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More Drugs, More Use Limits Seen in 2007 Medicare Drug Formularies

By CQ Staff

October 20, 2006 -- The Centers for Medicare and Medicaid Services released an analysis Friday comparing Medicare drug plan formularies for 2007 and 2006, concluding that more drugs will be covered next year but that limits on their use will be somewhat greater.

For the drug-only private plans offered to beneficiaries in the traditional fee-for-service program, formularies for 2007 show a 13 percent increase in the number of drug "items" covered. They also show a "slight increase" in the number of drugs requiring "step therapy" before they can be used. These requirements "encourage people to try proven, cost-effective drugs first," the CMS analysis says.

However, the formularies for 2007 also show a "slight decrease" in the percentage of covered drugs with "quantity limit restrictions." CMS said the limits are applied "to some drugs with safety concerns" to make sure they are used in recommended doses, such as drugs for mental health conditions or to treat severe pain.

Next year's formularies for Medicare managed care plans offering prescription drug coverage show "a greater than 10 percent increase on average" in the number of covered drugs and "a slight increase in the rate of step therapy."

Scrutiny of the drugs used most by seniors shows an 8 percent increase in these products covered by the drug-only plans and a 6 percent increase in the most popular Medicare managed care plans. For the drugs in these managed care plans, "there are slight increases in step therapy, prior authorization, and quantity limit requirements," CMS said.

Each prescription for a prior authorization drug must be approved by the drug plan in order for it to be covered.

CMS notes that if a person with Medicare is taking a Part D drug that is not on the plan's formulary, "a required transition period allows the person to get a temporary supply of the drug while they arrange for an alternate prescription or ask for an exception."

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