CFSP Certification Review

Certified Formulary Strategy Pharmacist (CFSP) Review

A Review Guide for the Certified Formulary Strategy Pharmacist (CFSP) Exam

Block 1: Foundations of Formulary Management

A-C

  • ACA: Affordable Care Act.
  • AMCP: Academy of Managed Care Pharmacy.
  • AMP: Average Manufacturer Price.
  • AWP: Average Wholesale Price.
  • BIA: Budget Impact Analysis.
  • BPCIA: Biologics Price Competition and Innovation Act.
  • CEA: Cost-Effectiveness Analysis.
  • CER: Comparative Effectiveness Research.
  • CMS: Centers for Medicare & Medicaid Services.
  • CUA: Cost-Utility Analysis.

D-H

  • DUR: Drug Utilization Review.
  • EBM: Evidence-Based Medicine.
  • EHR: Electronic Health Record.
  • FDA: Food and Drug Administration.
  • FDAMA: Food and Drug Administration Modernization Act.
  • FFS: Fee-For-Service.
  • HEDIS: Healthcare Effectiveness Data and Information Set.
  • HEOR: Health Economics and Outcomes Research.
  • HMO: Health Maintenance Organization.
  • HTA: Health Technology Assessment.

I-N

  • ICER: Institute for Clinical and Economic Review.
  • IDN: Integrated Delivery Network.
  • IND: Investigational New Drug.
  • MA-PD: Medicare Advantage Prescription Drug Plan.
  • MAC: Maximum Allowable Cost.
  • MCO: Managed Care Organization.
  • MTM: Medication Therapy Management.
  • NCCN: National Comprehensive Cancer Network.
  • NCQA: National Committee for Quality Assurance.
  • NDA: New Drug Application.

P-Q

  • P&T: Pharmacy and Therapeutics (Committee).
  • PA: Prior Authorization.
  • PBM: Pharmacy Benefit Manager.
  • PCORI: Patient-Centered Outcomes Research Institute.
  • PDP: Prescription Drug Plan.
  • PDL: Preferred Drug List.
  • PhRMA: Pharmaceutical Research and Manufacturers of America.
  • PMPM: Per Member Per Month.
  • PPO: Preferred Provider Organization.
  • QALY: Quality-Adjusted Life Year.
  • QL: Quantity Limit.

R-Z

  • RCT: Randomized Controlled Trial.
  • REMS: Risk Evaluation and Mitigation Strategy.
  • ROI: Return on Investment.
  • RWE: Real-World Evidence.
  • SNDA: Supplemental New Drug Application.
  • ST: Step Therapy.
  • UM: Utilization Management.
  • URAC: Utilization Review Accreditation Commission.
  • VBC: Value-Based Contracting.
  • WAC: Wholesale Acquisition Cost.

Definition and Purpose of a Formulary

  • A formulary is a continually updated list of medications covered by a health plan, hospital, or other healthcare organization.
  • Its primary purpose is to promote the use of safe, effective, and affordable medications.
  • It is a strategic tool for managing drug utilization and controlling pharmacy costs.
  • The formulary system is the entire process of developing, maintaining, and implementing the drug list.
  • This system includes policies, procedures, and clinical guidelines that govern medication use.
  • A CFSP understands that a formulary is more than a list; it is a dynamic clinical and financial management system.
  • The ultimate goal is to optimize patient outcomes while ensuring the responsible use of resources.

The Pharmacy & Therapeutics (P&T) Committee

  • The P&T Committee is the multidisciplinary body responsible for all aspects of the formulary system.
  • It is typically composed of physicians, pharmacists, nurses, and administrators.
  • The committee's primary function is to make evidence-based decisions about which drugs to include on the formulary.
  • They are responsible for developing all medication use policies, including utilization management criteria.
  • The P&T committee provides a formal structure for objective, unbiased decision-making.
  • A CFSP is a key leader within the P&T committee structure, often serving as the secretary or a voting member.
  • They are responsible for preparing the evidence and analysis that the committee uses to make its decisions.

Principles of Evidence-Based Medicine (EBM)

  • All formulary decisions must be grounded in the principles of EBM.
  • EBM is the conscientious, explicit, and judicious use of current best evidence in making decisions about the care of individual patients.
  • This involves a hierarchy of evidence, with systematic reviews and randomized controlled trials (RCTs) at the top.
  • The P&T committee evaluates a drug's safety and efficacy based on a critical appraisal of the available clinical literature.
  • A CFSP must be an expert in literature evaluation and the principles of EBM.
  • This evidence-based foundation is what gives the formulary its clinical credibility.

The Role of Health Economics

  • In addition to clinical evidence, formulary decisions are also based on economic evidence.
  • Health Economics and Outcomes Research (HEOR) is the discipline that evaluates the economic value of medical interventions.
  • The P&T committee will consider a drug's cost-effectiveness and its potential impact on the health plan's budget.
  • This does not mean choosing the cheapest drug, but the one that provides the best value for the money.
  • A CFSP must be proficient in interpreting economic models like Cost-Effectiveness Analyses (CEAs) and Budget Impact Analyses (BIAs).
  • The formulary strategy must balance clinical outcomes with financial sustainability.

Managed Care Pharmacy Principles

  • Formulary management is a core function of managed care pharmacy.
  • The goal is to manage the health of a defined population of members.
  • This population health perspective is different from the individual patient focus of traditional pharmacy.
  • Formulary strategy is designed to guide the prescribing for the entire population toward the most effective and valuable therapies.
  • This is achieved through a combination of formulary design, utilization management, and clinical programs.
  • A CFSP applies these managed care principles to develop a comprehensive formulary strategy.

Block 2: Drug Evaluation & Evidence Assessment

The Drug Monograph

  • The drug monograph is the comprehensive, evidence-based document that serves as the basis for a P&T committee decision.
  • It is prepared by a clinical pharmacist (often a CFSP).
  • It provides an unbiased summary of all the available information about a drug.
  • The monograph includes sections on pharmacology, clinical efficacy, safety, and economic considerations.
  • It concludes with a recommendation for formulary placement.
  • The quality and objectivity of the monograph are critical for a sound P&T decision.

Literature Evaluation

  • A key part of preparing a monograph is conducting a thorough and systematic literature review.
  • The CFSP must be able to search databases like PubMed to identify all relevant clinical trials.
  • They must then critically appraise these trials for their quality and validity.
  • This involves assessing the study design, internal and external validity, and statistical analysis.
  • The goal is to synthesize the findings from all the available studies to get a clear picture of the drug's efficacy and safety.
  • This is a core clinical skill for a formulary strategist.

Comparative Effectiveness Research (CER)

  • CER is the direct comparison of two or more effective treatments.
  • This is the most useful type of evidence for a P&T committee, as they are always making a choice between alternatives.
  • A study that compares a new drug to the current standard of care is much more valuable than one that compares it to a placebo.
  • The CFSP actively seeks out and prioritizes head-to-head trials in their monograph.
  • The findings from organizations like PCORI are a key source of CER.

Therapeutic Class Reviews

  • In addition to reviewing new drugs, P&T committees also conduct regular reviews of entire therapeutic classes.
  • This involves a comprehensive review of all drugs in a class (e.g., all statins).
  • The goal is to ensure the formulary is still aligned with the latest clinical evidence and guidelines.
  • A class review may lead to changes in preferred agents or the addition of new utilization management criteria.
  • A CFSP is responsible for preparing the extensive documentation needed for these class reviews.

The AMCP Dossier Format

  • The Academy of Managed Care Pharmacy (AMCP) has developed a standardized format for manufacturers to submit formulary information.
  • The AMCP Format provides a structured way for manufacturers to present their clinical and economic evidence.
  • This dossier is the starting point for the CFSP's own independent review.
  • While it is a valuable resource, the CFSP must always critically appraise the information, as it is coming from a biased source.
  • Understanding the structure of the AMCP Format is a key competency.

The ECHO Model

  • The ECHO (Economic, Clinical, and Humanistic Outcomes) model is a framework for a comprehensive assessment of a drug's value.
  • Economic: The impact on total healthcare costs.
  • Clinical: The impact on traditional medical endpoints (e.g., mortality, lab values).
  • Humanistic: The impact on patient-reported outcomes, such as quality of life and satisfaction.
  • A CFSP uses this model to ensure their drug reviews consider all aspects of value.

Cost-Effectiveness Analysis (CEA)

  • CEA compares the costs and outcomes of different interventions.
  • The result is an Incremental Cost-Effectiveness Ratio (ICER), which is the cost per unit of health gained (e.g., cost per life-year saved).
  • When the outcome is measured in Quality-Adjusted Life Years (QALYs), it is a Cost-Utility Analysis (CUA).
  • A CFSP must be able to interpret these analyses to assess a drug's economic value.
  • They must also be able to critically appraise the assumptions used in the economic model.

Budget Impact Analysis (BIA)

  • A BIA forecasts the financial consequences of adopting a new drug for a specific health plan.
  • It answers the question: "How will this decision affect our budget over the next few years?"
  • It considers the drug's price, the size of the eligible population, and any cost offsets.
  • A drug can be cost-effective but still have a very high budget impact.
  • The BIA is a critical tool for financial planning.
  • A CFSP must be able to develop or critically evaluate a BIA.

Real-World Evidence (RWE)

  • RWE is evidence derived from the analysis of Real-World Data (RWD), such as insurance claims and EHRs.
  • It provides insights into how a drug performs in a routine clinical practice, as opposed to the controlled environment of an RCT.
  • HEOR studies are increasingly using RWE.
  • A CFSP uses RWE to understand the real-world value of a medication for their specific patient population.
  • They must understand the methodological challenges of working with RWD.

The Role of ICER

  • The Institute for Clinical and Economic Review (ICER) is an independent organization that conducts detailed HEOR analyses of new drugs.
  • Their reports are highly influential in the managed care world.
  • P&T committees often use ICER's reports as a key piece of evidence in their own reviews.
  • ICER calculates a value-based price benchmark for each drug it reviews.
  • A CFSP must be familiar with ICER's methodology and be able to critically appraise their reports.

Committee Structure and Membership

  • An effective P&T committee has a diverse, multidisciplinary membership.
  • This must include practicing physicians from a range of key specialties.
  • It must include pharmacists with both clinical and operational expertise.
  • Other members can include nurses, administrators, and quality improvement specialists.
  • The committee should have a formal charter that outlines its structure, roles, and responsibilities.
  • A CFSP is often involved in recruiting and orienting new committee members.

Managing Conflicts of Interest

  • All P&T committee members must be free from significant conflicts of interest.
  • The committee must have a formal, written policy for managing conflicts of interest.
  • All members must disclose any financial relationships with pharmaceutical manufacturers on a regular basis.
  • A member with a direct conflict related to a drug being reviewed must recuse themselves from the discussion and vote.
  • Maintaining objectivity is essential for the committee's credibility.
  • The CFSP is often responsible for managing this disclosure and recusal process.

Meeting Planning and Facilitation

  • A well-run P&T meeting is the key to effective decision-making.
  • The CFSP is responsible for planning the meeting agenda.
  • All materials, including the drug monographs, must be sent to the members well in advance of the meeting.
  • The CFSP often facilitates the meeting, presenting the clinical and economic evidence.
  • They must be skilled at guiding a discussion among a group of experts with strong opinions.
  • The meeting must be run according to a set of formal rules (e.g., Robert's Rules of Order).

Documentation and Minutes

  • The proceedings of the P&T committee must be thoroughly documented.
  • Detailed meeting minutes must be taken.
  • The minutes should record the key points of the discussion, the final decision, and the vote count.
  • These minutes are a critical legal and regulatory document.
  • They provide an auditable record of the evidence-based decision-making process.
  • The CFSP is typically responsible for writing and maintaining the official minutes.

Communicating P&T Decisions

  • After the meeting, the P&T committee's decisions must be communicated to all stakeholders.
  • This includes updating the official formulary document.
  • It involves communicating changes to prescribers, pharmacists, and members.
  • The rationale for the decision should be communicated clearly.
  • The CFSP is responsible for developing and executing this communication plan.
  • This final step is crucial for the successful implementation of the committee's decisions.

Block 3: Formulary Design & Utilization Management

Open vs. Closed Formularies

  • Open Formulary: Nearly all drugs are covered, but cost-sharing may vary. This provides broad access but less cost control.
  • Closed Formulary: Only drugs on the formulary list are covered. Non-formulary drugs are not covered at all without a formal exception. This provides strong cost control but is more restrictive for patients.
  • Most commercial plans use a closed or partially closed model.
  • Medicaid and Medicare Part D have rules that require a more open formulary structure.
  • A CFSP must understand the strategic implications of this fundamental design choice.

Tiered Benefit Design

  • Tiering is the most common tool for formulary design.
  • It involves grouping drugs into tiers with different patient cost-sharing levels.
  • Tier 1 (Preferred Generics): Lowest copay.
  • Tier 2 (Preferred Brands): Medium copay.
  • Tier 3 (Non-Preferred Brands): Highest copay.
  • Tier 4/5 (Specialty Tier): Often uses coinsurance instead of a copay.
  • This design financially incentivizes members to use the most cost-effective medications.
  • A CFSP is responsible for the strategic placement of drugs into these tiers.

Preferred Drug Lists (PDLs)

  • A PDL is a list of the specific drugs that a health plan prefers within a therapeutic class.
  • These are the drugs that are placed on the lower-cost tiers.
  • The choice of preferred drugs is based on both clinical evidence and the rebate negotiated with the manufacturer.
  • Drugs not on the PDL are either non-preferred (higher tier) or may require step therapy.
  • The PDL is the primary tool for steering market share towards the most cost-effective agents.
  • A CFSP manages the development and maintenance of the PDL.

Formulary Exclusions

  • A more aggressive formulary strategy is to exclude certain high-cost brand drugs entirely.
  • This is typically done when there are multiple, clinically equivalent drugs in a class.
  • The PBM will negotiate with the manufacturers and exclude the drugs from the companies that do not offer the best rebate.
  • This is a powerful tool for increasing negotiating leverage.
  • However, it can be disruptive for patients and providers.
  • A CFSP must conduct a thorough clinical and financial analysis before recommending an exclusion.

Medical vs. Pharmacy Benefit Formularies

  • Historically, the pharmacy benefit had a tightly managed formulary, while the medical benefit was less managed.
  • With the rise of high-cost, provider-administered specialty drugs, this is changing.
  • Health plans are now actively managing the drugs on their medical benefit.
  • This can include creating a PDL for provider-administered drugs.
  • It also involves implementing prior authorization for these drugs.
  • A CFSP's role is expanding to include the strategic management of the medical benefit formulary.
  • This requires a different set of tools and a close collaboration with the medical management department.

Prior Authorization (PA) Strategy

  • PA is a core UM tool. The formulary strategy defines which drugs will require a PA.
  • The strategy should be targeted to drugs that are high-cost, have a high potential for misuse, or have very specific indications.
  • Applying PAs too broadly can create excessive administrative burden ("PA fatigue").
  • The clinical criteria for the PA must be evidence-based and developed by the P&T committee.
  • The CFSP is responsible for designing a PA program that is both clinically sound and administratively efficient.
  • This includes leveraging ePA to streamline the process.

Step Therapy (ST) Strategy

  • ST is used for chronic conditions where there are multiple treatment options with different costs.
  • The strategy involves defining a clear, evidence-based "step" progression.
  • For example, Step 1 might be a generic, Step 2 a preferred brand, and Step 3 a non-preferred brand.
  • The P&T committee must approve the clinical logic for these steps.
  • The program must also have a clear and timely process for overriding the step therapy when medically necessary.
  • A CFSP designs these protocols to promote cost-effective prescribing.

Quantity Limit (QL) Strategy

  • QLs are used to ensure safe and appropriate dosing and to prevent waste.
  • The limits are based on the FDA-approved labeling, clinical guidelines, and package sizes.
  • For example, a QL for a triptan for migraines might be set at 9 tablets per month.
  • Like other UM tools, there must be an exception process for when a higher quantity is medically necessary.
  • A CFSP is responsible for developing and maintaining the plan's QL policies.
  • This requires a regular review to ensure the limits are still clinically current.

Formulary Exception Process Design

  • All plans must have a formal process for prescribers to request an exception to the formulary or other UM edits.
  • This is a key patient protection required by CMS and state regulators.
  • The process must be clear, accessible, and timely.
  • The plan must have a standard turnaround time for making a decision.
  • The PA process is the operational workflow for handling these exception requests.
  • A CFSP is responsible for designing a process that is both compliant and efficient.

Integration of UM Tools

  • The most effective UM strategy is one that integrates all of these tools.
  • A single drug may be subject to multiple edits.
  • For example, a specialty drug might be on a high tier, require a PA, and have a quantity limit.
  • The formulary strategy must consider how these different tools interact.
  • The goal is to create a comprehensive system that guides prescribing towards the most valuable therapies.
  • A CFSP must have a holistic view of how all the pieces of the UM strategy fit together.

The Role of Rebates in Formulary Placement

  • Rebates are a primary driver of formulary decisions in the commercial market.
  • A PBM's ability to negotiate large rebates is a key part of its value proposition to health plans.
  • The formulary strategy is designed to shift market share to the drugs that provide the highest net savings after rebates.
  • This means that the drug with the lowest list price is not always the preferred drug.
  • A CFSP must be an expert at analyzing the financial impact of rebates.

Rebate Contracting Strategy

  • The PBM's contracting team negotiates rebate agreements with manufacturers.
  • The strategy is to create competition within a therapeutic class.
  • The PBM will often offer preferred status to only one or two drugs in a class.
  • This forces the manufacturers to compete on the size of the rebate they are willing to offer.
  • The contract may include performance guarantees, where the rebate is tied to achieving a certain market share.
  • A CFSP provides the clinical and financial analysis that supports this negotiating strategy.

Analyzing Net Costs

  • The most important financial metric for a formulary decision is the net cost of the drug.
  • Net Cost = Wholesale Acquisition Cost (WAC) - Manufacturer Rebate.
  • The P&T committee must compare the net costs of all drugs in a class.
  • The CFSP is responsible for preparing this net cost analysis.
  • This requires working with the PBM's industry relations team to get the confidential rebate information.
  • This analysis is a key input for the P&T decision.

Formulary Modeling

  • Before making a major formulary change, a PBM will conduct a formulary model.
  • This is a sophisticated analysis that projects the total financial impact of the change.
  • It considers the expected shift in market share from the non-preferred to the preferred drug.
  • It models the change in both gross drug spend and rebate revenue.
  • It also considers the potential for disruption for members and providers.
  • A CFSP is a key leader in conducting these complex models.

Value-Based Contracting as a Rebate Strategy

  • Value-based contracts are an evolution of the traditional rebate model.
  • Instead of being based only on market share, the rebate is also tied to the drug's real-world performance.
  • This aligns the financial incentives more closely with clinical outcomes.
  • For example, the rebate might be larger if a diabetes drug does not meet its target for A1c reduction.
  • A CFSP is involved in designing the clinical metrics for these contracts.
  • This is an advanced and growing area of formulary strategy.

The Challenge of Specialty Drugs

  • Specialty drugs now account for over 50% of total drug spending for many health plans, despite being used by only 1-2% of the population.
  • Managing this spend is the single biggest challenge and priority for any formulary strategist.
  • This requires a multi-faceted strategy that goes beyond standard formulary tools.
  • A CFSP must have deep expertise in specialty drug management.

Medical vs. Pharmacy Benefit Management

  • A key strategy is to manage specialty drugs across both the medical and pharmacy benefits.
  • This requires integrating the management of these two historically separate areas.
  • A common strategy is to move a drug from the medical benefit ("buy and bill") to the pharmacy benefit.
  • This allows the PBM to apply its formulary and UM tools to control the drug.
  • This is a complex process that requires collaboration between the health plan's medical and pharmacy departments.
  • A CFSP is a key leader in this integration effort.

Site of Care Management

  • This is a strategy for managing provider-administered specialty drugs.
  • It involves incentivizing or requiring patients to receive their infusions in a lower-cost setting.
  • The lowest cost settings are typically the patient's home or a free-standing infusion center.
  • The highest cost setting is the hospital outpatient department.
  • The formulary strategy can be designed to only cover a drug when it is administered in a preferred site of care.
  • A CFSP must analyze the cost differentials and design these policies.

Limited and Preferred Networks

  • For specialty drugs on the pharmacy benefit, payers use limited or preferred specialty pharmacy networks.
  • They may require a patient to use the PBM's own specialty pharmacy.
  • This allows the PBM to have greater control over the dispensing process and to capture more data.
  • It also allows them to capture the dispensing margin.
  • A CFSP is involved in the strategic design of these specialty networks.

High-Touch Clinical Management

  • Effective specialty management is not just about cost control; it is also about clinical management.
  • Health plans have dedicated teams of clinical pharmacists and nurses who work with specialty patients.
  • They provide education, monitor for side effects, and promote adherence.
  • This high-touch model is designed to improve outcomes and reduce the total cost of care.
  • A CMCP is often the leader of this clinical management team.
  • The formulary strategy must be integrated with this clinical strategy.

The Importance of a Communication Plan

  • A formulary decision is not fully implemented until it has been effectively communicated to all stakeholders.
  • A formal communication plan is a critical part of the formulary management process.
  • The plan must identify all audiences, the key messages for each, and the channels to be used.
  • A CFSP is responsible for developing and executing this plan.
  • Poor communication can lead to confusion, provider abrasion, and member dissatisfaction.

Communicating to Members

  • Members must be notified of any negative formulary changes that affect a drug they are currently taking.
  • This is a regulatory requirement for Medicare Part D.
  • The notification must be sent in writing at least 60 days before the change takes effect.
  • The letter must explain the change, list the alternative drugs that are still covered, and explain the right to request a formulary exception.
  • The language must be clear, simple, and easy to understand.
  • A CFSP is responsible for overseeing this member notification process.

Communicating to Providers

  • Providers must also be notified of formulary changes.
  • This allows them to adjust their prescribing to align with the new formulary.
  • Communication channels can include faxes, emails, newsletters, and web portals.
  • The communication should be proactive and provide clear clinical and administrative guidance.
  • For a major change, a health plan may deploy its team of clinical liaisons to visit high-volume prescribers.
  • A CFSP is responsible for developing the content for these provider communications.

Communicating to Pharmacies

  • Pharmacies are on the front lines of implementing formulary changes.
  • They are the ones who see the rejected claims at the point of sale.
  • PBMs communicate formulary information to pharmacies through their claims processing systems.
  • They also provide information through provider manuals and web portals.
  • Clear communication helps the pharmacist to explain the change to the patient and to contact the prescriber if needed.
  • A CFSP must ensure that the operational details of a formulary change are clearly communicated to the pharmacy network.

Internal Communication

  • Internal communication within the health plan is also critical.
  • The customer service department must be trained on the formulary changes so they can answer member questions.
  • The case management team needs to be aware of changes that affect their high-risk patients.
  • The provider relations team needs to be able to explain the changes to their network providers.
  • The CFSP is responsible for ensuring that all internal departments are aligned and have the information they need to manage the change.
  • This requires strong internal collaboration and project management skills.

Block 4: Formulary Design & Utilization Management

Tiering Strategy

  • Tiering is the most fundamental formulary design strategy.
  • The number of tiers can vary, from simple 2-tier (generic/brand) to complex 6-tier designs.
  • A common structure is: Tier 1 (Preferred Generic), Tier 2 (Non-Preferred Generic), Tier 3 (Preferred Brand), Tier 4 (Non-Preferred Brand), Tier 5 (Specialty).
  • The copayment or coinsurance increases with each tier.
  • The strategic placement of a drug on a specific tier is a key P&T committee decision.
  • This decision is based on clinical evidence, alternatives, and the negotiated rebate.
  • A CFSP models the impact of different tiering structures on member cost-sharing and plan costs.

Formulary Exclusions

  • An exclusion strategy involves not covering certain drugs at all.
  • This is the most aggressive form of formulary management.
  • It is typically used for brand-name drugs in a class where there are multiple, clinically similar alternatives ("me-too" drugs).
  • The PBM will exclude the drugs from manufacturers who do not provide a competitive rebate.
  • This strategy gives the PBM enormous negotiating leverage.
  • A CFSP must conduct a thorough clinical review to ensure that an exclusion will not have a negative impact on patient care.
  • There must be a clear and timely formulary exception process for patients who medically require an excluded drug.

Preferred vs. Non-Preferred Drugs

  • Within a therapeutic class, the formulary will designate certain drugs as "preferred."
  • These are the agents that the plan wants members and providers to use first.
  • They are placed on a lower-cost tier (e.g., Tier 2 or 3).
  • "Non-preferred" drugs are still on the formulary but have a higher cost-sharing (e.g., Tier 4).
  • The choice of preferred vs. non-preferred is based on a combination of clinical evidence and net cost after rebates.
  • A CFSP is responsible for the analysis that supports these placement decisions.

Benefit Design Integration

  • The formulary does not exist in a vacuum; it is part of the overall health benefit design.
  • The formulary strategy must be integrated with the design of deductibles, copayments, and coinsurance.
  • For example, a plan with a high deductible will expose the patient to the full cost of the drug until the deductible is met.
  • A CFSP must model how changes in benefit design will impact member behavior and drug utilization.
  • This requires collaboration with the actuaries and benefits team at the health plan.

Management of Compound Medications

  • Compounded medications pose a unique challenge for formulary management.
  • Many PBMs have implemented strict policies to manage the high cost of compounds.
  • This often involves creating a list of non-covered bulk chemical ingredients.
  • The PBM will only reimburse for compounds made from covered, FDA-approved drug products.
  • There may be a PA requirement for all compounded claims.
  • A CFSP would be involved in developing the clinical and financial strategy for managing compounded drugs.

Prior Authorization (PA)

  • PA is a process that requires pre-approval for a drug before it will be covered.
  • The formulary strategy dictates which drugs require a PA.
  • The CFSP is responsible for developing the evidence-based clinical criteria that are used to review PA requests.
  • These criteria are reviewed and approved by the P&T committee.
  • The goal is to design criteria that ensure the drug is being used for a medically necessary and appropriate indication.
  • The criteria should be specific, objective, and based on clinical guidelines.

Step Therapy (ST)

  • ST requires the trial and failure of one or more preferred, first-line drugs before a second-line drug is covered.
  • The formulary strategy involves designing these step protocols.
  • The choice of the first-line agent must be based on strong clinical evidence and cost-effectiveness.
  • The CFSP must define what constitutes an adequate trial (e.g., dose and duration) and what constitutes a failure (e.g., lack of efficacy or adverse event).
  • The ST protocol must be approved by the P&T committee.

Quantity Limits (QLs)

  • QLs are limits on the amount of a drug that can be dispensed per prescription or per month.
  • The formulary strategy for QLs is based on safety and efficiency.
  • The limits are typically based on the FDA-approved labeling, clinical trial data, and standard dosing regimens.
  • For opioids, QLs are a key tool for preventing abuse and diversion.
  • A CFSP is responsible for the clinical research that supports the setting of these limits.

Drug Utilization Review (DUR)

  • DUR is a broader review of prescribing and dispensing patterns.
  • Prospective DUR: Real-time checks at the point of sale for issues like drug interactions or therapeutic duplication.
  • Retrospective DUR: Analysis of claims data to identify patterns of inappropriate use (e.g., overuse of antibiotics).
  • The CFSP is involved in designing the clinical rules and edits that drive the DUR program.
  • The findings from the retrospective DUR are often used to develop educational interventions for providers.

Formulary Exception Process

  • All UM programs must have a formal exception process.
  • This allows a prescriber to request coverage for a non-preferred drug or a higher quantity if it is medically necessary for a specific patient.
  • The PA process is the operational workflow for these exception requests.
  • The CFSP helps to design the clinical criteria for approving an exception.
  • For example, an exception to a step therapy requirement could be granted if the patient has a contraindication to the first-line agent.
  • A well-designed exception process is a key regulatory and accreditation requirement.

The Role of Rebates in Formulary Strategy

  • Rebates are payments from manufacturers to PBMs/payers in exchange for favorable formulary status.
  • They are the primary tool used by PBMs to lower the net cost of brand-name drugs.
  • The formulary strategy is designed to maximize these rebate revenues.
  • This involves creating competition among manufacturers within a therapeutic class.
  • The CFSP must be an expert at balancing the clinical evidence with the financial impact of rebates.

Rebate Contracting Strategy

  • The PBM's industry relations team negotiates rebate contracts.
  • The strategy is to offer preferred status to only one or two drugs in a class, forcing manufacturers to compete on price.
  • The contract may include performance guarantees based on market share.
  • The CFSP provides the clinical analysis to support this strategy (e.g., "Are these drugs clinically interchangeable enough to create competition?").
  • They also provide the financial modeling to determine the target rebate needed to make a drug cost-effective.

Analyzing Net Costs

  • The most important financial metric for a formulary decision is the net cost.
  • Net Cost = Wholesale Acquisition Cost (WAC) - Manufacturer Rebate.
  • The P&T committee must compare the net costs of all drugs in a class.
  • The CFSP is responsible for preparing this net cost analysis, which is highly confidential.
  • This analysis is a key input for the P&T decision.

Formulary Modeling

  • Before making a major formulary change, a PBM will conduct a formulary model.
  • This is a sophisticated analysis that projects the total financial impact of the change.
  • It considers the expected shift in market share from the non-preferred to the preferred drug.
  • It models the change in both gross drug spend and rebate revenue.
  • It also considers the potential for disruption for members and providers.
  • A CFSP is a key leader in conducting these complex models.

Value-Based Contracting as a Rebate Strategy

  • Value-based contracts are an evolution of the traditional rebate model.
  • Instead of being based only on market share, the rebate is also tied to the drug's real-world performance.
  • This aligns the financial incentives more closely with clinical outcomes.
  • For example, the rebate might be larger if a diabetes drug does not meet its target for A1c reduction.
  • A CFSP is involved in designing the clinical metrics for these contracts.
  • This is an advanced and growing area of formulary strategy.

The Challenge of Specialty Drugs

  • Specialty drugs now account for over 50% of total drug spending for many health plans.
  • Managing this spend is the single biggest challenge and priority for any formulary strategist.
  • This requires a multi-faceted strategy that goes beyond standard formulary tools.
  • A CFSP must have deep expertise in specialty drug management.

Medical vs. Pharmacy Benefit Management

  • A key strategy is to manage specialty drugs across both the medical and pharmacy benefits.
  • This requires integrating the management of these two historically separate areas.
  • A common strategy is to move a drug from the medical benefit ("buy and bill") to the pharmacy benefit.
  • This allows the PBM to apply its formulary and UM tools to control the drug.
  • This is a complex process that requires collaboration between the health plan's medical and pharmacy departments.
  • A CFSP is a key leader in this integration effort.

Site of Care Management

  • This is a strategy for managing provider-administered specialty drugs.
  • It involves incentivizing or requiring patients to receive their infusions in a lower-cost setting.
  • The lowest cost settings are typically the patient's home or a free-standing infusion center.
  • The highest cost setting is the hospital outpatient department.
  • The formulary strategy can be designed to only cover a drug when it is administered in a preferred site of care.
  • A CFSP must analyze the cost differentials and design these policies.

Limited and Preferred Networks

  • For specialty drugs on the pharmacy benefit, payers use limited or preferred specialty pharmacy networks.
  • They may require a patient to use the PBM's own specialty pharmacy.
  • This allows the PBM to have greater control over the dispensing process and to capture more data.
  • It also allows them to capture the dispensing margin.
  • A CFSP is involved in the strategic design of these specialty networks.

High-Touch Clinical Management

  • Effective specialty management is not just about cost control; it is also about clinical management.
  • Health plans have dedicated teams of clinical pharmacists and nurses who work with specialty patients.
  • They provide education, monitor for side effects, and promote adherence.
  • This high-touch model is designed to improve outcomes and reduce the total cost of care.
  • A CFSP's formulary strategy must be integrated with this clinical strategy.

The "Buy and Bill" Challenge

  • Historically, drugs administered by a provider were managed under the medical benefit using the "buy and bill" process.
  • The provider buys the drug, administers it, and then bills the health plan for both the drug and the service.
  • This process gives health plans very little control over the price or utilization of the drug.
  • As more high-cost specialty drugs are administered this way, managing the medical benefit has become a top priority.
  • A CFSP must be an expert in the strategies used to manage this spend.

Developing a Medical Benefit PDL

  • A key strategy is to create a Preferred Drug List (PDL) for drugs on the medical benefit, just like on the pharmacy benefit.
  • This involves a P&T review of the clinical and economic evidence for all drugs in a class (e.g., all IV immunology drugs).
  • The plan then designates certain drugs as preferred.
  • This is a complex undertaking, as it requires managing J-codes instead of NDCs.
  • The CFSP is the clinical leader for developing this medical benefit formulary.

Implementing Medical Benefit PAs

  • Once a medical benefit PDL is in place, PA is the tool used to enforce it.
  • A PA is required for non-preferred drugs or for any drug to ensure it is being used for an appropriate indication.
  • This requires a different PA process than for the pharmacy benefit.
  • The PA review must be integrated with the medical claims system.
  • The CFSP is responsible for writing the clinical criteria for these medical PAs.

Site of Care Management

  • As discussed, site of care management is a primary strategy for controlling medical drug spend.
  • The formulary policy can be written to only cover a drug when it is administered in a cost-effective setting.
  • The CFSP must analyze the financial and clinical implications of this strategy.
  • This includes ensuring there is an adequate network of lower-cost sites available to patients.

Provider and Member Education

  • Implementing a managed medical benefit is a major change for providers who are used to the old "buy and bill" system.
  • A major communication and education effort is required.
  • The CFSP is responsible for developing the clinical content for this education.
  • They must be able to clearly explain the rationale for the new policies to physicians and hospital administrators.
  • Effective communication is key to a smooth implementation.

Block 5: Payer-Specific Formulary Policy

CMS Formulary Review and Approval

  • Every Part D plan must submit its formulary to CMS for approval each year.
  • CMS reviews the formulary to ensure it complies with all of their regulations.
  • This is a high-stakes process, as the plan cannot be offered until the formulary is approved.
  • The CFSP is the leader of the team that prepares and submits the formulary file to CMS.
  • This requires meticulous attention to detail.

The Six Protected Classes

  • A key CMS requirement is that Part D plans must cover "all or substantially all" drugs in six protected classes.
  • These classes are: anticonvulsants, antidepressants, antineoplastics (cancer drugs), antipsychotics, antiretrovirals (for HIV), and immunosuppressants.
  • This means a plan cannot exclude drugs in these classes for economic reasons.
  • UM can still be applied, but it must be for clinical reasons (e.g., ensuring correct diagnosis).
  • The CFSP must ensure their formulary strategy is compliant with this critical rule.

Formulary Change Notices

  • CMS has strict rules for how plans can make changes to their formulary during the year.
  • For most changes, the plan can only make them more generous (e.g., removing a PA).
  • For negative changes (e.g., removing a drug), they can only be made under specific circumstances, such as for a new safety warning.
  • If a negative change is made, the plan must provide 60 days' written notice to all affected members.
  • The CFSP is responsible for managing this change control process.

Transition Fills

  • CMS requires all Part D plans to have a transition fill policy.
  • This policy ensures that new members can get a temporary, one-time fill of a drug that is not on the new plan's formulary.
  • This is a key patient protection that prevents gaps in care when a member switches plans.
  • The temporary supply gives the member and their doctor time to either switch to a formulary alternative or request a formulary exception.
  • The CFSP must ensure their plan has a compliant transition fill policy.

The Role of the IRA

  • The Inflation Reduction Act will have a major impact on Part D formulary strategy.
  • The new drug price negotiation program will lower the cost of certain high-spend drugs.
  • This may change their relative value and their placement on the formulary.
  • The redesign of the benefit, which shifts more risk to the health plan, will increase the pressure to manage costs through formulary design.
  • A CFSP must be an expert on how the IRA will change the strategic landscape for Part D formularies.

The Medicaid Drug Rebate Program (MDRP)

  • The MDRP is the foundation of Medicaid pharmacy policy.
  • It requires manufacturers to pay a rebate to states in exchange for having most of their drugs covered.
  • This means that Medicaid programs have a generally "open" formulary.
  • Unlike commercial plans, they cannot exclude most drugs.
  • The main tool they have to manage utilization is the Preferred Drug List (PDL).

Preferred Drug Lists (PDLs)

  • A PDL is a list of the drugs that the state Medicaid agency prefers within a therapeutic class.
  • Preferred drugs are available without a PA.
  • Non-preferred drugs require a PA.
  • This creates a strong incentive for prescribers to use the preferred agents.
  • The state's P&T committee (often called a DUR Board) is responsible for developing the PDL.
  • A CFSP working for a state or a Medicaid MCO must be an expert on the state's PDL.

Supplemental Rebates

  • In addition to the federal rebate from the MDRP, states can negotiate for an additional, "supplemental" rebate from manufacturers.
  • They offer preferred status on the PDL in exchange for this supplemental rebate.
  • This allows the state to create competition among manufacturers and further lower its net costs.
  • The decision of which drug to prefer is based on a combination of clinical efficacy and the size of the supplemental rebate offer.
  • A CFSP at a state agency would be involved in the clinical analysis that supports these negotiations.

MCO Formularies

  • In states with Medicaid managed care, each MCO may have its own formulary.
  • However, the state often requires that the MCO's formulary be at least as generous as the state's FFS PDL.
  • This is to ensure that patients are not disadvantaged by being in an MCO.
  • This can create complexity, as the MCO must manage its own formulary while also adhering to the state's baseline requirements.
  • A CFSP at an MCO must be an expert at navigating this dual set of rules.

Physician-Administered Drug Policy

  • Like Medicare, Medicaid also has a medical benefit that covers provider-administered drugs.
  • States are increasingly implementing UM strategies to manage this spend.
  • This includes creating PDLs and requiring PAs for high-cost physician-administered drugs.
  • A CFSP would be involved in developing the clinical criteria for these medical benefit drug policies.
  • This is a growing area of focus for state Medicaid programs.

Employer Decision-Making

  • For employer-sponsored health plans, the employer is the ultimate customer of the PBM.
  • PBMs offer employers a range of formulary options, from very open to very restrictive.
  • The employer must choose a formulary that balances cost control with the need to provide a competitive benefit to its employees.
  • A CFSP at a PBM may be involved in consulting with large employers to help them design their benefit.
  • This requires an understanding of the employer's specific workforce and goals.

Self-Funded vs. Fully Insured

  • Fully Insured: The employer pays a fixed premium to an insurance company, and the insurer takes on all the financial risk. These plans are subject to state insurance laws.
  • Self-Funded: The employer pays for its employees' claims directly and bears the financial risk. These plans are governed by the federal law ERISA and are exempt from state insurance laws.
  • Most large employers are self-funded.
  • This distinction is very important for a CFSP, as it determines which set of regulations applies to the formulary.

Custom vs. Standard Formularies

  • PBMs offer their clients different levels of formulary customization.
  • Most smaller employers will use the PBM's standard, national formulary.
  • Very large employers may have the option to create a custom formulary.
  • A custom formulary allows the employer to make specific decisions about which drugs to cover or exclude.
  • A CFSP at a PBM would work with the large client to design and manage this custom formulary.
  • This is a highly specialized and data-intensive service.

Impact of Collective Bargaining

  • For unionized workforces, the health benefit, including the formulary, is often a subject of collective bargaining.
  • The union contract may specify certain levels of coverage or cost-sharing.
  • This can limit the employer's ability to make changes to the formulary.
  • Any proposed formulary change would need to be negotiated with the union.
  • A CFSP working with a unionized employer group must be aware of these contractual constraints.

Consulting and Analytics for Employers

  • PBMs provide extensive data and analytics to their large employer clients.
  • The CFSP is often part of the team that presents this information.
  • This includes reports on the employer's drug spend, utilization trends, and performance on quality measures.
  • The team will use this data to make strategic recommendations to the employer about how to improve their benefit design.
  • This is a highly consultative role that requires strong analytical and communication skills.

The Affordable Care Act (ACA) and HIX

  • The ACA created the Health Insurance Marketplace, or Exchange, where individuals can purchase private health insurance.
  • These plans are known as Qualified Health Plans (QHPs).
  • The law sets federal standards for these plans.
  • A CFSP working for a plan that is sold on the exchange must be an expert on these specific ACA requirements.

Essential Health Benefits (EHBs)

  • The ACA requires that all QHP plans cover a set of ten Essential Health Benefits.
  • Prescription drugs are one of these ten EHBs.
  • This means that all exchange plans must provide a credible drug benefit.
  • To meet this requirement, a plan's formulary must cover at least the greater of:
  • One drug in every USP category and class, OR
  • The same number of drugs in each category and class as the state's benchmark EHB plan.
  • A CFSP is responsible for ensuring their plan's formulary meets this standard.

Formulary Transparency

  • The ACA requires greater transparency for exchange plan formularies.
  • Plans must make their formulary drug list publicly available on their website.
  • This allows consumers to compare the drug coverage of different plans before they enroll.
  • The information must be up-to-date and easy for consumers to understand.
  • A CFSP is responsible for preparing and maintaining this public formulary file.

Out-of-Pocket Maximums

  • The ACA established annual limits on total out-of-pocket spending for consumers in exchange plans.
  • All copayments, deductibles, and coinsurance for in-network, covered services count towards this maximum.
  • This includes spending on prescription drugs.
  • This is a key patient protection that limits financial risk.
  • The formulary and benefit design must be structured to comply with this requirement.
  • A CFSP must be aware of the current year's out-of-pocket maximum when designing the benefit.

Non-Discrimination

  • The ACA prohibits health plans from discriminating against individuals with significant health needs.
  • In the context of formularies, this means a plan cannot design its benefit in a way that discourages sick people from enrolling.
  • For example, placing all drugs for a specific condition (like HIV) on the highest cost-sharing tier could be considered discriminatory.
  • CMS actively reviews exchange plan formularies for compliance with these non-discrimination requirements.
  • A CFSP must design their formulary in a way that is not only cost-effective but also equitable and non-discriminatory.

The Hospital P&T Committee

  • The hospital P&T committee has a broader scope than a payer P&T committee.
  • In addition to managing the formulary, they are also responsible for all medication use policies within the hospital.
  • Their primary focus is on patient safety and clinical outcomes.
  • While cost is a consideration, it is secondary to safety and efficacy.
  • The committee membership is drawn from the hospital's own medical and nursing staff.
  • A CFSP in a hospital setting is the key leader of this committee.

The Goal: Standardization and Safety

  • A primary goal of the hospital formulary is to standardize practice.
  • By having a limited, well-chosen set of drugs on formulary, the hospital can ensure that clinicians are familiar and proficient with the medications they use.
  • This reduces the risk of errors.
  • The formulary is also a key tool for implementing evidence-based clinical practice guidelines throughout the hospital.
  • The focus is on choosing the single best and safest agent in each class.

Formulary and the EHR

  • The hospital formulary is deeply integrated into the Electronic Health Record (EHR).
  • The EHR's clinical decision support tools are built around the formulary.
  • For example, order sets and treatment protocols will default to using formulary medications.
  • When a P&T committee makes a formulary change, a major implementation step is updating all of the relevant builds in the EHR.
  • The CFSP must work closely with the informatics team to manage this process.

The Non-Formulary Request Process

  • Hospitals must have a process for a physician to request a non-formulary drug for a specific patient when it is medically necessary.
  • This process is usually managed by the clinical pharmacists.
  • The pharmacist will review the request and may suggest a therapeutic alternative that is on formulary.
  • If the non-formulary drug is truly necessary, it will be approved and special-ordered for that patient.
  • The CFSP analyzes the data from these non-formulary requests.
  • A high volume of requests for a particular drug may indicate that it should be considered for addition to the formulary.

Integrated Delivery Networks (IDNs)

  • Many hospitals are now part of large IDNs that may also own a health plan.
  • In this setting, there is a need to align the hospital formulary with the health plan formulary.
  • This is a major strategic challenge.
  • The goal is to create a single, system-wide formulary that promotes seamless care as patients move between the inpatient and outpatient settings.
  • A CFSP in an IDN would be a leader in this complex formulary alignment process.
  • This is the ultimate form of integrated formulary management.

Block 6: Policy Implementation & Evaluation

The Importance of a Communication Plan

  • A policy is only effective if people know about it and understand it.
  • A formal communication plan is a critical part of policy implementation.
  • The plan should identify all key audiences (e.g., pharmacists, physicians, patients, payers).
  • It should define the key message to be delivered to each audience.
  • It should also specify the channels to be used for communication (e.g., email, meetings, newsletters).
  • The CPPA is often responsible for developing and executing this plan.
  • The plan must include a timeline for all communication activities.
  • It should also include a method for gathering feedback to see if the message was understood.
  • A well-executed plan prevents confusion and resistance.
  • It is a key part of successful policy implementation.

Crafting Policy Briefs and Memos

  • Policy briefs are concise summaries of a policy issue, designed for busy decision-makers.
  • They typically start with an executive summary that gets straight to the point.
  • They present the problem, the policy options, and the recommendation in a clear and logical way.
  • Data should be presented visually using charts and graphs.
  • The language should be non-technical and accessible.
  • A CPPA must be an expert at writing these types of documents.
  • The ideal length for a policy brief is typically 2-4 pages.
  • Clarity and conciseness are the most important qualities.
  • The brief should always end with a clear, actionable recommendation.
  • It is the primary tool for communicating the results of a policy analysis.

Presenting to Diverse Audiences

  • A policy analyst must be able to present their findings verbally to a wide range of audiences.
  • Presenting to a group of expert pharmacists requires a different approach than presenting to a community advisory board.
  • The level of technical detail and the key messages must be tailored to the audience.
  • A CPPA must be a skilled public speaker and facilitator.
  • They must be able to answer tough questions and defend their analysis.
  • Practice and preparation are key to a successful presentation.
  • Visual aids should be simple and powerful.
  • The presentation should tell a clear story, with a beginning, middle, and end.
  • It should conclude with a strong summary of the key takeaways.

Working with the Media

  • The media can be a powerful tool for disseminating information about a policy issue.
  • A CPPA may be involved in preparing press releases or fact sheets for the media.
  • They may also serve as a subject matter expert for interviews with journalists.
  • When working with the media, it is crucial to have a clear and consistent message.
  • The goal is to accurately inform the public debate.
  • All media interactions should be coordinated with the organization's communications department.
  • It is important to anticipate difficult questions and prepare responses in advance.
  • Building relationships with health reporters can be a valuable long-term strategy.
  • Never speak "off the record" unless you have a pre-existing, trusted relationship.

Dissemination in the Digital Age

  • Modern policy dissemination uses a variety of digital channels.
  • This includes publishing reports and data on the organization's website.
  • Social media can be used to share key findings and engage with stakeholders.
  • Webinars are an effective way to present a detailed analysis to a wide audience.
  • Infographics and short videos can make complex policy issues more accessible.
  • A CPPA should be familiar with these digital tools and how to use them effectively.
  • An online presence can significantly amplify the reach and impact of a policy analysis.
  • It is important to tailor the content for each specific digital platform.
  • Monitoring online conversations can also provide valuable feedback and insights.

Identifying Stakeholders

  • A stakeholder is any person, group, or organization that has an interest in or is affected by a policy.
  • The first step in engagement is to conduct a thorough stakeholder analysis to identify all relevant parties.
  • This includes supporters, opponents, and those who are neutral.
  • For a pharmacy policy, stakeholders could include patient advocacy groups, professional associations, pharmaceutical companies, and payers.
  • It is important to be comprehensive and not overlook any key groups.
  • The analysis should consider both internal stakeholders (within your organization) and external stakeholders.
  • A CPPA must be skilled at mapping out the stakeholder landscape for any given issue.

Stakeholder Analysis Matrix

  • This is a tool used to categorize stakeholders to prioritize engagement efforts.
  • Stakeholders are typically plotted on a matrix with two axes:
  • Interest: How much does the policy affect them? (Low to High)
  • Power/Influence: How much influence do they have over the policy outcome? (Low to High)
  • Stakeholders in the "High Interest / High Power" quadrant are the key players who must be actively managed.
  • Those with "High Power / Low Interest" need to be kept satisfied.
  • Those with "Low Power / High Interest" should be kept informed.
  • This analysis helps to focus limited time and resources where they will have the greatest impact.
  • The engagement strategy should be tailored to each quadrant.

Building Coalitions

  • A coalition is a temporary alliance of different groups who come together to work towards a common policy goal.
  • Coalitions are a powerful tool in advocacy, as they demonstrate a broad base of support for an issue.
  • Effective coalitions often include "strange bedfellows" - groups that may not normally work together but share a common interest on a specific issue.
  • A CPPA may be involved in identifying potential coalition partners and building these relationships.
  • This requires strong negotiation and interpersonal skills.
  • A formal coalition charter or memorandum of understanding can be helpful.
  • Successful coalitions require ongoing communication and management.
  • The power of a collective voice is often greater than the sum of its parts.

Engaging with Policymakers

  • Policymakers and their staff are the primary audience for policy analysis and advocacy.
  • Building long-term, trusted relationships with these offices is key.
  • This involves providing them with timely, accurate, and objective information.
  • The goal is to become a go-to resource for them on pharmacy policy issues.
  • A CPPA must understand the legislative process and how to effectively communicate in that environment.
  • This includes providing concise testimony at hearings and writing effective leave-behind documents.
  • It is important to understand the specific interests and priorities of each policymaker.
  • Always be respectful of their time.
  • Following up after a meeting is a critical step.

Grassroots vs. Grasstops Advocacy

  • Grassroots Advocacy: Mobilizing a large number of individuals from the general public to contact their elected officials about an issue.
  • This shows policymakers that an issue is important to their constituents.
  • Methods include letter-writing campaigns, phone banks, and social media campaigns.
  • Grasstops Advocacy: Engaging a small number of influential community leaders to advocate on an issue.
  • These are individuals who have a personal relationship with the policymaker.
  • Their voice can carry significant weight.
  • An effective advocacy campaign often uses both strategies.
  • A CPPA may be involved in providing the policy information and talking points that fuel these campaigns.
  • Grassroots advocacy provides the volume, while grasstops provides the influence.

The Purpose of Program Evaluation

  • Program evaluation is the systematic collection of information about a program to assess its effectiveness and make decisions.
  • It is the final stage of the policy cycle.
  • It answers the question: "Did the policy work?"
  • The findings from an evaluation are used to improve, continue, or terminate a program.
  • It provides accountability to funders and the public.
  • A CPPA must be able to design and interpret program evaluations.
  • It is the process by which we learn from our policy experiments.

Types of Evaluation

  • Process Evaluation: Assesses how a program is being implemented. Is it reaching the target population? Are the activities being delivered as planned?
  • Outcome/Impact Evaluation: Assesses the extent to which a program has achieved its intended outcomes. Did the policy actually solve the problem it was designed to address?
  • Economic Evaluation: Assesses the cost-effectiveness of the program. Were the benefits worth the costs?
  • A comprehensive evaluation often includes all three types.
  • It is important to choose the right type of evaluation to answer the specific questions being asked.

Evaluation Design: The Gold Standard

  • The "gold standard" for an impact evaluation is the Randomized Controlled Trial (RCT).
  • In an RCT, individuals are randomly assigned to either receive the policy intervention (the treatment group) or not (the control group).
  • Randomization ensures that the two groups are, on average, identical at the start of the study.
  • By comparing the outcomes of the two groups, the analyst can determine the true causal effect of the policy.
  • However, RCTs are often expensive, time-consuming, and may not be feasible or ethical in a real-world policy setting.
  • A CPPA must understand both the strengths and the limitations of RCTs.

Quasi-Experimental Designs

  • When an RCT is not possible, quasi-experimental designs are used.
  • These designs attempt to mimic an experiment without random assignment.
  • Difference-in-Differences (DID): Compares the change in outcomes over time between a group that received the policy and a similar group that did not.
  • Regression Discontinuity Design (RDD): Used when a policy has a sharp cutoff (e.g., an age or income threshold). It compares outcomes for people just above and just below the cutoff.
  • Interrupted Time Series (ITS): Compares the trend in an outcome before and after a policy was implemented.
  • These are powerful tools for estimating causal effects with observational data.
  • A CPPA should be familiar with these common evaluation designs.

Qualitative Evaluation Methods

  • Qualitative methods are important for understanding the "how" and "why" behind the numbers.
  • This includes conducting interviews with program staff and participants.
  • Focus groups can be used to gather in-depth feedback from a group of stakeholders.
  • Case studies can provide a detailed look at how the policy was implemented in a specific setting.
  • These methods provide rich, contextual information that complements the quantitative data.
  • A good evaluation uses a mixed-methods approach, combining both quantitative and qualitative techniques.
  • This provides a much more complete picture of the program's performance.

Stakeholder Analysis Matrix

  • An assessment tool used to categorize stakeholders to prioritize engagement efforts.
  • It plots stakeholders on a two-by-two grid based on their level of **Interest** in the policy and their level of **Power** to influence it.
  • High Power, High Interest (Manage Closely): These are the key players.
  • High Power, Low Interest (Keep Satisfied): Can be powerful allies or opponents if their interest is sparked.
  • Low Power, High Interest (Keep Informed): Good source of on-the-ground intelligence and potential coalition partners.
  • Low Power, Low Interest (Monitor): Require minimal effort.
  • This tool helps a CPPA to develop a strategic engagement plan.

Policy Implementation Fidelity Scale

  • A rating scale used in a process evaluation to measure how faithfully a policy or program is being implemented.
  • It breaks down the program into its core components.
  • Each component is then rated on a scale (e.g., 1-5) based on how well it is being delivered in practice compared to the original design.
  • This helps to distinguish between a policy that is ineffective because it was a bad idea (theory failure) versus one that was ineffective because it was poorly implemented (implementation failure).
  • This is a critical tool for understanding evaluation results.

The AGREE II Instrument

  • The AGREE (Appraisal of Guidelines for Research & Evaluation) II is an internationally recognized tool for assessing the quality of clinical practice guidelines.
  • It consists of 23 items organized into six domains (e.g., Scope and Purpose, Stakeholder Involvement, Rigor of Development).
  • A CPPA would use this tool to critically appraise a guideline before using it as evidence in a policy analysis.
  • It helps to determine whether a guideline is well-developed and trustworthy.
  • This is a key skill for an evidence-based analyst.

The Gunning Fog Index (or other readability scales)

  • A readability scale is a tool used to measure how easy a piece of writing is to read.
  • The Gunning Fog Index estimates the years of formal education a person needs to understand the text on the first reading.
  • A CPPA uses this tool to assess the readability of policy documents, patient education materials, and other communications.
  • The goal is to ensure that the writing is clear and accessible to the intended audience.
  • It is a practical tool for improving the effectiveness of policy communication.

Cost-Benefit Analysis (CBA) Framework

  • A framework for structuring an economic evaluation.
  • It involves identifying all the potential costs and benefits of a policy.
  • A monetary value must then be assigned to each cost and benefit.
  • This can be challenging, especially for intangible benefits like improved health or saved lives.
  • The total costs are then compared to the total benefits.
  • If the benefit-to-cost ratio is greater than 1, the policy is considered to have a net positive value.
  • This tool is used to assess the overall societal value of a policy.

Cost-Benefit Ratio

  • This formula is the final output of a cost-benefit analysis. It provides a single number that summarizes the relationship between the total benefits and total costs of a policy. A ratio greater than 1 suggests the benefits outweigh the costs.

\( \text{Benefit-Cost Ratio} = \frac{\sum \text{Present Value of Benefits}}{\sum \text{Present Value of Costs}} \)

Incremental Cost-Effectiveness Ratio (ICER)

  • The primary output of a cost-effectiveness analysis. It represents the additional cost required to gain one additional unit of health outcome (like a Quality-Adjusted Life Year, or QALY). This is used to compare the value of a new drug to the current standard of care.

\( \text{ICER} = \frac{(\text{Cost}_{\text{New}} - \text{Cost}_{\text{Old}})}{(\text{Effectiveness}_{\text{New}} - \text{Effectiveness}_{\text{Old}})} = \frac{\Delta C}{\Delta E} \)

Budget Impact Model (BIM) Calculation

  • A BIM estimates the net change in spending for a health plan if a new drug is added to the formulary. It considers the size of the eligible population, the market share the new drug will capture, and any cost offsets from reduced utilization of other services.

\( \text{Budget Impact} = \sum (\text{Cost}_{\text{New Scenario}}) - \sum (\text{Cost}_{\text{Current Scenario}}) \)

Number Needed to Treat (NNT)

  • A common measure of clinical effectiveness used in policy analysis. It represents the average number of patients who need to be treated with a new therapy to prevent one additional bad outcome. A lower NNT indicates a more effective therapy.

\( \text{NNT} = \frac{1}{\text{Absolute Risk Reduction (ARR)}} \)

Relative Risk (RR)

  • A fundamental statistic from clinical trials used in policy analysis. It compares the probability of an outcome in the treatment group to the probability of the outcome in the control group. An RR < 1 indicates the treatment reduces the risk of the outcome.

\( \text{RR} = \frac{\text{Probability of Event in Treatment Group}}{\text{Probability of Event in Control Group}} \)

Block 7: Advanced Topics & Final Review

Defining CER

  • CER is the direct comparison of existing healthcare interventions to determine which work best for which patients and in which settings.
  • It compares drugs, devices, and procedures to each other to see which is most effective in real-world practice.
  • This is different from the placebo-controlled trials often used for FDA approval.
  • The goal is to provide actionable evidence to help patients, clinicians, and policymakers make better-informed decisions.
  • A CPPA must understand the role of CER in the evidence ecosystem.

The Patient-Centered Outcomes Research Institute (PCORI)

  • PCORI was created by the Affordable Care Act to fund CER.
  • It is an independent, non-profit organization.
  • Its mission is to fund research that is guided by patients, caregivers, and the broader healthcare community.
  • PCORI has funded hundreds of studies comparing different treatment options.
  • The results of these studies are a key source of evidence for policy analysis.
  • A CPPA should be familiar with PCORI and how to access its research findings.

Real-World Evidence (RWE)

  • CER often relies on Real-World Data (RWD), such as data from EHRs and insurance claims.
  • The evidence generated from the analysis of RWD is called Real-World Evidence (RWE).
  • RWE provides insights into how treatments work in a broader, more diverse patient population than can be studied in a traditional clinical trial.
  • The FDA is increasingly using RWE in its regulatory decision-making.
  • A CPPA must understand the strengths and weaknesses of RWE compared to evidence from RCTs.

CER and Payer Policy

  • Payers use the results of CER to inform their coverage policies.
  • If a CER study shows that two drugs have equal effectiveness, a payer will likely prefer the cheaper one on its formulary.
  • The results of CER can be used to develop evidence-based PA criteria.
  • By law, Medicare is prohibited from using CER to make coverage decisions that are solely based on cost-effectiveness. However, the evidence can still be used to inform coverage.
  • A CPPA would analyze how payers are using CER to shape their policies.

Patient-Centered Outcomes

  • A key focus of PCORI and CER is on patient-centered outcomes.
  • This means looking at outcomes that matter most to patients, not just clinical endpoints.
  • This can include things like quality of life, ability to function, and symptom burden.
  • This patient-centered approach is a key part of modern health policy.
  • It ensures that the definition of "effectiveness" is not just determined by clinicians, but also by patients themselves.

Defining Health Equity and Disparities

  • Health Disparities: Differences in health outcomes that are closely linked with social, economic, and/or environmental disadvantage.
  • Health Equity: The principle that everyone should have a fair and just opportunity to be as healthy as possible.
  • Achieving health equity requires removing obstacles to health such as poverty and discrimination.
  • Pharmacy policy can either worsen or help to reduce health disparities.
  • A CPPA must analyze all policies through a health equity lens.

Social Determinants of Health (SDoH)

  • SDoH are the conditions in the environments where people are born, live, learn, work, and play that affect health.
  • These include factors like socioeconomic status, education, neighborhood and physical environment, and social support networks.
  • SDoH are the root causes of many health disparities.
  • For example, a patient living in a "pharmacy desert" has a transportation barrier to medication access.
  • A CPPA must consider how policies will impact patients with adverse SDoH.

Equity in Formulary Design

  • Payer policies can have a disproportionate impact on vulnerable populations.
  • For example, a high copay for an essential medication can be a major barrier for a low-income patient.
  • A formulary that excludes a drug for a condition that is more prevalent in a minority population could worsen disparities.
  • A CPPA would analyze formulary policies to assess their impact on health equity.
  • This includes looking at the placement of drugs for conditions like sickle cell disease or HIV.

Equitable Access to Clinical Trials

  • Historically, clinical trials have often failed to enroll a diverse population.
  • This means that the evidence base for new drugs may not be generalizable to all racial and ethnic groups.
  • There is a major policy effort to increase the diversity of clinical trial participants.
  • This includes policies to reduce the logistical and financial barriers to participation.
  • A CPPA would analyze these policies aimed at improving equity in clinical research.

Policy Levers to Advance Health Equity

  • Policy is a powerful tool for advancing health equity.
  • This can include expanding insurance coverage through Medicaid.
  • It can involve creating value-based payment models that reward providers for reducing disparities.
  • It can also include policies that address the upstream SDoH, such as investments in housing or nutrition.
  • A CPPA should be familiar with these policy levers.
  • Analyzing the equity impact should be a standard part of every policy analysis.

Comparative Health Systems

  • Understanding how other countries structure their healthcare systems provides valuable context for U.S. policy debates.
  • There are four basic models:
  • Beveridge Model: Healthcare is provided and financed by the government (e.g., United Kingdom).
  • Bismarck Model: Uses a system of private insurance plans, but they are tightly regulated and non-profit (e.g., Germany).
  • National Health Insurance Model: Has private-sector providers, but payment comes from a government-run insurance program (e.g., Canada).
  • Out-of-Pocket Model: The rich get care, the poor stay sick or die (the model in most poor countries).
  • The U.S. system has elements of all four models.

International Drug Pricing

  • Brand-name drug prices are significantly lower in almost every other developed country than in the U.S.
  • This is because most other countries have a system of government price negotiation or regulation.
  • They use tools like Health Technology Assessment (HTA) and reference pricing to determine what they will pay for a new drug.
  • The U.S. has historically not had such a system, though the IRA is a first step.
  • A key policy debate is whether the U.S. should adopt international reference pricing.
  • A CPPA would analyze the pros and cons of such a policy.

Health Technology Assessment (HTA) Abroad

  • HTA is a formal part of the coverage and reimbursement process in countries like the UK (NICE), Canada (CADTH), and Germany (IQWiG).
  • These bodies conduct rigorous cost-effectiveness analyses of new drugs.
  • Their recommendations determine whether a drug will be covered by the national health system.
  • A CPPA should be familiar with these international HTA bodies.
  • Their analyses are often used as a benchmark by U.S. organizations like ICER.

Parallel Trade

  • Parallel trade, or drug importation, is the practice of buying a drug in a country where it is cheap and reselling it in a country where it is expensive.
  • There have been many policy proposals to legalize the large-scale importation of prescription drugs into the U.S. from Canada and other countries.
  • Proponents argue this would lower prices for U.S. consumers.
  • Opponents, including the pharmaceutical industry and the FDA, raise concerns about safety and the integrity of the supply chain.
  • A CPPA would analyze the economic and safety implications of these proposals.

Lessons from Abroad

  • While no country's system is perfect, there are many lessons the U.S. can learn from international experience.
  • This includes lessons on universal coverage, primary care investment, and cost containment.
  • A CPPA with a global perspective is a more effective analyst.
  • They are able to bring a wider range of policy options and evidence to the table.
  • Understanding international systems provides a valuable benchmark for evaluating the performance of the U.S. system.

The Role of Ideology

  • Health policy debates in the U.S. are often shaped by fundamental ideological disagreements.
  • This includes debates about the proper role of government versus the private market in healthcare.
  • There are different views on whether healthcare is a right or a commodity.
  • These ideological differences often explain why policymakers can look at the same evidence and come to very different conclusions.
  • A CPPA must be aware of this ideological context.

Interest Group Politics

  • The policy process is heavily influenced by a wide range of powerful interest groups.
  • In pharmacy policy, these include the pharmaceutical industry (PhRMA), insurance companies (AHIP), PBMs (PCMA), and professional associations (AMA, APhA).
  • These groups spend billions of dollars on lobbying and campaign contributions to advance their interests.
  • A CPPA must understand the positions and influence of these key interest groups.
  • The final shape of any legislation is often the result of a compromise between these competing interests.

The Role of Public Opinion

  • Public opinion can be a powerful force in the policy process.
  • Elected officials are highly responsive to the views of their constituents, especially on salient issues like healthcare costs.
  • The high cost of prescription drugs is consistently a top concern for voters.
  • This public pressure is what creates the political will to act on an issue.
  • A CPPA should monitor public opinion polls to understand the political environment.

The Federal Budget Process

  • Many major health policy changes are made through the federal budget process.
  • This is because major health programs like Medicare and Medicaid are a huge part of the federal budget.
  • The budget reconciliation process has special parliamentary rules that allow a bill to pass the Senate with a simple majority.
  • This is how major laws like the ACA and the IRA were passed.
  • A CPPA must have a basic understanding of the federal budget process, as it is often the vehicle for significant policy change.

The Analyst in the Political Arena

  • A CPPA must be able to navigate this political environment while maintaining their objectivity.
  • This requires political savvy.
  • It means understanding the motivations and constraints of policymakers.
  • It means framing evidence-based arguments in a way that is persuasive to a political audience.
  • It requires building a reputation as a trusted, non-partisan source of information.
  • This is a challenging but essential part of being an effective policy analyst.

Policy is About Trade-Offs

  • There is rarely a single "perfect" policy solution.
  • Every policy choice involves trade-offs between competing values.
  • The classic trade-off is the "Iron Triangle" of Cost, Quality, and Access.
  • A policy that expands access might increase costs. A policy that cuts costs might reduce quality.
  • Another key trade-off is between innovation and affordability. Strong patent protection encourages innovation but keeps prices high.
  • The role of the policy analyst is not to find a solution with no downsides, but to clearly identify and analyze these trade-offs for policymakers.
  • Understanding that there are no easy answers is a sign of a mature policy analyst.

Evidence is Necessary, but Not Sufficient

  • Policy analysis is grounded in the use of rigorous evidence.
  • A strong recommendation must be supported by data from clinical trials, economic models, and program evaluations.
  • However, evidence alone does not make policy.
  • The policy-making process is inherently political.
  • Values, ideology, stakeholder interests, and public opinion all play a powerful role.
  • A policy that is technically sound according to the evidence may be politically impossible to pass.
  • A successful CPPA understands this and can operate effectively at the intersection of evidence and politics.
  • They know how to frame their evidence-based arguments in a way that is persuasive to policymakers.

Unintended Consequences are Inevitable

  • Every policy intervention in a complex system like healthcare will have unintended consequences.
  • A key part of a policy analyst's job is to anticipate these consequences as much as possible.
  • For example, a policy to limit opioid prescriptions for acute pain might have the unintended consequence of making it harder for chronic pain patients to get needed medication.
  • A policy that shifts costs from the payer to the patient (high deductibles) may have the unintended consequence of reducing adherence to essential medications.
  • A good analysis will always include a section on potential unintended consequences and risks.
  • After a policy is implemented, program evaluation is needed to measure these effects.

Objectivity is the Goal

  • A policy analyst serves the decision-maker, not a particular political position.
  • The goal is to be a neutral, objective, and credible source of information.
  • This is different from an advocate, whose job is to argue for a specific cause.
  • The analyst must be willing to follow the evidence wherever it leads, even if it contradicts their own personal beliefs.
  • This means fairly presenting the pros and cons of all policy options, not just the preferred one.
  • This commitment to objectivity is the foundation of the analyst's credibility.
  • Losing that credibility is a fatal blow to a policy analyst's career.

Communication is a Core Competency

  • A brilliant analysis is useless if it cannot be communicated effectively.
  • A CPPA must be able to translate complex clinical, economic, and legal information into clear, concise language.
  • They must be able to tailor their communication to different audiences, from expert committees to the general public.
  • Strong writing skills are essential for producing effective policy briefs and memos.
  • Strong verbal communication skills are needed for presenting findings and briefing policymakers.
  • The ability to tell a compelling story with data is a key skill.
  • Ultimately, policy analysis is a form of communication.
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