Magazine article Drug Topics

Formulary Management Moves Forward at Pharmacy Gold

Magazine article Drug Topics

Formulary Management Moves Forward at Pharmacy Gold

Article excerpt

Well, here are a couple of thoughts you can put to rest: the idea that formularies are based on price alone and that community pharmacists are uninvolved with formulary decisions.

That was the clear message gained from a visit to the headquarters of Pharmacy Gold, a pharmacy benefit manager (PBM) and formulary manager based in Minneapolis. Three officials there explained to Drug Topics how their formulary, which now covers about 18 million patients in a variety of health plans, is developed. The officials were Debra Dullinger, v.p., pharmacy programs; Alan Heaton, manager, clinical programs; and Gary Smith, director, pharmacy programs. All three have Pharm.D. degrees.

A formulary is basically a list of drugs from which a pharmacy benefit plan suggests physicians prescribe, pharmacists dispense, and patients swallow or inject.

"I view a formulary as a document that tries to optimize drug therapy and minimize the costs involved," Smith commented.

Pharmacy Gold, a subsidiary of Blue Cross & Blue Shield of Minnesota, first developed a formulary to serve the needs of its parent company. Last fall, it was made into a separate company to be able to gather business from other health plans, Dullinger explained. Most of its business now consists of providing formulary services.

Drugs are chosen for Pharmacy Gold's formulary based on, above all, therapeutic value, the officials claimed. The formulary targets mostly prescribing choices for the family care physician.

Who chooses the drugs? The company has its own formulary committee, which meets once every quarter. The committee consists of six health professionals, including four physicians and two pharmacists--all chosen to represent different perspectives on the use of medications. Of the two pharmacists, one is a clinical pharmacist who specializes in long-term care and the other is a community pharmacist.

Dullinger explained that the community pharmacist's input includes providing a "reality check" on formulary decisions. A community pharmacist will r have a good perception of which new drugs are likely to move quickly through the pharmacy and which are likely to collect dust on the shelf.

When the formulary committee meets to review formulary drugs, explained Smith, their priorities are these:

* Therapeutic value

* Side effects

* How they compare with other drugs on the formulary

* Cost

"Cost is the last thing we look at," Smith emphasized. If a drug is deemed therapeutically appropriate to add to formulary, then negotiations with the drug's manufacturer can begin (see box).

WHAT HAPPENS IN CONTRACT NEGOTIATIONS?

First of all, negotiations with manufacturers are conducted on the basis of Pharmacy Gold's total number of covered lives, rather than on a plan-by-plan basis, explained Debra Dullinger, v.p.-pharmacy programs for Pharmacy Gold. As new plans and more covered lives are added to the total, the formulary manager's negotiating clout grows, and all its plans benefit from the overall negotiations.

The negotiations are a "continuous" process, she added.

The greater the volume of sales Pharmacy Gold can deliver on a drug, the more of a discount it can demand from the manufacturer. With 18 million formulary-covered lives, Pharmacy Gold has gained a lot of clout not available to smaller pharmacy benefit plans for which it manages the formulary. But there comes a point where the discount is "maxed out," as Dullinger put it. …

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