Years ago, the undeclared rule of law was that a Pharmacy and Therapeutics (P&T) Committee’s deliberations must be free of cost concerns. This rule is increasingly being overturned.

The P&T Committee, as a formulary decision-making body, was supposed to decide a new agent’s fate based only on the clinical evidence for efficacy and safety. According to the standard protocol, once the P&T Committee’s decided to add a product to formulary, it was then the pharmacy contracting executives’ responsibility to simply get it for the best price available. This created a handy shield to prevent public complaint that a health plan or insurer was really making decisions based treatment cost.

The preeminence of 2 trends has caused payers to rethink this firewall. First, over the course of 25 years, multitiered copayment designs have become the standard. The very idea of a 3-tier plan, for instance, is to prefer products that medical and pharmacy executives believe patients should be incentivized to use, based on some facet of value. In practical terms, if tier 1 is for generics only, what is the difference between tier 2 (preferred brands) and tier 3 (nonpreferred brands)? The clinical difference between a preferred drug and, say, “me-too” agents on tier 3 is often insignificant. Most often, it comes down to which offers the best net price. Medicaid and exchange plans seem to be reverting to 2 tier plans (generic and covered brands), but these, too, are based on perceived value.

The second trend is the movement towards value-based benefit design (VBBD). At its simplified core, VBBD tries to determine whether certain drugs have more value (in terms of proof of clinical effectiveness, safety, or cost) compared with others. As a result, formulary decision makers are increasingly seeking comparative-effectiveness information or head-to-head study results to help determine the value of a new treatments. This information is added to P&T Committee discussions (sometimes included, if available, in drug information monographs). The result of which is a determination of whether prior authorization or step edits may be warranted to access the drug and what those criteria might be. P&T Committee members will have a hand in those decisions as well.

It only then makes sense to integrate the discussion of a drug’s cost into that of its clinical merits at the P&T Committee level, rather than to keep the greater value picture separate from formulary decisions.

The double-digit growth of specialty pharmacy spending has injected new urgency into the conversation about value for payers. The P&T Committee is (still) the arbiter of value for the pharmacy benefit and for specialty pharmaceuticals. That is why at least two-thirds of P&T Committees are now fully invested in cost considerations. The old firewall has been breached.

SM Health Communications provides writing, consulting, and market research services for the long-term care and payer markets. Its proprietary P&T Insight™ virtual P&T Committee program is the leading mock P&T Committee product in the field. For more information, please visit or contact Stanton R. Mehr, President, at

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