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Determinants of HMO formulary adoption decisions
David Dranove1, Edward F X Hughes, Mark Shanley
1Kellogg School of Management, Northwestern University, Evanston, IL, USA.
Objective:
To identify economic and organizational characteristics that affect the likelihood that health maintenance organizations (HMOs) include new drugs on their formularies.
Data Sources:
We administered an original survey to directors of pharmacy at 75 HMOs, of which 41 returned usable responses. We obtained drug-specific data from an industry trade journal.
Study Design:
We performed multivariate logistic regression analysis, adjusting for fixed-drug effects and random-HMO effects. We used factor analysis to limit the number of predictors.
Data Collection Methods:
We held initial focus groups to help with survey design. We administered the survey in two waves. We asked respondents to report on seven popular new drugs, and to describe a variety of HMO organizational characteristics.
Principal Findings:
Several HMO organizational characteristics, including nonprofit status, the incentives facing the director of the pharmacy, size and make-up of the pharmacy and therapeutics committee, and relationships with drugs makers, all affect formulary adoption.
Conclusions:
There are many organizational factors that may cause HMOs to make different formulary adoption decisions for certain prescription drugs.