New Jersey loosens HMO drug formularies

Although the state's new requirements for prescription drug coverage give physicians more freedom to prescribe, plans warn this may raise health care costs.

By Leigh Page, AMNews staff. Feb. 5, 2001.

New regulations on prescription drug coverage by managed care plans in New Jersey are good news for doctors and patients who want greater access to drugs but bad news for health plans and employers who want to rein in galloping drug costs.

The rules, which go into effect July 1, are thought to be the most sweeping in the nation. They require health plan formularies to include at least two drugs in every therapeutic class and limit the difference in co-payments to 30% on widely used three-tier payment formulas for patients.

"Physicians are very much for this because it removes some of the compromises that are in patient care when you have only one drug to choose from," said otolaryngologist Angelo S. Agro, MD, president-elect of the Medical Society of New Jersey.

But managed care officials who want to put a dent in pharmacy costs, growing by 15% a year, are not so pleased.

The rules "could have an impact on employers' willingness to provide a good pharmacy benefit," warned Richard Fry, senior director of pharmacy affairs at the Academy for Managed Care Pharmacy, an Alexandria, Va., group that represents pharmacists who work in managed care.

Managed care executives also suspect that pharmaceutical manufacturers, many of which are headquartered in New Jersey, lobbied for the rules because they loosen managed care regulations on drugs.

Terry Leach, director of pharmacy services at Horizon Blue Cross Blue Shield, said drugmakers submitted many of the more than 600 formal comments on the rules last year. [...]