New York Times Examines Debate Over Medicare Prescription Drug Formulary Guidelines

The New York Times on Sunday examined the "huge battle" between insurers and pharmaceutical companies over the number of medications that will be covered under the new Medicare law (Pear, New York Times, 9/26). Last month, the United States Pharmacopeial Convention released its proposed guidelines for the creation of a prescription drug formulary for the new Medicare drug benefit. The guidelines list 146 classes of medications that should be covered by Medicare, including categories for antidepressants, HIV/AIDS drugs, cholesterol-lowering medications and anti-inflammatories.

The process to create the formulary has resulted in intense lobbying between drug and insurance companies. Insurers and PBMs say that a Medicare drug formulary with a smaller number of classes would create more competition among drug makers and give negotiators more leverage to procure lower drug prices. However, pharmaceutical companies want more than 200 drug classes to enhance their odds of having products listed on the formulary and to give consumers broader access to drugs (California Healthline, 8/20). According to the Times, the formularies "could have a major impact on the success" of the new Medicare law because they will help determine "how many people sign up for drug benefits and how many private [health] plans participate."

According to the Times, pharmaceutical companies "stand to gain or lose billions of dollars depending on whether their drugs or competing products are included in Medicare formularies." Drug makers have joined with patient advocates in saying that beneficiaries should have access to the "full array of drugs for AIDS, asthma, depression, diabetes, epilepsy, multiple sclerosis, osteoporosis and other diseases," the Times reports. Howard Bedlin, vice president of the National Council on Aging, said, "A restrictive formulary with a limited number of therapeutic classes may save money in the short run, but it will cost Medicare and beneficiaries more in the long run" by increasing hospital and doctor visits and nursing home admissions. He added, "If beneficiaries discover that the drugs they take are not covered under the plans available in their area, many may choose not to enroll," thus increasing premiums for those who do enroll. Richard Smith, senior vice president for the Pharmaceutical Research and Manufacturers of America, called for expanding the formulary guidelines, saying that a formulary "could comply with the U.S. Pharmacopeia's guidelines while excluding coverage for 41 of the 50 drugs most commonly used by seniors."

Joseph Cranston, science director of the American Medical Association, said doctors are "deeply concerned" that the guidelines could affect beneficiaries' access to needed drugs, such as statins. Dr. Hans Vemer, senior vice president for Schering-Plough, said that by limiting coverage of such prescription drugs, health plans could "avoid attracting large numbers of patients with serious heart disease" and other chronic conditions. Andrew Sperling, a lobbyist for the National Alliance for the Mentally Ill, said that the guidelines make a "serious mistake" by lumping different treatments for depression into a single class, noting that older drugs are "not interchangeable" with new, more effective antidepressants that can cost more.

However, managed care companies and pharmacy benefit managers oppose expanding the formulary guidelines. "The drug makers' agenda could seriously undermine Medicare's ability to maintain an affordable benefit," Mark Merritt, president of the Pharmaceutical Care Management Association, said.

Alissa Fox, policy director for the BlueCross BlueShield Association, said, "Requiring coverage of drugs in too many categories will diminish the ability of drug plans to negotiate favorable prices." Judith Cahill, executive director of the Academy of Managed Care Pharmacy, added, "An excessive number of therapeutic classes reduces the drug plans' leverage."

Medicare officials said they will evaluate all health plans' formularies to ensure that they do not discourage sick people from enrolling in the drug benefit. CMS Administrator Mark McClellan said that officials also will analyze the formularies for such factors as copayments charged for different drugs, prior-approval requirements and appeal procedures for patients denied coverage.

McClellan added, "Our goal is to ensure that people can get the drugs they need at the lowest possible cost. The choice of drugs should reflect current medical practice." Sen. Chuck Grassley (R-Iowa) said that Medicare officials could require health plans to modify their formularies if government officials determine that the formularies discriminate against people with conditions such as mental illness or HIV/AIDS (New York Times, 9/26).