PBM Commercial formulary development for the coming year (2021) generally begins in the spring of the prior year (2020).  Historically, the approach to formulary management became more restrictive every year, through additional utilization management, more aggressive member cost sharing, and expanded exclusion lists.  This year, as the industry evolves to address the COVID-19 pandemic, some formulary restrictions loosened through more permissive utilization management, waived copayments for certain products, and more exceptions to normal acquisition processes.  As the formulary development process for 2021 begins, the question is, will the historical trend continue (more restrictions), or will there be efforts to loosen restrictions as a result of COVID-19?

It is important to first consider what actually occurred with respect to the loosening of restrictions.  Basically, it focused on strategies that simplify acquisition (thereby minimizing contact), for both the patient and their health care providers.  These include relaxation of refill too-soon requirements, expanded access to 90-day medication supplies, waiver of some cost-sharing (largely related to COVID-19 treatment) and extension of existing prior authorizations without a reauthorization.  These strategies did not increase the availability of products that PBMs are not currently preferring, nor have they significantly modified initial utilization management requirements.

Market trends suggest that rising unemployment will drive a significant movement (10-20 million lives) of formerly commercially insured beneficiaries to Medicaid.  As a result, PBMs are likely to either see reduced or completely lost profits on these patients if they are not participating in the Medicaid program in some way.  Concurrently, PBM clients are likely to see a surge in costs toward the end of 2020, secondary to deferred care and potentially worsened chronic conditions.  These downstream clients will likely pressure PBMs to assist with cost containment rather than relax controls.

Given that the current strategies are relatively limited in their relaxation of formulary restrictions, and that there are trends that suggest negative financial impacts for PBMs and their clients, it seems reasonable that PBMs will at least maintain their current approach to formulary management.  Utilization management programs will not be relaxed, beyond simplified reauthorization, and exclusion lists are unlikely to be reduced.  Even the occurrence of an early (late summer), and significant, second wave of COVID-19 cases would unlikely result in a loosening of formulary controls, based on the timing for formulary distribution.

As a final thought, there are at least 2 nuances to the general idea that PBM formulary management will largely continue. First, if PBMs are considering expanding their exclusion lists into any new, more challenging classes (eg, HIV, oncology), they may defer those plans until a later date.  Second, it is also reasonable to assume that incumbent products may have an easier time maintaining their position, given that PBMs may be unwilling to cause any significant disruptions to their membership.


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