| Chapter III | Table of Contents | Chapter V |
Newer antidepressant and antipsychotic medications were much more readily available to health care consumers in 1999 than they were when first introduced. Primary research indicated few cases where newer agents were either not reimbursed or older agents were designated as preferred first-line agents. Notably, many respondents indicated that the removal of restrictions (e.g., demonstrating failure first on conventional therapy) was a relatively recent policy change. In this section, we report on the status of access as assessed in our research.
In summary, this study found:
Health care payers almost always cover psychotherapeutics as part of a general pharmaceutical benefit. As such, most health care payers provide coverage for psychotherapeutics on an equal basis with other drug classes and do not apply special restrictions to antidepressants or antipsychotics as general classes. Specifically, psychotherapeutics as a class are not generally:
New generation antidepressants and antipsychotics are widely included on health plan formularies. Few formularies completely exclude newer psychotherapeutics. However, not all formularies include every new generation antidepressant and antipsychotic agent.
Prior authorization is a more common utilization control than is formulary exclusion.
Step care protocols whereby treatment failure on generic agents is required before a patient is allowed access to new generation agents appear to be largely in the past.
Each of these issues is discussed in further detail below.
Most health care payers interviewed covered pharmaceuticals to at least some degree. We found only one case where psychiatric medications are covered as a benefit separate from the general pharmaceutical benefit. Financing represents a mix of fee-for-service and capitation arrangements, although it appears that payers are abandoning capitation and risk-sharing in a return to fee-for-service financing.
Two out of the four consumer and provider associations interviewed (NAMI, AAFP) reported that differences in the coverage of behavioral health and other (e.g., physical health) pharmaceuticals were more common in the private sector than in the public sector. The most commonly cited reason for this difference was that managed care plans have more restricted access. In this study, we did not observe that psychotherapeutics are being singled out for special restrictions or exclusions because they are psychotherapeutics. Payers who place restrictions on pharmaceutical benefits do not generally discriminate among drug classes.
Of the four Medicaid programs (California, Georgia, Texas, Wisconsin) and the four State Mental Health System programs (Arizona, Maryland, Massachusetts, and Ohio) interviewed, seven manage their pharmacy programs internally. The Massachusetts State Mental Health System contracts with a third party vendor to manage its program. Seven of the eight States interviewed (Wisconsin is the exception) reported that their pharmacy benefit is generally integrated with other benefits and financed through a mix of capitation and/or fee-for-service arrangements. Exhibit IV-1 outlines the reimbursement mechanisms for each state's pharmacy benefit.
| Exhibit IV-1. Reimbursement Mechanisms for Pharmacy Benefit under Medicaid and State Mental Health System Programs | ||
|---|---|---|
| Method | Medicaid | SMHS |
| Fee-for-service | California Georgia Texas Wisconsin |
Maryland (for psychiatric drugs through Public
Mental Health System)
Ohio (outpatient settings) |
| Capitated | Wisconsin | Arizona Maryland (for drugs provided under managed care) |
| Global Budget | N/A | Massachusetts Ohio (inpatient settings) |
The DoD has carved out its pharmacy benefit within Tri-Care to Pharmaceutical Benefit Managers (PBMs) through the various TriCare managed care plans. Patients are instructed to first use an Military Treatment Facility (MTF). MTF's generally have limited formularies. If the MTF is not available or if the required drug is not available on the formulary, patients then order the drug from the PBM. If the drug is ordered through the PBM, the patient is responsible for a higher level of cost-sharing. The PBM program is administered on a fee-for-service basis. The VA internally manages the pharmacy benefit from within the global VA budget, fully integrating it with other benefits.
Private health care payers reported a variety of methods to finance and manage pharmaceutical benefits. MCOs sometimes finance pharmaceuticals through capitation, although this arrangement varies to meet the needs of their customers (e.g., employers, Medicare, and Medicaid). It appears that MCOs are increasingly moving towards financing pharmaceuticals on a fee-for-service basis. In addition, several HMOs continue to operate risk-sharing arrangements for pharmaceuticals with their physicians.
Most HMOs interviewed manage the pharmacy benefit internally. A few carve it out. Again this arrangement varies by plan and by the client being served. Even in cases where the benefit is managed internally, the HMO may contract the services of a PBM to process claims or provide other services. In almost all cases, psychotherapeutics are covered under the same pharmacy benefit as that for physical health. It is unclear whether the financing arrangement has any direct correlation with the comprehensiveness of formulary offerings.
PBMs generally finance pharmaceutical benefits on a fee-for-service basis for both their MCO and employer clients. However, PBMs occasionally enter into risk sharing or capitation arrangements. PBMs generally manage pharmaceutical benefits for all outpatient pharmaceutical classes, including psychotherapeutics. However, long-acting injectable formulations of antipsychotics, may be covered under the behavioral or physical health benefit because these are usually administered in a provider's office, clinic, or hospital. The covered lives serviced by a PBM include all persons who obtain some or all pharmacy benefit services through the PBM. The services provided by a PBM to its MCO and employer clients may include mail service, claims processing, and/or formulary and utilization management. Some MCOs or employer clients use a PBM only to provide one or two of these services, while others utilize the complete spectrum of services.
Employers may finance pharmaceutical benefits either through full capitation through their MCO carriers or on a fee-for-service basis. In the latter case, employers will often work with a PBM to provide pharmaceutical benefits. Although employers work with their carriers to design benefits, they rarely become intimately involved with the details of coverage.
Behavioral Health Managed Care Organizations (BMHCOs) prefer not to cover pharmaceuticals. BMHCOs prefer instead to leave the pharmacy benefit integrated with the general pharmacy benefit. In a few cases (e.g. Arizona's State behavioral health managed care program) the BMHCO manages the pharmacy benefits for behavioral health directly. In Arizona, this benefit is financed on a capitated basis.
Both the New York State prison system and Indian Health Service report financing pharmacy benefits out of their global budget. This method is generally similar to fee-for-service.
Consumer associations and pharmaceutical manufacturers report that psychotherapeutics often are subject to higher copayments or lower total cost caps than are other classes of drugs. Our research has not validated this concern. It is clear that the copayments required for branded drugs are universally higher than those required for generics, but this differential applies to all branded drugs, regardless of indication.
No differences in cost sharing between psychiatric drugs and other drug classes exist in any of the Medicaid programs interviewed. Differences do exist between the copays required for branded and generic drugs. Co-payment requirements within Medicaid pharmacy benefit programs are regulated by Federal statute. In 1997, 17 States required no co-payment for prescription benefits, whereas co-payments ranged between $0.50 and $3.00 in the remaining programs. Co-payments for pharmacy benefits within Medicaid managed care programs are regulated by the waiver operating in that State and vary from plan to plan.19
Currently, 12 State Medicaid programs (Arkansas, California, Florida, Georgia, Mississippi, Nevada, New York, North Carolina, Oklahoma, Texas, West Virginia, Wyoming) limit the number of prescriptions per patient per month, while all but two States (Indiana and Iowa) place limits on the number of refills per prescription or the quantity that can be dispensed at any one time. Restrictions on the number of prescriptions range from 10 per year (West Virginia) to 6 per month (several States). States that impose limits most commonly limit recipients to either 3 or 6 prescriptions per month.19 These prescription limitations apply regardless of therapeutic class. Several States interviewed recognized that these limitations can pose problems for patients with other illnesses requiring frequent prescriptions, and indicated that often these restrictions can be worked around by "staggering" the filling of different prescriptions from month to month. For example, Wisconsin limits recipients to three prescriptions per month. However, maintenance medications can be dispensed in 90-day supplies. In contrast, none of the State Mental Health programs reported any limitations on the number of prescriptions that could be dispensed to any one beneficiary in a given month.
The DoD and the VA do not require co-payment for prescriptions if the prescription is dispensed from a DoD or VA facility pharmacy. If the prescription is dispensed at a non-DoD or VA pharmacy, a nominal co-payment is required, ranging between $2 and $9. The level of copayment is set based on whether the drug is a branded or a generic drug. Drug class does not affect copayment.
None of the private insurers interviewed reported restricting the number of prescriptions reimbursed per recipient. However, individual plans may have annual limits on the dollar amount reimbursed. This limit applies to all pharmaceuticals and is not selectively applied to psychotherapeutics. Similarly, private sector insurers do not demand higher copayments for psychotherapeutic agents than they do for other drug classes. Most plans require a higher copayment for branded drugs than they do for generics. Therefore, because the newer psychotherapeutic agents do not have generic equivalents available, there may appear to be a difference between the copayment required for these newer psychotherapeutics than is required for many "physical health" drugs.
The "three tiered copay" is a new method of cost sharing being introduced by many health care payers. These arrangements are causing increasing concern among both consumers and pharmaceutical manufacturers. Whereas "classical" copayment systems require a higher copayment for a branded products than for generic ones (e.g., $10 brand, $5 generic), these new copay systems create 3 groups: generic, "preferred brand," and "non-preferred brand." The designation of "preferred" and "non-preferred" is not simply a statement of superior drug efficacy. Rather, drugs are grouped into these categories based on a complex decision made by the MCO that considers a range of issues including efficacy, safety, therapeutic duplication, use and abuse potential, cost and cost-effectiveness. The specific rationale for placing any specific drug in one of these tiers is generally regarded as a trade secret. The ability of the MCO to negotiate contracts with pharmaceutical manufacturers likely plays a role in this process, although no MCO or manufacturer was willing to discuss this issue.
Under one proposed system for Blue Choice (Rochester, NY area), copayments for generics would range between $2 and $10, preferred brands between $12 and $25, and non-preferred brands between $30 and $40. These copayment levels reflect a marked change from the previous "nominal" copayments. In most of these three-tiered systems, individual new generation antidepressants and antipsychotics appear in both the "preferred" and "non-preferred" categories. Although, many of the newer psychotherapeutics are classified as "non-preferred," there does not appear to be any "singling out" of psychotherapeutics as a class for higher copayments. Indeed, several popular antibiotics, antihistamines, statins, and calcium channel blockers are placed in the non-preferred class.20
Neither the New York State corrections system nor the Indian Health Service requires cost sharing of its recipients.
Consumer associations expressed concern that patients were forced to change medications when the transitioning between treatment settings (e.g., inpatient to outpatient) because of formulary restrictions, or when transferring among payers. These associations were also concerned that the agents used in inpatient settings were chosen more for cost reasons than out of concern for appropriate care. Provider associations indicated that it was common to change a patient's medication when the patient is admitted to inpatient treatment, largely because the admission likely indicates that current therapy is not working. Respondents from the pharmaceutical industry indicated that coordination between inpatient and outpatient care was a problem in the past, but that this issue has resolved with increasing access to newer agents.
The choice of psychotherapeutic agent in an inpatient setting likely plays a role in the ultimate treatment choice for many, but certainly not all, patients with mental illnesses. Individual hospitals will have internal formularies that are not subject to the allowances or restrictions of health care payers. Therefore, it is quite possible that the agent used to stabilize a patient after a hospital admission will not be on the formulary of the patient's health care payer when discharged. Payers have differing ways of approaching these scenarios, although in most they did not perceive the issue to be much of a problem. This disconnect between perceptions of consumers and providers and those of payers suggests a need for more extensive follow-up research, public education, or payer training on these issues.
State programs were unaware of any problems with continuity of care between treatment settings. This is likely because most State programs have open formularies (see next section). Likewise, State programs were unaware of any systematic differences between the pharmacy benefit coverage between Medicaid and State Mental Health programs, as these often work off the same formulary and route purchases through the same channels. In two States (AZ, MD) Medicaid has assigned authority for behavioral health services to a single state agency for mental health, leading to nearly seamless coordination between the two programs. State Mental Health programs more actively coordinate pharmaceuticals between inpatient and outpatient than do Medicaid programs.
Similarly, the DoD and VA reported no issues with continuity of care between inpatient and outpatient settings. In fact, the VA requires that outpatient clinics follow treatment protocols established for the patient during hospitalization. In order to assure continuity, the VA requires that a VA physician be consulted prior to a patient's refilling a prescription in an outpatient clinic after release from an inpatient setting.
Private payers uniformly report that coverage for psychotherapeutic agents is no different between inpatient or outpatient settings. One MCO specifically reported explicit allowances for patients to continue taking non-formulary drugs upon discharge from the hospital. However, hospital formularies may dictate the choice of drugs available to the patient in an inpatient setting, independent of the insurer's formulary. Hospital formularies are usually hospital-specific and health care payers do not generally have any direct say in their composition.
The Indian Health Service reports no difference between its inpatient and outpatient formularies. Therefore, if patients are treated within IHS inpatient hospitals or day treatment facilities, they will have no coordination issues. However, inpatient psychiatric admissions are contracted to other facilities. In these cases, the IHS will attempt to switch patients from non-formulary drugs started in hospitals to agents of similar class when they transition to the outpatient setting.
Consumer associations report that prescriber credentialling can act as a serious barrier to access to newer psychotherapeutics. Interviews with key informants for this study indicate that there are several cases where health care payers require that a psychiatrist write the prescription for a designated medication. However, these requirements are not widespread and operate almost exclusively in the private sector.
The issue of prescriber credentialling largely applies to antidepressants. Most providers and payers agree that prescription of antipsychotics by primary care physicians (PCPs) is not medically appropriate. Many payers are concerned about inappropriate use of antidepressants for purposes other than the treatment of depression (e.g., weight loss, work performance improvement), and therefore may impose restrictions on the prescription of these agents by PCPs in an effort to prevent this.
None of the Medicaid or State Mental Health programs interviewed require that a psychiatrist prescribe antidepressants or antipsychotics. The DoD and VA reported that either a primary care physician or psychiatrist can prescribe antidepressants or antipsychotics. DoD did report that some medical treatment facilities restrict prescribing priviledges to psychiatrists. However, this practice is highly discouraged by DoD.
Private sector insurers indicated a range of prescriber credentialling ranging from moderate restrictions to none. For example, one MCO interviewed requires primary care physicians to obtain psychiatrist approval for prescription for selected antidepressants. At this MCO, these agents include bupropion, venlafaxine, nefazadone, mirtazapine, and monoamine oxidase inhibitors. PCPs may prescribe any TCA or SSRI of their choice without obtaining this approval. Psychiatrists in this MCO have free choice of any psychotherapeutic included on the formulary.
Similarly, one of three PBMs interviewed reported that any outpatient drug prescribed by a psychiatrist is covered without question. However, this PBM requires prior authorization (PA) for all psychotherapeutic prescriptions from PCPs. Other PBMs require no prescriber credentialling.
Although most employers do not become intimately involved with the details of prescribing, Motorola has adopted a more activist approach to meet employee needs and insure quality. In 1995, Motorola embarked on a partnership with Private Healthcare Systems (PHCS) to create a customized network of providers within the Motorola benefits system. To date it has identified approximately 100,000 physicians, 900 hospitals, and 4,000 mental health care providers nationwide who are permitted to prescribe without obtaining special authorization. Employees may nominate new providers on an ongoing basis. After a trial period these providers can achieve the same status as other providers.
In the New York State prison system, the prison staff psychiatrist or primary care physician manages mental health service delivery. This management includes pharmaceuticals. There are no restrictions on who can prescribe specific prescription drugs.
The Navaho region of the Indian Health Service reported that up until one year ago, only psychiatrists were allowed to prescribe SSRIs. This restriction has been removed. However, the IHS still requires that a psychiatrist prescribe antipsychotic medications.
The four provider and consumer associations interviewed reported that formularies are no longer impeding access to newer psychotherapeutics. All four associations have witnessed a diffusion of new drugs, namely the newer generation antidepressants and antipsychotics, in the market.
The manufacturers interviewed concurred, reporting that formulary access either under fee-for-service arrangements or in hospital settings was a problem of the past. Manufacturers believed psychotropics to be regarded differently than physical drugs, both favorably and unfavorably. Specifically, an informant from one manufacturer thought formulary approval was easier or faster for psychotropics due to high visibility and publicity of extreme cases and political pressure (e.g., from consumer and advocacy groups). Manufacturers approach to formulary access appears to be advocating broad class coverage, even as they work to achieve "preferred" status for their own product where possible by demonstrating superior effectiveness or cost-effectiveness.
The concept of "open, closed, or restricted" formulary is changing in meaning. A closed formulary generally means that non-formulary medications will not be reimbursed. Often, however, closed formularies allow non-formulary drugs to be reimbursed if prior authorization is obtained. A 1997 survey indicated that only 19% of closed formularies did not allow physicians to override formulary restrictions.21,22,23 However, plans with closed formularies may also impose monetary penalties on physicians who routinely prescribe non-formulary medications.
The use of "preferred" drug lists, whereby physicians are encouraged, but not required, to prescribe a particular drug is also growing, and may be replacing the traditional formulary. In 1995, 70% of HMOs maintained preferred pharmaceutical lists, while 83% did so in 1998. Often patients receiving a non-preferred drug are required to pay a higher co-payment (39.1% of plans in 1995, 71.7% of plans in 1998).24
According to Health Care Financing Administration(now known as Centers for Medicare and Medicaid Services(CMS)) (HCFA(now known as CMS)) formularies should not generally affect access in State Medicaid programs. Currently, only ten drugs are not approved for reimbursement by HCFA(now known as CMS). These are mainly barbiturates and benzodiazepines. Formulary acceptance is the same for all classes of drugs. In other words, HCFA(now known as CMS) does not apply a different set of criteria required for reimbursement approval to one drug class as opposed to another. HCFA(now known as CMS) monitors state formularies through utilization review.
Occasionally, HCFA(now known as CMS) has taken a pro-active approach toward influencing State Medicaid formularies and policies regarding coverage of particular prescription drugs. For example, a recent letter from HCFA(now known as CMS) to all State Medicaid Directors has urged the inclusion of atypical antipsychotics on Medicaid formularies.25
While the Omnibus Budget Reconciliation Act of 1990 (OBRA 1990) abolished the rights of States to maintain closed formularies for Medicaid, States with previously restricted formularies continued to make fewer drugs available than other States.26 Because many States incurred large increases in costs as a result of this provision in OBRA 1990, States were allowed once again to restrict formularies in 1993. Currently, closed formularies are maintained in 8 States (California, Colorado, Hawaii, Illinois, Michigan, Montana, Ohio, South Dakota). A closed formulary does not necessarily indicate relative restrictiveness.27 For example, Kentucky maintains an open formulary, but includes less than 50% of all FDA-approved drugs in its formulary. Most of the excluded drugs are generics with multiple manufacturers. Our interviews reveal that only Medi-Cal excludes any of the newer antidepressant and antipsychotic drugs. None of the State Mental Health Systems interviewed for this study exclude the newer antidepressant and antipsychotic medications from coverage. Neither State Mental Health systems nor Medicaid programs are required to use therapeutic substitution; however, Medicaid programs are required by HCFA(now known as CMS) to use generic substitution.
The DoD includes all FDA-approved drugs on the formulary for its managed care programs (i.e., TriCare). The formulary in place at the military treatment facilities is closed but providers can prescribe off formulary with prior authorization. TriCare also operates a mail order program via Merck-Medco that uses a preferred drug list that includes a limited number of newer antidepressants and atypical antipsychotics. Additions to the formulary are based on consumer need and cost.
The Veteran's Administration (VA), like DoD, has a closed formulary but allows off formulary prescriptions pending prior authorization. Pharmaceutical additions to the formulary are based on effectiveness, safety, and experience in the VA system.
Formularies are used by over 75% of HMOs, up from less than 50% in 1990 although leveling off from 1993. The trend appears to be toward closing formularies: in 1997, 33% of HMO formularies were classified as "closed" (up from 28% in 1996) and an additional 52% were described at "selective" or "partially closed" (up from 39% in 1996).21,22,28 However, within this trend toward more stringent formularies, physicians appear to have increasing influence over the choice of medications included.24,29
The managed care organizations (MCOs) interviewed for this study varied in their formulary status from open to restricted to closed. Formularies often vary by customer type or customer preference. For example, an MCO may offer several formulary options ranging from completely open to somewhat restricted to very restricted. The choice of formulary is then left to the discretion of the purchaser, such an employer, group, or individual. Larger employers and groups are more likely to choose a more expensive option such as an open formulary. Smaller or extremely cost-sensitive sensitive employers may opt for restricted formulary that is available at a lower cost. Often, the options available to individuals will also include a more restricted formulary. Furthermore, individual clients groups may further restrict or expand the "national formulary" of their providing MCO. MCOs enforce formulary compliance in a variety of ways: physician profiling, claim lockouts, and physician bonuses. MCOs reported difficulty in tracking formulary compliance for mental health drugs due to mis-coding or non-coding of mental illnesses (e.g., depression) at the time of claim submission.
Drug switching reportedly occurs less frequently with mental health pharmaceuticals than with other drug classes. The MCOs interviewed, with one exception, do not endorse active switching; more commonly, MCOs request that the dispensing pharmacist consult with the prescribing physician to discuss alternatives prior to dispensing a non-formulary drug. This latter practice is referred to as "outbound calling." The MCOs interviewed were unwilling to discuss their rationale for targeting specific drugs for outbound calling. However, it is likely that the most frequently targeted drugs are chosen on the basis of high abuse or misuse potential, high volume utilization, safety concerns, or cost.
Employers do not generally get involved with the specifics of formulary management. Most of the employers interviewed stated that they had open formularies. Most employers interviewed reported using the formulary recommended by the MCO or PBM administering their pharmacy benefit. However, one employer reported working with its PBM to expand the options on formulary. Employers leave formulary compliance in the hands of the managed care organizations or pharmacy benefit managers.
The formulary in the New York State prison system is closed, as is that used by the Navajo Region of the IHS. In general, formulary overrides are not permitted, and these payers routinely substitute a formulary drug of the same class for a non-formulary drug, even if that means switching a patient's medication. The New York State prison system reported continuing to encourage the use of generic antidepressants and antipsychotics due to budgetary constraints.
The formulary decision-making process ranges from a relatively simple administrative process to a complex review of the efficacy and economics of a therapeutic class, depending on the payer type and the individual benefit package.
The pharmaceutical manufacturers interviewed indicated that several factors impede the pace of formulary review. The most frequently cited barriers to formulary approval included effectiveness and cost. The relative importance of each of these factors depends on the class of drugs and particular interest of an individual health plan. One manufacturer indicated that for a therapeutic area with no clearly effective options, such as Alzheimer's Disease, any new drug that shows efficacy would be approved almost immediately. This is not the case in a crowded therapeutic area such as depression where none of the new agents have been demonstrated to be clearly superior to any of the others.
In Medicaid, any drug for which the manufacturer has entered into a rebate agreement with HCFA(now known as CMS) is eligible for inclusion on Medicaid formularies. There are only 10 exceptions, mostly barbiturates and benzodiazepines. Most States have open formularies and immediately reimburse any agent approved for reimbursement by HCFA(now known as CMS) on the basis of a rebate agreement.
Medi-Cal, on the other hand, has a more complex method of approving drugs for formulary inclusion. Medi-Cal revises its formulary either when it elects to undertake a complete therapeutic class review, or when a pharmaceutical manufacturer petitions for addition to the formulary between review cycles. Medi-Cal conducted a complete review of the antidepressant therapeutic class in mid 1990s with assistance from Eli Lilly. These criteria were published in a journal article describing the information needs for this purpose.6 In addition, Medi-Cal makes available its criteria for formulary review.
The DoD maintains a Pharmaceutical and Therapeutics (P&T) Committee comprised of 13 members, which meets quarterly. P&T Committees also exist in individual Military Treatment Facilities (MTFs). These must meet at least quarterly to consider new drugs; most meet once per month. New drugs are added to the formulary based on efficacy, side effects, and cost of the particular drug. Consumer need also influences the decision-making process.
The VA convenes a Medical Advisory Panel (MAP) monthly via telephone phone basis to discuss new pharmaceuticals. The MAP also convenes in person every quarter. Furthermore, the 22 Veterans Integrated Service Networks (VISNs) maintain individual formulary committees to review new drugs. Effectiveness, safety, and experience in the VA system are the primary factors upon which the formulary decision-making process is based. New drugs can be added at any time and the criteria for evaluating antidepressants and antipsychotics does not differ from those applied to other drug classes.
In the private sector, health care payers maintain pharmacy and therapeutics committees that review formularies on a regular basis. These committees are made up of physicians, pharmacists, and administrators. The physician group may or may not include a psychiatrist. In general other mental health professionals are not included on P&T committees. Employers do not maintain their own P&T committees, but work with their MCOs and PBMs to design a formulary suitable to their needs. One employer reported that it was more likely for his company to want to expand a PBM's "national formulary" than shrink it.
The private payers interviewed differed on the most important pieces of information necessary to make formulary decisions. Employers, PBMs and MCOs all ranked safety and efficacy first. However, they differed on the relative importance of cost and choice. Summary rankings are shown in Exhibit IV-2 below.
| Exhibit IV-2. Relative Importance of Issues Affecting Formulary Decisions | |||
|---|---|---|---|
| Issue | PBM Rank | MCO Rank | Employer Rank |
| Safety | 1 | 2 | 1 |
| Effectiveness | 2 | 1 | 2 |
| Cost | 3 | 5 | 3 |
| Cost-Effectiveness | 4 | 6 | 5 |
| Avoid Duplication | 5 | 4 | 6 |
| Consumer And Provider Choice | 6 | 3 | 4 |
MCOs and PBMs often work together in designing formularies. Formal reviews of the literature are the most common method for determining drug suitability for formulary inclusion. However, these payers may revise their formularies in the response to provider requests. These payers indicated that it is unlikely that psychotherapeutics receive either faster or slower review than other therapeutic classes. Expedited review is utilized only when the product is approved by the FDA and designated as first-in-class innovator drugs. This designation indicates that the drug represents a marked change or improvement in therapeutic strategy.
Newer antidepressant and antipsychotic medications have attained formulary status in most of the programs surveyed in this study. Although most payers provide for the coverage of at least several of the newer agents first-line, not all payers cover every newer agent without prior authorization.
The present survey shows that most payers cover at least two of the four SSRIs approved in the US for the treatment of depression (fluoxetine, paroxetine, citalopram, sertraline), and at least one other new antidepressant (venlafaxine, nefazadone, bupropion). Coverage of fluvoxamine and mirtazapine appears to be the most scant. The approval of bupropion for the treatment of smoking cessation appears to have increased the frequency of requiring prior authorization for the dispensing of this drug. Likewise, the new-generation antipsychotics (risperidone, olanzapine, quetiapine) have also achieved formulary status.
Among Medicaid programs interviewed for this study, only California maintains a restricted formulary. Medi-Cal conducted a therapeutic class review of antidepressants in the mid-1990s. This review resulted in the addition of fluoxetine and paroxetine to the Medi-Cal formulary in 1996. At the same time drugs fluvoxamine, bupropion, and nefazadone were added to the formulary. The antipsychotics risperidone, olanzapine, and quetiapine were also added via petition between 1996 and 1998.
The four State Mental Health agencies interviewed all reported open formularies. Only mirtazapine and citalopram were reported as exclusions. Citalopram was approved in the 4th quarter of 1998, and therefore is likely too new to have achieved widespread formulary acceptance. The reasons for the exclusion of mirtazapine are less clear, although the lack of a clear advocacy for its inclusion cannot help its uptake.
The CHAMPUS program of the Department of Defense maintains a system wide formulary that represents the minimal set of pharmaceuticals covered for treatment within military treatment facilities (MTFs). The national formulary is generally somewhat more limited in scope than those that may be in used in individual MTFs. For example, the national formulary includes a limited selection of newer antidepressants and antipsychotics on its formulary. TCAs and haloperidol are specifically included on the national formulary. In addition, each individual military treatment facility (MTF) must include at least one SSRI on its own formulary. Although these formularies are technically closed, providers can prescribe off formulary with prior authorization. The DoD has made the addition of at least one SSRI to the national formulary a priority.
The Veteran's Administration (VA) includes one SSRI (citalopram) and one atypical antipsychotic (quetiapine) on formulary. Off-formulary prescriptions are allowed, however, pending prior authorization.
The private sector has embraced the newer agents, although formularies appear to be more actively managed than in the public sector. A review of over forty managed care formularies (in addition to those MCOs interviewed for this study) found no managed care plans or PBMs who did not include at least two of the newer antidepressants on their formulary. However, few plans included every newer agent. Results of the survey for antidepressants are shown in Exhibit IV-3 below.
| Exhibit IV-3. Formulary Status of Antidepressants in 41 Managed Care Plans | |||||
|---|---|---|---|---|---|
| Agent | Reimbursed without Qualification | PA Required | Not Reimbursed | Higher Copay Required | Total |
| Fluoxetine | 27 | 8 | 4 | 2 | 41 |
| Paroxetine | 37 | 2 | 2 | 41 | |
| Sertraline | 28 | 9 | 3 | 1 | 41 |
| Venlafaxine | 31 | 8 | 1 | 1 | 41 |
| Bupropion | 33 | 7 | 1 | 41 | |
| Nefazadone | 37 | 4 | 41 | ||
As can be seen in Exhibit IV-3, paroxetine (N=37) and nefazadone (N=37) are the drugs most frequently included on formulary in these 41 plans, followed by bupropion (N=33), venlafaxine (N=31), and sertraline (N=31). Fluoxetine is the drug most frequently not reimbursed (N=4), followed by sertraline, paroxetine, and venlafaxine. Again, it should be stated that in none of the formularies reviewed are newer antidepressants excluded outright. Rather, at least two SSRIs are reimbursed, together with at least one or more of the other newer agents.
Formulary coverage of newer antipsychotics is even more widespread than is that of newer antidepressants. Exhibit IV-4 shows the results of the survey of 41 health plans for antipsychotics.
| Exhibit IV-4. Formulary Status of Antipsychotics in 41 Managed Care Plans | |||||
|---|---|---|---|---|---|
| Agent | Reimbursed without Qualification | PA Required | Not Reimbursed | Higher Copay Required | Total |
| Risperidone | 34 | 5 | 1 | 1 | 41 |
| Olanzapine | 32 | 5 | 2 | 2 | 41 |
| Quetiapine | 20 | 6 | 12 | 3 | 41 |
| Clozapine | 26 | 12 | 1 | 2 | 41 |
As shown in Exhibit IV-5, risperidone is refused reimbursement by only one plan, olanzapine by only two plans, and clozapine by only one plan. In a small minority of cases, these agents are reimbursed but require higher copayments as non-formulary drugs. Only 50% of plans surveyed covered quetiapine at the time of this survey. This likely represents the relatively recent approval date of quetiapine (4th quarter 1997) relative to the frequency of updating of published formularies. It may also represent a lack of demand for quetiapine. This lack of demand may reflect curiosities in the treatment of schizophrenia. Clozapine is utilized as a second or third line agent for the treatment of schizophrenia. Clinicians and plans may prefer to use the agents with which they are most familiar (i.e., risperidone and olanzapine) prior to switching to clozapine for treatment refractory patients, leaving quetiapine without a therapeutic niche.
The formulary status of the newer antidepressant and antipsychotic agents is consistent with the pattern observed for other classes of pharmaceutical agents. For example, Exhibit IV-5 shows the formulary status of the statin class of lipid lowering agents. This drug class is a useful comparator to psychotherapeutics because it represents a class of branded agents that, with few exceptions, has failed to differentiate themselves one from another. A clear exception is atorvastatin, which has been shown to be the most powerful of these agents. The statins have similar per day costs to the SSRIs. However, statins have no historical antecedents, as do the psychotherapeutics, and therefore comparison is not strictly parallel.
| Exhibit IV-5. Formulary Status of Lipid Lowering Agents (HMG-co-A Reductase Inhibitors, i.e., Statins) in 40 Managed Care Plans | |||||
|---|---|---|---|---|---|
| Agent | Reimbursed without Qualification | PA Required | Not Reimbursed | Higher Copay Required | Total |
| Fluvastatin | 35 | 2 | 3 | 40 | |
| Atorvastatin | 32 | 5 | 3 | 40 | |
| Pravastatin | 31 | 5 | 3 | 1 | 40 |
| Simvastatin | 15 | 13 | 9 | 3 | 40 |
At first glance, it would appear that coverage of the statins is slightly more generous than that of the newer antidepressants. However, one would expect that a drug class with only four options would show a slightly higher rate of formulary inclusion of each agent than a drug class with over seven options.
The formulary for the New York State Department of Corrections is more limited with regard to antidepressants than antipsychotics. The antipsychotic formulary includes both risperidone and quetiapine, while excluding olanzapine. However, the antidepressant formulary excludes six of the newer agents: citalopram, paroxetine, bupropion, nefazadone, venlafaxine, and mirtazapine. Use of newer antidepressants and antipsychotics is discouraged because of the cost. Generics are used to the extent possible, if therapeutic efficacy remains unchanged as a result of use.
The Navajo Region of the Indian Health Service includes five of the newer antidepressants on its formulary: fluoxetine, sertraline, paroxetine, bupropion, and venlafaxine. The antipsychotics included on formulary are risperidone and olanzapine. Clozapine is not included on the IHS formulary because patients with treatment refractory schizophrenia will usually be referred to an outside provider and reimbursed on a fee-for-service basis.
The provider and consumer associations interviewed reported that formularies are no longer impeding access to newer medications. This view has been confirmed by the research presented above. These groups felt that prior authorization and paperwork requirements were now the primary barrier to access. The four associations interviewed reported that prior authorization is required more for mental health pharmaceuticals than other drugs. It is unclear the degree to which PA requirements are proving unduly burdensome. Our research shows that PA is becoming increasingly automated and that this trend is adding efficiency to the process.
The pharmaceutical manufacturers interviewed disagreed as to whether PA is required more or less for psychotherapeutics than for other drugs. They agreed that antipsychotics no longer require prior authorization as a matter of policy (e.g., Medicaid, VA, MCO). However there are some restrictions at the facility (community) level. PA may be more common for antidepressants. In the public sector, manufacturers attempt to overcome the budgetary reasons for PA in different ways. For example, Government Affairs departments may work with government officials to expand the overall mental health budget in order to expand access to their newer psychotherapeutics. In the private sector, manufacturers' reimbursement department may discuss drug products with CEOs of health plans to demonstrate value.
HCFA(now known as CMS) has no statutory or regulatory authority over States' PA programs, provided that therapeutic alternatives are available without PA. However, HCFA(now known as CMS) has some authority over process issues. For example, in response to complaints from advocacy groups on PA programs that were too active and involved cumbersome paperwork, HCFA(now known as CMS) performed a state-by-state analysis on atypical antipsychotics. HCFA(now known as CMS)'s research verified that some PA programs were indeed too active based on the criteria of "reasonable process." In response, HCFA(now known as CMS) sent a letter to States requiring a 24-hour response rate and 72-hour emergency drug supply for drugs that required prior authorization. Based on the number of complaints received by HCFA(now known as CMS), this action appears to have resolved many of the problem areas.
State Medicaid and Mental Health programs interviewed reported few drugs that required prior authorization, as would be expected for programs with open formularies. California requires PA for several non-formulary antidepressants, including citalopram, sertraline, venlafaxine, and mirtazapine. When required, any certified health care provider can request PA, and a response is obtained via fax in 24 hours. Medi-Cal reports that the system may take longer when the 20 consulting pharmacists who review PA requests are overwhelmed by request volume. All States require prior authorization for clozapine, as required by Federal law.
Within the DoD system, prior authorization programs vary by military treatment facility (MTF). On the base, primary care physicians, psychiatrists, pharmacists, physician assistants, and nurses can initiate a PA request. This request must be justified by safety and effectiveness arguments. The Pharmaceutical and Therapeutic Committee reviews PA requests. The VA requires no PA except for clozapine. A primary care physician or psychiatrist initiates all PA requests.
Within the private sector, the MCOs interviewed believed that PA is required less often for psychotherapeutics than for other drug classes. Based on the above review of formularies, presented above, it appears that PA for a specific antidepressant may be somewhat more common than for a specific statin, although PA for obtaining access to any newer antidepressant is not any more common. Three of the MCOs interviewed made all antidepressants and antipsychotics available without PA. One MCO interviewed required PA for venlafaxine and nefazadone. Approval of these requests required documentation of a treatment failure with a first-line agent, typically an SSRI.
The PBMs interviewed reported that prior authorization programs are rare. When they exist, they typically are designed at the request of an MCO or employer client. The PBMs interviewed indicated that PA is required for psychotherapeutics no more frequently than for other drug classes. One PBM indicated that PA was probably most common in anti-infectives, where there was a need to reserve many newer agents for treatment-resistant strains of bacteria. Some PBMs attempt to integrate PA with physician education and monitoring of appropriate care. For example, one PBM is in the process of instituting a prior authorization program for all behavioral health pharmaceuticals on the formulary if the prescription exceeds the FDA-recommended dose. Safety and efficacy were named the prime factors for justifying PA. Primacy care physicians or psychiatrists initiate such a request. Employer or MCO clients may specify additional PA approval criteria. Staff pharmacists of the PBM usually review the request with or without the consultation of a staff physician. Decisions take approximately 24 hours by phone or fax through an automated system.
The employer-sponsored health plans interviewed do not operate prior authorization programs for psychotherapeutic drugs. These employers report that they do not see the value in prior authorization. In fact, one employer eliminated their prior authorization program at their employees' request. Instead, this employer now educates physicians about cost-effective prescribing. The current trend appears to be toward open formularies, with management of "lifestyle" drugs (e.g., drugs for migraine, erectile dysfunction) via quantity limits or higher co-payments. Otherwise, employers are rarely involved in the management of the utilization of individual drugs.
Prior authorization does not generally operate in the New York State corrections system. Off-formulary drugs are theoretically available in the IHS via prior authorization. Any physician can make a PA request. The staff pharmacists and clinical directors at the central area office review these requests. A decision is returned in three working days, although provisions are made for emergency distribution of the requested drugs. The IHS has not implemented an automated PA system at this juncture.
A principal finding of this study is the absence of traditional step care protocols, whereby patients are required to try an older generation agent prior to obtaining approval for reimbursement of a newer one. This situation represents a shift from the situation several years ago, where trial of either a tricyclic antidepressant or a typical antipsychotic was more routinely required prior to the approval of the dispensing of a new-generation agent.
It is more common, however, that providers or patients demonstrate a failure on at least one new-generation formulary drug, prior to being reimbursed for a non-formulary agent. Although this procedure does not represent full and open access to every FDA approved drug, it is consistent with open access to the newest and most-up-to-date treatment modalities.
| Chapter III | Table of Contents | Chapter V |
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Last updated August 20, 2000