Dynamic Therapeutic Formulary (DTF) A Tiered Drug Plan

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1 Dynamic Therapeutic Formulary (DTF) A Tiered Drug Plan Our tiered DTF drug plan is designed to help you manage drug costs while preserving plan member choice. a two-tiered drug plan. With this approach, the DTF combines the cost-saving benefits of a managed formulary with the flexibility of a traditional drug plan. For benefit plan members that means access to drug therapies is not limited to those on the DTF, preserving treatment flexibility and choice. ESI Canada s Dynamic Therapeutic Formulary (DTF) is a managed drug plan, which includes a list of clinically effective and affordable prescription drugs. ESI Canada, the country s largest pharmacy benefit manager, designed the DTF to be offered as the top tier of How it works As the name suggests, coverage under the DTF tiered drug plan is provided at two levels. Formulary drugs are offered at a higher reimbursement (co-insurance) level than other covered medications. The DTF is not meant to replace a physician s best advice. Ultimately, it is up to the plan member to work with their physician to select a drug that will treat their condition, while also factoring lifestyle and DTF coverage considerations into the treatment plan.

2 Build customization at the base Combining the DTF with a traditional drug plan allows you to add custom options at the plan s base (tier two). Select from a range of options available Prescription Plan (with generic substitution*) includes drugs that legally require a prescription. Prescribed Plan (with generic substitution*) includes all drugs under the Prescription Plan plus non-prescription drugs prescribed by a physician. Optional features include or exclude additional therapeutic categories of drugs such as smoking cessation products, sexual dysfunction treatments and anti-obesity drugs. Note: Tier one, ESI Canada s DTF, is a shared drug plan and cannot be customized. *We recommend generic substitution for the base plan to maximize savings and ensure consistency across both tiers. Special note for Quebec plans: Both the DTF and tier-two (base) drug plans include items covered by the RAMQ formulary. Since Quebec-based plans must mirror RAMQ coverage, it is recommended that reimbursement levels for each tier be set, equal to or greater than, the RAMQ minimum requirements. However, should you choose to set reimbursement levels below the RAMQ minimum, our claims adjudication logic will ensure that items included on the RAMQ formulary continue to be reimbursed at the RAMQ minimum requirements, regardless of plan design. Manage costs two ways The plan s tiered design allows you to manage plan costs and encourage members to use more cost-effective drugs. The result your plan saves two ways: Managed formulary / tiered co-insurance levels Claims analysis indicates, a group with a prescription plan that moves to a tiered platform with the DTF may be able to reduce their plan costs by up to 4%.* Prescription drug plan 100% co-insurance DTF 100% co-insurance + Original prescription drug plan 80% co-insurance Plan costs reduced by 4% * Potential savings depend upon plan design and must be quoted on a case-by-case basis Member switching Additional savings can be generated if plan members switch their existing medications to lower cost DTF alternatives. Even at a higher co-insurance than tier two medications, the lower cost of DTF drugs offsets their increased member reimbursement level, ultimately reducing the overall cost to your plan. For example: The DTF drug, Pariet, is equally effective as the drug, Losec, in treating ulcers. However, Pariet is approximately 35% cheaper. By switching to the DTF medication, drug costs are reduced - for both your plan member, as well as your plan. Losec 70% co-insurance Pariet 90% co-insurance Savings if switched between Losec and Pariet Total drug cost $76.00 $49.00 Member cost $22.80 $4.90 Member saves: $17.90 Plan cost $53.20 $44.10 Plan saves: $9.10 *Pricing comparison courtesy of ESI Canada and is provided for demonstrative purposes only. Actual drug costs may vary at the time of purchase. 2

3 More about ESI Canada s Dynamic Therapeutic Formulary (DTF) ESI developed the Dynamic Therapeutic Formulary (DTF) with the intent to provide clinically effective and affordable drug coverage for plan members, while offering possible cost savings to both the plan member and the plan sponsor. Who determines the drugs covered by the DTF? ESI has a Drug Evaluation Committee (DEC), which includes ESI Canada s doctors of pharmacy, pharmacists and pharmacy technicians. The DEC can also draw on the resources of their US parent company, Express Scripts to assess the impact of new drugs, which may have been marketed in the United States before they are marketed in Canada. The DEC will then make recommendations about new drugs to the Plan Management Validation Committee. The Plan Management Validation Committee is composed of ESI pharmacists, ESI Health Claims Administration, ESI Customer Services, external pharmacy consultants and representatives from insurance carriers. This group will review the DEC recommendation and decide if the new drug should be covered or if existing drugs should be removed. What drug categories are included in the DTF? Although the DTF is based on a clinical review of most drugs, certain drug categories are typically included or excluded from the DTF. WHAT DRUG CATEGORIES ARE INCLUDED AND EXCLUDED FROM THE DTF? Includes Copies of drugs (e.g., generics) already included in the plan Most dosage formulations for a listed drug are included (e.g., oral liquids, slow release tablets, etc.) Diabetic supplies (excluding devices and monitors) and insulin Drugs for life-threatening diseases: most drugs for HIV/AIDS, cancer, hepatitis, organ transplant, antibiotics, and blood clots Allergenic serums Life-sustaining non-prescription drugs (e.g., low dose aspirin) Excludes Hospital drugs Smoking cessation products Erectile dysfunction drugs Anti-obesity drugs Fertility drugs Drugs to promote or inhibit hair growth Pharmaceutical devices (except for diabetic syringes, needles and lancets) Drugs approved for cosmetic conditions (e.g., Botox Cosmetic) Oral drugs specifically indicated for acne therapy (e.g., Accutane, Diane-35) Blood derivatives Non-hormonal contraceptives (e.g. foams, devices) Diagnostic agents Radiodiagnostics Non-prescription medications (except life sustaining) Herbal products Vaccines 3

4 ESI s 3-Step DTF Drug Evaluation Process ESI follows a three-step process for assessing drugs for inclusion on the DTF. Step 1 Selecting which drug classes to include in the DTF All drug classes are reviewed to determine if a specific drug class should be included in the DTF. Step 1 considers the following Is it a common treatment used for the medical condition? Is it a drug / drug class of choice or considered a therapeutic alternative? What is the impact on mortality, morbidity, hospitalization or productivity? Is this drug / drug class affected by potential plan design considerations? (inclusions, exclusions, limitations) Is there a potential that this drug / drug class can be used inappropriately? Are there major side effects known with this drug class? Step 2 Selecting preferred DTF drug(s) for each drug class At this stage The most highly utilized drug classes representing approximately 80% of drug cost are analyzed in more detail to select a preferred drug or drugs for the DTF. Drugs that are generally used clinically for the same or similar indications are compared. If a more cost-effective drug exists with similar clinical value, it will be selected as the preferred therapy and the other drugs will be excluded from the DTF. If all drugs in a therapy class are similar in effectiveness, side effects and cost, then all drugs in that class will be included. Step 3 Monthly reviews Regular reviews All new drugs introduced to the Canadian market are reviewed monthly to determine eligibility for the DTF. New strengths or new formulations of an existing drug (e.g., line extensions) will generally be included in the DTF if the brand drug or active ingredient already exists in the DTF. New generics will generally be included if the brand drug is already in the DTF. DTF Possible results Inclusion of the drug in the DTF. Inclusion of the drug in the DTF with Prior Authorization (PA) protocols to ensure appropriate coverage of drugs. (Typically PA is used when new drugs have a potential for unapproved use or a government or hospital drug program may cover the drugs.) Exclusion of the drug from the DTF. Drugs may be removed from the DTF if new information (clinical or cost) indicates that it is no longer clinically sound or cost-effective. 4

5 Clinical effectiveness of DTF drugs To determine the clinical efficacy of a drug to be included in the DTF, the following criteria is used: A drug will be covered if it is accepted as a drug of choice by a published medical journal, unless it is significantly more expensive than another drug in the DTF that is therapeutically equivalent for the condition it treats. If a drug in the DTF already treats the same condition as a new drug, the new drug will have to offer a therapeutic advantage or be cost neutral to be included. Cost-effectiveness After considering the clinical criteria for inclusion of a drug, the following economic criteria are used to assess the drug s cost-effectiveness and its potential financial impact on drug plans: Financial impact assessments Cost comparisons for similar drugs and Pharmacoeconomic analyses (comparisons of pharmaceuticals and the economic benefits of using them) A new drug will normally be covered if there is not a drug on the current DTF to treat a condition. Strong consideration will be given to drugs that have documented medical literature to show it reduces absenteeism and/or increases productivity. For more information on ESI Canada s Dynamic Therapeutic Formulary or our tiered DTF drug plan, contact your Manulife Financial representative. 5

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