Today, I update our annual tracking of the number of exclusions by each PBM. I also highlight the expansion of exclusions into major specialty therapy classes. The 2021 formulary exclusion lists are available below for your downloading pleasure.
The growth in excluded products shows how competitive many specialty therapy categories have become—and the undisclosed but presumably significant rebates generated by these products. Patient impact is also increasing, as products move on and off formularies.
Eight years ago, I outlined the inevitability of formulary exclusions. But I didn’t anticipate just how far PBMs would push this tool. Expect much more controversy as exclusions hit previously untouched but sensitive sole-source products in oncology, rheumatology, and beyond—and even start moving into Medicaid.
UNPICK ME
Formulary exclusions have emerged as a powerful tool for PBMs to gain additional negotiating leverage against manufacturers. The prospect of exclusion leads manufacturers to offer deeper rebates to avoid being cut from the formulary. Exclusions are a key factor behind the growing gap between list and net prices for brand-name drugs. (See Surprise! Brand-Name Drug Prices Fell (Again) in 2020.)
Formulary exclusions block access to specific products on a PBM’s recommended national formulary. These are suggestions, not mandates. Thus, a drug’s appearance on an exclusion list does not guarantee that all patients will lose access. Plan sponsors—the PBM's clients—can choose not to adopt their PBM’s standard formulary. However, they would then face reduced rebates and/or higher plan costs.
Here are the 2021 formulary updates for commercial clients of the three largest PBMS:
EXPANDING EXCLUSIONS
The practice of formulary exclusion began in 2014. Since then, the number of products excluded from the national preferred formularies of the three largest PBMs has grown dramatically. The chart below tracks the growth at each company.
Notable changes since our previous analysis:
BRAND-NAME ATTACK
Many exclusions target traditional, non-specialty treatments for chronic diseases. Drugs targeted for formulary exclusion typically fall into one or more of the following categories:
SPECIALTY GETS LESS SPECIAL
Over the past few years, formulary exclusions have also been extended to specialty drug categories, though PBMs do not have a uniform approach to these products. Consider the three specialty classes that represent a significant share of payers’ spending:
PATIENTS GET BOUNCED
Exclusions affect a patient’s out-of-pocket costs and access to a particular therapy. They raise the prospect of non-medical switching—altering a patient’s drug therapy for reasons other than a drug’s efficacy, side effects, or clinical outcome.
Express Scripts stated that due to its 2021 exclusions, drug coverage will change for 1.3% of its beneficiaries. That’s up from the 0.37% of its beneficiaries who were affected by its initial 2020 exclusions. CVS stated that only 0.4% of its members will be affected by its 2021 exclusions.
These figures may seem low, but they are more significant than they may appear. For instance, inflammatory conditions accounted for only 0.75% of Express Scripts’ commercial claims in 2019. How many of those patients will be affected by a switch from Cosentyx, which was preferred in 2020, to Taltz, which will be a preferred option in 2021? What will happen to patients if the formulary status of these products switches back again?
That’s why PBMs should provide more transparency into how patients taking drugs for cancer and for other specialty therapies are affected by formulary changes.
Patient groups and physicians have been raising these questions for years. I recommend reading recent physician comments—and the rebuttal from Express Scripts—in this Healio Rheumatology article: Formulary exclusions, non-medical switching jeopardize disease control, patient trust.
The ever-growing presence of exclusions—and differences between PBMs’ lists—raises important issues about patient care. Individual patients’ access to a particular therapy is determined by their plan’s PBM. Patients who change plans (or employers) can unknowingly lose access to their physician’s preferred therapy—unless they and their doctors can scale the paperwork mountain.
One final item: Exclusion is now moving into the previously untouchable Medicaid program. Last week, CMS announced that under a section 1115 demonstration, Tennessee will be able to implement a “commercial-style” closed drug formulary that does not cover certain drugs. This is the first time that a state has been permitted to exclude products from its Medicaid formulary without losing Medicaid rebates. As expected, 21 patient and consumer groups strongly oppose this move.
I suspect that the Biden administration will rescind permission for the Tennessee demonstration. But it's an important precedent. Looking ahead, there’s no doubt that more drugs will find themselves on the outside looking in.
Eight years ago, I outlined the inevitability of formulary exclusions. But I didn’t anticipate just how far PBMs would push this tool. Expect much more controversy as exclusions hit previously untouched but sensitive sole-source products in oncology, rheumatology, and beyond—and even start moving into Medicaid.
UNPICK ME
Formulary exclusions have emerged as a powerful tool for PBMs to gain additional negotiating leverage against manufacturers. The prospect of exclusion leads manufacturers to offer deeper rebates to avoid being cut from the formulary. Exclusions are a key factor behind the growing gap between list and net prices for brand-name drugs. (See Surprise! Brand-Name Drug Prices Fell (Again) in 2020.)
Formulary exclusions block access to specific products on a PBM’s recommended national formulary. These are suggestions, not mandates. Thus, a drug’s appearance on an exclusion list does not guarantee that all patients will lose access. Plan sponsors—the PBM's clients—can choose not to adopt their PBM’s standard formulary. However, they would then face reduced rebates and/or higher plan costs.
Here are the 2021 formulary updates for commercial clients of the three largest PBMS:
- CVS Caremark: 2021 Standard Control Formulary Removals and Updates and Advanced Control Specialty Formulary
- Express Scripts: 2021 National Preferred Formulary Exclusion (12/01/20)
- OptumRx: 2021 Premium Standard Formulary
EXPANDING EXCLUSIONS
The practice of formulary exclusion began in 2014. Since then, the number of products excluded from the national preferred formularies of the three largest PBMs has grown dramatically. The chart below tracks the growth at each company.
[Click to Enlarge]
Notable changes since our previous analysis:
- For 2021, CVS removed 57 drugs and added six drugs back, increasing its list to an estimated 417 products.
- Express Scripts expanded its exclusion list by 70 products, to an estimated 450 products for 2021.
- OptumRx excluded 27 additional products, increasing its total exclusion list to an estimated 476 products.
BRAND-NAME ATTACK
Many exclusions target traditional, non-specialty treatments for chronic diseases. Drugs targeted for formulary exclusion typically fall into one or more of the following categories:
- Brand-name products with generic equivalents or therapeutic alternatives
- Non-preferred (tier 3) drugs with very low utilization
- Heavily promoted drugs in therapeutic classes with multiple generic alternatives
- Medicines treating chronic conditions
SPECIALTY GETS LESS SPECIAL
Over the past few years, formulary exclusions have also been extended to specialty drug categories, though PBMs do not have a uniform approach to these products. Consider the three specialty classes that represent a significant share of payers’ spending:
- Multiple sclerosis. Beginning with its 2020 list, Express Scripts added a new categorization to distinguish between beta interferons vs. oral therapies treating multiple sclerosis. It maintained these distinctions on its 2021 list. CVS and OptumRx publish a single list for the multiple sclerosis drug class.
Some products are covered by one or two of the PBMs, but excluded by the others. For instance, Aubagio is excluded only by Express Scripts, while Rebif is excluded only by OptumRx. Tecfidera, which now has an approved generic, is excluded by Express Scripts, but it remains on the CVS and OptumRx standard formularies.
- Oncology. The oncology therapy class on the Express Script 2021 list includes multiple sub-categories for patient-administered therapies. Three of these categories are unchanged from its 2020 list. For 2021, Express Scripts added five new oncology categories for patient-administered medicines.
Caremark addresses oncology products on its separate Advanced Control Specialty Formulary, while OptumRx publishes a single list.
The PBMs have taken opposite positions for certain oral oncology products. For instance, Express Scripts excludes Kisqali and Calquence. Neither product is excluded by CVS or OptumRx.
- Inflammatory conditions. Indication-based formularies for inflammatory conditions are now routine. Express Scripts uses an indication-specific formulary for the inflammatory conditions drug class. Its Inflammatory Conditions Care Value Program was launched in 2016. It is based on seven such conditions. Such a formulary allows Express Scripts to create greater competition within the therapy class by making single-indication products compete directly with nonspecific products. CVS Caremark takes a similar approach to the category, because it lists preferred and excluded options by condition.
For 2021, Express Scripts and CVS introduced step therapy for certain products and indications. Consider the ulcerative colitis indication. At CVS Caremark, Stelara and Xeljanz are preferred only after patients step through Humira. All other products are non-preferred. But at Express Scripts, Simponi and Xeljanz are preferred after patients step through Humira.
There are other notable variations in exclusions. Express Scripts and OptumRx both excluded Cosentyx, but CVS Caremark did not. Express Scripts added Taltz to its preferred formulary for the first time. By contrast, CVS Caremark excluded Enbrel (but only for psoriasis), but Express Scripts and OptumRx did not.
Exclusions affect a patient’s out-of-pocket costs and access to a particular therapy. They raise the prospect of non-medical switching—altering a patient’s drug therapy for reasons other than a drug’s efficacy, side effects, or clinical outcome.
Express Scripts stated that due to its 2021 exclusions, drug coverage will change for 1.3% of its beneficiaries. That’s up from the 0.37% of its beneficiaries who were affected by its initial 2020 exclusions. CVS stated that only 0.4% of its members will be affected by its 2021 exclusions.
These figures may seem low, but they are more significant than they may appear. For instance, inflammatory conditions accounted for only 0.75% of Express Scripts’ commercial claims in 2019. How many of those patients will be affected by a switch from Cosentyx, which was preferred in 2020, to Taltz, which will be a preferred option in 2021? What will happen to patients if the formulary status of these products switches back again?
That’s why PBMs should provide more transparency into how patients taking drugs for cancer and for other specialty therapies are affected by formulary changes.
Patient groups and physicians have been raising these questions for years. I recommend reading recent physician comments—and the rebuttal from Express Scripts—in this Healio Rheumatology article: Formulary exclusions, non-medical switching jeopardize disease control, patient trust.
The ever-growing presence of exclusions—and differences between PBMs’ lists—raises important issues about patient care. Individual patients’ access to a particular therapy is determined by their plan’s PBM. Patients who change plans (or employers) can unknowingly lose access to their physician’s preferred therapy—unless they and their doctors can scale the paperwork mountain.
One final item: Exclusion is now moving into the previously untouchable Medicaid program. Last week, CMS announced that under a section 1115 demonstration, Tennessee will be able to implement a “commercial-style” closed drug formulary that does not cover certain drugs. This is the first time that a state has been permitted to exclude products from its Medicaid formulary without losing Medicaid rebates. As expected, 21 patient and consumer groups strongly oppose this move.
I suspect that the Biden administration will rescind permission for the Tennessee demonstration. But it's an important precedent. Looking ahead, there’s no doubt that more drugs will find themselves on the outside looking in.
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