We found that PBMs practiced what we called the “the Soprano approach” to negotiation - threaten harm to all, but negotiate payoffs from all to abstain from harm. In our 2005 paper The Effect of Corporate Structure on Formulary Design, we looked at key therapeutic classes with small molecule brands having close therapeutic equivalents - proton pump inhibitors (PPI), COX-2 inhibitors, and 2nd generation antihistamines. Before that, they would include non-preferred drugs in Tier III of a formulary which carried the highest copayments. It has only been since 2012 that PBMs began to make significant formulary exclusions of FDA-approved prescriptions drugs. PBM formulary switches and exclusions are growing The more a PBM shelters a given drug from competition via its array of formulary controls, the higher Pharma is willing to pay formulary rebates to avoid those controls. Placement entails more that just inclusion vs exclusion, but also entails a whole array of other conditions including prior authorization, step therapy, and quantity limits. This power enables them to negotiate rebates with pharmaceutical manufacturers (Pharma) in return for formulary placement. Via formularies, PBMs’ have the power to affect the demand for patented, but therapeutically equivalent drugs.
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Formularies are lookup tables embedded in software at the retail and mail order point of sale that alerts pharmacists as to which drugs are covered by a customer’s drug benefit plan. One of the most effective cost-controls employed by pharmacy benefit managers (PBMs) are their national formularies. We conclude with a look at the impact of this event on state “frozen formulary” laws. We estimate that this change is going to affect up to 7.2% of CVS’s 94 Million covered lives, or 6.8 Million people who have Type I or Type II diabetes, as they require daily blood glucose monitoring via a glucometer and test strips. In particular, CVS has been negligent in giving ample warning to diabetes patients of an upcoming switch in blood glucose test strips from LifeScan’s OneTouch brand to Roche’s Accu-Chek brand. District Court of the District of Columbia. The review included the Department of Justice, state Attorney Generals and Judge Richard Leon of the U.S. We believe that there has been a willful intent by CVS to minimize attention to upcoming formulary changes fearing bad publicity would delay government approval of their merger with the insurance company Aetna. During an August 8th 3Q2018 Earning Conference Call, CVS said that 2019 formulary details would be available around October 1, 2018.īut, CVS waited until Novemto post details on its own website. It posts these changes on its own websites.īut that changed in 2018. Around the first week in August for the past four years, CVS has made an official announcement of its next year’s formulary changes.