Unbiased Analysis of Today's Healthcare Issues

Patient-Centered Formularies: Steps In The Right Direction, But Challenges Remain

Written By: Jason Shafrin - Apr• 11•18

That is the title of my latest blog post in Health Affairs with co-author Mark Linthicum.  The premise is as follows:

CVS recently announced its new Transform Rheumatoid Arthritis Care initiative, which aims to reshape coverage of rheumatoid arthritis care through “value-based management strategies including outcomes based contracts and a new indication-based formulary for autoimmune conditions.” The CVS announcement comes amid an ongoing movement to tie formulary design to measures of treatment value, including initiatives such as value-based insurance design (VBID). The Center for Medicare and Medicaid Innovation even partnered with 13 Medicare Advantage plans to implement its VBID Model.

As payers take important steps toward value-based care, the broader debate around how value should be assessed points to the importance of different stakeholders’ perspectives on the tools, methods, and sources of data. A number of organizations have created formal value assessment frameworks, each with a different perspective on what value means. These frameworks highlight the need for value-based coverage decisions to account for underlying differences in the patients affected. To truly link benefit decisions such as formulary design to value, formularies must incorporate the factors that determine value from patients’ perspectives, while also accounting for diversity in covered populations.

The rest of the post examines the feasibility of making formularies patient-centered. Please do read the whole thing.   The piece would be interesting for those focused on patient-centered care.  For economists, the article even uses the results from the Arrow Impossibility Theorem to help inform the challenge of formulary design.

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One Comment

  1. Robert J. Sobel, M.D. says:

    I appreciate the analysis and always respect referencing Professor Arrow. What I do not accept is the impossibility that we can create a structure without formularies. The patient-physician decision process is indeed as delicate as you describe. The problem is the financial impact of these nuances when one option is an expensive biologic and one is an inexpensive older agent like methotrexate (to go with the rheumatoid arthritis example). If we accept that the Hatch-Waxman compromise is the only reality we can ever have, you are correct. If we return and modify the law to combine price regulation with long-term brand rights for each agent, then you can apply your economics expertise to the price side. I’ve been doing this too many years to accept the further manipulation by financial coercion of patients and physicians as the way out of our pharmaceutical pricing failure. The administrative costs, the price of direct interference with clinical autonomy, the inflationary effect on new drug pricing, and the lost opportunity for innovation due to drug cycling strategies, discredit the idea of a 90% generic market being cost saving.

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