Formulary friction: Doctors fear prescription limits

Doctors are eager for Medicare to start covering the outpatient drugs they prescribe. But that enthusiasm is tempered by fears that the new benefit now receiving its finishing touches from federal regulators will be far too restrictive.

Physicians soon could encounter a system in which tightly controlled drug formularies leave them with too few drug options for patients who are elderly and have disabilities, says the American Medical Association. Any attempt to get a plan to pay for an excluded medication could be such a hassle that doctors simply decide they don't have the time or resources to go through with it.

Such concerns are at the heart of the AMA comments on the Centers for Medicare & Medicaid Services' proposed drug benefit rule. After reviewing comments from all stakeholders, the agency hopes to unveil final regulations for implementing the new program, called Medicare Part D, in early January, said Patricia Smith, director of CMS' Medicare Advantage Group. The drug benefit will begin in 2006.

Part of the perceived problem is that federal officials aren't saying much right now about formularies. They are opting instead to give authorized prescription drug plans the freedom to set up their own lists of covered drugs. These plans can choose to incorporate model guidelines from the U.S. Pharmacopeial Convention or develop their own, as long as the final product meets CMS specifications by not excluding vital drugs in a way that discriminates against any class of patient.

Such an approach would give drug plans the upper hand and could be harmful to seniors who can't pay more for excluded drugs, wrote AMA Executive Vice President Michael D. Maves, MD, in the Association's comment letter. "Patient care may be compromised if a drug formulary system is not optimally developed, organized and administered," he stated.

The AMA has proposed to CMS that doctors should have input into the formulary development process at the very beginning, when pharmacy and therapeutics panels discuss the implementation of a plan's drug list and any cost-control measures. Doctors serving patients within a plan's geographic region should be permitted to sit on that panel and oversee its work, and the decisions of the P&T committee should be binding on the plan, Dr. Maves wrote.

Striking a balance

But physicians should be careful what they wish for, said Chris Jennings, a former Clinton administration health adviser and president of Jennings Policy Strategies in Washington, D.C. They could end up trading more inclusive formularies for stricter cost controls on pharmaceuticals.

"The logical outcome of ... multiple drug categories will be a great deal of pressure to allow insurers and businesses and other managers of the drug benefit to have a lot of flexibility to impose some hurdles," he said. "Then it's the physicians' burden."

Most doctors are familiar with these cost controls because they already deal with them when prescribing for privately insured patients. CMS will not mandate any particular drug utilization management techniques. But the agency's proposed rule repeatedly mentions tiered cost sharing, generic substitution, prior authorization and step therapy as promising avenues for drug plans to rein in costs.

Plans would be surprised if doctors choose more cost control over more limited formularies, said Mark Merritt, president of the Pharmaceutical Care Management Assn. in Washington, D.C., which represents the pharmaceutical benefit managers with the task of administering Part D. The PBM group is fighting for more restrictive drug lists.

The formulary guidelines CMS is considering already are more generous than the ones found in private insurance, and those seem to work just fine with few access problems, he said.

Although doctors should remain the hub of the clinical care system, there are many decisions about prescription drugs that benefit managers are better equipped to make, Merritt added.

"Physicians need to take advantage of the enormous amount of clinical information that PBMs have," he explained. "No single physician can have access to all the latest studies and all the latest clinical trials and all the affordability patterns of every single drug in the country."

If the new benefit includes wide-open drug lists, doctors also need to consider the potential for even more aggressive detailing by pharmaceutical companies eager to sell their products, said John Rother, AARP policy director.

Instead of contending with the industry over the final rule's makeup, the physician community finds itself in an alliance with drugmakers in calling for inclusion of more classes in the model formulary.

Jennings sees the drug benefit as an area in which the AMA and the brand-name drug industry may have a lot of general agreement. "And they love that physicians are making that pitch," he said.

Getting a second opinion

No matter what changes federal officials make to the regulations in the coming weeks, doctors who care for the new Medicare Part D enrollees starting in 2006 will encounter some level of formulary restrictions.

CMS has begun outlining the process for challenging these drug lists when patients need an excluded or non-preferred medication. The AMA warns that the agency is heading in the wrong direction.

Medicare officials underscore the delicate balance they must strike between minimizing bureaucratic burdens for doctors who petition a plan for drug coverage exceptions and maximizing pharmacy benefit managers' ability to keep a lid on costs.

But CMS has not yet achieved an appropriate balance, according to the AMA. By requiring the practicing physician to prove to the drug plan that the use of a non-preferred or non-formulary drug is absolutely vital to the patient's health, the proposed exceptions and appeals process is too burdensome, Dr. Maves stated.

Such an approach fails to recognize what an immense headache it would pose for doctors, given the sheer number of prescriptions -- and possible formulary challenges -- that will be needed for Medicare seniors, he wrote.

The AMA recommends that plans be required to respond to a request for a formulary exception within four hours, using the physician's statement that the drug in question is medically necessary as the only required threshold for approval. A denial under this system automatically would be referred to an as-yet-undefined independent panel, which would be required to make its decision within 24 hours.

The bureaucratic weight that would be imposed on physicians would be even worse if a drug plan decides to change its formulary midyear. The CMS proposal allows such switches as long as they are made more than 30 days after the start of the calendar year and with a minimum month's notice to beneficiaries.

Preventing a senior from maintaining coverage for a vital drug through the end of that year would wreak havoc on the physician's plan of care, especially for patients who are chronically ill and who have complicated treatment requirements, the AMA said.

"From a clinical perspective, it is unconscionable to potentially destabilize a patient's condition by forcing the patient to switch to another drug for cost reasons because a [drug plan] changes its formulary during the plan year," Dr. Maves stated.

Doctors vs. patients?

The physician community fears that many medical practices will lack the time and resources necessary to lodge repeated coverage appeals on their patients' behalf. Doctors already are squeezed financially and pressed for time.

"It is important to note that none of the physician and physician staff time involved in pursuing this cumbersome exceptions or appeal process is reflected anywhere in the physician fee schedule," Dr. Maves concluded in his comments to CMS.

Doctors have secured a Medicare rate increase of 1.5% for 2005, but lobbying to erase a planned 5% reduction in 2006 is expected to begin in earnest when Congress returns next year. Physician pay might become an issue if beneficiaries believe that it will diminish their drug benefit.

"Patients generally look to physicians as their most important advocate and the people who will act in their best interests," said Ron Pollack, president of the consumer group Families USA in Washington, D.C. "Anything that neutralizes that role has the potential to undermine the patient-physician relationship."

But while stricter formularies might produce more frustration over coverage and cost, a real backlash of seniors against physicians is unlikely, said Robert Hayes, president of the Medicare Rights Center in New York.

"Doctors will bear the brunt of much of the consumer anger over the inaccessibility of the drug benefit just because your doctor is on the ground with you," Hayes said. "But I don't think many consumers will make a connection between higher payment rates and the quality of their own benefit."

Because the rate update was a more urgent priority for lawmakers and regulators, physician groups' recommendations about the makeup of the Part D benefit are just now taking center stage at CMS. The physician lobby is working hard to make sure doctors aren't in for too much of a nasty surprise come 2006, said Edward Langston, MD, an AMA trustee and family physician in Lafayette, Ind.

"Any time major legislation is passed, there are always caveats in there that aren't fully appreciated until it's implemented," Dr. Langston said.

Meanwhile, the clock is steadily ticking down. After promulgating a final rule and establishing the geographic regions in which individual drug plans will operate, the federal government must get physicians and other Medicare participants, plans and beneficiaries up to speed on the system before the first planned open enrollment period begins in November 2005.

In what could be good news for doctors and their Medicare patients, experts predict that the reform statute will be revisited numerous times on both the legislative and regulatory sides. The agency will regularly update rules and guidance to address any problems, said CMS spokesman Peter Ashkenaz. Some lawmakers already are planning to take another look at the statute itself.

"I would be surprised if we don't have a whole series of Medicare amendments coming up in the next Congress," said Stuart Altman, health policy professor at Brandeis University in Waltham, Mass. "They'll all get the chance to play again."