How a ‘Waste-Free Formulary’ Misses What’s Most Important to Employers

Jennifer Bright
Innovation and Value Initiative
Mark Linthicum
Innovation and Value Initiative

The “waste-free formulary” under development by the Pacific Business Group on Health and reported by Managed Care (“The Few. The Effective. The Cheapest. The Waste-Free Formulary,” August 2018) sounds promising, but ultimately may not deliver the impact to self-insured employers its creators are promising.

In the article, Lauren Vela from the Pacific Business Group on Health says: “We want doctors to have all the information they need at the time of prescribing to select the best and most high-value options for their patients.”

Jennifer Bright

Mark Linthicum

We absolutely agree but are also concerned that the proposed waste-free formulary approach glosses over a critical question: What constitutes “high-value”?

As this and other efforts aim to restrict spending to high-value care, the definition of value plays a central role in determining the care that patients ultimately receive. Clinical effectiveness and cost are not the only factors, though they are clearly of great importance. Patients’ concerns about risks of side effects, clinical demands (such as having to go to an infusion center for hours versus taking a pill), and effects on ability to work, on family, and on caregivers—they all matter.

Most value assessments based on cost effectiveness provide generalized estimates derived from population averages. Local decision makers, such as employers, need and deserve tailored analyses that keep pace with both scientific developments and emerging health care data sources.

But how do we advance to value assessment?

First, better value measurement must hardwire the patient perspective into all the assessment tools. Patients differ in their personal preferences, progression of illness, and response to treatments. These are all important factors to the overall health and productivity of the covered lives that employers manage. Value assessments should incorporate methods and tools to account for this diversity.

Second, assessing value must be a community activity. Patients, employers, policymakers, payers, providers, and manufacturers all have important contributions to make if we are to move to value-based decision making. No one entity has all the answers to determine value; instead, we need a democratized approach that considers and strives to incorporate all viewpoints.

Third, value assessment must be transparent. An increasing number of organizations are engaged in earnest efforts to identify and measure high-value care, but stakeholders don’t trust one another. Differences of opinion about approach and the methods used to discern value are a healthy part of transforming our conversation from volume to value. Going forward, such analysis should occur in an open-source, visible environment, rather than emerge from an opaque, black-box process. Transparency is a powerful tool for equalizing stakeholder perspective and for accountability. Let’s use it in health care measurement.

Fourth, recipes for value assessment must go beyond cost and evidence of outcomes from clinical trials. Real-world data on patient outcomes are needed to supplement trial evidence and provide insights into how therapies work in patients. Value assessment must incorporate the full spectrum of experience with an intervention. Impact on caregiver burden, absenteeism and productivity, and indirect medical costs are just three data points employers should have at their fingertips when evaluating value.

Eliminating waste in formularies is a laudable goal, and examining cost effectiveness is a good start. But by following the principles described above, value assessment models and tools can be created that better measure therapeutic value and give employers modernized resources to weigh benefit, risk, and costs in a way that reflects how they define value.

Jennifer Bright is the executive director of the Innovation and Value Initiative in Los Angeles, Calif. Mark Linthicum is the organization’s director of scientific communications.