CMS Guidance on Formulary Changes During the Plan Year

Both industry best practices and the best interests of Medicare beneficiaries call for limited formulary changes during the benefit year. Formulary stability is extremely important so that enrollees maintain access to the benefit they chose during enrollment as represented to them by the plan.

However, prescription drug use and pricing is constantly evolving, and new drug availability, new medical knowledge, new drug pricing arrangements, and new opportunities for improving safety and quality in prescription drug use at a low cost will inevitably occur over the course of the year. These new developments may require formulary changes during the year in order to provide high-quality, low-cost prescription drug coverage.

Under Part D, no beneficiaries will be subject to a discontinuation or reduction in coverage of the drugs they are currently using, except for clear scientific and cost reasons including the availability of a new generic version of the drug or new FDA or clinical information.

All proposed formulary changes, excluding formulary expansion changes, must be submitted to CMS for review and approval. We will continue to review these requests, as we have been doing, using the principles outlined below, which include a comprehensive review of a formulary each time a change request is submitted. CMS will continue to ensure that each formulary provides a broad range of medically appropriate drugs and does not discriminate or substantially discourage enrollment of certain groups of beneficiaries.

Q: What changes can Part D plans make to their formularies during the plan year?

A: Both industry best practices and the best interests of Medicare beneficiaries call for limited formulary changes during the plan year. We believe that formulary stability is extremely important so that enrollees maintain access to the benefit they chose during enrollment as represented to them by the plan. However, prescription drug therapies are constantly evolving, and new drug availability, new medical knowledge, and new opportunities for improving safety and quality in prescription drug use at a low cost will inevitably occur over the course of the year. As recognized in the statute and regulations, these new developments may require formulary changes during the year in order to provide high-quality, low-cost prescription drug coverage.

1. Part D plans may expand formularies by adding drugs to their formularies, reducing copayments or coinsurance by lowering the tier of a drug, or deleting utilization management requirements any time during the year.
2. Part D plans may not change their therapeutic categories and classes in a formulary other than at the beginning of each plan year, except to account for new therapeutic uses and newly approved Part D drugs.
3. Formulary Maintenance Changes: After March 1, Part D plans may make maintenance changes to their formulary, such as replacing brand-name with new generic drugs or modifying formularies as a result of new information on drug safety or effectiveness. Those changes must be made in accordance with the approval procedures described below and following 60 days notice to CMS, SPAPs, prescribers, network pharmacies, pharmacists and ?affected enrollees?.
4. Other Formulary Changes: Part D plans may only remove Part D drugs from their formulary, move covered Part D drugs to a less preferred tier status, or add utilization management requirements in accordance with the approval procedures described below and following 60 days notice to CMS, SPAPs, prescribers, network pharmacies, pharmacists, and ?affected enrollees?. For these additional types of formulary changes approved by CMS for 2006, Part D plans should make such formulary changes only if enrollees currently taking the affected drug are exempt from the formulary change for the remainder of the plan year. CMS expects that Part D plans will continue to comply with this policy in 2007 and subsequent plan years, and will include such assurances in their future bids and contracts.

1. Removal or placement in less preferred tier of a brand drug upon the availability and addition of an A-rated generic or multi-source brand equivalent, at a lower tier or cost to the beneficiary.
2. Removal of a non-Part D drug inadvertently included on the formulary.
3. Removal of a drug based upon a new FDA ?black box? warning or market withdrawal.
4. Removal or placement in a less preferred tier based upon new clinical guidelines or information recognized by CMS (e.g. CDC?s recommendation against using older antivirals for treatment and prophylaxis of the flu)
5. The addition of utilization management when necessary to effectuate other approved formulary changes (e.g. prior authorization on a brand drug when generic is now available on formulary at a lower cost), to help determine B vs. D coverage (subject to CMS guidance on least burdensome ways to make this determination), or to promote safe utilization of a Part D drug based upon new clinical guidelines or information.

Part D plans will need to provide this type of justification when submitting these formulary change requests, but may assume that change requests based upon these justifications are approved if they do not hear from CMS within 30 days of submission. Part D plans are required to send 60 days notice to CMS, SPAPs, prescribers, network pharmacies, pharmacists, and ?affected enrollees? (except for FDA or manufacturer withdrawals).