Weighing the Evidence: Trends in Managed Care Formulary Decision Making

Health plans, pharmacy benefit managers, and other organizations use drug formularies to promotequality care while controlling costs. However, restrictive formularies are often viewed as constraintson physician practice and potential barriers to optimal patient care. Reluctance to add new drugs to anestablished formulary is rational economic behavior. Innovative compounds may have unknown propertieswith uncertain outcomes and therefore may impose costs in the form of risk. Products that seeminglyduplicate drugs already on formulary may increase transaction costs without additional benefit.In evaluating new products, formulary managers face the task of identifying, assembling, and synthesizinga wide range of complex information. Manufacturers, who may be in the best position to supplythat information, have been severely restricted by U.S. Food and Drug Administration (FDA) regulationsthat limited marketing communications to findings from well-controlled clinical trials. The FDAModernization Act of 1997 eased these restrictions somewhat by acknowledging that sophisticatedpurchasers such as organized health plans were capable of weighing the quality and impartiality ofmanufacturer-supplied evidence. The Academy of Managed Care Pharmacy (AMCP) created a standardizedtemplate that formularies can use to request comprehensive information about specific drugsfrom manufacturers. Widespread adoption of the AMCP format by health plans and manufacturerswill greatly increase access to information about new drugs, speeding the process of formulary committeedeliberation, and instilling greater confidence in the outcome of those decisions. Wider accessto new drugs may result.