SUMMER  2001 
Volume 6 / Number 3

Formulary Design for the 21st Century

Terrance Killilea, Pharm.D., Vice President, Pharmacy Services, Regence Blue Shield of Idaho, Regence Blue Cross Blue Shield of Utah

Dr. Terry Killilea noted that rising medical insurance premiums are a serious challenge to American businesses, and is likely to result in the shift of choice and cost to employees and members. The conflict between decreasing corporate profits and increasing prescription drug costs is already driving change and will only increase in the coming years.

Killilea advocates a "value-based, evidence-driven formulary". To illustrate this issue, he presented an analysis of cholesterol lowering medications that combines the annual cost of different drugs with their effectiveness in lowering cholesterol levels. He believes conducting this type of analysis will result in the highest quality, most cost effective formulary.

According to Killilea, many of the top therapeutic classes by cost have major brand drugs going off patent in the coming years. In fact, he said that the top six classes will all have a very good therapeutic agent available in generic form. This will have a significant impact on the design of future formularies.

In summary, for those plan sponsors that have the flexibility to aggressively manage their benefit design, Killilea suggest they and their PBMs can reduce plan sponsor drug costs by aggressively managing their formularies. This includes using value-based, evidence-driven formulary design, taking advantage of generic availability, eliminating "me too" drugs, and putting new drugs on the formulary only if they demonstrate value.

Back to top | PBMnews