Drug product management in health maintenance organizations

A national mail survey of drug product management in health maintenance organizations (HMOs) is described. The survey covered 570 HMOs--502 by questionnaires mailed to pharmacy directors at individual independent and multistate HMOs and 68 represented by six executives of multistate HMOs who agreed to report aggregate data for their HMO operations. Responses for 180 individual HMOs were received (36% response rate); four of the six multistate HMO executives returned aggregate data. Individual HMO respondents reported using the following methods of drug product management: formularies, 66% (of these, 60% reported using a restrictive formulary or a restrictive formulary with exceptions); MACs, 54%; prior authorization, 44%; contracts for co-marketed and single-source drug entities, 46% for each. Almost all HMOs with contracts also had exclusive or preferred status for dispensing or reimbursement of some drug products. Most HMOs received discounts, manufacturer's value-added services, price protection, rebates based on market share, and rebates based on use as contract incentives; discounts and rebates based on use were chosen as the most preferred incentives. Established methods of drug product management, such as formularies and MACs, were most commonly reported by HMOs; however, nearly half reported using new approaches, including contracts with manufacturers, incentives, such as discounts and rebates based on use, and exclusive or preferred status.