AH045 - Pharmacy Benefits 101: Formularies & Formulary Management, with Nisha Bhide, PharmD

Transcript

Lightly edited for clarity.

[00:27] Justin Venneri: Hello and thank you for joining us for this episode of the Astonishing Healthcare Podcast. I'm Justin Venneri, your host and Director of Communications at Capital Rx, and today I'm excited to chat with our Director of Formulary Operations, Nisha Bhide.

We'll be discussing everything you can want to know about formularies, what they are, how they work, the differences between open and closed formularies, how specialty drugs fit into the equation, and more.

Nisha, welcome to the podcast!

Nisha Bhide, PharmD: Thanks, Justin. I'm glad to be here and excited for this discussion.

Justin Venneri: Likewise. So glad we finally found time on your schedule to get you on here. So first of all, congratulations are in order. For those that don't know or maybe didn't see it on LinkedIn or otherwise, Nisha was named one of Modern Healthcare Executives 2024 Emerging Healthcare Leaders, which is super exciting and well-deserved.

And that's not all. She's also this year's recipient of the Albert B. Prescott Pharmacy Leadership Award. So we'll hype you a little bit here if you don't want to hype yourself.

Nisha Bhide, PharmD: Thanks, Justin.

Justin Venneri: So, you've been with Capital Rx since 2020. Can you tell us a little bit about your background? What led you to Capital Rx and your current role?

Nisha Bhide, PharmD: Absolutely. I'm very grateful to have received these recognitions this year. I started my pharmacy journey by pursuing a Doctor of Pharmacy degree at the Rutgers University Ernest Mario School of Pharmacy.

Following this, I completed a PGY1 pharmacy practice residency, a PGY2 health system corporate Pharmacy Administration Residency, and then an Executive Pharmacy Leadership and Supply Chain Management Fellowship. After three years of postgraduate training, I spent several years in the Corporate Health System Pharmacy Administration space in the Midwest before joining Capital Rx.

As you mentioned, in 2020, I lead the Formulary Operations team as well as currently I'm the PGY-1 managed care residency Program Director here, and when I started till today I got to build out the Formulary Operations team from the ground up to serve all of the different lines of businesses that we serve today.

And additionally, I'm very fortunate. I serve on several local, regional, and national committees, including the Healthcare Safety and Quality Extra Committee as part of the United States Pharmacopeia as well as the format for Formulary submissions Committee as part of the Academy of Managed Care Pharmacy.

[02:37] Justin Venneri: Awesome. Let's start super high-level. Thank you for your help previously - we have a blog that I'll link in the show notes along with the award announcements.

• Pharmacy Benefits 101: What is a Formulary?
• 2024 Emerging Leaders in Healthcare post (LinkedIn)
• 2024 Alfred B. Prescott Pharmacy Leadershop Award (PLEI, LinkedIn)

What is a formulary and where does it, or where do they, because some clients have multiple, where does the formulary fall within the pharmacy benefits workflow?

Nisha Bhide, PharmD: At a high level, the formulary is a list of medications covered by a prescription drug plan or a plan offering medication benefits. A formulary primarily promotes the safe and effective use of prescription drugs while trying to deliver value to our plan, our clients, and our members.

So generally, formularies ensure that members have access to a robust offering of medications that treat all diseases. So they're typically based on committee recommendations. It's called a P&T Committee, or Pharmacy and Therapeutics Committee.

And this committee has several physicians, pharmacists, patient advocates, and other clinicians with diverse backgrounds that bring their expertise together to review all medications that have been approved by the United States Food and Drug Administration or the FDA.

So when putting together the formulary and review of these medications, we look at several things. Importantly, we look at the clinical data of the medication, efficacy and safety data, and then secondarily, we'll look at market trends as well as cost of care and pharmacoeconomics.

These variables can change throughout a given year, so the formulary also updates alongside those changes. So typically we have a P&T meeting quarterly. And so typically you'll see a formulary change every quarter or so in the commercial line of business.

[04:14] Justin Venneri: Oh, interesting. I had a question for you on that. I was talking to Brian TenEyck, our National Director of Broker and Consultant Relations. He mentioned that channel partners sometimes ask him that.  

So if they can change quarterly, how do updates end up getting communicated to members?

Nisha Bhide, PharmD: It's a great question. So after a P&T meeting, we take a look at kind of all those different changes and work with the analytics team to understand member disruption.

From there, we put together a member-specific letter to let them know 60 days in advance of the formulary change that this is kind of what the formulation is going to be, what the alternatives are that are on formulary for that member, if it requires a prior authorization or requires an additional quantity limit, and then give them information on how they can submit a coverage exception should they need to. So all of that is available there.

[05:05] Justin Venneri: Oh, got it. Cool. Okay. And then you described what the formulary is, what it's typically based on the P&T community. What is the difference between an open and closed formulary?

Nisha Bhide, PharmD: We - kind of focusing on the commercial space for a moment - today we offer two different standard formulary offerings. One is called Liberty, which is more closed, and one is called Freedom, which is more open. (If you'd like to dive into the details of a formulary, check out Capital Rx's Freedom (Open) Formulary Lookup or Capital Rx’s Liberty (Closed) Formulary.)

The Open formulary has more medications on formulary versus the Liberty formulary has more exclusions. So you'll see perhaps brands with many generics on the market excluded. On the Liberty formulary, you'll see more medications that have therapeutic alternatives that you have a financial upside on, whether through costs or rebates or things like that.

You may see more exclusions on the Liberty formulary than you would on our Freedom formulary.

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[05:53] Justin Venneri: And then you alluded to this, but working on formularies and setup, etc., for employers, commercial and health plans, Medicare, Medicaid, etc., are there differences between the commercial and government programs formularies?

Nisha Bhide, PharmD: Yes. So our exchange, Medicaid, and Medicare formulary options are more designed to meet state and federal requirements while still balancing the same rigorous review of clinical effectiveness and safety, but also the kind of cost of care component as well.

[06:20] Justin Venneri: Okay, so diving a little deeper, are all FDA approved and/or regulated drugs included on a formulary?

Nisha Bhide, PharmD: Not necessarily so. Drugs that don't appear on the formulary list are generally excluded from coverage. There could be several reasons why, including if our P&T Committee determines that the medication does not meet safety and efficacy thresholds.

Additionally, we exclude very high-cost medications that have therapeutically equivalent alternatives on formulary. We may also exclude, for example, as I mentioned, brands that have many generics on the market to promote the use of generic medications.

So usually members can contact their PBM or take a look at the formulary on our website to see which medications are covered. But in addition to coverage itself, there may be other restrictions you might see on the formulary.

So if a medication requires prior authorization, has a step therapy requirement, could only be FDA approved for certain age ranges, or may have a quantity limit to kind of promote again, safe and efficacious use of those medications.

Those restrictions as well you'll see on the formulary and the other kind of piece of this is the specialty drug piece. So on the formulary, we identify medications that are considered specialty that usually treat more complex medical conditions, conditions like hemophilia or multiple sclerosis.

They may require special handling, administration or just coordination of care and tend to be higher cost compared to some other medications that you may see that are not specialties. So depending on the pharmacy benefit design and formulary selection, specialty drugs may be part of the benefit with specific Coverage or co-pay requirements.

But all of that information you'll see.

[08:07] Justin Venneri: As part of the formulary, and this comes up a lot, tiers. What are formulary tiers?

Nisha Bhide, PharmD: Tiers are the defined area of the formulary where a drug is listed. So a medication could be tier one, tier two, tier three, and then from there in the plan benefit area, you can define what the member's cost share or co-pay would be based on that tier information.

So they really work hand in hand where the formula will tell you what tier the medication is and then ultimately what the member's responsibility would be would be associated with that plan design's cost share selection.

[08:40] Justin Venneri: Okay, and you rattled off a few things like caveats or restrictions if you will, prior authorization. We have a great episode on that. I'll link that in the show notes. But then like step throughs and other things that are quote unquote restrictions.

Can you just take a minute and share like how listeners should think about those things in the context of the formularies. The list of drugs that are available, it's pretty much integral to the pharmacy benefit coverage for the members, right?

Nisha Bhide, PharmD: Yes, exactly. So most of our utilization management edits you could say are really focused on ensuring members are getting the most safe and efficacious care. So a quantity limit we may impose one on a product that is a controlled substance just to make sure that members are getting what is within the FDA-approved labeling that is considered to be safe for members.

Members may need an exclusion or an exception request to those which then will be reviewed by our prior authorization team to if they meet those criteria. But all in all our quantity limits or our age edits and prior authorizations want to make sure that members are getting the right medication at the right time.

And then from kind of a step therapy perspective it's very similar. So the goal really is to make sure that members are stepping through perhaps maybe first line therapies before moving on to second line or third line therapies aligned with national guidelines and associated clinical literature.

[10:04] Justin Venneri: Got it. Are there any current Judi -- our adjudication platform or enterprise health technology platform -- are there any current Judi features that make controlling accessing, understanding the formulary simpler?

Nisha Bhide, PharmD: Yeah, absolutely. Today it's very easy to make elections in Judi based on what medications you want to cover, how you want your co-pay structure and tiering and specialty products to process for your members as well as it's very easy to make customizations utilizing the tag feature in Judi to the formulary to meet different client needs.

[10:39] Justin Venneri: So if a plan fiduciary says, "Hey we have members with specific needs..." or something like that. They can call up their account management team and have a discussion and potentially make a change pretty quickly.

Nisha Bhide, PharmD: Yeah.

Justin Venneri: Cool.

[10:51] Justin Venneri: And we have lists. I know this is like standard, but just if you could explain it, I think it would be helpful in this context. Like high-cost generics, high-cost brands, potentially wasteful drugs with alternatives. Can you explain how some of this works?

Nisha Bhide, PharmD: Yeah, no, that's a great question. So I'll bucket them into three different sections. So the first is the outlier medications that you talked about. These are medications that we standardly exclude on our standard formularies.

These are high-cost medications that have significantly lower-cost therapeutic alternatives on formulary where there's really no clinical reason for those medications to be used. So for example, I can give you is a product that has two generic products in combination, but that is perhaps 50 times the cost of those two individual products available generically on their own.

So those types of medications we would exclude outright. The next kind of bucket there is what you mentioned, which is the high-cost brand. So this is a list that the formulary operations team maintains to help certain plants who are looking for a tighter formulary with even more exclusions than we have today.

Standardly they can go ahead and exclude those medications. These are typically medications where there's lower cost, either brands, alternative brands, or alternative generic medications. So an example here could be where there is a tablet formulation of a product which is branded and then a capsule formulation of a product that is generic, where they're exactly the same drug with the same dose and the same patient outcome but significantly higher price.

And then the third kind of area is the kind of high-cost generic area. So clients can choose to either up-tier those medications where meaning that the member would pay a higher cost share of those products, or they can choose to exclude those altogether.

This is another list that the formula operations team maintained and very similar to the example I gave earlier. This is again where a particular product may be much higher cost compared to other therapeutic equivalent generics.

So an example I can give you is there may be a product that's 150 milligrams and there may another one that's 155 milligrams and there's really no therapeutic difference in terms of the patient outcome with the extra 5 milligrams, but there is a huge difference in price.

And so in that situation we may, as an election, clients can choose to elect to exclude or up tier that product so that members are paying a higher cost share for the more expensive product when there are therapeutically equivalent generics on the formulary.

[13:18] Justin Venneri: All right, and I just have a couple more questions for you. I think the next topic here or the next question I have is in second place in terms of drug coverage in the media only because of how hot GLP-1s are. Biosimilars - I kind of have to ask; can you comment on biosimilars in the context of formularies today?

Nisha Bhide, PharmD: Absolutely. So biosimilars are FDA-approved medications that are highly similar to their original biologics. They're also known as the reference product.

Justin Venneri: Okay.

Nisha Bhide, PharmD: They're as safe and effective as the original reference product. So biosimilars have no clinically meaningful differences.

And so really that means they have the same safety and effectiveness parameters that you would expect from the reference product. Biosimilars also have been proven to go through the submission of robust clinical and analytic data to the FDA.

Due to that, a member can expect the same safety and effectiveness from a biosimilar that they would expect from the original biologic. Overall, biosimilars are potential cost-saving alternatives to brand-name drugs once the patent exclusivity rights of the reference product have expired.

And they're also beneficial because they provide greater access to biologics out in the market than are available when there's just one.

[14:30] Justin Venneri: Okay. Similar to what you described earlier about the elections using tags and things we I think about just a comment on GLP-1s. I think it's still about 40% of our clients cover them for weight loss.

They're covered for diabetes. So it's like one class of drugs, but it's kind of like for different purposes on the formulary it's like there's always covered for diabetes, but it may or may not be covered for weight loss. Does that pose an issue for you and your team? How do you deal with that kind of thing?

Nisha Bhide, PharmD: So it's very easy to configure these things in Judi. And so today we are able to provide formulary and utilization management information on both the diabetes and the weight loss agents.

And then clients can elect in the benefit whether they would like to cover those products or not very, very easily in the plan management area.

[15:19] Justin Venneri: Awesome. Okay, last question. So I ask everybody what's the most astonishing thing you've seen that you can share, of course, either during your time at Capital Rx or related to our discussion about formularies today.

Nisha Bhide, PharmD: So it has to be for me because I was fortunate to be here during that time. The launch of Judi and claims adjudication Just being with the team at midnight, watching the first claim come through was just a very surreal experience. So glad I was here for that.

Justin Venneri: Very cool. So, Nisha, thanks so much for coming on the show, and I look forward to having you back on.

Nisha Bhide, PharmD: Thanks, Justin.

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