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The Impact of Formulary Drug Exclusion Policies on Patients and Healthcare Costs
James D. Chambers, PhD; Pallavi B. Rane, PhD; and Peter J. Neumann, ScD
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The Impact of Formulary Drug Exclusion Policies on Patients and Healthcare Costs

James D. Chambers, PhD; Pallavi B. Rane, PhD; and Peter J. Neumann, ScD
The authors review empirical evaluations of drug exclusion policies to examine their impact on patients and on healthcare costs.
ABSTRACT

Objectives: In an attempt to increase the efficiency of their drug benefit policies, insurers are increasingly excluding drugs from their formularies that they deem to be of low value. Our objective was to identify and review empirical evaluations of drug exclusion policies and examine how they affected patients and healthcare costs.

Study Design: Literature review.

Methods: We performed a literature search to identify empirical studies that evaluated drug exclusion policies. We reviewed each study to determine how the policy impacted patients (ie, if disease control or frequency, or severity of symptoms, were affected) and if healthcare costs (eg, drug expenditures and costs associated with physician office visits, hospitalizations, laboratory tests) changed.

Results: We included 26 studies pertaining to 27 drug exclusion policies. Twenty studies reported the impact of 21 drug exclusion policies on patients: 6 (28.6%) policies were reported to have had a positive impact, 6 (28.6%) to have had a negative impact, and 9 (42.8%) to not have impacted patients. Eighteen studies reported the impact of 19 drug exclusion policies on overall healthcare costs: 14 (73.7%) policies were reported to have reduced costs, 1 (5.3%) to have had a neutral impact on costs, and 4 (21.1%) to have increased costs.

Conclusions: Although there were important exceptions, most studies found that drug exclusion policies reduced costs and did not negatively impact patients.

 Am J Manag Care. 2016;22(8):524-531
Take-Away Points

Insurers are increasingly implementing policies that exclude drugs from their formularies that they deem to be of low value. We reviewed empirical evaluations of drug exclusion policies to examine the impact the policies had on patients and overall healthcare costs.
  • Twenty-seven drug exclusion policies across 7 different conditions were included in our review.
  • The majority of drug exclusion policies were reported to reduce costs and not negatively impact patients.
  • However, roughly 20% of drug exclusion policies were found to increase costs, and roughly 25% of the policies were found to negatively impact patients (eg, patients’ symptoms became more frequent or severe). 
Insurers are increasingly supplementing long-standing management approaches, such as tiered formularies, prior authorizations, and coverage restrictions, with formulary policies that exclude drugs deemed to offer questionable additional benefits over cheaper alternatives. Drug exclusion lists provide healthcare payers and pharmacy benefit managers (PBMs) greater negotiating power with product manufacturers and can be a potent tool in controlling drug spending.1,2
 
The goal of a drug exclusion policy is to reduce costs by limiting patient access to an expensive drug for which there is a more cost-effective alternative. However, there is a risk in mandating that patients switch from their current treatment to an alternative drug, as it may affect adherence to therapy, disease control, and health outcomes. There is further concern that poor control of patients’ conditions could lead to additional physician office visits and hospitalizations, and, ultimately, to an increase in overall healthcare costs.3-5
 
A better understanding of how drug exclusion policies impact patients and affect healthcare costs would aid in their implementation. The aim of this study was to identify and review empirical evaluations of drug exclusion policies and to examine how the policies have affected patients and affected healthcare costs.

METHODS
We performed a literature search to identify empirical studies that evaluated the impact of drug exclusion policies on affected patients (ie, patients who were required to change their medication as a result of the policy) and on healthcare costs. The search strategy is presented in Table 1. We performed the literature search in September 2015 and included studies that examined the impact of the drug exclusion policy on affected patients. The studies excluded were those that evaluated physician- or patient-initiated medication changes (ie, medication changes not mandated by the insurer), as well as those that evaluated generic substitution or reference pricing policies.
 
Two researchers reviewed each abstract identified by the search strategy. We then evaluated each study that met our inclusion criteria and extracted information as follows. First, we reported details of the change in treatment (ie, the drug that was excluded from the formulary and the drug to which patients were switched). Second, we recorded the reported impact that the drug exclusion policy had on patients. We considered a drug exclusion policy to have had a positive impact on patients if the patients’ condition improved as a result. We considered a drug exclusion policy to have had a negative impact on patients if they were found to have experienced greater frequency or severity of symptoms, or if they experienced lapses in disease control (eg, if a patient’s blood pressure increased following the exclusion of an antihypertensive drug from the formulary).
 
On occasion, studies reported that the drug exclusion policy’s impact on study end points varied (ie, the policy had a positive or negative impact on some study end points but not others); in these instances, we reported the policy’s net impact. For example, Parra et al6 reported the impact of a policy that led hypertensive patients to switch from amlodipine to an alternative calcium channel blocker and found a reduction in diastolic blood pressure (P = .03) and mean arterial pressure (P = .03), but no reduction in systolic blood pressure (P value reported as nonsignificant); accordingly, we determined the impact of the drug exclusion policy to be “positive.” In another example, Condra et al7 reported the impact of a policy that led patients with gastroesophageal reflux disease (GERD) to switch from omeprazole to lanzoprazole and found that patients reported an increase in treatment side effects (P <.01) but no difference in total reported symptom scores (P = .28); thus, we determined the impact of the drug exclusion policy to be “negative.” No study in our sample reported that the drug exclusion policy positively impacted 1 or more end points while negatively impacting others.
 
Third, we reported how the drug exclusion policy affected healthcare costs. We considered all costs related to the drug exclusion policy, including drug expenditures, and costs related to physician office visits, hospitalizations, laboratory tests, and so on.

RESULTS
Our search strategy identified 3195 abstracts. Twenty-six studies met the study inclusion criteria. Of the 26 studies,3,5-29 1 reported the impact of 2 separate drug exclusion policies, meaning that we included information pertaining to 27 drug exclusion policies in our study.8
 


 
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