Alternate Financial Incentives in Multi-tiered Formulary Systems to Improve Accountability for Outcomes

BACKGROUND: Drug manufacturer rebates paid to health plans and pharmacy benefit management companies have come under increased public scrutiny. Over the past several years, numerous articles have appeared in the literature encouraging a shift to a more quality-based decision-making process for health plan drug formularies. OBJECTIVES: To propose a new basis for formulary placement decisions that would include consideration of health-plan-specific measures (clinical outcomes, total cost, adherence, and appropriateness of care) and align incentives for health plans, physicians, pharmacists, and pharmaceutical companies to promote high quality care. SUMMARY: The proposed approach builds on key components of the Pharmacy's Framework for Drug Therapy Management in the 21st Century and the Academy of Managed Care Pharmacy's Format for Formulary Submission, including a focus on patient outcomes and evidence-based decision making. The proposed approach would lessen the influence of drug manufacturer rebates on formulary placement by shifting the focus to appropriateness of care, clinical outcomes, patient adherence, and total cost of care. Pharmaceutical manufacturers would benefit from the focus on adherence to drug therapy and total cost of care. Health plans and pharmacy benefit management companies would gain in that they may be able to reduce efforts in drug utilization review as pharmaceutical manufacturers are given incentives to market their drugs more appropriately. Physicians and pharmacists would benefit because the rebate money would be used to provide quality-based financial incentives related to adherence and appropriate use of drugs. CONCLUSIONS: The implementation of this approach would be difficult and require cooperation from employers, pharmacists, pharmaceutical manufacturers, health plans, and pharmacy benefit management companies. Aspects of this approach could be incorporated into existing pharmacy benefit management processes to encourage the delivery of high-quality health care.