect in 2019

December 18, 2018  |  Dan Kelly, Clinical Pharmacist

A Brief History of Drug Formularies And What to Expect in 2019

Drug formularies are prescription lists that health insurers prefer (and will cover) based on greatest overall value. They’re a health insurance industry standby because they lower insurer and patient costs. Patients and providers rely on formularies—alongside medical efficacy considerations—for prescribing decisions that are both medically appropriate and cost-conscious.

The history of formularies reveals an interesting glimpse into the health insurance industry’s maturation and patients’ desire to keep out-of-pocket (OOP) costs manageable. Read on to understand how formularies became integral to health care.

The Recent History of Formularies

Formularies have been tracked as early as the 1800s. In 1816, the Pharmacopoeia of the New York Hospital listed available drugs in its hospital pharmacy.1,2 From there, the formulary’s purpose shifted to limiting certain prescriptions for regulatory and clinical reasons, and later to reducing costs for programs like Medicaid.1

By the 1980s, possible effects, like offsetting low prescription spending with more spending elsewhere in the hospital budget, began to concern various stakeholders, and the formulary’s function evolved further.1

1980s: Many related brands emerge in multiple prescription-drug categories.3 Because most brands cost roughly the same, formularies were used to determine which option(s) insurers would cover.3

1990: The Omnibus Budget Reconciliation Act (OBRA) goes into effect, enacting a number of regulations, including no longer allowing individual states to maintain formularies.3 Up to this point, 13 states and the District of Columbia had their own formularies.3

1993: OBRA is updated and reverses the guidelines around state formularies, again allowing states to maintain formularies as long as they meet certain lawful requirements. One example is that drugs can only be excluded “if the drug does not have a significant, clinically meaningful therapeutic advantage in terms of safety, effectiveness, or clinical outcomes over other drugs included in the formulary and there is a written explanation of the basis for the exclusion available to the public.”3

1995: The Veterans Health Administration (VHA) is the largest health care system in the U.S. and establishes its own pharmacy benefit manager, the VHA Pharmacy Benefits Management Strategic Healthcare Group (VHA PBM).4,5

1997: The VHA PBM establishes a national formulary, which is credited with achieving manufacturer price reductions, decreasing drug spend, and encouraging providers to regularly prescribe selected medications.5

2003: Congress passes the Medicare Modernization Act of 2003, creating the Medicare Part D retail prescription drug benefit.6 The included formulary system makes generic drugs the least expensive, which is expected to increase their consumption.6

2005: The Medicare Modernization Act of 2003 is implemented.6

2006: The Centers for Medicare and Medicaid Services (CMS) begin mandating how private plans under Part D operate formularies, including requiring annual reviews of Part D plan formularies and enforcing requirements around the Pharmacy and Therapeutics (P&T) Committees that determine formularies.6

2014: The CMS tries to remove protections on three of the six protected drug classes (anticonvulsants, antidepressants, antineoplastics, antipsychotics, antiretrovirals and immunosuppressants), which would allow formulary management to lower prices, but Congress blocks this and other suggested changes.6

Today, health insurers maintain that formularies keep prescription drugs affordable and accessible for better patient outcomes. That’s why P&T committees regularly meet to discuss clinical trial results, new drugs, provider recommendations and more.

Important Formulary Updates for 2019

As is the standard at the start of a new year, many health plans make adjustments to their formularies to give patients better therapy options while controlling costs. Before confusion arises about what health plans will cover, review the important formulary changes below.

Express Scripts National Preferred Formulary (NPF) Adding: Trulance (IBS-C, CIC), Zepatier (HCV) Removing: Pradaxa (anticoagulant), Mavyret (HCV), Atripla (HIV), Contrave (weight loss) View the formulary »

CVS Caremark Commercial Adding: Jardiance, Synjardy IR/XR (diabetes), Accu-Chek strips and kits (diabetes testing) Removing: Invokana, Invokamet IR/XR (diabetes), Tradjenta, Jentadueto IR/XR (diabetes), OneTouch strips and kits (diabetes testing), Contrave (weight loss) View the formulary »

United Healthcare Commercial Adding: Glyxambi (diabetes), Ozempic (diabetes), Tresiba FlexTouch (diabetes), Trelegy Ellipta (COPD), Symfi, Symfi Lo (HIV), Symproic (OIC) Removing: Atripla (HIV), Movantik (OIC) View the formulary »

Aetna Commercial Adding: Mavyret (HCV) Removing: Zepatier (HCV) View the formulary »

Cigna Commercial Standard Prescription Drug List Adding: Removing: Praluent (cholesterol), Livalo (cholesterol) View the formulary »

Humana Medicare Removing: Azopt (glaucoma), zolpidem tartrate ER (insomnia) View the formulary »

Health plan formulary requirements are one of the most common reasons for adopting an electronic prior authorization (ePA) solution.7 An ePA solution can alert providers to which medications have new prior authorization (PA) requirements thanks to formulary changes. Not only does this limit delays to patients receiving necessary treatments, it saves valuable provider time by streamlining the PA process.

  1. Do Open Formularies Increase Access To Clinically Useful Drugs?
  2. Formularies: the role of pharmacy-and-therapeutics (P&T) committees.
  3. Prescription Drug Payment Policy: Past, Present, and Future
  4. The Impact Of A National Prescription Drug Formulary On Prices, Market Share, And Spending: Lessons For Medicare?
  5. Establishing Pharmacy Benefits Management in the Veterans Health Care System, 1997
  6. Formularies
  7. 2018 Formulary Changes Contribute to Prior Authorization Increase
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