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PBMs, Payers Exclude Coverage for Growing Number of Priciest Drugs

Posted 12 May 2016 | By Zachary Brennan 

PBMs, Payers Exclude Coverage for Growing Number of Priciest Drugs

Two of the largest pharmacy benefit managers (PBMs) in the US are excluding a growing number of costly drugs from their formularies (ie. the drugs are not eligible for reimbursement), as the fight over drug costs is beginning to take a turn toward clinical and cost-effectiveness.

According to a new study from the Tufts Center for the Study of Drug Development (CSDD), the number of exclusion lists has grown by around 65% from 2014 to 2016.

Exclusion lists are based on establishing clinical equivalency of drugs in a therapeutic class and assessing the costs of therapeutic alternatives. Excluded drugs are those that the PBMs believe offer no additional benefit over alternative treatments in the same class of drugs, according to Tufts.


With prescription drug spending in the US having grown more than 8.5% in 2015, the Tufts study predicts that PBMs and payers will continue to embrace novel approaches to formulary management, which will challenge the bio­pharmaceutical industry to provide more concrete evidence of clinical superiority and cost-effectiveness of their products.

The exclusion lists and other measures by payers to cut costs come as the number of brand-name drugs sold in the US with a coupon or co-pay offset rose more than eight-fold from 2009 to 2015.

However, authors Joshua Cohen, PhD, associate professor at Tufts CSDD, and Christelle El Khoury, MPH, note that no comparative clinical and cost-effectiveness studies were conducted for 10 of 16 drugs excluded by both of the largest PBMs in the US, CVS Caremark and Express Scripts.

CVS and Express Scripts

Christine Cramer, spokesman for CVS, told Focus that her company employs an “independent Pharmacy & Therapeutics (P&T) Committee to help evaluate clinical appropriateness of every drug when making decisions about formulary placement and/or exclusions. This includes review of scientific evidence, peer-reviewed medical literature and accepted clinical practice guidelines.

“With regards to the study’s claims that the PBMs do not always select the most cost-effective drugs to keep on the formulary, it is important to keep in mind that the study authors did not have access to information about the negotiated prices that our clients pay for drugs on our formularies,” she said. “The drugs included on our formularies are always more cost effective than the alternatives that are excluded.”

Similarly, David Whitrap, spokesman for Express Scripts, told Focus that the cumulative increases cited in the study come as the number of new exclusions in each successive year has actually decreased from 48 new exclusions in 2014, to 18 in 2015, to 14 in 2016.

“Separately, a modernized, better-funded FDA would be able to accelerate review of the 2nd and 3rd products in a therapy class, creating more market competition by shortening the monopolies of 'breakthrough' medications. We also recommend that the government put an end to patent extensions for minor changes to existing medications, as well as ‘pay for delay’ schemes that contribute to higher prices,” Whitrap told us.

Tufts CSDD also predicts that more aggressive formulary management by PBMs and payers, via exclusion lists and indication restrictions, is expected to moderate the rate of drug cost growth through 2024.


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