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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.
Insurers and PBMs are increasingly excluding drugs from their formularies that they deem to be of low value. Indicative of this trend, in 2016, Express Scripts increased the number of drugs excluded from their preferred drugs list from 66 to 80, and CVS/Caremark increased the number of drugs excluded from their standard formulary from 95 to 124.1,2,30,31 Although much has been written about the proliferation of drug exclusion policies, little attention has been focused on their impact on patients.32-34 We identified and reviewed empirical evaluations of drug exclusion policies and examined their impact on patients and healthcare costs.
We found that roughly three-fourths of the included studies reported that the drug exclusion policies either positively impacted patients (ie, the patients’ condition improved) or that patients’ conditions were unaffected. In the one-fourth of studies that reported that drug exclusion policies negatively impacted patients, a number of factors may be at work. Although the excluded drug was often replaced with a drug in the same therapeutic class (eg, one PPI was replaced with another PPI), the drugs in the same class may not have identical safety, efficacy, or metabolic profiles, and some patients may respond differently to them.35 In addition, drug exclusion policies may negatively impact patient adherence, which, in turn, can lead to compromised disease management.
We found that roughly four-fifths of the included studies reported that the drug exclusion policies reduced overall healthcare costs. In the remaining studies, savings from reductions in drug expenditures were offset or exceeded by costs incurred elsewhere in the healthcare system (eg, due to an increased rate of physician office visits or hospitalizations). Other reasons for increased overall costs may include the costs of implementing the drug exclusion policy, and the costs of additional office visits, medical authorizations, and phone calls that accompany the medication changes.
Looking Forward
Faced with the introduction of innovative technology and rising costs, insurers and PBMs will continue to search for ways to make their drug benefit designs more efficient. Payers may be prepared to accept some degree of disruption to patient care.36 Removing drugs from formularies for which equally effective, but less expensive, alternatives are available is an attractive option. Our study suggests that, for the most part, these policies have been successful in reducing costs while minimizing the impact on patient care, although the exceptions provide room for caution. Decision makers should thus be mindful of the potential negative clinical and economic consequences of drug exclusion policies. Decision makers can help mitigate this risk by using formal cost-effectiveness analyses and budget impact models to account for all potential costs and benefits in their decisions.37 Drug exclusion policies should be transparent, with the evidence that informed the policy clearly communicated to patients and physicians, and implemented with a goal of maximizing continuity of patient care.38

Our study has a number of limitations. The studies included in our review varied in their methodologies. Among the included studies were retrospective chart reviews,17 prospective cohort analyses,18 analyses of administrative claims data,29 and patient surveys.15 Differences in the methods employed and the study end points prevented a formal synthesis of the included studies through meta-analysis. The included studies also varied in how study findings were reported. Not all studies reported the effect of the drug exclusion policy on both patients and healthcare costs. Further, some studies reported the costs incurred following the drug exclusion policy with greater granularity than others.
Insurers are increasingly using drug exclusion policies as a tool to help reduce the cost of their drug benefit. Our findings suggest that although there were important exceptions, a majority of policies have successfully reduced costs and have not negatively affected patients. 

Author Affiliations: Tufts University School of Medicine (JDC, PJN), Center for the Evaluation of Value and Risk in Health, Institute for Clinical Research and Health Policy Studies, Tufts Medical Center (JDC, PJN, PBR), Boston, MA.

Source of Funding: This study was funded by Bayer HealthCare Pharmaceuticals Inc.

Author Disclosures: Unrelated to this research, Dr Chambers has participated in an advisory board for Sanofi. At the time of this study, Dr Rane was an employee of Tufts Medical Center; she is currently an employee of Amgen Inc. Dr Neumann has previously served on the advisory boards of Merck, Bayer, Pacira, Novo Nordisk, Shire, and Amgen for health economics topics; he has served on the advisory board for the Congressional Budget Office; he has consulted for Boston Health Economics, Purdue, Vertex, and Precision Health Economics. The CEA Registry has been funded by NSF, NLM, AHRQ, CDC, and a variety of pharmaceutical and device companies who subscribe to the data.

Authorship Information: Concept and design (JDC, PJN); acquisition of data (JDC, PBR); analysis and interpretation of data (JDC, PBR); drafting of the manuscript (JDC, PBR); critical revision of the manuscript for important intellectual content (PJN, PBR); statistical analysis (PBR); obtaining funding (JDC, PJN); and supervision (PJN).

Address Correspondence to: James D. Chambers, PhD, Assistant Professor, Tufts University School of Medicine, Center for the Evaluation of Value and Risk in Health, Institute for Clinical Research and Health Policy Studies, Tufts Medical Center, 800 Washington St, #63, Boston, MA 02111. E-mail:

1. 2016 preferred drug list exclusions. Express Scripts website. Published 2016. Accessed July 20, 2016.

2. Formulary drug removals. CVS Caremark website. Published July 2016. Accessed July 20, 2016.

3. Schneeweiss S, Maclure M, Dormuth CR, Glynn RJ, Canning C, Avorn J. A therapeutic substitution policy for proton pump inhibitors: clinical and economic consequences. Clin Pharmacol Ther. 2006;79(4):379-388.

4. Björnsdóttir US, Gizurarson S, Sabale U. Potential negative consequences of non-consented switch of inhaled medications and devices in asthma patients. Int J Clin Pract. 2013;67(9):904-910. doi: 10.1111/ijcp.12202.

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17. Longyhore DS, Stockton CM, Thomas MR. Lipid profile changes associated with changing available formulary statins: removing higher potency agents. Am J Manag Care. 2009;15(7):409-414.

18. Patel RJ, Gray DR, Pierce R, Jafari M. Impact of therapeutic interchange from pravastatin to lovastatin in a Veterans Affairs Medical Center. Am J Manag Care. 1999;5(4):465-474.

19. Bryant GA, McDanel DL, Horner KE, Farris KB, Newkirk EN. Evaluation of dosing and clinical outcomes in patients undergoing conversion of insulin glargine to insulin detemir. Pharmacotherapy. 2013;33(1):56-62. doi: 10.1002/phar.1168.

20. Kabadi UM. Deleterious outcomes after abrupt transition from insulin glargine to insulin detemir in patients with type 1 diabetes mellitus. Clin Drug Investig. 2008;28(11):697-701.

21. Nadel HL. Formulary conversion from glipizide to glyburide: a cost-minimization analysis. Hosp Pharm. 1995;30(6):467-469, 472-474.

22. Law SK, Song BJ, Fang E, Caprioli J. Feasibility and efficacy of a mass switch from latanoprost to bimatoprost in glaucoma patients in a prepaid health maintenance organization. Ophthalmology. 2005;112(12):2123-2130.

23. McKinley SH, Singh R, Chang PT, Gross RL, Orengo-Nania S. Intraocular pressure control among patients transitioned from latanoprost to travoprost at a Veterans Affairs Medical Center Eye Clinic. J Ocul Pharmacol Ther. 2009;25(2):153-157. doi: 10.1089/jop.2008.0100.

24 Robst JM, Constantine R, Boaz T, et al. Short-term impact of preferred drug list changes on health care use and Medicaid costs: injectable risperidone. Psychiatr Serv. 2010;61(9):937-939. doi: 10.1176/

25. Meissner B, Dickson M, Shinogle J, Reeder CE, Belazi D, Senevirante V. Drug and medical cost effects of a drug formulary change with therapeutic interchange for statin drugs in a multistate managed Medicaid organization. J Manag Care Pharm. 2006;12(4):331-340.

26. Benedetto SR, Sloan AS, Duncan BS. Impact of interventions designed to increase market share and prescribing of fexofenadine at HMOs. Am J Health Syst Pharm. 2000;57(19):1778-1785.

27. Chase SL, Peterson AM, Wordell CJ. Therapeutic-interchange program for oral histamine H2-receptor antagonists. Am J Health Syst Pharm. 1998;55(13):1382-1386.

28. Good CB, Fultz SL, Trilli L, Etchason J. Therapeutic substitution of cimetidine for nizatidine was not associated with an increase in healthcare utilization. Am J Manag Care. 2000;6(10):1141-1146.

29. Skinner BJ, Gray JR, Attara GP. Increased health costs from mandated therapeutic substitution of proton pump inhibitors in British Columbia. Aliment Pharmacol Ther. 2009;29(8):882-891. doi: 10.1111/j.1365-2036.2009.03940.x.

30. CVS Caremark. Formulary drug removals. Published January 2015. Accessed July 20, 2016.

31. 2015 Express Scripts national preferred formulary with limited package. Express Scripts website. Published 2015. Accessed July 20, 2016.

32. Kelly C. Express Scripts’ 2016 formulary continues exclusion of Gilead’s Harvoni. The Pink Sheet website. Published July 31, 2015. Accessed July 20, 2016.

33. Pierson R, Berkrot B. CVS strips Viagra, other top drugs, from insurance coverage. Reuters website. Published August 5, 2015. Accessed July 20, 2016.

34. Silverman E. Which drugs are CVS Caremark and Express Scripts restricting? look here. The Wall Street Journal website. Published August 6, 2014. Accessed July 20, 2016.             

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36. Duerden MG, Hughes DA. Generic and therapeutic substitutions in the UK: are they a good thing? Br J Clin Pharmacol. 2010;70(3):335-341. doi: 10.1111/j.1365-2125.2010.03718.x.

37. Chambers JD. Do changes in drug coverage policy point to an increased role for cost-effectiveness analysis in the USA? Pharmacoeconomics. 2014;32(8):729-733. doi: 10.1007/s40273-014-0166-6.

38. Rood MN, Cruz-Knight W, Cunagin J, et al. The effect of insurance-driven medication changes on patient care. J Fam Pract. 2012;61(7):E1-E7.
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