AIS Newsletter Examines Criticism of PBM Formulary Exclusion Lists

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The Aug. 8 issue of Atlantic Information Services’s Drug Benefit News (DBN) takes a look at criticism surrounding formulary exclusion lists, which pharmacy benefit managers see as a way to flex their negotiating muscle and control rising drug trend.

In a continuing effort to flex their negotiating muscle and control rising drug trend, CVS Caremark Corp. and Express Scripts Holding Co. on Aug. 1 released their respective long-awaited formulary exclusion lists for 2015, with the two pharmacy benefit managers (PBMs) excluding more products than ever. It’s an increasingly popular strategy, but some industry observers question just how much savings these exclusions are likely to achieve, and whether adopting the lists is worth the member disruption. The Aug. 8 issue of Atlantic Information Services’s Drug Benefit News (DBN) takes a look at criticism surrounding this tactic.

“Generally speaking, the savings to the plan due to the lower drug costs generated by the new formulary are fairly small,” Craig Oberg, R.Ph., a managing consultant with The Burchfield Group, tells DBN. In his experience working with national employers, many clients have embraced the changes, while a subset has not agreed with the concept of formulary exclusions “but accepted the change only because they could not afford the loss in rebates,” he tells DBN.

A new brief issued by the National Business Coalition on Health (NBCH) echoes Oberg’s concern. “As with any new approach, purchasers should consider this strategy with caution and consideration of the risks and benefits,” advises NBCH, which points out that there has not yet been any independent third-party validation of the impact on pharmacy spend.

Removing certain drugs from formularies essentially allows PBMs to maintain the rebates or discounts delivered to their clients, Oberg explains. “When a PBM removes a certain manufacturer’s drug from their formulary, it greatly rewards the remaining manufacturer with a significant increase in market share and, in many cases, an exclusive position on the PBM’s national formulary.” For clients who do not opt to use the recommended formularies, however, their rebate dollars could be reduced by 30% to 50%, he points out.

CVS Caremark in late 2011 cut 34 products from its Standard Formulary for the 2012 plan year, and has continued to eliminate select brands from that formulary ever since. The PBM last week notified clients that for the 2015 plan year, it plans to remove another 22 products to reach nearly 100 excluded products. For 2015, Express Scripts updated its National Preferred Formulary to exclude 66 products that have “clinically equivalent, lower cost alternatives,” up from the 48 eliminated from the formulary for 2014.

Visit to read the article in its entirety, which includes statements from CVS Caremark chairman and CEO Larry Merlo, and Express Scripts chief medical officer Steve Miller.

About Drug Benefit News
Published biweekly, Drug Benefit News delivers timely news and proven cost management strategies for health plans, PBMs, pharmaceutical companies and employers. Coverage includes up-to-the minute news of industry consolidation, strategies for participation in exchanges, generic promotion tactics, formulary decisions, innovative benefit designs, drug pricing methodologies, PBM contracting, changes in Part D and other federal initiatives, and much more. Visit for more information.

About Atlantic Information Services
Atlantic Information Services, Inc. (AIS) is a publishing and information company that has been serving the health care industry for more than 25 years. It develops highly targeted news, data and strategic information for managers in hospitals, health plans, medical group practices, pharmaceutical companies and other health care organizations. AIS products include print and electronic newsletters, websites, looseleafs, books, strategic reports, databases, webinars and conferences. Learn more at

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Jill Brown, Executive Editor
Atlantic Information Services
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