PHARMACY BENEFIT COVERAGE GUIDELINE
Medical Necessity Criteria and Dispensing Quantity Limits for Exchange Formulary Benefits
*This coverage is managed through the Pharmacy benefit.
New regulatory requirements generated by implementation of the Affordable Care Act and the resulting creation of federal and state insurance exchanges have led to the creation of novel pharmacy benefit designs that differ substantially in structure, breadth of formularies and utilization management requirements. The following additional criteria will apply to these benefits:
A step therapy edit is a requirement that one or more specified first step agents be tried and failed before coverage will be provided for another second step agent. When the step therapy requirement is met and recent member claims history shows that the required first step agent(s) have been tried, approval for coverage of a second step agent will be automatically processed electronically in real time at the point of service without inconveniencing the member, pharmacist or prescriber.
In the event, that such documentation is not available in recent claims history, manual review for medical necessity is required, based on the following criteria:
Drugs subject to the Step Therapy Protocol are listed in the following table:
The following dispensing quantity limits are based on the maximum dose recommendations in the product’s FDA-approved labeling. This information is available for each product at the manufacturer’s Web site or www.fda.gov.
Drugs with Dispensing Quantity Limits are listed in the following table:
Sedative Hypnotic Drugs Quantity Level Limit for 30-Day Period
Quantities greater than those listed above may be considered medically necessary in the following circumstances:
The initial approval period with be 12 months. Continued approval beyond 12 months will require documentation that the above criteria is still being met and that the medication is still effective for the member.
Medical policies are systematically developed guidelines that serve as a resource for Company staff when determining coverage for specific medical procedures, drugs or devices. Coverage for medical services is subject to the limits and conditions of the member benefit plan. Members and their providers should consult the member benefit booklet or contact a customer service representative to determine whether there are any benefit limitations applicable to this service or supply. This medical policy does not apply to Medicare Advantage.
This policy applies only to closed formulary pharmacy benefits designed to be sold on state and federal insurance exchanges. (See definitions in Additional Information section below.) As used in this policy, “Formulary” refers to the applicable formulary list specified in a member’s contract. The policy does not apply to open benefit designs in which non-formulary drugs are covered, though in some cases at a higher tier.
Closed Formulary Benefit: A closed formulary benefit is one that routinely covers only formulary (preferred) drugs. A non-formulary drug may be covered when its use has been determined to be medically necessary after a review of the individual clinical case circumstances.
Formulary: A formulary is a list of drugs approved by the Pharmacy and Therapeutics Committee (P&T) for routine use. A well-designed formulary should provide adequate drug selection to meet the treatment needs of most patients; however, there will always be exceptional cases where a non-formulary drug may be the best therapeutic choice.
Formulary Drug: A formulary drug (also known as a preferred drug) is a drug that is on the formulary list. Drugs that are not on the list are referred to as non-formulary drugs.
Label: Product label refers to the FDA approved prescribing information that is available for every legend drug approved for use in the U.S. The label includes indications, contraindications, recommended dosing, warnings, precautions, side effects, drug interactions and information on safety in pregnancy and other special populations. The drug’s pharmacology, pharmacokinetics, and available dosage forms are also provided. The current format also includes a summary of the pivotal clinical trials that were submitted to FDA in support of the New Drug Application.
This prescribing information is included as a package insert with the product and is available on the manufacturer’s Web site.
Quantity Limits: A quantity limit is the maximum amount of a medication that may be dispensed during a given calendar period or at one prescription fill without an exception request. Dispensing of a larger quantity may be approved, based on individual case review. A specified larger quantity may be approved when patient-specific circumstances require it, or when published clinical evidence supports a higher dose protocol.
(Note: Dispensing quantity limits are not intended to apply in circumstances where logistics may dictate otherwise. These circumstances include but are not limited to member vacation or business travel, disruption of normal prescription supply chains due to adverse weather events or other disasters and members living in remote areas where travel to the nearest pharmacy may sometimes be problematic.)
Step Therapy: A step therapy edit is a requirement that one or more specified first step agents be tried and failed before coverage will be provided for another second step agent. Step therapy requirements are based upon evidence from published, peer-reviewed clinical studies demonstrating that first-line use of the first step agents is clinically reasonable in most circumstances.
Step therapy edits are designed to channel utilization toward drugs that are at least as safe and effective and lower cost than other similar drugs that are also available. In many cases, the first step drugs in a particular edit algorithm are generics and the second step alternatives are brands that are more expensive and offer no proven incremental clinical benefit compared to the first step drugs. Step therapy, prior authorization and other similar utilization management tools are designed to steer members toward more cost-effective therapeutic choices and are thus an important component of affordable benefit designs.
Recent trends in prescription drug prices in the United States have led to an increased pressure on health care providers to keep down the cost of prescription medication while maintaining high levels of availability to the patient. Mandatory controls will become more important in plan designs that meet the Essential Health Benefit (EHB) requirements of the Affordable Care Act. In making care more accessible to members, the EHB requirements limit some of the financial incentives that have been developed to incent members to select lower cost alternatives. Furthermore, many manufacturers provide copay coverage, eliminating any additional cost impact to the member. Well designed and clinically based step therapy programs thus encourage proper drug selection without negative effects on members.
Motheral and colleagues published a retrospective database analysis of three step therapy programs implemented in a 20,000 member plan in 2002. The three edits targeted proton pump inhibitors, selective serotonin reuptake inhibitors and nonsteroidal anti-inflammatory drugs, respectively. The investigators studied two years’ worth of pharmacy claims of the intervention group against a comparator group of members from similar plans that did not have the three step therapy programs. Per member per month costs (PMPM) decreased by $0.83 in the intervention group, compared to a $0.10 rise on in the comparator group. A mailed self-administered member survey found that 30% received a generic, 23% were granted an exception and received the originally requested drug, 16% paid the full prescription price and 17% received no drug. Patients were 8 times more likely to receive a covered medication when the pharmacist called the prescriber. Failure to receive a covered medication reduced member satisfaction. The authors concluded that step therapy programs do reduce plan cost, but improving members’ and providers’ understanding of the programs would improve their outcomes and member satisfaction. (1)
A major objection to step therapy and other prior authorization programs has always been the administrative effort by provider office staff required to process exception requests. Historically, studies that attempted to measure this have reported conflicting results. A recent study by Morley, et al. estimated an average annual cost of $2,161 to $3,430 per clinic physician FTE. Over 50% of the staff time spent on prior authorization processing was by clerical staff. Less that 10% was by physicians, the remainder being provided by nurses and physician assistants. (2) The authors believe that further analysis is warranted, and with the expected improvement in ubiquity and interoperability of health information systems, it is likely that the administrative effort will be further reduced. A small convenience sample study at the Cambridge Health Alliance psychiatric emergency department found that prior authorization requirements for medications did add much to the time spent in ER prior to discharge.(3)
Prior authorization, step therapy and quantity limits are typical features of managed Medicare and Medicaid programs. Soumerai and colleagues, Hoadley and others have studied the effect of these interventions and generally report that they save plan cost and move utilization toward lower cost generic and preferred brand drugs without major impact on adherence. (4),(5),(6)
Quantity limits in this policy are based on maximum FDA approved dose as stated in the product label. These limits represent the upper bound of the dose range that has been shown to balance safety and efficacy as demonstrated by clinical trial data contained in the New Drug Application (NDA) or supplemental application (sNDA) for higher labeled dosing.(7) Quantities in excess of the limits in this policy may be approved based on adequate evidence from published peer reviewed clinical studies.
New policy, add to Prescription Drug section.
Replace policy. Policy section reflects updates to the Step Therapy and Dosing Limits tables.
Annual review. Step Therapy Protocol and Dosing Limit Tables updated within the Policy section.
Interim review. Step Therapy Protocol and Dosing Limit Tables updated within the Policy section. Sedative hypnotic drugs quantity level limit for 30-day period added to the Policy Guidelines section.
Interim Update. Formulary table updated; Myrbetriq added to the list of approved second-step agents for overactive bladder; Ibuprofen and meloxicam replaced with diclofenac, generic NSAIDs under miscellaneous topicals; Hetlioz removed from the dosing table (addressed in a separate policy). Policy Guidelines updated within the Sedative Hypnotic Drugs Quantity Level Limit for 30-Day Period section.
Interim review. Covered to Benefit Coverage Guideline template. Coverage criteria updated within the step-therapy table in the Coverage Guideline section.
Annual review. Dispensing quantity limits table updated within the Policy section; Plegridy and Trulicity added.
Interim review. Quantity limits updated on Relenza and Tamiflu to indicate the quantities are per 365 days and not per 30 days as previously indicated.
Annual review. Updated quantity limits added to drugs as appropriate; drugs for which a PA is no longer required removed from the policy.
Disclaimer: This medical policy is a guide in evaluating the medical necessity of a particular service or treatment. The Company adopts policies after careful review of published peer-reviewed scientific literature, national guidelines and local standards of practice. Since medical technology is constantly changing, the Company reserves the right to review and update policies as appropriate. Member contracts differ in their benefits. Always consult the member benefit booklet or contact a member service representative to determine coverage for a specific medical service or supply. CPT codes, descriptions and materials are copyrighted by the American Medical Association (AMA).