Over the last decade, insurers have increasingly used step therapy, or “fail-first,” policies as a strategy to contain pharmaceutical costs. Step therapy requires patients to begin treatment for a medical condition on a typically less expensive drug, and only progress to more costly second-line drugs when the first-line therapy becomes ineffective or inappropriate. Step therapy shifts clinical decision-making away from physicians and toward centralized policies that define treatment steps for patient populations based on the potential for more cost-effective care.
The rapid growth in the use of step therapy policies in recent years—from 27 percent in 2005 to 73 percent in 2013 among employers—indicates a misunderstanding about the direct and indirect harms of this “one-size-fits-all” approach.
Step therapy can delay access to the most efficacious therapies
This can increase the duration of illness and raise the total cost of health care in the long-run. Delays in receiving health care, whether caused by step therapy edits or other factors, have been shown to be significantly detrimental to patient health outcomes.
For example, breast cancer patients with a treatment delay of three months or more had a 12 percent lower five-year survival rate compared with breast cancer patients with only a zero to three month delay. Similarly, patients with rheumatoid arthritis who delayed disease-modifying treatment for approximately four months experienced significantly more radiologic joint damage after two years compared with patients who began treatment within two weeks of diagnosis.
Delaying effective treatment can lead to disease progression, increased symptom severity, poorer patient outcomes, or even death. For example, a four-week delay in receiving adjuvant chemotherapy has been associated with a significant decrease in disease-free survival and overall survival in colorectal cancer patients. Similarly, patients with multiple sclerosis (MS) who initiated interferon beta-1b treatment at the time of diagnosis had a 41 percent lower risk of developing clinically definite MS compared with MS patients who started treatment two years after diagnosis.
Alzheimer’s research also indicates that patients treated early and persistently show less behavioral, functional, and cognitive deterioration over time than those treated later — early detection and treatment can delay MS progression by at least 2.8 years in some cases. Thus, the available evidence clearly demonstrates that delays in health care, including those potentially caused by waiting for step therapy edits, can result in significant undue harm to patients.
In the case of chronic illness, medication switching due to blunt formulary policy can also have negative health consequences. For example, approximately 100 million Americans suffer from chronic pain. Acute and chronic pain management is unique to each patient and must be approached as such — what relieves pain for one patient may not work for another.
Furthermore, efficacy is not the only dimension that should be considered — side effects and changing symptoms must also be taken into account. For example, psoriasis medications are well known for side effects (e.g., renal problems and bone marrow suppression), which requires doctors to monitor patients and rotate therapies as needed based on changes in symptoms resulting from accumulated toxicities. Similarly, although COX-2 painkillers are typically $50 to $70 more than traditional NSAIDS, COX-2 painkillers can reduce the risk of serious gastrointestinal adverse events. Although Blue Cross Blue Shield states that they would allow exemptions for “members at high risk for adverse events from NSAID therapy” (i.e., those with ulcer history), is it ethical to require a patient to experience severe gastrointestinal side effects before approving a COX-2?
Step therapy trades prescription spending for time and hospital costs to patients and providers
One study reported that 28 percent of patients who had encountered a step therapy edit spent three or more hours trying to obtain second-line drugs from their physicians’ offices. Increased rates of discontinuation, along with delays in accessing treatment, can contribute to less efficient use of health care resources and increased costs over time. For example, the introduction of step therapy for schizophrenia medications initially saved Georgia’s Medicaid program $20 per member per month, but the state subsequently spent $32 per member per month on outpatient services because patients utilized ineffective medications.
Overall, the combination of prior authorization and step therapy is associated with higher inpatient spending, while formulary restrictions have been positively correlated with higher drug costs, more office visits, and higher likelihood of hospitalization among patients with certain diseases. Furthermore, drugs that require laboratory tests and monitoring can increase non-pharmacy costs that may have been avoidable with alternative therapies.
Step therapy also increases the administrative burden on medical providers. Staff must spend time contacting insurance companies to determine if a drug will be covered, in addition to appealing denied treatments, which leaves less time for patient-centered health care. By some estimates, this increased administrative burden takes approximately two hours per patient.
From a financial perspective, maintaining insurer preferred drug lists, spending time requesting authorization for second-line therapies, and imposing on physicians’ ability to prescribe their first choice drug is estimated to cost $1,569 per physician per year for statins and anti-hypertensives alone. Thus, it is no surprise that an American Medical Association survey of 2,400 physicians revealed that 78 percent of doctors rated “eliminating hassles caused by prior authorization requirements” as very important to address.
Complicated step therapy rules create barriers to health care
The time and administrative burden associated with step therapy is an obstacle to access that can lead to unnecessary breaks in treatment. Indeed, depending on therapeutic class, 7 percent to 22 percent of patients did not submit any prescription claim to their insurance provider following a step edit, instead forgoing treatment.
This lack of follow-up may be due to insufficient levels of effective pharmacist involvement in the resolution of rejections, or due to the reality that more than 77 million U.S. adults have basic or below basic health literacy skills. This widespread low level of health literacy makes it challenging for patients to decipher complex policies and take appropriate action. Ultimately, the hassle patients face attempting to obtain coverage in restrictive health plans may result in lower medication utilization and adherence, with a related increase in total health care spending.
‘Fail-first’ policies, as their name suggests, increase the risk of dangerous side effects
For certain patients–like those who need immunologic and biologic agents—these concerns are particularly salient. Researchers found that 18 insurance plans— representing approximately 97 million insured lives—required 45 percent of beneficiaries to “step through” one or two drugs bearing an FDA “black box warning” of serious adverse events before progressing to a drug without such warning. As a result, patients may needlessly face severe health risks in disease areas that have benefited from recent advances in immunologic and biologic therapy, such as cancer and inflammatory diseases.
Legislative and regulatory options
State legislatures are clearly concerned about these issues. Most recently, Indiana and West Virginia joined seven other states, including Connecticut, California, and Louisiana, in passing laws providing step therapy protections for patients. Other state legislatures, such as New York, Ohio, Illinois, and Florida, are in the process of attempting to limit the reach of step therapy protocols. Proposed bills about step therapy echo similar concerns — they typically recommend regulating the number of times a patient can be forced to fail on a sub-optimal medication and defining what constitutes “failure” before a patient can be exempt from the step therapy protocol.
Unfortunately, insurers in most states are still not required to justify formulary policies with evidence, have transparency in their policies, or address exemption requests in a timely manner. Thus, there is a clear need for legislation that protects patient access by, for example, limiting the length of time that patients must fail on an inadequate treatment before lifting a restriction.
One size does not fit all
In an ideal world, insurers would be able to provide limitless coverage of care while charging low premiums, allowing providers to make patient-by-patient decisions and leveraging the best treatments that medical innovation has to offer. However, in reality, insurers must balance the cost of covering care against the need to increase premiums (and potentially lose customers). Similarly, public payers are faced with resource constraints that require attempts to contain costs. Resulting efforts to contain coverage costs have led to centralized medical decision-making with a “one-size-fits-all” approach.
But one size does not fit all. Each patient has unique symptoms and side effects, making them respond differently to mandated choices. This problem is not exclusive to step therapy, but encompasses all health plan restrictions, including differential copays and cost sharing, pre-authorization rules, and quantity limits on prescriptions.
Centralized decision-making assumes that what works for one patient will work for another. However, doctors typically understand the nuances of their patients’ health issues best. Thus, the goal of a plan’s policies should be to promote optimal matching of patients to existing therapies rather than to declare, without medical expertise, that one therapy is better than another for everyone. Health plan restrictions designed to control costs should be implemented with great caution. Otherwise, over time, uncontrolled restrictions on access will lead to worse health outcomes and more health care spending down the road.
Authors’ Note
Adrienne Chung and Joanna MacEwan are employees at Precision Health Economics and Dana Goldman is a founder, member of the Value and Evidence Advisory Board, and Executive Economist at Precision Health Economics, a consulting firm to the health care industry.
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