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Payers and PBMs Are Excluding Cancer Drugs at a Growing Rate. How Can Manufacturers Prepare?

By Jayne Hornung

With rebates now a common pharma practice, and generics and biosimilars launching in oncology, payer management of once-untouchable cancer drugs is growing. As the FDA continues to approve a large number of cancer drugs, resulting in increased competition in various tumor types, and spending on these agents continues to rise, PBM and payer formularies are now excluding some oncolytics while designating others as preferred.

Not so long ago, oncology was fairly off-limits for utilization management, but that is no longer the case. Almost 10 years ago, PBMs began excluding drugs from their formularies in an attempt to rein in spending. But it wasn’t until 2017 that oncolytics started appearing on lists of excluded agents, with their generic or biosimilar competitions being included on formularies. Since that time, exclusions have broadened to include other branded competitors. The seven top national commercial payers and PBMs excluded nearly 100 cancer medications in 2022, and 34 of those drugs did not have generics or biosimilars—only other branded therapies.

While most of these exclusions (48) were for oral oncolytics covered under the pharmacy benefit, 34 were infused drugs, which traditionally have not experienced much management. Also increasing are the tumor types subject to scrutiny. In 2017, only two conditions had exclusions, but by 2022, 20 tumor types were impacted, led by breast cancer, chronic lymphocytic leukemia and non-Hodgkin’s lymphoma.

And those restrictions show no signs of decreasing. MMIT found that among both commercial and Medicare payers, those with more than half of covered lives said that breast cancer, small cell lung cancer and prostate cancer were the top oncology indications for increased restrictions beyond simply prior authorization. Respondents said that the availability of generics, less costly agents, contracting, rebates and numerous competitors within a class were all reasons for their tighter management of cancer drugs. Oncologists also cited breast cancer, as well as non-small cell lung cancer, as the top indications in which they are seeing greater management. In addition, payers said that they expect non-small cell lung cancer will be a focus of increased restrictions within the next year.

While many payers look to national guidelines, such as those from the National Comprehensive Cancer Network, for help determining their coverage, NCCN ratings are not the sole factor in those decisions. More than half (65%) of oncology exclusions are for drugs given the highest rating by NCCN whose preferred alternative is a brand competitor.

We have seen a growing number of oncology drugs processing more frequently through specialty pharmacies, for both self-administered drugs under the pharmacy benefit and professionally administered drugs under the medical benefit through the use of white bagging. Traditionally, providers acquired drugs from distributors and kept them in their office until they were ready to be administered, billing for the medication afterwards, a process known as buy and bill.

But according to MMIT data, white bagging—when a specialty pharmacy provides a drug to a practice— is chipping away at that process, allowing PBMs and payers to place tighter management on drugs administered in a provider’s office or hospital setting through the use of various utilization management strategies available under the pharmacy benefit. White bagging for infused oncolytics grew from 15% in 2019 to 18% in 2021 in the physician office setting. During the same time frame, the practice increased from 28% in 2019 in the hospital outpatient department setting to 35% in 2021. And while white bagging declined in the home infusion setting from 72% in 2019 to 54% in 2021, it still represents a sizable chunk of the market.

Brown bagging—where a patient picks up a drug at a pharmacy and brings it to a provider’s office for administration—and clear bagging via a provider’s internal specialty pharmacy, also have boosted the role of specialty pharmacies in the distribution of medical benefit drugs.

Implementation of these payer restrictions is showing no signs of slowing and, therefore, companies should not automatically assume that their cancer treatment will be covered. So what can manufacturers do to make sure their oncology drugs are being preferred on formularies?

Contracting for placement is key, particularly on the medical side if they have products that fall under that benefit. Attractive rebates, competitive pricing, top-notch patient support services and a compelling value story also may help drugmakers stand out from others within a class.

Manufacturers—even those with established oncolytics—must protect their bottom lines and proactively work to prevent their therapies from being excluded from payer formularies.

© 2024 MMIT
Jayne Hornung

Jayne Hornung

Jayne Hornung is the Chief Clinical Officer at MMIT (Managed Markets Insight & Technology), a trusted go-to-market partner who believes that patients who need lifesaving therapies shouldn't face delays because accessing drugs can be confusing. She is a clinical pharmacist and has been one of MMIT’s clinical subject matter experts for the past 13 years. In her role, she conducts research of drug, indication and policy data and helps MMIT’s clients understand market access from a clinical perspective. You can find her on LinkedIn.

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