The Value of Active Pharmacy Management: Express Scripts 2018 National Preferred Formulary

Once an independent panel of medical experts makes its recommendations, Express Scripts (Nasdaq: ESRX) negotiates with drug makers to ensure the medicines included on our National Preferred Formulary (NPF) are the best combination of clinically appropriate and cost effective. This rigorous process relies on a complex interaction of high-tech data analytics, pharmacological evidence, and predictive modeling to yield clinically sound, cost-effective formularies.  

Express Scripts provides pharmacy benefits to 83 million members. Of these, more than 27 million obtain their pharmacy benefit coverage through one of Express Scripts' standard formularies and more people use the National Preferred Formulary than any other formulary in the U.S.

For the 2018 benefit year, Express Scripts is making specific changes to drug coverage, with 64 new drug exclusions. Taken together with prior year exclusions, the total number of excluded drugs is just 159 out of more than 3,791 available drugs.

The vast majority of patients we serve – 99.22% to be exact – will not see any changes to their drug coverage. Of course, some patients will be asked to use a different medication that achieves the same health outcome at a lower cost. If any patient has a clinical need that requires a medication that is not on the formulary, we have provided a clear pathway to have that drug covered. Our goal is always to make sure a patient gets the medicine that helps them achieve the best outcome.

Because of our formulary strategies, employers who use the NPF are expected to save an additional $2.5 billion in 2018. Collectively, from 2014-2018, Express Scripts expects to save participating NPF clients and patients $7.4 billion because of formulary exclusions.

For an example of how the NPF has evolved, you can look at the experience of Tymlos, a new osteoporosis treatment that was launched this year. Tymlos has similar clinical outcomes as the current market-leading drug, Forteo. However, following discussions and negotiations with Express Scripts, the maker of Tymlos brought it to market at a lower price than Forteo. Excluding Forteo and moving to Tymlos will significantly lower client costs while providing a clinically appropriate alternative.

Formulary management is one way to bring down drug costs. Throughout the 2000s and on into today, increasing generic utilization has helped lower net drug costs for plan sponsors. That generic wave continues, but is now joined by a "formulary wave," where active pharmacy management can deliver greater value to employers, health plans and other plan sponsors who pay the bulk of the pharmacy bill in the United States.

For the first time ever, in 2018, brand drug manufacturers must provide significant savings to be included on the NPF if there are clinically equivalent, lower cost options available. For the 2018 NPF, we focused on high-spend multi-source brand drugs and excluded 46.

SOURCE Express Scripts

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