Expert Says Medicare Rx Formularies Are Minimalist

Despite assurances that all medically necessary drugs must be made available under the Medicare prescription drug benefit, the final guidelines for designing the Rx formularies could still leave numerous drugs off the list, says a pharmaceutical industry expert.

The U.S. Pharmacopeia's (USP) model guidelines for developing Medicare formularies -- which were included in the Jan. 21 final rules implementing the Medicare Modernization Act (MMA) -- appear to be somewhat minimalist, said Joshua Cohen, senior research fellow at the Tufts Center for the Study of Drug Development.

The USP model guidelines cover approximately 350 drugs across 146 classes, he noted. "I've been analyzing formularies for a long time, and I can't find a single formulary in the U.S. with fewer than 600 drugs," Cohen said. The USP baseline may be a problem for drugmakers, he added. "Sure [the guideline] is a minimum, but insurers and third-party payers tend to gravitate toward minima. If that's what they're required to offer, that is what they will offer."

Medicare drug plan sponsors that use the USP guidelines for their formularies would be exempt from certain regulatory oversight by the Centers for Medicare & Medicaid Services (CMS). Nevertheless, CMS has said the formularies must provide access to all medically necessary drugs and may not exclude access to products that would discriminate against beneficiaries with certain illnesses. The final MMA implementing rules also streamline the process for beneficiaries seeking exceptions and appeals to formularies, said CMS Administrator Mark McClellan.

Cohen acknowledged it is unclear how the final formularies will look when the benefit becomes available in January 2006. Public pressure could force Medicare drug plans to offer a more generous range of drugs, he said. But insurers would still stand to gain by shedding a few drugs per class and moving toward roughly 350 drugs, Cohen added.