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Medication Formularies: Navigating the Maze. Anoop Agrawal, M.D. Baylor College of Medicine. Why do drug formularies exist?.

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medication formularies navigating the maze

Medication Formularies:Navigating the Maze

Anoop Agrawal, M.D.

Baylor College of Medicine

why do drug formularies exist
Why do drug formularies exist?
  • Formularies are used by near every institution that provides medical care: hospitals, insurance health plans, city health systems, state governments, Medicaid, Medicare, etc.
  • Provide a means to control the cost and utilization of prescription drugs.
types of formularies
Types of Formularies
  • “Open” – provides coverage for both listed and nonlisted drugs
  • “Closed” – provide coverage only for drugs that are included on the list.
  • Most fall somewhere in between by encouraging use of the “preferred” drugs with a mechanism to request non-preferred drugs.
    • Some systems use a tiered cost-sharing approach
    • For example, generic drugs would be on the lowest tier and have the least expensive co-pay. A second tier would contain brand-name “preferred” drugs. A third tier would have brand-name non-preferred drugs and would have the highest co-pay.
formularies at baylor
Formularies at Baylor
  • Harris County Hospital District – i.e., used by Gold card patients
  • Medicaid
  • Medicare Part D
  • Texas Children’s Hospital - available online only at TCH (also available in a 3” thick book format for lugging around in lab coats)
  • Numerous private insurance plans
harris county hospital district
Harris County Hospital District
  • Formulary is “two-tiered” – preferred drugs and restricted drugs.
  • HCHD receives negotiates contracts with pharmaceutical companies to obtain very competitive pricing – often preferred drugs are purchased for as little as one cent per pill
  • Due to this aggressive contracting, HCHD physicians are not allowed to accept free samples for patient distribution.
  • To obtain a restricted drug, approval must be obtained via the FCC (Formulary Command Center)
hchd continued
HCHD continued
  • Requirements for restricted drugs are available on the HCHD intranet and can be downloaded as a PDF file.
  • HCHD formulary changes frequently – almost every 6 – 12 months, based on pharmaceutical contract negotiations.
  • FCC must be called when ordering med – ext. 33706.
  • Some medications may be further restricted to only certain subspecialists or approval must be received from that subspecialist.
  • The Pharmacy & Therapeutic committee regulates formulary changes.
  • Also employs a “two-tiered” system – preferred and restricted.
  • Known as Medicaid Preferred Drug List (PDL)
    • This list is available as downloadable PDF file
  • Restricted drugs are known as needing “Prior Authorization” or “PA”
  • Health care provider must call 1-877-PA-TEXAS with patients Medicaid number to receive approval.
tx medicaid drug search website
TX Medicaid Drug Search Website


Search in Google: ‘texas medicaid drug search’

Downloadable drug listing: is more cumbersome to use, but lists specific requirements that must be met to receive drugs requiring ‘Prior Authorization.’

example of search results
Example of search results

Typed in ‘loratadine’

If there is a ‘YES’ in either of the last two columns, then the drug requires a call for PRIOR AUTHORIZATION!

This example highlights a medication that is generic and sold over the counter, yet for Medicaid requires a call for approval.

You will see Medicaid patients at BTGH and TCH – so be mindful of your drug selections.

example of pdl file
Example of PDL file

Preferred Drug List is periodically updated. This one page from the most recent update – January 23, 2008. Overall list is 27 pages.

Left side of page lists preferred drugs.

Right side lists drugs requiring Prior Authorization (PA) along with criteria for approval.

Majority of the criteria are simply treatment failure, contraindication or allergy with preferred products.

medicare part d
Medicare Part D
  • This is a little more complicated than HCHD or Medicaid.
  • Part D is the prescription drug plan for Medicare patients
  • All patients 65 yo and older are eligible for Part D. Also any patient who has received Medicare at an earlier age is eligible.
  • All qualifying patients are STRONGLY encouraged by the federal government to enroll.
    • For every year a person delays in enrolling, their premium will increase by 1% for each year they waited.
medicare part d12
Medicare Part D
  • Formulary is a “three-tier” system.
    • Tier 1 – generics
    • Tier 2 – preferred brand names
    • Tier 3 – non-preferred brand names (most expensive)
  • Unlike HCHD and Medicaid, there is not just one Medicare Part D formulary.
    • In Texas, there are approximately over 30 formularies – the patient must pick one formulary from these 30.
    • The formularies are hence forced to compete with each other to offer competitive drug prices.
medicare part d13
Medicare Part D
  • How exactly does it work?
  • There are two groups of seniors:
    • Low-income (living off of or making less than 150% of federal poverty level)
    • Everyone else (i.e., normal plan)
  • Part D works differently for each group
  • Texas figures show approximately 50% of seniors are in low-income category.
example normal plan
Example – Normal Plan

67 yo woman signs up for Plan X which costs $35/month.


Step 1: she will pays 100% for the first $275 retail cost of her meds.

Step 2: For the next $2,235 worth of retail cost, she will pay 25% or $558.75. The plan will cover the other 75%.

Step 3: “The Donut Hole” – she pays 100% of the next $3,216.25 worth of medications.

Step 4: “Catastrophic Coverage”- all generics will cost $2.25, all brand names will cost $5.60.

medicare part d example
Medicare Part D example
  • For the 67 yo woman her total spending out of pocket is as follows:
    • Premium: $35/month x 12 months = $420
    • Deductible (step 1): $275
    • 25/75 (step 2): $558.75
    • Donut Hole (step 3): $3,216.25
    • Total spending thus far: $4,470
  • After donut hole, now in Catastrophic Benefit Period where fixed price for generics ($2.25) and brands ($5.60)
  • All steps must be cycled through annually.
medicare part d low income
Medicare Part D – Low-income
  • Low-income seniors may qualify for ‘EXTRA HELP’ program
  • Social Security Administration will help patient find out if they qualify.
  • If they do, then they may qualify for the following:
    • No monthly premium
    • No initial $275 deductible
    • No donut hole
    • Immediately enter Catastophic Coverage Period: fixed price for generics ($2.25) and brands ($5.60)
  • Depending on their income level, some have a monthly premium priced on a sliding scale and a small deductible ($50)
medicare part d formularies
Medicare Part D formularies
  • When seeing a Medicare patient, you need to find out which plan they have signed up for.
  • If you are prescribing a brand name drug, then you will want to find out if their formulary covers it and at what cost to the patient.
  • Is the patient receiving Extra Help or are they following the traditional model?
finding a drug on the formulary
Finding a drug on the formulary
  • This process can be a lot of work given all the formularies that exist – over 30 Medicare ones, Medicaid and HCHD.
  • Fortunately, there is an excellent resource:
    • Accounts are free for MDs. Use it on a desktop or download the software onto your PDA/iphone and it will be with wherever you go
    • They have ALL federal Medicare plans, Texas Medicaid and near all private plans as well.
    • They do not have TCH or HCHD formularies.
  • Create your account prior to next week’s clinic.
  • Incorporate a method by which your patient obtains their medications as part of their social history.
  • Start learning which plans are most commonly subscribed to and start building your formulary listing in your Epocrates account.
  •, last accessed June 18, 2008.
  •, last accessed June 18, 2008.