A comparison of drug formularies and the potential for cost-savings

Brand-name drug costs have been escalating in the United States, and the reasons for this are not immediately clear. A lack of adequate and accurate information about drug effectiveness, safety, and cost has implications for drug utilization and cost.

To explore the extent to which health plan formularies were consistent with recommended drug listings and identify what would be the potential cost-savings on total drug expenditures if the utilization rate of the recommended therapies was increased.

This study compared publicly available recommended drug listings with the formularies of 8 major health plans in Minnesota. Data from 1 of the health plans underwent an in-depth case analysis to evaluate the potential impact on pharmaceutical expenditures, using increased utilization rate scenarios of the recommended drugs.

Health plans were similar with respect to degree of coverage for the recommended drugs. However, the case analysis showed that by increasing the utilization rate of recommended drugs, a potential cost-savings of more than 50% could be realized for the evaluated health plan for some therapeutic categories.

This study demonstrates an approach to assessing drug formularies using publicly available, recommended drug lists that incorporated evidence for effectiveness, safety, and cost. By using the application of this type of reliable information, formulary changes can be guided to incentivize value-based utilization for patient populations.