May 16, 2024

In the United States, the FDA approves medications through various pathways, which depend on medication type. The FDA teams review the company’s data and ensure that the benefits outweigh the known risks. What the FDA does not consider is the pricing structure of the medications or the landscape with competitors.

While breakthrough medications that have an impact do occur, it is more common that new medications that do not bring a large added value to the market. Low-value medications, sometimes referred to as “silly” or “wasteful” drugs, can be assessed when evaluating a medication formulary.  While PBM formularies do take more into account than the FDA, there is still the potential for gaps.  This is why it is critical that pharmacy benefit plan sponsors work with a consultant that keeps them aware of new medications, as well as their impacts on plan costs and member outcomes

Here are just a few examples of situations where low-value medications can make their way onto the market.

Follow-on (Me-too) medications:

While new entities are approved each quarter, there are also medications approved that are the 3rd, 4th, or even 10th in their respective drug class. While these additions in a class can drive down prices, as the later agents are approved, the first few agents may be ready to or already have lost exclusivity. Favoring the agents that have lost or are closest to losing exclusivity can allow for quicker savings and less disruption once a generic or biosimilar is approved.

Line Extensions:

Often medications come to market that are different from currently available medications, but in a very minor way. Examples could be a new capsule (where tablets were already available), a new strength or an alternative method of administration.

For example, if a new capsule comes to the market at the same price as the current tablets, this extension may have value. However, all too often, the new line extension is at a much higher price than what is currently on the market. In most cases, this new product does not add value to what is currently on the market.

Combination products:

In an effort to improve convenience, manufacturers come to market with combination products that significantly increase plan and member cost. These combinations can come to market as a brand name combination of two medications already on the market as generics.

Another example is combinations where a prescription drug is combined with an over-the-counter medication. While members may have less tablets to use in a day, the inflated price is not justified by the incremental improvement in convenience.

New Drug to Market Reviews

These are just a few examples of where this waste can creep in, and in each of these categories, there are dozens of examples which have come to market in the last few years. The ability to customize your formulary with exclusions is a vital tool in the active management of your pharmacy benefit spend.

At Innovative Rx Strategies we have developed a proprietary process to manage this tool for our clients. We review new drugs, biosimilars, generics, and line extensions as only clinical pharmacists can.

With attention to best practice guidelines, the current marketplace, and cost effectiveness we craft decisions for clients targeting the best outcomes for the plan and its members. To learn more about how Innovative Rx Strategies can bring more tools to your pharmacy benefit strategy reach out to our team today.

Reach out to our team