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Opinion 8.135 - Cost Containment Involving Prescription Drugs in Health Care Plans

When health care plans, whether publicly or privately financed, establish drug formulary systems, physicians are obligated to advocate for formularies that meet the medical needs of their patients.

(1) Physicians should maintain awareness of plan decisions about drug selection by staying informed, where appropriate, about pharmacy and therapeutics (P&T) committee actions and by ongoing personal review of formulary composition. P&T committee members should include independent physician representatives. Mechanisms should be established for ongoing peer review of formulary policy. Physicians who perceive inappropriate influences on formulary development should notify the proper regulatory authorities.

(2) When scientifically based evidence is available, physicians are ethically required to advocate for changes to the formulary that would benefit the patient. Physicians also should advocate for exceptions to the formulary on a case-by-case basis when justified by the health care needs of particular patients. Mechanisms to appeal formulary exclusions should be established. Other cost-containment mechanisms, including prescription caps and prior authorization, should not unduly burden physicians or patients in accessing optimal drug therapy. Quality improvement rather than cost containment should be the primary determinant for formulary exclusions. In order to be cost efficient, however, physicians should select the lowest cost medication of equal efficacy for their patients.

(3) Physicians should advocate that limits be placed on the extent to which health care plans use incentives or pressures to lower prescription drug costs. Financial incentives are permissible when they promote cost-effectiveness, not when they require withholding medically necessary care. Physicians should not be made to feel that they jeopardize their compensation or participation in a health care plan if they prescribe drugs that are necessary for their patients but that may also be costly. There should be limits on the magnitude of financial incentives, which should be calculated according to the practices of a sizeable group of physicians rather than on an individual basis, and incentives based on quality of care rather than cost of care should be used. Prescriptions should not be changed without the physician’s knowledge and authorization. This affords the physician the opportunity to discuss the change with the patient.

(4) Physicians should encourage health care plans to develop mechanisms to educate and assist physicians in cost-effective prescribing practices, including the availability of clinical pharmacists. Such initiatives are preferable to financial incentives or pressures by health care plans or hospitals, which can be ethically problematic.

(5) Physicians should advocate that methods to limit prescription drug costs within health care plans in which they participate be disclosed to patients. In particular, they should encourage health care plans to inform patients upon enrollment concerning:

(i) the existence of formularies

(ii) provisions for cases in which the physician prescribes a drug that is not included in the formulary

(iii) incentives or other mechanisms used to encourage formulary compliance by physicians

(iv) relationships with pharmaceutical benefit management companies or pharmaceutical companies that could influence the composition of the formulary

If physicians exhaust all avenues to secure a formulary exception for a significantly advantageous drug, they are still obligated to disclose the option of the more beneficial drug to the patient, so that the patient can consider whether to obtain the medication out-of-plan. Under circumstances in which the health care program will not subsidize the drug, physicians should help patients by identifying alternative forms of financial assistance, such as those available through pharmaceutical companies’ assistance programs. (III)

Issued June 1996 based on the report "Managed Care Cost Containment Involving Prescription Drugs," adopted June 1995 (Food and Drug Law Journal. 1998;53:25-34); updated June 2002.