From the GIC Summer 2005 Newsletter pdf format of    fybsummer2005.pdf

Question: After the U.S. Food and Drug Administration (FDA) reviews a prescription drug's safety and efficacy and releases it to the market, how does a drug get approved for a plan's drug formulary ?

Answer: Pharmacy Benefit Managers (PBMs), which manage prescription drug benefits for health plans, follow a multi-step process for determining whether or not a drug is placed on their formulary. Express Scripts, the PBM for Commonwealth Indemnity Plan members, uses the following processes (other PBMs have similar practices):

  1. The Therapeutic Assessment Committee, comprised of pharmacists and Express Script's medical director, evaluates a drug after its approval by the FDA. The committee conducts a thorough clinical review to evaluate a drug's safety, efficacy and dosage. Side effects, toxicities, and drug interactions are also reviewed. The committee then ranks the drug within its therapeutic class according to its relative effectiveness.
  2. The Value Assessment Committee (VAC), composed of pharmacists, product management, account management and financial analysts, then reviews the recommendation of the Therapeutic Assessment Committee. This committee evaluates the medication based on its cost relative to clinically-equivalent products.
  3. The Pharmacy and Therapeutics (P & T) Committee, consisting of physicians from a broad range of medical specialties, as well as pharmacists, meets to review the recommendations from the first two committees, and the P & T Committee decides whether to include the drug on its formulary. This committee also determines where on the formulary (e.g., Tier 1, Tier 2, or Tier 3) the drug should be placed.

This information provided by the Group Insurance Commission.