2018 was a landmark year for new drug approvals. However, patients’ access to these novel drugs varied by drug category and enrolled health plan.
Objectives: To examine US commercial health plans’ adoption of 2018 FDA-approved drugs.
Study Design: Database analysis.
Methods: We identified novel drugs that the FDA approved in 2018 and categorized them as follows: cancer treatment, orphan drug, included in an expedited review program, and biosimilar. Using a data set of 17 large health plans’ drug coverage policies and formularies, we examined coverage 1 year following FDA approval.
Results: The FDA approved 66 drugs in 2018 (5 were not yet marketed 1 year following approval). For 60 of 61 drugs, some plans issued coverage policies whereas other plans included the drug in their formularies. Plans imposed restrictions (eg, step therapy) in 37% (275/742) of coverage policies. Plans covered biosimilars, orphan drugs, and cancer treatments more generously than drugs not in those categories (P < .05). Plans imposed restrictions in their policies with different frequencies (range, 7%-52%). Plans imposed utilization management (UM) in 82% (3837/4697) of formulary entries. Of those entries, plans required prior authorizations in 98%, included drugs on the highest patient co-payment tier in 70%, and imposed step therapy in 3%. Plans most often placed orphan drugs and cancer treatments on the highest cost-sharing formulary tiers (68% and 64% of the time, respectively). Plans imposed UM in their formularies with different frequencies (range, 62%-100% of entries).
Conclusions: Health plans imposed fewer coverage restrictions on cancer treatments, orphan drugs, and biosimilars than on drugs not in those categories. Some plans covered 2018 FDA-approved drugs more generously than others, which has implications for patients’ access to innovative therapies.
Am J Manag Care. 2022;28(4):e153-e156. https://doi.org/10.37765/ajmc.2022.88869
In 2018, the FDA approved 66 drugs, the most the agency has approved in any year.1 The FDA included 65% (43/66) of these drugs in expedited review programs, which are reserved for drugs offering substantial improvements over existing therapies or addressing acute unmet clinical needs.2 The large number of drug approvals was a positive development for patients. However, before a physician can prescribe a drug, a patient’s health insurance plan must cover it. Novel drugs with high prices pose a challenge to health plans and their already stretched drug budgets.3-5
Plans communicate drug coverage information in 2 main ways: drug formularies and coverage policies. Plans typically communicate coverage of self-administered drugs through formularies (pharmacy benefit) and physician-administered drugs through coverage policies (medical benefit). This distinction matters because plans include different information in formularies and coverage policies. Formularies include information on plan-imposed utilization management (UM) criteria, including co-payment tier, the need for prior authorization (PA), and so on. In contrast, coverage policies describe the patient population for whom the plan considers the drug to be medically necessary, including information on required diagnostic testing, clinical criteria (eg, severity of symptoms), and step therapy protocols (ie, a requirement that patients first try and fail a prior therapy before gaining access to a particular therapy).
On occasion, plans may include the drug in both a formulary and a coverage policy. For instance, a plan may additionally include a physician-administered drug in its pharmacy benefit (and thus its formularies) to shift costs and to enable the use of formulary UM criteria. In these cases, the drug would be distributed from a pharmacy but would be administered in a physician’s office.6,7 For self-administered drugs, plans may additionally issue coverage policies to more transparently communicate the plan’s medical necessity criteria to providers and patients. This often occurs when plans include all drugs indicated for a particular indication (eg, multiple sclerosis) in a single coverage policy, irrespective of whether the indicated drugs are physician-administered or self-administered.
In this study, we examined how a set of US commercial health plans covered 2018 novel FDA-approved drugs. We reported plans’ mode of coverage communication (coverage policies vs formularies) and examined differences in plan coverage of drugs with different characteristics (eg, orphan vs nonorphan drugs). Understanding how US health plans adopt new technology is important given many patients’ often urgent need to access these treatments.
We identified novel drugs that the FDA approved in 2018. When the FDA approved a drug for multiple indications, we considered each drug-indication pair separately. For example, because the FDA approved omadacycline for skin infections and for community-acquired bacterial pneumonia, we included omadacycline twice in our data set. We used information from the FDA’s website to categorize each drug-indication pair as follows: included in an expedited review pathway, orphan drug status, cancer indication, and/or biosimilar (eAppendix Table 1 [eAppendix available at ajmc.com]).
We explored how 17 large US commercial health plans (eAppendix Tables 2 and 3) covered each drug 1 year after approval. For example, for a drug approved on March 1, 2018, we identified and reviewed plans’ publicly available coverage policies and formularies posted on their websites that were current on March 1, 2019.
We reviewed each drug coverage policy and determined whether the plan imposed restrictions beyond the drug’s FDA label indication. We categorized coverage restrictions as patient subgroup restrictions (eg, a requirement that disease severity meet or exceed some level); step therapy protocols; and “other,” meaning any other coverage restriction (eg, requiring the drug be used in combination with another drug). We also reported plan-imposed prescriber requirements (eg, a requirement that a neurologist prescribe the drug).
We identified the same plans’ drug formularies that were in force 1 year following a drug’s approval from their websites. We reviewed formulary entries for each drug and categorized UM criteria as PAs, step therapy protocols, or inclusion of a drug on the highest patient co-payment tier. We also identified quantity limits and age eligibility requirements.
We categorized the mode of plans’ coverage communication using the following categories: coverage policy only, drug formulary only, both coverage policy and drug formulary, or neither. Because formularies and coverage policies include different information, we were unable to compare their contents.8 For example, whereas coverage policies precisely describe the criteria patients must meet before being eligible for a drug, a formulary reports only whether a PA is necessary. A PA may include similarly detailed patient eligibility requirements or may be a simple attestation that a patient has a particular diagnosis; however, it is not possible to determine this information from a formulary. Similarly, whereas coverage policies clearly outline step therapy requirements (ie, the number of prior therapies that plans require patients to fail), formularies specify only whether a step therapy protocol is required. Further, whereas coverage policies report a plan’s specific coverage criteria for each of a drug’s indications, formularies do not provide indication-specific coverage information. Because of these differences, we analyzed formularies and coverage policies separately.
We explored how health plans covered drugs in 2 ways. First, we examined differences in plan coverage of drugs with different characteristics (eg, orphan drugs vs nonorphan drugs). Second, we evaluated variation in drug coverage across health plans.
In 2018, the FDA approved 66 novel drugs (42 new drug applications; 24 biologics license applications), corresponding to 82 drug-indication pairs (eAppendix Table 1). We excluded 5 drugs that were not yet marketed, including 3 biosimilars. The remaining 61 drugs corresponded to 70 drug-indication pairs.
Mode of Coverage Communication
On average, plans issued coverage information (coverage policies or drug formularies) for 88% (913/1037 potential instances; range, 74%-98%) of drugs (eAppendix Figure); plans issued both a coverage policy and a formulary for 35%, only a coverage policy for 27%, only a formulary for 27%, and neither for 12%. Three plans most often issued only a coverage policy, 5 plans most often issued only a formulary, and 9 plans most often issued both a coverage policy and a formulary.
For 60 of 61 drugs, some plans issued coverage policies whereas others included the drug in their formularies. All 13 plans that issued coverage information for doravirine (indicated for the treatment of HIV-1 infection) included the drug in a formulary and did not issue a separate coverage policy.
Imposed Coverage Restrictions
Coverage policies. Plan coverage was consistent with the FDA’s approved indication 63% (465/742) of the time. Plans imposed coverage restrictions 37% (275/742) of the time (Figure 1 and eAppendix Table 4). In 2 cases, a plan deemed a drug to be experimental/investigational and hence did not cover it. Of restricted coverage policies (n = 275), plans imposed step therapy protocols in 69% and patient subgroup restrictions in 57% (eAppendix Table 4). Plans imposed multiple restriction types in 27% of restricted coverage policies. For step therapy protocols (n = 191), plans required patients to first fail a single drug 53% of the time; 2 drugs, 34%; and 3 or more drugs, 13%.
Plans imposed coverage restrictions on noncancer treatments more often than on cancer treatments (49% vs 12%; P < .01), novel therapies more often than biosimilars (42% vs 18%; P < .01), and nonorphan drugs more often than orphan drugs (41% vs 34%; P < .05). Plans restricted coverage of drugs that the FDA reviewed through its standard process more often than drugs that the FDA included in an expedited review program (41% vs 35%), although this difference was not statistically significant (P = .13) (eAppendix Table 4). Plans tended to impose different coverage restriction types to drugs with different characteristics. For example, plans most often restricted orphan drugs (n = 137 restricted coverage policies) by applying patient subgroup restrictions (80% of the restricted policies); in contrast, plans most often restricted nonorphan drugs (n = 138 restricted coverage policies) by applying step therapy protocols (95% of restricted policies) (eAppendix Table 4).
Formularies. Health plans issued a combined total of 186 formularies (some plans issued more formularies than others) (eAppendix Table 5). Plans excluded drugs from their formularies (ie, did not cover the drug) 3% of the time (140/4697 instances) and imposed UM criteria 82% of the time (3837/4697). Of formulary entries with UM criteria (n = 3837), plans required a PA in 98%, included drugs on the highest patient co-payment tier in 70%, and imposed step therapy protocols in 3% (eAppendix Table 5). Plans imposed multiple UM tools 60% of the time (Figure 2).
Plans tended to impose different types of UM on drugs with different characteristics. For example, plans required PA more often for cancer drugs than noncancer drugs (93% vs 63%) and for orphan drugs than nonorphan drugs (86% vs 58%). Plans placed cancer drugs and orphan drugs on the highest tier of their formularies more often than noncancer drugs and nonorphan drugs (64% vs 56% and 68% vs 49%, respectively).
Variation in Drug Coverage Across Health Plans
Coverage policies. Health plans imposed coverage restrictions with different frequencies (range, 7%-52% of coverage policies) (Figure 1). Four plans imposed coverage restrictions in a majority of their policies; 7 plans did so in fewer than one-third of their policies.
Drug formularies. All plans imposed UM criteria with different frequencies (range, 62%-100% of formulary entries) (Figure 2). Eight plans imposed UM in more than 90% of formulary entries; 2 plans did so in fewer than 75% of entries.
Health plan adoption of novel technology is critical to patients’ access to innovative therapies, but plans must balance drug costs with providing their enrollees access to innovative treatments. Our study provides a snapshot of patients’ access to 2018 FDA-approved drugs and important lessons for how plans adopt novel therapies in general.
We found that plans inconsistently issued coverage information (some issued coverage policies whereas others issued formularies) for all but 1 drug in our sample. This inconsistency is notable as it suggests that enrollees in different plans have access to different levels of drug coverage information.9
Our findings suggest that plans grappled with drugs approved in 2018; overall, health plans imposed coverage restrictions in more than one-third of their coverage policies and UM criteria in more than 80% of formulary entries. Plans tended to offer more generous access to some categories of drugs than others. For instance, plans less often imposed coverage restrictions on biosimilars, orphan drugs, and cancer treatments compared with drugs not in those categories. Our findings highlight often complex, and sometimes conflicting, patient access criteria. For example, whereas plans less often imposed coverage restrictions on cancer and orphan treatments, plans most often placed these drugs on the highest cost-sharing formulary tiers.10
Some plans more often restricted their enrollees’ access to drugs than other plans. This variation can have important implications, as it means patients’ access to novel therapies may depend on the plan in which they are enrolled. Future studies should examine the plan characteristics associated with drug coverage generosity. For example, research that examines whether plans with higher premiums provide more generous access to innovative therapies, or whether plans in more competitive markets are more likely to adopt novel drugs, would be valuable.
For novel drug approvals, health plans must typically rely only on a product’s registration study, which may be placebo controlled, when adjudicating drug coverage. A lack of information on how a novel drug performs in a real-world setting relative to existing treatments complicates decision-making. Future research should examine how plans adjust drug coverage as a drug’s evidence base matures. This research would improve decision-making transparency and provide valuable information on how plans use different types of evidence when formulating drug coverage policies. Early engagement between drug manufacturers and health plans would also be beneficial, as it may help ensure that plans have faster access to the evidence they need, thus speeding patients’ access to care. Expanded use of “core outcomes sets,” which are standardized outcomes agreed upon by experts and stakeholders to include in clinical studies, may also speed patients’ access to care.11
Our study has a number of limitations. First, our findings may not generalize to other commercial plans, to public payers (eg, Medicaid), or to other drug approval years. Second, we do not account for when plans provide access to drugs in the absence of promulgated coverage policies or for enrollee power to appeal coverage denials. Third, we did not account for differences in the health status of each health plan’s enrollee population, which may affect how a plan prioritizes coverage of different drugs. Finally, although we analyzed health plan assignment of drugs to their most expensive patient co-payment tiers, we did not have information to compare the magnitude of required co-payments.
We examined US health plan adoption of 2018 FDA-approved drugs and found important differences in how plans communicated their drug coverage decisions to their enrollees. Plans tended to cover to particular categories of drugs (eg, biosimilars, orphan drugs, and cancer treatments) more generously than drugs not in those categories. Some health plans covered 2018 FDA-approved drugs more generously than others, suggesting that a patient’s plan may have affected their access to innovative therapies.
Author Affiliations: Center for the Evaluation of Value and Risk in Health, Institute for Clinical Research and Health Policy Studies, Tufts Medical Center (ADP, NMM, NB, MCO, RCL, JDC), Boston, MA.
Source of Funding: None.
Author Disclosures: Dr Chambers has previously participated in a Biogen Payer Advisory Board.The remaining authors report no relationship or financial interest with any entity that would pose a conflict of interest with the subject matter of this article.
Authorship Information: Concept and design (ADP, NMM, NB, RCL, JDC); acquisition of data (ADP, NMM, NB, MCO, RCL); analysis and interpretation of data (ADP, NMM, MCO, RCL); drafting of the manuscript (ADP, MCO, JDC); critical revision of the manuscript for important intellectual content (ADP, RCL, JDC); statistical analysis (ADP, NB); administrative, technical, or logistic support (ADP); and supervision (JDC).
Address Correspondence to: Ari D. Panzer, BS, 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. Email: firstname.lastname@example.org.
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