Life Sciences

Medicare & Reimbursement Advisor Weekly, February 4th, 2009

Medicare & Reimbursement Advisor Weekly, February 4, 2009



Without access, expect to lose 90% of prescription volume in closed formulary

So what happens in a closed formulary? Here are some observations some formulary decision-makers have passed on.

The impact to a manufacturer is alarming financially. The National Drug Code (NDC) block in a closed formulary removes quite a bit of new prescriptions for a given brand. Your managed care customers are seeing migration to the generics and other formulary agents.Depending on how rigid a closed formulary is, your branded agent left out could lose between 90% to 95% of those scripts. Consider a company that invests in its salesforce and generates 1,000 new scripts in one month: with an NDC block, the scripts aren’t filled, and, typically, the patient would end up with the generic or, in some cases, a script for the on-formulary brand.

If your company’s managed markets strategy is to get access to your product with closed formulary plans, that’s probably smart. Contracting is the key to access because without it, you could lose around 90%–95% of your volume (i.e., 950 out of those 1,000 scripts). With step edits, the effect is less, but you could still lose around 50%–70% in volume if your drug is restricted in this way.

Pharmaceutical manufacturers will need to adapt their contracting strategies to accurately determine a plan’s level of control. It is imperative that manufacturers segment the market into plans with open versus closed formularies.

Most plans in Medicare D have some closed formularies as you know. Closed formularies and the use of NDC blocking are a great cost-control strategy for plans because they drive the brand cost down. —BC



Closed formulary takeaway

Losing new prescriptions if blocked out of a closed formulary has a kind of sentinel effect, according to some managed care plans, because at the point of clinical decision-making, behavior begins to change. The patient, pharmacist, and physician may file for a coverage determination or perhaps switch to a generic or an on-formulary brand because of messaging at the retail pharmacy, but clearly the brand will lose many new prescriptions.



Survey snapshot

72% of managed care plan case managers who rate their opinion and influence in formulary decision-making as increased in the past two years, and 55% who rate their opinion as carrying “some weight” with clinical directors in the pharmacy or medical division. Based on a poll of 18 preselected case managers, part of HCPro Managed Care Advisory Board. Interview highlights to be reported in upcoming issue.



Drugs with better safety profiles may win in hospital pharmacy initiative

With patient falls rising steadily and payers pressuring hospitals to eliminate hospital-related injuries, Peg Daly, RN, director of education at North Adams (MA) Regional Hospital, says it has turned to its falls committee to research evidence and change how nurses assess patients’ risks for falls and how to prevent them, specifically by revamping pharmacy protocols.

CMS generally follows the Joint Commission’s (formerly JCAHO) guidelines, and the accreditor requires hospitals to reduce falls. “About 60% of our patients are covered by either Medicare or Medicaid, so we are predicting that in the near future payers (government and commercial) will not reimburse for injuries sustained as a result of a fall while in the hospital,” says Debbie Durant, RN, BSN, director of the medical surgical unit at North Adams Regional Hospital.

That’s one reason the hospital may try to ensure that the preferred medications aren’t causing adverse effects or side effects that could increase fall risk. Medications with a better safety profile have an advantage, Durant says.

The goal is to reduce falls by 10% in one year; a single patient fall costs one of your hospital customers $33,785.00, according to a U.S. Department of Veterans Affairs analysis.

Changing protocol

In a new process, a pharmacist will conduct a more careful analysis of medications to check for potential drug interactions that could cause a patient to become disoriented and fall. “If they’re at high risk for a fall, we want pharmacists to look at medications and make sure that the pharmacy review is a little more in-depth,” Daly says, “but we’re still figuring out what that mechanism is. We have to work this out with the pharmacy. It’s possible that we would consider adjusting a medication policy or looking to the P&T committee for input.”

Working among the silos of a typical hospital will be a challenge, say Daly and Durant.

“When it comes down to it, patient safety isn’t just the responsibility of nursing but all departments,” says Durant.

No significant pharmacy data are available yet, but they will be reported in a future MRAW.

North Adams Regional Hospital also added new IV criteria to its process for assessing falls. Patients who were hooked up to IVs were being assessed in the same manner as those who did not have IVs.


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