Red flag raised on CMS indication–based formulary design policy


Physician groups are expressing concerns regarding a new policy that will allow indication-based formulary design in the Medicare Part D prescription drug benefit.

Pills and capsules atop a spread of $100 bills Kenishirotie/Thinkstock

The Centers for Medicare & Medicaid Services announced the new policy in an Aug. 29 memo to Part D plan sponsors.

According to a fact sheet issued by CMS on the same day, indication-based formulary design “is a formulary management tool that allows health plans to tailor on-formulary coverage of drugs predicated on specific indications.”

Current Part D policy requires plan sponsors to cover all Food and Drug Administration–approved indications for each drug that is on a plan formulary. Sponsors can begin to implement the new indication-based formulary design policy for plans issued in 2020.

The memo notes that if a Part D plan sponsor chooses to opt into this policy, “it must ensure that there is another therapeutically similar drug on formulary for the nonformulary indication. For example, if a tumor necrosis factor (TNF) blocker is FDA-approved for both Crohn’s disease and plaque psoriasis, but the Part D plan will include it on formulary for plaque psoriasis only, the plan must ensure that there is another TNF blocker on formulary that will be covered for Crohn’s disease.”

Beneficiaries can use the exceptions process to get coverage for a drug that has an indication not on the formulary.

Seema Verma CMS

Seema Verma

“By allowing Medicare’s prescription drug plans to cover the best drug for each patient condition, plans will have more negotiating power with drug companies, which will result in lower prices for Medicare beneficiaries,” CMS Administrator Seema Verma said in a statement.

However, physician groups see this more as something that could create access issues for patients.

The “proposed changes will exacerbate many of the access issues patients currently face with plan usage of existing utilization management practices, such as step therapy,” the American College of Rheumatology said in a statement. “Unlike step therapy, which often delays effective treatments, this proposal would go even further and allow plans to remove therapies from the formulary altogether, leaving patients completely unable to access treatments that doctors and patients choose together. ... We also have concerns on what this would mean for work being done on compendia inclusion to secure off-label drug coverage if plans don’t have to cover all approved FDA-approved indications.”

The ACR called on CMS to clarify the exception process to make sure patients have access to their needed drugs.

The American Medical Association agreed.

Dr. Barbara McAneny, AMA President

Dr. Barbara McAneny

“Under the plan, Medicare patients will face increased challenges as they navigate health plans to make sure that their needed drug is on their selected formulary, which can change based on what health conditions they have,” AMA President Barbara McAneny, MD, said in a statement. “While the CMS notice included a statement that plans had to include information addressing indication-based formularies in materials provided to prospective enrollees, that is not much help to patients who are not sophisticated in how formularies work.”

Dr. McAneny added that it will be even more difficult for physicians who are working with patients to get them on the best medicines covered by the patient’s formulary.

“Physicians already lack ready access to accurate formulary information – preferred/tier status, on/off formulary, PA [prior authorization] and step therapy requirements – at the point of care in their EHRs,” she said. “These transparency problems will expand by an order of magnitude by the complications this change introduces.”

She also noted that it could be difficult for patients who have multiple chronic conditions to find a drug plan that covers the range of their medications, although CMS said the move is expected to increase the number of drugs available on a given plan’s formulary.


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