The exclusion-list formularies—ESI’s National Preferred Formulary and CVS’s Value Formulary—certainly claim to provide a lot of deals for clients. What are in these deals for regional plans?  First, let’s define what we mean by the term regional plan. A regional plan encompasses one state or multiple states in the same geographical area as the primary service area. The focus of this article is on regional plans that manage their own pharmacy and therapeutics (P&T) committees and review and place drugs on formularies independently of the pharmacy benefit manager (PBM) that administers services. These tend to be larger regional plans with memberships in the millions.

Adopt, adapt, or build? That is the question.

For certain lines of business, typically self-funded employers or large fully insured employers, a regional plan may need to offer an exclusion formulary in order to compete against other plans and PBMs in their market space. Plans need to make a choice as to whether to simply adopt their PBM’s exclusion formulary and rebrand it (though this has implications for their P&T process) or adapt it. At my former organization, we opted to build our own. While we incorporated many of the PBM exclusions—due to rebate deals in which we participated—we also expanded the number of “nuisance” drugs that were excluded. These included:

  • Branded versions of drugs that had lost patent protection and are generically available
  • High-priced combinations or formulations of older, generically available drugs
  • High-priced combinations or formulations of older drugs a customer could purchase over the counter without a prescription
  • Ointments, salves, balms, and other topicals that have no active pharmaceutical ingredients—the FDA classifies these as devices since they are not pharmacologically active but (are marketed as having an) effect on the structure or function of a body part

So, what does the next iteration of PBM exclusion formularies mean for regional plans?  Truthfully, it means they will have to iterate as well to stay competitive and relevant in market. Big-ticket rebate-linked exclusions (specifically for products in the inflammatory conditions and diabetes) will continue to be driven from the PBM.

Other additions to the exclusion lists managed by regional plans will continue, but more in the nuisance area, with particular focus on drugs that enter the market with extremely high costs relative to the competing therapies (especially generics). You may also see some changes to the benefit structure, wherein drugs that cannot be outright excluded may be placed on the highest non-specialty copay tier, typically nonpreferred Tier 3. This could include some of those nuisance brands as well as some high priced generics.

In the long run, exclusions are here to stay. PBMs determine exclusions that drive value for clients, and regional health plans benefit from exclusions. Those that own their formulary independently from the PBM leverage the exclusions as well as incorporate other exclusions to stay competitive and relevant in an environment rich with acquisitions and mergers.