How Closed Formularies Hurt Patients

How Closed Formularies Hurt Patients

Insurance providers have a problem: how do they balance the cost of drugs to patients versus the cost of drugs to themselves? Drug costs can pile up quickly on either side of the scale (or both!). To try and find the balance, many healthcare plans opt to reduce their costs by implementing a drug formulary method. But drug formularies hurt patients when they deny access to important medications. 

A picture of a man in a suit holding a sign that says "no"

What is a closed formulary?

Drug formularies are lists of medications created by medical professionals that correspond to certain diseases or conditions. Formularies can be open, limited, or closed.

  • Open Formulary: drugs that are “non-formulary” can still be accessed by patients, but they require a larger copayment.
  • Limited Formulary: has components of both open and closed models by using cost levels. For instance, you may find that the insurer will allow you to purchase different brands of test strips, but they may have a “preferred” brand that is the lowest co-payment or co-insurance cost to a patient. Other test strips may be listed, but you will pay more to access them. If you wish to use a brand of test strip not found on the formulary, you will pay out of pocket. 
  • Closed Formulary: access to medications used for a particular condition are restricted. The drug list (formulary) can be limited to specific prescribers, geographic areas, or severity of condition. This means you either use the brand/generic listed on the formulary or you pay out of pocket. Often, you may have only one or two choices for a drug. 

Closed formularies became popular in the 1990s, died out, and are now making a comeback in many states across the nation because they are popular with drug manufacturers. Some manufacturers see cost savings of 10 – 25% with formulary management services.

The resurgence of the closed formulary model is especially notable for diabetes drugs. According to Managed Care Magazine, some payers were not willing to limit options for diabetes patients as recently as a few years ago. Now, however, times have changed. Closed formularies are becoming increasingly popular for diabetes medications (and test strips).

A photograph of a doctor's hand giving a prescription

How does it affect patients?

Closed formularies may sometimes force patients to frequently change drugs, and they may not be able to get their preferred medications. Closed formularies are based on the assumption that all drugs will act the same with anyone who has a particular affliction. But as we know, diseases do not affect each person in the same way. A drug that effectively manages one person’s condition may not work for another individual with the same diagnosis.

Closed formularies also disable a patient’s ability to work with their physician to freely choose the best treatment for their particular symptoms. Remember, part of the formulary design is categorization by prescriber, by area, or condition, so there may not be an obvious reason to who has access to certain medications.  A patient living in one area may have access to a drug that helps their symptoms, but if he or she moves to a home on the other side of town, it may be barred from them. And the patient of one endocrinologist may not have access to drugs that another endocrinologist could prescribe for them simply because their endocrinologist is not on the formulary list. 

Which states have closed formularies?

As of February 2018, Montana, Texas, Oklahoma, Arizona, Ohio, New York, and Tennessee have adopted closed drug formularies within certain state programs. California is also slated to implement a closed formulary in 2018. Closed formularies are spreading as well; already four more states have made moves to implement the system, and two are considering it.

An outline of the United States of America filled in with a dollar bill

  • Indiana: S.B. 369 (authored by state Senator Randall Head) would require adopting a closed drug formulary for injured employees by 2019. It would also require insurance prior authorization for any drug not on an employer’s formulary.
  • Massachusetts: As of February, Massachusetts has a pending waiver that would allow adoption of a closed formulary for Medicare patients statewide. What is horrifying is they wish to restrict their formulary to one drug per class of medications. (Think one brand of basal insulin and one brand of rapid insulin. One brand of test strips. One brand of cholesterol drugs.)
  • Arizona: As of December 2017, Arizona’s state Medicaid Agency requested a waiver from the Centers for Medicare & Medicaid Services that proposes implementation of a closed formulary.
  • Pennsylvania: S.B. 936 was introduced in February 2018 and would require a closed formulary for the state’s Workers Compensation program.
  • Florida and Louisiana are also considering implementing closed formularies as well, mainly due to increasing statewide pressure to limit opioid prescriptions.

What is being done to fight closed formularies?

There has been public pushback across the country to stop states from implementing closed formularies. California is the best example of the effectiveness media campaigns can have on state legislation or requests for Medicare waivers. The state has promoted multiple periods of public comments and a highly structured stakeholder feedback event, resulting in changes to the proposal and delay of implementation.

If you are in one of the states mentioned above, where they’re trying to or considering putting a closed formulary in effect, make your voice heard! Contact your state delegates (click here to find your state delegates’ contact information) and tell them how harmful closed formularies can be for their citizens!


Like this article?

Share on facebook
Share on Facebook
Share on twitter
Share on Twitter
Share on linkedin
Share on Linkdin
Share on pinterest
Share on Pinterest

Leave a comment

Skip to toolbar