Study Suggests Part D Payers’ Prior Authorization Policies for New Drugs May Be Too Strict

Most new drugs covered under Medicare Part D are subject to prior authorization (PA) requirements, largely due to their high launch prices. A recent study published in JAMA Health Forum observed that these policies are frequently inconsistent across payers and may prove too burdensome for patients and providers.

Researchers identified drugs approved between 2013 and 2017 and reviewed the 2020 formularies of the eight largest Part D payers, which cover about 90% of all Part D beneficiaries. They compared PA policies to each drug’s FDA-approved indications and noted if payers mirrored the approved labeling or were more restrictive than the drug’s label. Researchers observed substantial variation in the frequency and type of PA across payers, and they found that about 40% of the new drugs had PA criteria that went beyond the drug’s labeling.

Researchers elected to study six of the categories that CMS requires to be reported in PA documentation and found that required medical information was the most common type of PA. This can include requirements such as a patient’s clinical diagnosis, documentation of previously used therapies and known intolerance to other medications. Humana had the most PA requirements of any payer, at 187, while Kaiser Permanente had the fewest with eight.

Overall, 104 of the 109 new drugs were listed on at least one of the eight payers’ 2020 formularies, and 72 required some form of PA. Researchers then identified the 43 drugs with PA requirements that were more restrictive than the drug’s FDA-approved labeling, highlighting eight notable examples (see table, below).

NOTE: Examples of PA criteria have been condensed. See full study for complete PA requirements.

The researchers suggested that while their study time frame may not be generalizable to other drugs, more consistency in how plans implement PA in Part D could ease administrative burdens on providers and improve patient access to needed therapies. Indeed, of the eight drugs highlighted in the study, only Pfizer’s Duavee, Amgen’s Corlanor and Otsuka’s Rexulti hold covered or better status under the pharmacy benefit for more than 50% of Medicare beneficiaries as of March 2023, according to data from MMIT Analytics (MMIT is the parent company of AIS Health). Utilization management requirements, which can include both PA and step therapy, are still common across the board, while Hikma Pharmaceutical’s Northera is rarely covered at all (Hikma launched a generic version of the drug in 2021).

NOTE: Under the pharmacy benefit, 49.8 million lives are covered under Medicare formularies.

SOURCES: “Characteristics of Prior Authorization Policies for New Drugs in Medicare Part D,” JAMA Health Forum, Feb. 24 2023; MMIT Analytics, as of March 2023.

This infographic was reprinted from AIS Health’s biweekly publication RADAR on Medicare Advantage.

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