What is the sweet spot for non-formulary drugs?

Although the formulary exception is technically a one-off, if a patient needs a refill of the drug within 120 days, that refill—along with all subsequent refills—is also likely to be covered. Once the exception is processed and the prescription is in the patient’s claims history, most claims processing hubs will bypass the exclusion edit. The patient will be able to access the drug indefinitely.

This access trick poses a conundrum for manufacturers. If your non-formulary drug is in the sweet spot—meaning that it’s an inexpensive drug, dispensed from retail pharmacies rather than specialty pharmacies—it may be preferable to stay where you are rather than attempting to get on a plan’s formulary.

While this seems counterintuitive, negotiating with payers to gain formulary placement opens up the possibility that a payer might impose utilization management restrictions on your drug. Physicians might need to submit a prior authorization, subject to review by the plan’s medical director, before the prescription is allowed. Worse yet, the drug might be saddled with step therapy restrictions, which specify that patients must first step through a competitor’s drug before beginning treatment.

Both scenarios are typically much worse for your bottom line than the drug remaining unlisted or on an exclusion list. Essentially, if your drug has the potential to be in the sweet spot, your company will likely fare better by sending sales reps out to educate physicians about your drug’s benefits and general availability, regardless of its lack of formulary placement.

Learn more by reading the full ebook The Essentials of Market Access: How to Build a Strong Commercialization Strategy for Your Pharmacy Benefit Therapy.