Exclusion lists are intended to reflect clinical and cost-effectiveness and contain drugs that are ineligible for reimbursement. However, according to a recent analysis by Tufts Center for the Study of Drug Development, cost-effectiveness may not correlate with exclusion or recommended status.
According to the report, drug manufacturer rebates to pharmaceutical benefit managers (PBMs) and patients play “a key role” in determining exclusion decisions. However, exclusion lists present a challenge to the drug industry when products are excluded from coverage by a PBM.
“While it's a small number of products overall that are excluded, any exclusion may limit the ability of a drug company to garner market share,” Joshua P. Cohen, Ph.D., Research Associate Professor, Tufts Center for the Study of Drug Development, told Outsourcing-Pharma.com, adding that the challenge grows as the lists increase in size.
According to the analysis by the Tufts, the number of drugs on the exclusion lists of the two largest pharmaceutical benefit managers (PBMs) in the US grew approximately 65% from 2014 to 2016.
Yet, the study found that it was not necessarily the case that clinical and cost-effectiveness drove decisions to exclude or recommend a specific drug. Additionally, cost-effective brand name drugs are not always recommended over less cost-effective brand name drugs in the same therapeutic class.
“In fact, the traditional rebate mechanism - drug companies provide rebates to PBMs based on their ability to move market share - appears to continue to dominate,” added Cohen. “This said, positioning of products on formulary as either excluded or recommended is increasingly a function of clinical and cost-effectiveness. So, in order for drug companies to compete they will have to demonstrate their product’s value, specifically its clinical and cost-effectiveness.”