Weighing the evidence: trends in managed care formulary decision making

Health plans, pharmacy benefit managers, and other organizations use drug formularies to promote quality care while controlling costs. However, restrictive formularies are often viewed as constraints on physician practice and potential barriers to optimal patient care. Reluctance to add new drugs to an established formulary is rational economic behavior. Innovative compounds may have unknown properties with uncertain outcomes and therefore may impose costs in the form of risk. Products that seemingly duplicate drugs already on formulary may increase transaction costs without additional benefit. In evaluating new products, formulary managers face the task of identifying, assembling, and synthesizing a wide range of complex information. Manufacturers, who may be in the best position to supply that information, have been severely restricted by U.S. Food and Drug Administration (FDA) regulations that limited marketing communications to findings from well-controlled clinical trials. The FDA Modernization Act of 1997 eased these restrictions somewhat by acknowledging that sophisticated purchasers such as organized health plans were capable of weighing the quality and impartiality of manufacturer-supplied evidence. The Academy of Managed Care Pharmacy (AMCP) created a standardized template that formularies can use to request comprehensive information about specific drugs from manufacturers. Widespread adoption of the AMCP format by health plans and manufacturers will greatly increase access to information about new drugs, speeding the process of formulary committee deliberation, and instilling greater confidence in the outcome of those decisions. Wider access to new drugs may result.