Health Affairs recently published a study that found Medicare Part D plans greatly increased utilization restrictions on prescription drugs from 2011 to 2020. The report found that Part D plans became “significantly more restrictive over time,” with an average of 31.9% of compounds restricted in 2011 to 44.4% in 2020. Additionally, formulary exclusions grew rapidly during that same time frame, and by 2020, plan formularies excluded an average of 44.7% of brand-name-only compounds.
The authors note that prior authorization and step therapy requirements have long been ways for pharmacy benefit managers to manage the use of medications, but over the past decade, there was also an increase in the number of compounds excluded from plan formularies. While prior authorization and step therapy restrictions often require additional administrative steps that might delay a patient’s access to a restricted drug, exclusions remove the drug from coverage altogether, leading to a patient’s access to a restricted drug being cut off entirely.
The analysis did not consider how prior authorization and step therapy requirements were enforced, including that patients may still be granted access to compounds and that denials may be overturned on appeal. The analysis also did not distinguish between restrictions that may be justified due to cost effectiveness and those that save costs but may harm patient health.
During the time frame at issue, from 2011 to 2020, the number of plans, formularies, and beneficiaries in Medicare Part D increased from 33.2 million beneficiaries in 4,179 plans using 301 formularies in 2011 to 52 million beneficiaries in 6,160 plans using 544 formularies in 2020. Additionally, the share of Medicare Advantage Part D plans increased during that same time period from 68.7% of all Medicare plans in 2011 to 80.2% in 2020.
According to the authors, in 2011, plans excluded an average of 20.4% of compounds from their formularies with an additional 11.5% subject to prior authorization or step therapy restrictions. By 220, 30.4% of compounds were excluded with another 14% subject to prior authorization or step therapy.
It isn’t just brand-name-only compounds that were on the receiving end of the increases, though brand-name-only compounds did receive a higher frequency of exclusions and prior authorization or step therapy restrictions. On average, in 2020, plans excluded 21.9% of compounds with a generic available with another 8.1% subject to prior authorization or step therapy. Among brand-name-only compounds, plans excluded 44.7% and subjected an additional 23.7% to prior authorization or step therapy restrictions, resulting in a whopping 68.4% of brand-name-only compounds facing some sort of utilization restriction in 2020.
Cost also played a factor, with 16.7% of generic-available compounds with an average cost of $100 or less per prescription being either excluded or under prior authorization or step therapy, compared to 59.5% of generic-available compounds with an average cost above $1,000, in 2020. For brand-name-only compounds, 15.8% of those with a $100 or less price tag faced restrictions in 2020, compared to 83.7% of those that cost more than $1,000.
When comparing plan types, utilization restrictions were greater among standalone prescription drug plans than Medicare Advantage prescription drug plans for all the years studied, with an increase over time.
The authors conclude that while encouraging the use of less expensive alternatives may be warranted, the large and increasing number of compounds that are subject to review or are outright excluded from coverage raises concerns on the impact of patient health. Adding an additional layer of complexity, because different pharmacy benefit managers exclude different medications and may also change formularies on an annual basis, Medicare beneficiaries may face difficulties in getting their important prescription drugs filled, sometimes without much notice.