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Formulary Exclusions are Gaining Popularity

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Jeenal Patel, PharmD, BCGP, a formulary manager for WellDyne, said pharmacy benefit managers (PBMs) and employers are increasingly turning to formulary exclusions to control the rising cost of drugs.

Tyrone’s Commentary:

The human resources department should anticipate some backlash from employees when formulary exclusions are adopted to help manage costs. The frustration associated with formulary exclusions can be alleviated by communicating the benefits to employees before adoption. Use multiple mediums to communicate with employees such as welcome letters, mobile notifications, member portal inbox messages, and SPDs, for example. If executed properly, formulary exclusions work without sacrificing patient outcomes. The good news is employees are smart and usually make the adjustment within 90 days or so.  

Formulary exclusions are gaining popularity as a means of managing the type and cost of medications used. “Many times when you have an excluded or not-covered product, it’s perceived to be a stronger deterrent to usage versus having the product placed on a higher tier, controlled by prior authorization or step therapy,” Patel said.

Even in the specialty arena, we’re starting to see limited drugs available on formulary for narrow therapeutic areas and unique oncology indications, for example. We’re seeing decreased redundancy across the board in broader categories, such as psoriasis and arthritis,” Patel said. PBMs are finding exclusions “one of the more attractive ways to lower costs” and develop a more competitive pricing landscape, she said.

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Tyrone Squires, MBA, CPBS

I am the proud founder and managing director of TransparentRx, a fiduciary-model PBM based in Las Vegas, Nevada. We help health plan sponsors reduce pharmacy spend, by as much as 50%, without cutting benefits or shifting costs to employees.

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