The Pharmacy Benefit Management Policies

Healthcare insurance companies, through Pharmacy Benefit Management (PBM) policies, typically employ drug formularies which designate which drugs they will pay for, under what circumstances and in what quantities, with or without co-pays. Physicians, particularly those experienced in the medical specialty under which drugs are typically prescribed, may not be present on formulary review boards which determine these policies or on benefit management panels which implement them. PBMs sometimes also impose additional rules which may be unsafe for patients or deleterious to the patient-physician relationship, or both. The New Jersey Psychiatric Association takes the following positions with regard to PBM policies:

We oppose:

  1. “Step therapy” policies which are not clearly related to dangerousness of prescribed drugs or extreme cost issues. These policies require time-consuming and potentially dangerous prior trial and failure of “preferred” formulary drugs before the company will cover the drug originally prescribed by the physician.
  2. Onerous prior authorization requirements and arbitrary quantity caps for drugs in common use. (This relates to formulary restrictions based not on medical practice standards but on proprietary business issues beyond reasonable cost control measures.)
  3. Forced quantities and dosages of drugs against the judgement of the prescribing physician.
  4. Automatic refills and delivery to patients who do not explicitly request or authorize a refill and home delivery at that time. These practices can result in accumulation of unused drugs, theft or diversion of drugs being delivered, and by-passing of check-ups by the prescribing physician.
  5. Predatory pricing of well-established common drugs, both brand-name and generic.
  6. The substitution for a prescribed drug of a different drug which is included in the same broad “therapeutic category” but with a different mechanism of action, efficacy, side effect and safety profile, or a generic for a brand-name drug (or vice versa) without the express consent of the prescribing physician. Different drugs are not interchangeable, and patients may experience different effects or idiosyncratic side effects to generic versus brand-name formulations of the same drug.

We favor:

  1. Including psychiatrists on formulary review boards that are setting policies for coverage of psychotropic agents and on benefit management panels which implement them.
  2. Requiring full disclosure of names and credentials, as well as any conflicts of interest of all individuals who make decisions about drug coverage.



  1. American Psychiatric Association, Position Statement on Pharmacy Benefit Management/Pharmacy Benefit Managers (PBMs), 2002
  2. Bransfield, Robert C., Consensus and Evidence Based Guidelines for Psychotropics in Formularies, approved by the New Jersey Psychiatric Association, 5-04-2005
  3. American Medical Association, Managed Care Cost Containment Involving Prescription Drugs, Policy H- 285.965, Reaffirmed 2014
  4.  American Medical Association et al., Prior Authorization and Utilization Management Reform Principles, accessed 2-13-2017

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