MANAGED CARE FORMULARIES have been around long enough that most pharmaceutical and biotech representatives have some level of experience promoting products in formulary environments.

I say "long enough" because while researching this article, I was surprised to learn just how far back formularies go. Apparently, the history of drug formularies extends back for hundreds — maybe thousands — of years, and to the American Revolution here in the United States.

In those times, formularies were simple lists of assorted cures, remedies and ingredients. Later, through most of the 20^th century, formularies were used primarily in hospitals to help manage purchasing and inventories. Recently, formularies have come to be associated more commonly with managed care, where they are used to help manage the costs and utilization of prescription medications.

Today, all kinds of healthcare organizations manage their own formularies: health maintenance organizations, preferred provider organizations, pharmacy benefit managers, specialty pharmacy providers, the Veterans Health Administration, the Department of Defense (TRICARE), employer coalitions, physician groups, state Medicaid programs – and of course, all of the Medicare prescription drug plan sponsors administering the new Part D drug benefit for seniors.

Formularies, like managed care in general, are in a constant state of evolution. With the abundance of Part D drug lists now populating the marketplace, now is a good time to take stock of the situation and determine what strategies you can employ to help boost utilization of your company's products.

In this article, I'll review some formulary basics, look at some fundamental positioning concepts you can apply during your sales calls, and then examine current formulary trends that require your attention.

Formulary basics

A formulary is a list of pharmaceutical/biotechnology products that identifies selected drugs available within a therapeutic class for purposes of patient access, purchasing, dispensing and reimbursement.

At their most basic, formularies are either open or closed. Open formularies typically list virtually all medications in a broad range of therapeutic classes and place few restrictions on coverage or access. Closed formularies are more restrictive. They typically limit the number of medications in each therapeutic class, and certain medications may be subject to restrictions and exception procedures. Between true open and closed formularies lie all manner and degrees of restrictions and levels of enforcement.

Within each formulary system, the managing organization utilizes a number of tools to achieve its clinical and cost objectives, including:

• Generic prescribing.
• Generic and therapeutic substitution.
• Point-of-service edits.
• Step therapy.
• Nonformulary exception procedures (such as prior authorization).
• Limits on quantity, cost and refill frequency.
• Variable (tiered) copayments.
• Designation of "preferred" products (including exclusive listings in some classes).
• Restrictions according to physician specialty.
• NDC (National Drug Code) blocks.