Description and Analysis of the VA National Formulary (2000) / Chapter Skim
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How Does the VA National Formulary Compare with Private Insurance Formularies for Drugs and Devices and with Other Government Formularies?
How Does the VA National Formulary Compare with Private Insurance Formularies for Drugs and Devices and with Other Government Formularies?
Pages 149-182
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From page 149... ...
These benefits must be flexible and responsive to public needs and preferences if they are to compete in the private marketplace. The VA has explicitly attempted to model its recent reorganization and pharmacy benefits after many aspects of those in the private sector (Kizer, 1996, 1999, Ogden et al., 1997~.
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From page 150... ...
Employer plans are more generous, but 20% require dispensing generics when available, otherwise the enrollee must pay either the entire prescription cost or, more often, the difference in cost between the brand and the generic drug (Wyeth-Ayerst, 1998~. MCO and PBM coverage of members of major drug classes is usually more extensive than the VA National Formulary, but financial penalties for nonformulary drugs, nonpreferred drugs, or brand name drugs when generics are available are more and more common.
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From page 151... ...
At the same time, some of these plans listed five or six ACEIs or HMG CoA RIs compared to two or three in these classes in the VA National Formulary. Tufts Health Plan publishes its list of noncovered drugs as part of its Prescription Alternative Program (www.tutts-healthplan.com, under member information)
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From page 152... ...
MCOs may have different formularies, prior approval, and copayment provisions for different clients such as employers, individuals, Medicare, and Medicaid programs. Some insurers have numerous health plans, each with a unique drug benefit structure.
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From page 153... ...
. Tennessee Bill SA0684 amends SB0637 and prohibits managed care organizations from either switching or discontinuing an enrollee's prescription drug unless the patient's provider determines that this change would not harm or prolong the patient's treatment (www.legislature.state.tn.us/Bills/lOOgahtm/lOO_amnd/ saO684.htm)
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From page 154... ...
Most of the provisions of these state laws are not relevant to the VA National Formulary, which is characterized by complete disclosure (www.dppm.med.va.gov) , off-label coverage, low or no copayments, and relatively stable drug coverage.
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From page 155... ...
The DOD health system and pharmacy benefit budgets are similar in size to the VHA and VA Pharmacy budgets, and there is considerable interest in coordinating DOD and VA formularies and pharmacy benefits or in making changes that would bring the DOD pharmacy benefit design closer to that of the VA (see P.L.
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From page 156... ...
Only 3.3 million of a total of about 26 million veterans are enrolled in the VA health care system, and they tend to be older, disadvantaged, and minorities (VA Annual Report, 1998, Fonseca et al., 1996~. Title XIX of the SSA specifies the types of services that must be provided to Medicaid recipients if states are to qualify for federal matching funds.
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From page 157... ...
This may make VA providers and managers more sensitive to budget overruns and to the need for controls that demonstrably achieve their intended purposes. Medicaid Prescription Drug Benefit Every Medicaid program provides coverage for prescription drugs.
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From page 158... ...
~. The current Medicaid prescription drug benefit also allows prior approval of any drug as long as the prior approval system provides a response within 24 hours and a 72-hour emergency supply of the drug under review.
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From page 159... ...
No two Medicaid drug benefit programs are exactly alike, but no state has the flexibility in designing formularies and formulary systems, including exceptions processes, enjoyed by the VA. Medicaid Controls Prior Approval and Formulary Systems Formularies, prior approval systems, copayments, exclusions, and prescription limits or quantity controls are the most common restrictions found in Medicaid programs.
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From page 160... ...
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From page 161... ...
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From page 162... ...
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From page 163... ...
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From page 164... ...
Considerable additional data were required for continuing clozapine, which appear to have represented significant time burdens for prescribing physicians. Copayments and prescription limits are additional forms of drug use and cost controls.
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From page 165... ...
In any case, as discussed later in this chapter, the cost effects on other parts of the Medicaid program pharmacy benefit or on nonpharmacy program components may be of concern and are often unrecognized or unmeasured. Some of these cost effects have resulted from restrictions in the optional outpatient pharmacy benefits end their formularies (which are the primary subject of this chapter)
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From page 166... ...
, the VA has not excluded drugs except insofar as nonformulary requests are disapproved. The VA National Formulary provides fewer choices in some drug classes, particularly the closed classes, although Medicaid prior approval in some of these classes may hinder unfettered access to drug members.
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From page 167... ...
As a result, they were determined to be nonreimbursable by government payers. These researchers conducted interrupted timeseries analyses of data on almost 400,000 Medicaid recipients over 42 months (July 1980 to D ecemb er 1983 ~ to determine how the withdrawal of reimbursement affected their use of DESI and substitute medications.
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From page 168... ...
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From page 170... ...
In early 1992, the Florida Medicaid program imposed a policy of reimbursing only one antiulcer prescription drug at a time, limiting all antiulcer prescriptions to one refill, and covering high-dose treatment for acute disorders for a maximum of 60 days. The study used quarterly Medicaid drug claims data, nonfederal short-stay hospital discharge data, and monthly Medicaid eligibility data for 1989 through 1993.
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From page 171... ...
The authors ran two additional regressions for 1988 and 1989 that included state-level information on prescription limits, refill limits, and unit limits per prescription. Inclusion of these variables eliminated the significant association between restrictive formularies and reduced per capita drug expenditures, and resulted in an association of restrictive formularies and increased per capita Medicaid expenditures.
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From page 172... ...
Medicaid programs around the country reported increases in drug expenditures after the elimination of restrictive formularies. These authors warned that formularies are complex policy instruments that may lead to intended and unintended consequences (Walser et al., 1996~.
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From page 173... ...
that is highly effective for peptic ulcer disease. Effects of Medicaid Prescription Limits Several studies have focused on the effect of prescription limits, or quantity controls, on utilization and expenditures in Medicaid (Martin and McMillan, 1996, Soumerai et al., 1987, 1991~.
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From page 174... ...
compared to similar Medicaid recipients in New Jersey. A1though the use of the study medications returned to near baseline after the prescription limit was replaced with a copayment, the patients admitted to nursing homes remained there.
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From page 175... ...
Medicaid Managed Care: Background Medicaid managed care is not new, but it has expanded dramatically in the past 10 years. In 1991, less than 10% of all Medicaid recipients were enrolled in Medicaid managed care plans.
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From page 176... ...
Drug Benefit in Medicaid Managed Care There is no standard prescription drug benefit package in Medicaid managed care. It is possible that each of the hundreds of different Medicaid managed care programs has a unique drug benefit plan.
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From page 177... ...
For example, the Michigan RFP noted only that health plans may use a drug formulary, whereas the Florida Medicaid managed care contract specified that the plan should not have a pharmacy benefit more restrictive than Medicaid fee for service. The plan could use a preferred formulary as long as adherence was voluntary.
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From page 178... ...
States that carve out the drug benefit are able to retain participation in the Medicaid rebate program and guaranteed best-price discounts that otherwise would be lost for the managed care portion of their Medicaid pharmacy benefit. Presumably, state legislation on disclosure of formularies and nonformulary processes, continuation of needed drugs, and off-label coverage, reviewed earlier in this report, would apply to Medicaid managed care but would have relatively minor effect since Medicaid fee-for-service and therefore managed care programs do not usually present barriers that these laws are designed to address.
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From page 179... ...
for nonnetwork retail drugs, are imposed in other settings, retail pharmacies, and the mail order program. MTF drugs are distributed through a prime vendor at prices negotiated by the Defense Supply Center Philadelphia (sic)
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From page 180... ...
The DOD mail order program provides drugs to patients with chronic health conditions at Defense Supply Center Philadelphia negotiated prices using Merck-Medco as the contractor. All categories of military personnel (except Medicare retirees, although the NDAA has ordered a study of a more comprehensive pharmacy benefit for these retirees)
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From page 181... ...
Furthermore, as noted earlier in this chapter, restrictions on access to medically indicated drugs by the BCF or some MTFs may divert utilization and costs to other settings, that is, retail pharmacies, other MTFs, or in the case of Medicare-eligible retirees, to the VA (although they would have to see VA physicians to obtain VA pharmacy benefits) , where these treatments or alternatives are available.
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From page 182... ...
GENERAL COMMENTS ON COMPARISONS In examining private-and public-sector formularies and formulary systems in comparison to the VA National Formulary and formulary systems, the committee concluded that some formularies are more open. For example, Medicaid programs are required to offer all drugs on the Federal Supply Schedule.
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