PBM Restrictions Force Dermatologists to Consider OTC Products

Pharmaceutical Benefit Managers, or PBMs, are gaining increasing leverage in formulary decision-making, which ultimately affects the treatment choices clinicians make. Indeed, just three companies (CVS/Caremark, OptumRx, and ExpressScripts) control 79 percent of the market, measured by adjusted claims data. As CVS/Caremark states in their whitepaper “Current and New Approaches to Making Drugs More Affordable” (August 2018) that PBMs employ three strategies to reduce the cost drugs:

• Encouraging use of generics through step therapy
• Employing prior authorizations to ensure evidence-based therapy
• Pushing pharmaceutical companies to compete on price when companies have clinically-equivalent drugs

While the cost-savings aspect to the insurance companies of the three strategies is undeniable, all of us have encountered the administrative and personal burden they place on our staff and us. Long and repeated calls with pharmacies, medical directors, and patients have a measurable cost at the practice level, and ultimately, at the level of national care. The Council for Affordable Quality Healthcare (CAQH), a non-profit alliance of health plans, released data in 2020 estimating the cost of each prior authorization to a practice at $11 when done manually, and between $2 and $4 when done electronically. Practices are not reimbursed for this cost.

But the formulary restrictions have more than a measurable economic cost in our offices. The PBMs’ tireless efforts to contain pharmaceutical expenditure is stifling innovation, forcing us to rely on drugs that are decades old. This rings true especially for topical medications for common skin conditions such as acne and rosacea. A quick glance at CVS/Caremark’s 2021 formulary reveals that age-old treatments such as benzoyl peroxide (BPO), BPO and Clindamycin or Erythromycin, Clindamycin or Erythromycin alone, and adapalene with or without BPO comprise the options. Notably absent are novel topical medications with enhanced delivery systems, combination ingredients, or ingredients that were historically impossible to stabilize, all of which offer benefit to our patients. This strategy works; in the white paper mentioned above, CVS/Caremark boasts that, “US generic use is nearly 90 percent—almost double that of the OECD.”

Industry Responses

Pharmaceutical companies themselves are trying to circumvent the restrictions of the PBMs. Employing fixed-price cash-pay options, thereby offering their products outside of the purview of PBMs, innovative companies are trying to change the model of purchasing medications. While the advantages of this platform include complete price transparency, no administrative burden on practices, and the assurance that the correct product is delivered as prescribed (i.e., no generic switching), patients may be uneasy as they are unable to use their pharmacy benefits on these medications. Entrepreneurial companies have tried to solve the PBM conundrum by offering “compounded” prescriptions at fixed prices. These products involve the blending of approved, generic ingredients into a customized topical product. While many clinicians and patients alike have gravitated to this option, the lack of information and standardization regarding stability, concentration, manufacturing, and efficacy cause others to search for a different solution.

Filling the Gap

So where can we turn for innovation, to avoid the burden (both financially and administratively) of prior authorizations, and ensure our patients are being treated with efficacious yet tolerable products? Companies that focus on over-the-counter (OTC) products are filling the gap. Indeed, companies now utilize clinical discovery, testing, and manufacturing processes previously found only in the pharmaceutical space to bring new OTC products to consumers.

As background, the FDA limits the active ingredients, as well as their formulation and dose, allowed in OTC products to those that are generally recognized as safe and effective (GRASE). These ingredients, outlined in a monograph, can be combined and formulated without further FDA approval. The monograph for acne, for example, includes benzoyl peroxide, resorcinol, resorcinol monoacetate, salicylic acid, and sulfur. In 2016 the FDA also approved adapalene 0.1% gel for OTC acne use.

While these ingredients have been around for decades, skincare companies’ drive to enhance penetration, tolerability, and efficacy harnesses these ingredients’ true potential for medical (and aesthetic) purposes. A quick search in the professional resources section of their websites reveals mounds of data supporting the pre-clinical developmental work and clinical studies showing efficacy. One cannot expect the same rigor of these trials as is seen in pharmaceutical drug development, however many include placebo or comparator arm(s), and are powered sufficiently to achieve statistical significance.