In recent years, there has been significant attention on the use of utilization management (UM) for prescription drugs. One aspect of UM that has not been broadly studied is the transparency of step therapy (ST) policies, specifically the details of ST policies and how they are applied on Medicare Part D plan formularies. A previous Avalere analysis looking at UM policies found that products labeled as requiring only prior authorization (PA) on a formulary may have an ST requirement as part of that PA (referred to as embedded ST).

To further explore this topic, Avalere evaluated 2023 coverage and UM for drugs treating psoriatic arthritis (PsA) and multiple sclerosis (MS), identifying instances in which plans embedded ST requirements under PA or required step edits that are more restrictive than the prescribing information on the Food and Drug Administration (FDA) label (definitions provided in Table 1).

This analysis evaluates 2023 data in standalone Medicare Prescription Drug Plans (PDPs) and Medicare Advantage Prescription Drug Plans (MA-PDs) for branded, single source drugs indicated to treat PsA and MS.

Table 1: Definitions of UM Policies Included in the Analysis

Background

Health plans employ PA and ST to manage spending and prevent use of contraindicated drugs. Many factors influence drug coverage and a plan’s use of UM, including drugs’ clinical profiles, therapeutic competition, availability of generics and biosimilars, costs, and rebate dynamics. As healthcare costs continue to rise and more innovative and specialized therapies enter the market, plans may consider changes to PA and ST to limit premium growth. In Medicare Part D, Centers for Medicare and Medicaid Services (CMS) regulations govern the use of PA and ST. For Part D plans, formularies indicate whether a covered drug requires PA, ST, or quantity limits and more detailed coverage information is often available on a plan or PBM’s website.

Findings: Coverage and Utilization Management

Coverage and utilization management for PsA and MS vary by plan type. For both conditions, PDPs have lower levels of coverage than MA-PDs. The analyzed PsA drugs are covered 59% of the time by PDPs and 72% of the time by MA-PDs (see Figure 1.) PDPs provide coverage of MS drugs 19% of the time, while MA-PDs provide coverage 46% of the time. Detailed coverage and utilization management information for PsA and MS drugs is available in Tables 2 and 3 below.

Figure 1. Part D Coverage by Indication and Plan Type, Single-Source Brand Drugs, As a Percent of Total Part D Lives, 2023

For a Part D plan to require UM for a specific drug, the drug must be covered on a plan’s formulary. Unless otherwise stated, the following statistics represent the portion of covered lives subject to a particular UM requirement. PDPs require UM for PsA drugs 100% of the time and 87% of the time for MS drugs (see Figure 2). MA-PDs’ use of UM for PsA drugs is comparable to that of PDPs, requiring UM 93% of the time. MA-PDs use UM less frequently for MS drugs than PDPs, with UM required 51% of the time.

PsA drugs are more frequently subject to PA with embedded ST than MS drugs (see Figure 2). For covered PsA drugs, PDPs apply embedded ST 50% of the time and MA-PDs apply embedded ST 58% of the time. The rate of embedded ST is far lower for MS drugs, with embedded ST applied 2% of the time when covered for both PDPs and MA-PDs.

When ST is embedded in PA, the step edits often include more steps than what is required by the FDA label for both PsA and MS drugs. For PsA drugs, PDPs require more steps than the FDA label 28% of the time and MA-PDs require more steps than the FDA label 41% of the time. Alternatively, embedded ST that is aligned with the FDA label is only used 22% of the time for PDPs and 17% of the time for MA-PDs. For MS drugs, both PDPs and MA-PDs apply more steps than the FDA label 2% of the time. Neither PDPs nor MA-PDs apply embedded ST that is aligned with the FDA label for MS drugs.

Figure 2. Part D Utilization Management by Indication and Plan Type, Single-Source Brand Drugs, As a Percent of Lives with Drug Coverage, 2023

Note: Any drug that has both PA and ST requirements is counted based on its ST policy.

The number of alternative drugs that a beneficiary must step through before a drug subject to ST beyond the FDA label would be covered varies by drug and plan type. For PsA and MS drugs, beneficiaries may be required to step through up to two alternative drugs beyond what is required by the FDA label before the intended drug is covered by their plan. For two of the analyzed PsA drugs, Avalere found that every MA-PD in the sample that covers these drugs requires all beneficiaries to step through two alternative drugs, beyond what is required by the FDA label, before the original drug would be covered.

Stakeholder Considerations

While plans may employ ST to encourage the use of safe and effective medicines, it can create access concerns for beneficiaries who need a specific medicine. This analysis outlines complexities of ST that are not frequently examined and may not be widely understood.

For beneficiaries who rely on PsA or MS drugs, this work demonstrates the variation in UM practices across plans. Given this variation, it is important that beneficiaries review coverage choices annually based on information available on CMS’s “Plan Finder” and plan websites. Plan Finder allows beneficiaries to compare drug coverage across plans but only provides information regarding labeled ST; the details of embedded ST are found on individual plan websites.

Policymakers and patient groups may also consider possible access implications of these findings, including whether relevant information is available to beneficiaries making plan selections and whether the application of ST varies by geography, which could affect plan options for beneficiaries based on where they live. As public and policymaker attention on UM practices continues, CMS may consider whether the formulary review process accounts for embedded ST. Finally, plans might consider reviewing exceptions and appeals processes to ensure timely and appropriate access is available to beneficiaries who need a specific medicine.

Additional Tables

Table 2. Coverage and UM Detail as a Percent of Total Lives, Psoriatic Arthritis, 2023

Note: Italics indicate sub-categories of the category listed above.

Table 3. Coverage and UM Detail as a Percent of Total Lives, Multiple Sclerosis, 2023

Note: Italics indicate sub-categories of the category listed above.

Methodology

Avalere evaluated the 2023 coverage and restrictions policies for branded, single-source drugs within two indications—multiple sclerosis and psoriatic arthritis—on the pharmacy benefit for Medicare Part D plans (MA-PD and PDP). For each drug, Avalere evaluated whether the plan required ST, either explicitly listed as a step therapy or embedded in PA criteria; which drugs were listed as step edits; whether the step edit was aligned with the FDA label or included more step edits than the FDA label; and the number of step edits required for each indication. The UM criteria for each drug was compared to the FDA label. If the ST criteria matched the FDA label criteria (e.g., FDA label required that the PsA patient had an inadequate response or intolerance to a TNF blocker, and UM criteria matched the label) then the ST criteria was categorized as aligning with the FDA label. If the ST criteria required step edits beyond what the FDA label required (e.g., the FDA label required no step edits, but ST criteria required a step edit), then the ST criteria was categorized as ST including steps beyond than the FDA label. Avalere did not evaluate how the UM criteria conform to clinical guidelines.

Avalere partnered with Clarivate to obtain formulary and restrictions data. Restrictions policy data were limited to plans for the top 250 plan sponsors based on enrollment.

Funding for this research was provided by Let My Doctors Decide Action Network; Avalere retained full editorial control.