Good Pill Hunting

The making of a drug formulary

By Anne Federwisch, OTR
Illustration by Malcolm Garris
August 24, 1998

Viagra may be grabbing all the headlines, but the little blue wonder drug isn’t the only pharmaceutical scrutinized by third party payers to determine whether the intended clinical outcomes warrant the price tag. Careful review by a pharmacy and therapeutics (P&T) committee is standard operating procedure for hospitals, managed care organizations, and pharmacy benefits management companies when choosing what to include in a drug formulary.

"Formularies are a list or a compendium of products that are considered most useful in contemporary medical practice," said Allan Zimmerman, RPh, senior executive vice president for National Prescription Administrators Inc., a pharmacy benefits management company in East Hanover, N.J. "They’re determined and evaluated based on cost, safety, and efficacy—not in that order, but simultaneously and concomitantly." Since Viagra’s debut, necessity has also been an issue, he said.

That’s all talk, according to Jamie Court, who contends that cost is the only issue being considered. He is the executive director of Consumers for Quality Care, a patient advocacy group in Santa Monica, Calif. "We’re talking about curbing costs at the expense of a doctor’s drug choices," Court said. "I don’t see it as helpful at all. It’s simply the best deal for the company in terms of money. It’s not the best deal for the patient in terms of medicine."

What is cost-effective?

Others see a value in formularies. The idea is that by determining the most cost-effective drugs in a therapeutic class, health plans save money and are able to keep premiums low for consumers. "When you hear the expression most cost-effective, that is not equivalent to cheapest," said Diane Ginsburg, MS, RPh, FASHP, clinical associate professor at the University of Texas at Austin and president of the Texas Society of Health-System Pharmacists.

"You can’t look at the cost of a drug exclusively," Ginsburg said. The expense needs to be weighed against the cost of alternative treatments, side effects, and whether the drug could prevent a costly hospital stay, she said. "Sometimes it might be the least expensive drug, but sometimes it might be the most expensive drug."

Despite sometimes high costs, medications still deliver a powerful punch in the fight against disease, according to Jeff Trewhitt, spokesperson for the Pharmaceutical Research and Manufacturers of America. "It has been proven over and over again that pharmaceuticals are the most cost-effective component of health care," he said. "If you can avoid an ulcer operation and be sustained on medicine, the average cost is about $1,000 a year. The cost of the operation is about $25,000."

Making the cut

Determining a formulary is generally a three-phase process, Zimmerman said. The P&T committee making the decisions is multidisciplinary, often including physicians, pharmacists, nurses, and administrators. "The process of evaluation generally starts with a scientific evaluation, where you really scrub the clinical literature and identify whether or not a product actually is safe and effective," Zimmerman said.

Phase 2 is the pharmacoeconomic evaluation, during which the committee figures out where the drug fits in the overall treatment of the condition. According to Zimmerman, the questions under consideration are: Is the drug more effective than other drugs that are used to treat that condition? Less effective? If it’s more effective, what’s the clinical and financial impact of that?

"In Phase 3, you add the expert opinions of those around the table, their experiential information that they can bring," Zimmerman said.

The resulting formulary is constantly changing, Ginsburg said. Formularies are "always under scrutiny and review to make sure that they are cutting edge, that they are representing the best that there is to treat the patients, to best manage the patients that they cover," she said.

Going outside the lines

Formularies are a one-size-fits-all approach that’s more appropriate for T-shirt sizing than medicine, according to Court. "It’s cookie-cutter medicine," he said. Drug choices should be made by physicians, not committees, he said. "Every patient has a different response to a different drug. Some patients may be more forgetful and need drugs in different dosages. That should be for a doctor to decide."

Zimmerman insists that formulary management is not a case of business dictating medicine. Rather, it is a way of helping practitioners effectively choose from the multitude of drugs on the market. "When we have eight or nine ACE inhibitors on the marketplace, does one really need that many to treat hypertension? Probably not," he said.

Formularies are recommendations, according to Zimmerman. "Most prudent P&T committee formulary programs have some release or outlet valve for those unusual circumstances where a patient does not respond, has a unique clinical condition or requirement," he said.

Yet Court does not see that as a feature that can override the basic premise of formularies. He said, "Their only purpose is to restrict the drugs in the arsenal of a physician."