Formulary Submission Reminders
The reprieve of Plan Sponsors having only one set of calendar year (CY) formularies to maintain is coming to an end. It’s that time of year where, in preparation for CY 2016 formulary submission, Plan Sponsors are diligently assessing their formulary and benefit structure to optimize beneficiary access to formulary drugs while leveraging cost containment strategies.
The assessment should include an analysis between offering a custom formulary or a standard formulary offered by a Pharmacy Benefit Manager (PBM), including rebates, while meeting the needs of the Plan Sponsor’s targeted population. Strategic collaboration among the clinical and financial decision-makers is critical to find the appropriate balance.
Although not formalized, but included in the draft 2016 Call Letter, the following two changes are important for Plan Sponsors to consider for the upcoming formulary submission: CMS is enhancing the Quantity Limit (QL) submission process for CY 2016. The Health Plan Management System (HPMS) formulary file field descriptors and allowable values will be changed for CY 2016. The Quantity_Limit_YN field will be changed to a Quantity_Limit_Type field. Sponsors will designate each formulary drug with a “0” (No QL), “1” (Daily QL), or “2” (QL over time).
Also, the tier labeling for generic tiers will change in CY 2016. There will no longer be a “Non-Preferred Generic” Tier. This change merges the generic and non-preferred generic tiers into one standard “Generic” tier, with the option of having a “Preferred Generic” tier with lower cost-sharing for a subset of generic drugs. In addition, CMS is reminding Plan Sponsors that a Drug Tier Label should be representative of the drugs that largely make up that tier when placing both brand and generic drugs in a tier and will be evaluating this trend as part of the bid review process.
A key component in the formulary development process is the consideration of utilization management (UM). Plan Sponsors may want to keep in mind the industry statistics. In 2014, the average Prescription Drug Plan (PDP) enrollee is in a plan where the formulary lists 83 percent of all eligible drugs, the same as in 2013, but slightly below the average in prior years. The average Medicare Advantage Prescription Drug (MA-PD) plan enrollee is in a plan with slightly more drugs on formulary (87 percent) than PDPs. Since 2007, PDPs have applied UM restrictions to an increasing share of on-formulary drugs, increasing from 18 percent in 2007 to 35 percent in 2014. MA-PDs tend to apply UM restrictions to a somewhat smaller share of drugs.
Key dates to remember regarding formulary submission are summarized in the table below.
Resources
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