MEDICATION FORMULARY SYSTEM MANAGEMENT

To declare that decisions on the management of a medication formulary system, including criteria for use, (1) should be based on clinical, ethical, legal, social, philosophical, quality-of-life, safety, comparative effectiveness, and pharmacoeconomic factors that result in optimal patient care; (2) must include the active and direct involvement of physicians, pharmacists, and other appropriate healthcare professionals; and (3) should not be based solely on economic factors; further,

To support the concept of a standardized medication formulary system among components of integrated health systems when standardization leads to improved patient outcomes; further,

To oppose independent payer-directed formulary decisions that would increase the complexity of the medication-use system.

Rationale

A formulary is a continually updated list of medications and related information, representing the clinical judgment of pharmacists, physicians, and other experts in the diagnosis and treatment of disease and promotion of health. A formulary includes, but is not limited to, a list of medications, standardized medication concentrations, and medication-associated products or devices, medication-use policies, important ancillary drug information, decision-support tools, and organizational guidelines. The multiplicity of medications available, the complexities surrounding their safe and effective use, and differences in their relative value make it necessary for healthcare organizations to have medication-use policies that promote rational, evidence-based, clinically appropriate, safe, and cost-effective medication therapy. The formulary system is the ongoing process through which a healthcare organization establishes policies on the use of drugs, therapies, and drug-related products and identifies those that are most medically appropriate and cost-effective to best serve the health interests of a given patient population.

As described in more detail in the ASHP Guidelines on the Pharmacy and Therapeutics Committee and the Formulary System, a fundamental characteristic of the formulary system is that all decisions are made based on factors that result in optimal patient care, include the involvement of appropriate healthcare professionals, and are not based solely on economic factors.

Formulary management techniques may differ under an integrated or network system versus an individual healthcare entity. Standardized drug formularies within integrated health systems increase coordination complexity but help drive standardized medication use processes across sites of care.

Ensuring consistency within a formulary system is crucial, and the development of adherence tools and metrics for compliance plays a significant role in achieving this. By utilizing these tools, healthcare professionals are more likely to follow formulary guidelines, leading to better patient outcomes and more efficient use of resources. Additionally, monitoring and evaluating compliance through these metrics allows for the identification of areas needing improvement, ensuring that the formulary system is used as intended. This approach also supports quality assurance programs by providing a basis for tracking adherence over time, identifying trends, and implementing corrective actions when necessary. Furthermore, the data obtained from these metrics can inform future formulary decisions, helping committees make more informed choices about which medications to include or exclude based on patterns of adherence and non-adherence.

Additionally, insurance coverage of medications should not interfere with the safe and effective provision of care. For example, some hospitals are currently being forced to administer a specific payer-preferred biosimilar drug to a covered patient, which requires hospitals to stock a different product for each payer and then ensure the correct one is dispensed. This costly and resource-intensive practice also has medication safety implications and negatively affects supply chain efficiency. Biosimilar drugs are considered to be therapeutically equivalent, but the current Food and Drug Administration (FDA) approval process does not include a determination of interchangeability between reference and biosimilar products. Because the substitution of a biosimilar for a reference product is a decision outside the FDA regulatory process, it is therefore a matter of state pharmacy law. The obligation to have a specific payer-preferred biosimilar results in hospitals and health systems devoting significant resources to procure, store, label, and dispense payer-preferred biosimilars. This duplication adds complexity to the medication-use process, and as more biosimilars become available, the potential for harmful medication errors will increase. The use of biosimilars was a key cost-reduction concept in the Affordable Care Act. However, in May 2018, the price linkage cost-reduction concept within Medicare Part B was rescinded. Going forward, reimbursement will be based on the specific biosimilar product pricing. The full impact of this change for individual healthcare organizations will depend on patient and payer mix. Biosimilars that are priced at a lower acquisition cost compared to the innovator product are likely to stagnate or lose market share due to a low reimbursement margin. As a result, pricing of biosimilars may increase to make the reimbursement margin competitive with the innovator product, leaving healthcare organizations in search of other cost reduction opportunities.