Drug use and spending under a formulary informed by cost-effectiveness

Area of Science:

• Health Economics and Outcomes Research
• Pharmaceutical Policy and Management
• Clinical Pharmacy and Pharmacology

Background:

• The National Academy of Medicine recommends value-based drug formularies to manage health plan prescription drug expenditures and ensure access to high-value medications.
• A "Value-Based Formulary-essentials" (VBF-e) program was implemented by 30 employer-sponsored plans, utilizing cost-effectiveness data to guide cost-sharing and coverage decisions.

Purpose of the Study:

• To assess the impact of the VBF-e program on medication utilization patterns.
• To evaluate changes in patient out-of-pocket spending and overall health plan expenditures on prescription drugs and other healthcare services.

Main Methods:

• A difference-in-differences cohort study design was employed from 2015-2019, including a 1-year follow-up period.
• The study compared individuals (aged <65) enrolled in employer groups that implemented VBF-e with propensity score-matched control groups.
• Outcomes measured included medication days on hand (by VBF-e tier), prescription drug spending, and other healthcare utilization (ED visits, hospital days, outpatient visits).

Main Results:

• VBF-e significantly reduced the use of low-value drugs (tier 4 and excluded) by 17% and 83%, respectively.
• High-value specialty drug use saw a substantial increase of 123%.
• Health plan spending decreased by $14 PMPM, while member out-of-pocket spending increased by $1 PMPM; other healthcare use remained stable.

Conclusions:

• An exclusion formulary informed by cost-effectiveness evidence effectively reduced low-value drug consumption and decreased overall health plan spending.
• The VBF-e program successfully shifted medication use towards high-value specialty drugs.
• The implementation did not lead to significant increases in acute care utilization, despite a modest rise in member out-of-pocket costs.