Medicaid Formulary Restrictions May Increase Costs

Many payers establish cost-control measures for expensive medications, particularly the current crop of branded antipsychotics, like Zyprexa, Abilify, Invega, Latuda, and Saphris. These medications are sometimes over $500 per month when paid at full-price. For most Medicaid payers, these atypical antipsychotics are the most costly drug category they manage, so cutting access to these drugs during these times of state budget cuts becomes an attractive target.

Mechanisms to limit the use of these drugs include formularies, preferred drug lists (PDLs), fail-first policies, tiering strategies, dosage limits, pill count limits, limits based on diagnosis, and prior authorizations. Adding hoops through which the prescriber or patient must jump is known to reduce the utilization of target medications while funneling medication decisions into less costly generic or lower cost drugs. However, these same barriers can also result in increased costs when consumers fail to obtain the prescribed medication, causing them to go without medication and potentially resulting in a relapse that can lead to avoidable ER (emergency room) visits and hospitalizations.

The 2009 study by Joyce West, et al., in Psychiatric Services (“Medicaid Prescription Drug Policies and Medication Access and Continuity: Findings From Ten States”) found that Medicaid patients with medication access problems had 3.6 times the number of adverse events (including ER visits, hospitalization, homelessness, suicidal ideation, and incarceration). States with more stringent cost-control mechanisms were associated with more access problems and more adverse events. Patients who required a prior authorization were three times more likely to have a psychiatric hospitalization and twice as likely to have an ER visit. Those who required the use of a preferred drug list or formulary were 2.3 times more likely to be hospitalized and 1.8 times more likely to have an ER visit.

With the high costs of hospitalization and emergency care, this begs the question of whether the savings produced by these pharmacy management methods are outweighed by the excess costs associated with increased care needed when patients stop taking medications due to access problems. Indeed, each state should ask for independent analyses of their medication claims and inpatient and outpatient utilization data to determine where the greatest benefit lies. Unfortunately, the impression is that short-term, line-item cost reductions are emphasized rather than a system level focus.

In Maryland, where I sit on the Medicaid Pharmacy Program’s Pharmacy & Therapeutics Committee (P&T), we have moved over the past 3 years or so from an open access position (for psychotropics) to one with increasing restrictions based on a preferred drug list (PDL), which now has three tiers. P&T is advisory to the health department, but often accepts our recommendations. There is also a Drug Utilization Review Committee (DUR) that also advises on drug utilization issues. Up until last month, the minutes from these committees were not made available on their website, but now contain the 2010 meetings for both P&T and DUR. Most states have their full minutes posted. Each of the meetings are public and permit limited public testimony (except for DUR, which does not accept public input).

The mechanism we now have in place to limit use of antipsychotics is complex, but I’ll try to explain it. Maryland Medicaid now has two classes of antipsychotic medications in its formulary, Preferred and Nonpreferred. Drugs that are Preferred are on the PDL (Preferred Drug List). The PDL is split into Tier 1 and Tier 2 categories: Tier 1 meds never require a prior authorization. Tier 1 currently includes older generic antipsychotics, generic risperidone and clozapine, Fanapt, Geodon, and Risperdal Consta depot injection. Tier 2 includes only Zyprexa and Abilify. Tier 3 includes Invega, Latuda, Seroquel XR, Saphris, Invega Sustenna depot injection, and Zyprexa Relprevv depot injection.

Tier 1 drugs never require a prior authorization. Patients who are considered “drug-naïve” -- and so have never been on an antipsychotic before and should have fewer constraints about which drug to first try -- must be tried on a Tier 1 medication for at least 6 weeks (i.e., has filled at least two prescriptions) before trying a Tier 2 drug. Tier 2 medications do not require a prior authorization as long the patient has previously been on a Tier 1 drug for 6 weeks within the most recent 120 days. This 120-day period is the “look-back period.” If you want to try a Tier 2 drug on a “drug-naïve” patient, a prior authorization must be completed. (As noted above, requiring a prior authorization is more likely to be associated with delays in obtaining medications, sometimes causing patients to stop medications, potentially resulting in increased ED visits and hospitalizations.) Tier 3 medications -- also called Nonpreferred drugs -- always require a prior authorization.

A prior authorization involves a phone call or a fax, and is nearly always approved when requested, which is less stringent than many states. However, web-based authorizations are not available. The phone call must be made by the prescriber and takes about 5-8 minutes. This is sometimes onerous for busy clinicians, who may instead choose to complete the fax form. The faxed authorization takes up to 24 hours to complete so the patient who goes to the pharmacy on the same day may be told that the medication has not been authorized.

The look-back period is key in determining who is considered to be “drug-naïve.” The P&T committee members originally developed the concept of “drug-naïve” to limit the need to obtain prior authorizations only for those patients who had never been on antipsychotics. The idea was that those who have a history of taking antipsychotics -- including those who did particularly well or poorly on a Tier 1 drug or those who were unable to tolerate these drugs due to side effects -- would not have to go back and take a Tier 1 medication again and could get a “free pass” to get Tier 2 medications without jumping through the hoop of obtaining a prior authorization. This concept was undermined by adding a rule that patients who are “drug-naïve” are defined as such by whether they had outpatient prescriptions filled during the “look-back period.”

The look-back period for determining whether someone is “drug-naïve” is now 120 days. Here is the effect of this scheme: If a patient does not get two prescriptions filled (actually, a total of 42 days worth of medications) during the most recent 120 days, then the patient’s status reverts back to “drug-naïve” and the patient has to start all over.  So, if a patient is non-compliant for 4 months, or receives samples for 4 months, or is hospitalized or imprisoned for 4 months, and so does not get at least 2 prescriptions filled during that time period, then the patient now becomes “drug-naïve” -- even if the patient has failed medication trials or has had unacceptable side effects in the past. The patient has to either go through the Tier 1 drugs again OR go through the prior authorization process again.

This does not make clinical sense. The Kaiser pharmacist on the committee indicated that they look back as far as they have data to make such decisions. So the committee unanimously voted to extend the look-back period to 2 years in August 2010, but the DUR committee rejected this as unnecessary and costly.

It is hoped that an independent group will soon be able to review the pharmacy and inpatient and outpatient databases to analyze the downstream effects of these medication access decisions. In an era of cost containment and evidence-based medicine, we all want to be sure that states are not being penny-wise and pound-foolish.

<[QM—Steven Roy Daviss, M.D., DFAPA

Dr. Daviss is co-author of Shrink Rap: Three Psychiatrists Explain Their Work, chair of the department of psychiatry at the University of Maryland’s Baltimore Washington Medical Center, and serves on the Maryland Medicaid Pharmacy Program’s Pharmacy and Therapeutics Committee. He can be reached on Google Plus, Twitter, and Facebook.

Many payers establish cost-control measures for expensive medications, particularly the current crop of branded antipsychotics, like Zyprexa, Abilify, Invega, Latuda, and Saphris. These medications are sometimes over $500 per month when paid at full-price. For most Medicaid payers, these atypical antipsychotics are the most costly drug category they manage, so cutting access to these drugs during these times of state budget cuts becomes an attractive target.

Mechanisms to limit the use of these drugs include formularies, preferred drug lists (PDLs), fail-first policies, tiering strategies, dosage limits, pill count limits, limits based on diagnosis, and prior authorizations. Adding hoops through which the prescriber or patient must jump is known to reduce the utilization of target medications while funneling medication decisions into less costly generic or lower cost drugs. However, these same barriers can also result in increased costs when consumers fail to obtain the prescribed medication, causing them to go without medication and potentially resulting in a relapse that can lead to avoidable ER (emergency room) visits and hospitalizations.

The 2009 study by Joyce West, et al., in Psychiatric Services (“Medicaid Prescription Drug Policies and Medication Access and Continuity: Findings From Ten States”) found that Medicaid patients with medication access problems had 3.6 times the number of adverse events (including ER visits, hospitalization, homelessness, suicidal ideation, and incarceration). States with more stringent cost-control mechanisms were associated with more access problems and more adverse events. Patients who required a prior authorization were three times more likely to have a psychiatric hospitalization and twice as likely to have an ER visit. Those who required the use of a preferred drug list or formulary were 2.3 times more likely to be hospitalized and 1.8 times more likely to have an ER visit.

With the high costs of hospitalization and emergency care, this begs the question of whether the savings produced by these pharmacy management methods are outweighed by the excess costs associated with increased care needed when patients stop taking medications due to access problems. Indeed, each state should ask for independent analyses of their medication claims and inpatient and outpatient utilization data to determine where the greatest benefit lies. Unfortunately, the impression is that short-term, line-item cost reductions are emphasized rather than a system level focus.

In Maryland, where I sit on the Medicaid Pharmacy Program’s Pharmacy & Therapeutics Committee (P&T), we have moved over the past 3 years or so from an open access position (for psychotropics) to one with increasing restrictions based on a preferred drug list (PDL), which now has three tiers. P&T is advisory to the health department, but often accepts our recommendations. There is also a Drug Utilization Review Committee (DUR) that also advises on drug utilization issues. Up until last month, the minutes from these committees were not made available on their website, but now contain the 2010 meetings for both P&T and DUR. Most states have their full minutes posted. Each of the meetings are public and permit limited public testimony (except for DUR, which does not accept public input).

The mechanism we now have in place to limit use of antipsychotics is complex, but I’ll try to explain it. Maryland Medicaid now has two classes of antipsychotic medications in its formulary, Preferred and Nonpreferred. Drugs that are Preferred are on the PDL (Preferred Drug List). The PDL is split into Tier 1 and Tier 2 categories: Tier 1 meds never require a prior authorization. Tier 1 currently includes older generic antipsychotics, generic risperidone and clozapine, Fanapt, Geodon, and Risperdal Consta depot injection. Tier 2 includes only Zyprexa and Abilify. Tier 3 includes Invega, Latuda, Seroquel XR, Saphris, Invega Sustenna depot injection, and Zyprexa Relprevv depot injection.

Tier 1 drugs never require a prior authorization. Patients who are considered “drug-naïve” -- and so have never been on an antipsychotic before and should have fewer constraints about which drug to first try -- must be tried on a Tier 1 medication for at least 6 weeks (i.e., has filled at least two prescriptions) before trying a Tier 2 drug. Tier 2 medications do not require a prior authorization as long the patient has previously been on a Tier 1 drug for 6 weeks within the most recent 120 days. This 120-day period is the “look-back period.” If you want to try a Tier 2 drug on a “drug-naïve” patient, a prior authorization must be completed. (As noted above, requiring a prior authorization is more likely to be associated with delays in obtaining medications, sometimes causing patients to stop medications, potentially resulting in increased ED visits and hospitalizations.) Tier 3 medications -- also called Nonpreferred drugs -- always require a prior authorization.

A prior authorization involves a phone call or a fax, and is nearly always approved when requested, which is less stringent than many states. However, web-based authorizations are not available. The phone call must be made by the prescriber and takes about 5-8 minutes. This is sometimes onerous for busy clinicians, who may instead choose to complete the fax form. The faxed authorization takes up to 24 hours to complete so the patient who goes to the pharmacy on the same day may be told that the medication has not been authorized.

The look-back period is key in determining who is considered to be “drug-naïve.” The P&T committee members originally developed the concept of “drug-naïve” to limit the need to obtain prior authorizations only for those patients who had never been on antipsychotics. The idea was that those who have a history of taking antipsychotics -- including those who did particularly well or poorly on a Tier 1 drug or those who were unable to tolerate these drugs due to side effects -- would not have to go back and take a Tier 1 medication again and could get a “free pass” to get Tier 2 medications without jumping through the hoop of obtaining a prior authorization. This concept was undermined by adding a rule that patients who are “drug-naïve” are defined as such by whether they had outpatient prescriptions filled during the “look-back period.”

The look-back period for determining whether someone is “drug-naïve” is now 120 days. Here is the effect of this scheme: If a patient does not get two prescriptions filled (actually, a total of 42 days worth of medications) during the most recent 120 days, then the patient’s status reverts back to “drug-naïve” and the patient has to start all over.  So, if a patient is non-compliant for 4 months, or receives samples for 4 months, or is hospitalized or imprisoned for 4 months, and so does not get at least 2 prescriptions filled during that time period, then the patient now becomes “drug-naïve” -- even if the patient has failed medication trials or has had unacceptable side effects in the past. The patient has to either go through the Tier 1 drugs again OR go through the prior authorization process again.

This does not make clinical sense. The Kaiser pharmacist on the committee indicated that they look back as far as they have data to make such decisions. So the committee unanimously voted to extend the look-back period to 2 years in August 2010, but the DUR committee rejected this as unnecessary and costly.

It is hoped that an independent group will soon be able to review the pharmacy and inpatient and outpatient databases to analyze the downstream effects of these medication access decisions. In an era of cost containment and evidence-based medicine, we all want to be sure that states are not being penny-wise and pound-foolish.

<[QM—Steven Roy Daviss, M.D., DFAPA

Dr. Daviss is co-author of Shrink Rap: Three Psychiatrists Explain Their Work, chair of the department of psychiatry at the University of Maryland’s Baltimore Washington Medical Center, and serves on the Maryland Medicaid Pharmacy Program’s Pharmacy and Therapeutics Committee. He can be reached on Google Plus, Twitter, and Facebook.

Many payers establish cost-control measures for expensive medications, particularly the current crop of branded antipsychotics, like Zyprexa, Abilify, Invega, Latuda, and Saphris. These medications are sometimes over $500 per month when paid at full-price. For most Medicaid payers, these atypical antipsychotics are the most costly drug category they manage, so cutting access to these drugs during these times of state budget cuts becomes an attractive target.

Mechanisms to limit the use of these drugs include formularies, preferred drug lists (PDLs), fail-first policies, tiering strategies, dosage limits, pill count limits, limits based on diagnosis, and prior authorizations. Adding hoops through which the prescriber or patient must jump is known to reduce the utilization of target medications while funneling medication decisions into less costly generic or lower cost drugs. However, these same barriers can also result in increased costs when consumers fail to obtain the prescribed medication, causing them to go without medication and potentially resulting in a relapse that can lead to avoidable ER (emergency room) visits and hospitalizations.

The 2009 study by Joyce West, et al., in Psychiatric Services (“Medicaid Prescription Drug Policies and Medication Access and Continuity: Findings From Ten States”) found that Medicaid patients with medication access problems had 3.6 times the number of adverse events (including ER visits, hospitalization, homelessness, suicidal ideation, and incarceration). States with more stringent cost-control mechanisms were associated with more access problems and more adverse events. Patients who required a prior authorization were three times more likely to have a psychiatric hospitalization and twice as likely to have an ER visit. Those who required the use of a preferred drug list or formulary were 2.3 times more likely to be hospitalized and 1.8 times more likely to have an ER visit.

With the high costs of hospitalization and emergency care, this begs the question of whether the savings produced by these pharmacy management methods are outweighed by the excess costs associated with increased care needed when patients stop taking medications due to access problems. Indeed, each state should ask for independent analyses of their medication claims and inpatient and outpatient utilization data to determine where the greatest benefit lies. Unfortunately, the impression is that short-term, line-item cost reductions are emphasized rather than a system level focus.

In Maryland, where I sit on the Medicaid Pharmacy Program’s Pharmacy & Therapeutics Committee (P&T), we have moved over the past 3 years or so from an open access position (for psychotropics) to one with increasing restrictions based on a preferred drug list (PDL), which now has three tiers. P&T is advisory to the health department, but often accepts our recommendations. There is also a Drug Utilization Review Committee (DUR) that also advises on drug utilization issues. Up until last month, the minutes from these committees were not made available on their website, but now contain the 2010 meetings for both P&T and DUR. Most states have their full minutes posted. Each of the meetings are public and permit limited public testimony (except for DUR, which does not accept public input).

The mechanism we now have in place to limit use of antipsychotics is complex, but I’ll try to explain it. Maryland Medicaid now has two classes of antipsychotic medications in its formulary, Preferred and Nonpreferred. Drugs that are Preferred are on the PDL (Preferred Drug List). The PDL is split into Tier 1 and Tier 2 categories: Tier 1 meds never require a prior authorization. Tier 1 currently includes older generic antipsychotics, generic risperidone and clozapine, Fanapt, Geodon, and Risperdal Consta depot injection. Tier 2 includes only Zyprexa and Abilify. Tier 3 includes Invega, Latuda, Seroquel XR, Saphris, Invega Sustenna depot injection, and Zyprexa Relprevv depot injection.

Tier 1 drugs never require a prior authorization. Patients who are considered “drug-naïve” -- and so have never been on an antipsychotic before and should have fewer constraints about which drug to first try -- must be tried on a Tier 1 medication for at least 6 weeks (i.e., has filled at least two prescriptions) before trying a Tier 2 drug. Tier 2 medications do not require a prior authorization as long the patient has previously been on a Tier 1 drug for 6 weeks within the most recent 120 days. This 120-day period is the “look-back period.” If you want to try a Tier 2 drug on a “drug-naïve” patient, a prior authorization must be completed. (As noted above, requiring a prior authorization is more likely to be associated with delays in obtaining medications, sometimes causing patients to stop medications, potentially resulting in increased ED visits and hospitalizations.) Tier 3 medications -- also called Nonpreferred drugs -- always require a prior authorization.

A prior authorization involves a phone call or a fax, and is nearly always approved when requested, which is less stringent than many states. However, web-based authorizations are not available. The phone call must be made by the prescriber and takes about 5-8 minutes. This is sometimes onerous for busy clinicians, who may instead choose to complete the fax form. The faxed authorization takes up to 24 hours to complete so the patient who goes to the pharmacy on the same day may be told that the medication has not been authorized.

The look-back period is key in determining who is considered to be “drug-naïve.” The P&T committee members originally developed the concept of “drug-naïve” to limit the need to obtain prior authorizations only for those patients who had never been on antipsychotics. The idea was that those who have a history of taking antipsychotics -- including those who did particularly well or poorly on a Tier 1 drug or those who were unable to tolerate these drugs due to side effects -- would not have to go back and take a Tier 1 medication again and could get a “free pass” to get Tier 2 medications without jumping through the hoop of obtaining a prior authorization. This concept was undermined by adding a rule that patients who are “drug-naïve” are defined as such by whether they had outpatient prescriptions filled during the “look-back period.”

The look-back period for determining whether someone is “drug-naïve” is now 120 days. Here is the effect of this scheme: If a patient does not get two prescriptions filled (actually, a total of 42 days worth of medications) during the most recent 120 days, then the patient’s status reverts back to “drug-naïve” and the patient has to start all over.  So, if a patient is non-compliant for 4 months, or receives samples for 4 months, or is hospitalized or imprisoned for 4 months, and so does not get at least 2 prescriptions filled during that time period, then the patient now becomes “drug-naïve” -- even if the patient has failed medication trials or has had unacceptable side effects in the past. The patient has to either go through the Tier 1 drugs again OR go through the prior authorization process again.

This does not make clinical sense. The Kaiser pharmacist on the committee indicated that they look back as far as they have data to make such decisions. So the committee unanimously voted to extend the look-back period to 2 years in August 2010, but the DUR committee rejected this as unnecessary and costly.

It is hoped that an independent group will soon be able to review the pharmacy and inpatient and outpatient databases to analyze the downstream effects of these medication access decisions. In an era of cost containment and evidence-based medicine, we all want to be sure that states are not being penny-wise and pound-foolish.

<[QM—Steven Roy Daviss, M.D., DFAPA

Dr. Daviss is co-author of Shrink Rap: Three Psychiatrists Explain Their Work, chair of the department of psychiatry at the University of Maryland’s Baltimore Washington Medical Center, and serves on the Maryland Medicaid Pharmacy Program’s Pharmacy and Therapeutics Committee. He can be reached on Google Plus, Twitter, and Facebook.