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Formulary Decisions: Exploring the Ethics of Drug Approval

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Formularies come into effect at the hospital level and the individual insurer level

When developed and managed with due care and consideration, drug formularies can be a good tool for controlling pharmaceutical – and therefor overall medical – spending. In the old days, formularies were in the hospital purview, but today they are part of the managed care and pharmacy benefits management environments as well.

Formularies are stricter than ever, and gaining approval for drugs not on a formulary can be a daunting task for physicians. It is the classic case of needs being without limit, but resources having definite limits. Therefore, the people who manage formularies must maintain proper tension between moral and professional responsibilities, something that is, to put it mildly, challenging.

Problems with Step Therapy Policies

Step therapy is a common approach to management of formularies, and on the surface, it is easy to see its potential advantages. Patients try an approved, usually less-costly first-line treatment, then step to the second-line treatment if that does not work, and so on.

However, step therapy brings its own set of problems. If a patient does not respond to the first, second, or subsequent therapies as permitted by the formulary, but does respond to an innovative or expensive therapy tried later, how does the time delay in getting them the proper treatment affect outcomes? If patients do not respond to a first-line drug and end up in the hospital because of it, where are the cost savings?

Some states are trying to address these questions by passing patient protections in regard to step therapy policies. Some healthcare systems are designing new models for their formularies that weigh the traditional factors of efficacy, risk, and cost along with factors like patient quality of life and societal benefit.

Benefits and Risks

Benefits and risks should always be the bedrock of formulary design because they are also the bedrock of the physician’s dual responsibilities to do good and avoid harm. When benefit and risk are not further fleshed out in terms of patient quality of life, and due to the simple fact that some people simply do not respond as expected to some medications, formularies can sometimes do more harm than good.

Patients need and want to account for benefits, risks, and out-of-pocket costs.

Further, benefits and risks must also consider the benefits and risks associated with the patient’s cost out of their own pocket. It is not a comfortable subject to address, but it is real and needs to be part of the discussion between physicians and patients.

Cost Transparency

In a perfect world, patients would not worry so much about the cost of specialty drugs needed to manage their health conditions. But they do; most simply have to do so. Physicians do not always know how much various drugs cost, but it is important that physicians and patients discuss costs when deciding on a course of treatment. If a physician insists on going straight to a new, innovative therapy that is expensive (and possibly not covered under the patient’s insurer’s formulary), the ultimate result may be the patient foregoing treatment altogether, and that is often the worst outcome. The average healthcare consumer cannot act as if drug prices do not affect their treatment choices, because they do. Conversations reflecting this need to happen between physicians and their patients.

Ethics Review for Drug Pricing

Formularies may appear to be dry, data-driven documents, but in fact formularies make ethical statements whether they mean to or not. People who make decisions on which drugs are included on formularies, and in what order they must be tried, will have to take a longer-term look at healthcare costs to get the true picture of the costs of less expensive drugs. When less expensive drugs do not work, patients may lose valuable time getting to the drugs that do work, or they may end up back in the hospital, which can easily cost more than even very expensive drugs. The perfect formulary probably does not exist, but an iterative approach to ethics review can help them improve over time.

Drug cost is a sticky problem, and it involves asking difficult questions and facing difficult answers. The ethics of formularies can only improve if formulary managers understand risks and benefits on a long-term basis, if physicians and patients have candid conversations about treatment costs, and if society, in general, is willing to face these questions and realize that no single answer will solve the problem of high drug costs.

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