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Survey: Health Exchanges Drive Change in MCO Strategies and Physician Prescribing Decisions

Era of open formularies may be ending

Analysts at Decision Resources Group, a health care research firm located in Burlington, Mass., have conducted a survey to identify health care funding changes brought about by the Patient Protection and Affordable Care Act (PPACA), which has affected both the reimbursement for and the prescribing of pharmaceutical therapies.

The PPACA altered how managed care organizations (MCOs) cover beneficiaries through new regulations and expanded access via government-supported programs.

According to the new report, dynamic change is occurring in the health exchanges — state-based "marketplaces" set up by states or the federal government that allow individuals to shop for subsidized coverage — where benefit design and physician behavior result in an altered prescribing environment.

The report finds that MCOs are increasingly participating in the exchanges. Some MCOs that sat out 2014, such as UnitedHealthcare, indicated that they may be entering the market for 2015.

In a survey of 40 MCO pharmacy and medical directors that employ narrow networks, 65% expressed the desire to reduce drug costs, and 58% pointed to reducing medical costs as the key drivers.

The report also finds that the era of open formularies may be ending. In a survey of 44 MCOs that offer products on the exchange, fewer than half offered an open formulary — choosing instead either a closed or a partially closed formulary.

According to the report, MCOs are placing higher out-of-pocket costs on exchange-based plans. Individuals covered by these plans are likely facing a deductible of at least $1,500. Surveyed plans with a deductible reported deductibles ranging from $1,600 to nearly $2,000 for an individual, based on the value of the plan.

The report predicts that physicians will react to higher cost shares by prescribing lower-cost drugs, thereby hurting branded products. With electronic health records systems and e-prescribing, physicians understand patient formularies better than before, the report finds.

Roy Moore, Principal Director at Decision Resources Group, commented: “Health insurance exchanges represent the biggest opportunity for the drug industry since the launch of Part D a decade ago, but this new market is not without challenges. Health plans’ desire to control cost and utilization has resulted in new hurdles to access, which ultimately affect the actual drug prescribed. Drug firms must understand the intricacies of specific exchange-based plans to devise successful strategies that will work in this new channel.”

Source: Decision Resources Group; July 31, 2014.

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