Payers and Prior Authorizations (PAs): The Need for a Nuanced Management Strategy

PAs can impose significant limits on market access and uptake for pharmaceutical products, and their application should not be oversimplified. Over the past 12 years, most of my payer research has included an element exploring and analyzing the PAs that were likely to be imposed on a new agent to market or an older agent facing market disruptions (a branded or generic competitor, a new indication, e.g.).

A recent article (7 Prior Authorization Myths Smashed) published on LinkedIn may create the impression that PAs are medically necessary, not economically driven, and not time consuming for prescribers. As with most complex rule structures, there is some truth to these implications. However, the reality is far more nuanced. PAs are subjective, selectively (but not randomly) enforced, and intended (appropriately) to save the plans money without compromising the health of their members.

PAs in the form of step edits are not monitored with the same vigor in all drug categories. Payers fully enforce the restriction that patients fail on a generic antibiotic before being prescribed a branded one for most standard infections. Generic antibiotics are effective, have few side effects and are inexpensive. Requiring that this step be honored to the letter does not put payers in the position of second-guessing providers.

In other areas, payers will put steps into place that they do not enforce. In a recent study exploring payer coverage of certain long acting contraceptives, several payers stated that they would impose a step through generic oral contraceptives before approving an expensive, long-acting product. However, after probing, several admitted that while the step technically would be in place, they would trust each woman’s gynecologist to determine if there was any reason that oral contraceptives were not an appropriate choice.

So why would payers bother with such a step? Payers would prefer that doctors prescribe the cheapest option that is appropriate for the patient. However, as a Pharmacy Director from a west coast regional plan explained, “We believe that doctors are educating patients enough about these forms of contraception and we don’t like to second guess providers.”

Also, contrary to the assertions in the recent article, providers find obtaining authorizations to be time consuming and annoying. While this is not the goal of these restrictions, payers are aware of the burdens inherent in this process. For mature drug classes (such as DPP-4s), payers require providers to complete documentation that the patient tried and failed on at least one generic and (sometimes) two preferred branded agents before considering approval of a non-preferred brand. According to a Medical Director from an East Coast regional plan, “Before we will approve [a preferred DPP-4], the provider must document failure, serious side effects or absolute contra-indications with two generic agents and a non-DPP-4 agent. They have only a six-month look-back period. A simple one-month certification is not enough.” To suggest that this process is not time consuming for a provider’s staff shows a limited understanding of the process.

While the recent article asserts that PAs are not about saving money, the author admits that, “Each PA costs payers approximately $40, so the average savings from managing utilization through PAs must exceed $40. That’s why payers typically consider PAs only for high-cost therapies.” Conversely, the article then claims that PAs are in place “….to flag contraindications and other risks of using the drug. Many providers cry foul over the burden PAs place on their practice, but just how many lives have been saved and injuries prevented by PAs is hard to say.” If preventing misuse or off-label use of drugs was a driving force, payers would place PAs on all agents regardless of price. In reality, payers freely admit that they do not track off-label or misuse of generics and have no plan to do so in the future.

Payers are vocal in their trust of doctors, their strong desire not to second-guess their providers, and their firm avoidance of recommending a medical course of action. While PAs are in place often to require that only specialists may prescribe unique, high-priced drugs, I have never heard a payer claim that the plan imposed these restrictions to save patients from incompetent provider prescribing. Rather, they seek to avoid over- or off-label prescribing for expensive specialized agents when a cheaper option will suffice.

Lastly, to suggest that some force other than economics is the major driver for these restrictions is disingenuous. Health insurance plans are businesses. They watch the bottom line. Furthermore to imply that, “Providers and consumers who throw tomatoes at PAs on an open formulary should consider the alternative — a closed formulary that aggressively blocks the use of certain products” has no factual basis. Payers will not (and often cannot) switch to a closed formulary plan because the world is whining about PAs.

Payer management of costly agents is economically driven and nuanced, based on disease class and contracting. Providers are highly sensitive to the time their staffs devote to filling out the necessary paper work so as to maximize the chance of approval, and patients have different tolerance levels for management of their drugs depending on the disease from which they suffer and the efficacy and safety of the agent their provider prefers.

Each clinical trial design, launch and market disruption is unique. Manufacturers can influence this dynamic by developing and implementing a comprehensive strategy based on information gathering specific to the product or disease class. To assume uniformity and discount economic drivers to drug management can be a costly mistake.