PBMs Worry Revised Formulary Will Perplex Users

Wednesday, December 26, 2018 | 0

The latest draft of drug formulary rules proposed by the New York State Workers’ Compensation Board promises to be the most intricate of any formulary adopted by a state workers’ comp system so far — another step in an evolution from simple yes-and-no drug lists that were introduced to comp a little more than a decade ago.

The New York State Workers’ Compensation Board is proposing to adopt its own version of the American College of Occupational and Environmental Medicine formulary published by The Reed Group, which California adopted effective at the start of this year. But the revised formulary proposal released in October by the board adds new layers of complexity.

Like California’s formulary, New York’s draft ties medications to the type of injury; 12 specific injury categories are listed in the New York formulary. But New York goes beyond that. 

The revised formulary includes a table that marks whether a drug is appropriate for specific phases of care. It also denotes second-line medications that can be approved after a preferred drug is tried without producing satisfactory results.

The ACOEM formulary is already far more discerning than the Official Disability Guidelines formulary, which was among the first to be introduced to workers’ comp, starting with Texas in 2007. ODG, published by MCG Health, lists medications as preferred or not preferred. ACOEM’s formulary adds a layer that ties medications to the type of injury or illness.

David Price, director of government affairs for pharmacy benefit manager Preferred Medical, said the addition of second-line medications and multiple phases shows that New York regulators are “building on the California experience.”

“That’s a very nuanced approach,” Price said. “You can tell that was written with prescribers in mind and not PBMs.”

Price is in the process of updating an analysis of the proposed formulary rules that he wrote after the first draft was released earlier this year. He said it is clear that New York regulators are attempting to refine the ACOEM model adopted by California.

California’s recognized only two phases of care: a special-fill, meaning a drug dispensed within seven days after initial treatment, and a perioperative phase from four days before to four days after surgery. 

New York’s latest draft also has a perioperative phase and adds three more phases where preauthorization is not required: 

• Phase A, which is similar to California’s “special fill” phase, for prescriptions dispensed within seven days of initial treatment for no more than a 30-day supply.
• Phase B, which covers cases that have not yet been accepted by the insurer or established by the board for drugs prescribed from the eighth day to the 13th day after injury, with no more than a 30-day supply. 
• Phase C, for covering prescriptions 30 days after injury for no more than a 90-day supply, or for claims that have been accepted by the carrier or established by the board.

The New York formulary also marks drugs as “yes” or “second” to denote whether they can be used as a first-line treatment or whether another drug must be tried first.

“The board has long said that it wanted to adopt a condition-based formulary; the current proposed rules contemplate a formulary that is both condition-based and phase-based,” Price said in a brief analysis of the revised formulary that he emailed to WorkCompCentral.

Some in the industry wish New York’s approach were a bit less complicated.

“There is a simple beauty to simplicity,” said Brian Allen, vice president for government affairs for Mitchell International Pharmacy Solutions. “It’s easer for people to make change and adapt to change when its less complicated.”

Allen’s chief peeve with the New York formulary is that the timing of the phases in some cases is tied to the date of treatment instead of the date of injury. Pharmacy benefit managers and claims administrators don’t have access to the date of treatment. It would be far simpler to tie everything to the date of injury so that all parties involved in the claim can stay on the same page, Allen said.

Beyond that, Allen said the New York board’s attempt to make the formulary cover all scenarios has the downside of making the rules too complicated. He said in some cases the latest formulary version seems redundant. For example, the written regulations that are included in the formulary state that medications must conform to the state’s Medical Treatment Guidelines, yet the revised formulary notes those guideline recommendations by marking some drugs as “second,” meaning prior-authorization is not required for second-line use.

“It almost feels like they were trying to bake in some of the treatment guidelines into the drug formulary,” he said. “I think they would be better served to let the treatment guidelines speak for themselves.”

Kevin Tribout, executive director for government affairs for Optum, had similar concerns. 

“I think its a little bit too layered, if that makes sense,” Tribout said. “It’s going to be very difficult for PBMs and claim processors to coordinate all of the moving parts that come into play.”

Tribout said he has spoken with staff for the Workers’ Compensation Board about tying the phases to date of injury instead of date of treatment, and they seemed to understand the concern.

He said his sense is that the board intends to adopt the formulary without making major changes that would require it to reopen public comments for another 30 days. He said he believes the board will amend the rules to remove the references to treatment dates if it is able to without opening public comments again. If not, the rules can be amended later, he said.

The Workers’ Compensation Board did eliminate one complication when it revised its formulary proposal. The previous version of the rules included language mandated by the state Legislature that will require PBMs to pass along any rebates they receive from drug manufacturers to employers and report all rebates to the board.

The board removed the rebate language from the formulary and is proposing to put that rule in a separate set of regulatory changes that will update its pharmacy fee schedule. 

Allen of Mitchell International said the rules are unnecessary because rebates are rarely paid for medications in the workers’ compensation arena, and Mitchell’s reimbursement model already ensures that employers receive the benefit of any rebates paid.

The board has no choice but to adopt a rule because the Legislature mandated it in the same bill that directed the adoption of the formulary. Allen said he is pushing for language to be added stating that nothing in the regulation will require PBMs to disclose proprietary information. 

The board closed public comment on the latest draft of the formulary rules on Nov. 15, and stakeholders are waiting on a final version to be released. The pharmacy fee schedule rules, with the language on PBM rebates, are proceeding separately. The board is accepting public comment until Feb. 3.

“Until the formulary and fee schedule regulations are finalized, the board will not be making any public comments,” said board spokeswoman Melissa Stewart. “We welcome and encourage health care providers, injured workers and other stakeholders to share their feedback by emailing regulations@wcb.ny.gov."