The Academy of Managed Care Pharmacy’s
`Concepts in Managed Care Pharmacy
`
`Prior Authorization
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`What is Prior Authorization and Why is it an Essential Managed Care Tool?
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`Health plans, employers and government-sponsored health care programs are focusing their
`attention on optimizing patient outcomes through the use of medications that have established
`evidence of efficacy and safety, while providing the highest value. Implementation of a well-
`designed, evidence-based prior authorization program optimizes patient outcomes by ensuring
`that patients receive the most appropriate medications while reducing waste, error and
`unnecessary prescription drug use and cost. Prior authorization (PA) is an essential tool that is
`used to ensure that drug benefits are administered as designed and that plan members receive the
`medication therapy that is safe, effective for their condition, and provides the greatest value.
`Prior authorization requires the prescriber to receive pre-approval for prescribing a particular
`drug in order for that medication to qualify for coverage under the terms of the pharmacy benefit
`plan.1 Drugs that require prior authorization will not be approved for payment until the
`conditions for approval of the drug are met and the prior authorization is entered into the system.
`Prior authorization procedures and requirements for coverage are based on clinical need and
`therapeutic rationale. The process gives the prescriber the opportunity to justify the therapeutic
`basis for the prescribed medication.2 Administration of a prior authorization process must take
`into consideration the desired outcome for the patient, the design of the drug benefit, the value to
`the plan sponsor, and all statutory and regulatory requirements. Prior authorization may also be
`referred to as “coverage determination,” as under Medicare Part D.
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`Guidelines and administrative policies for prior authorization are developed by pharmacists and
`other qualified health professionals Each managed care organization develops guidelines and
`coverage criteria that are most appropriate for their specific patient population and makes its own
`decisions about how they are implemented and used. Well-designed prior authorization
`programs consider the workflow impact on health care system users and minimize inconvenience
`for patients and providers.
`
`Requiring prior authorization in a drug benefit can effectively help avoid inappropriate drug use
`and promote the use of evidence-based drug therapy. Such efficient and effective use of health
`care resources can minimize overall medical costs, improve health plan member access to more
`affordable care and provide an improved quality of life.3
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`Approved by AMCP Board April 2012
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`IPR2017-00807
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`Examples of How Prior Authorization is Utilized within a Prescription Drug Benefit
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`Prior Authorization Addresses the Need for Additional Clinical Patient Information:
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`The prior authorization process can address the need to obtain additional clinical patient
`information. For example, online adjudication of prescription claims by prescription benefit
`management companies (PBMs) and health plans has resulted in an efficient process for
`administering the drug benefit, however necessary and pertinent information required for drug
`coverage decisions is not always available via the online adjudication system. For example, a
`patient's clinical diagnosis, weight and height information, laboratory results, over-the-counter
`medication use, and non-drug therapy are examples of information that is not transmitted during
`the claims adjudication process. The prior authorization process can be used to obtain this
`additional information. This information is then evaluated against established plan coverage
`guidelines to determine if coverage is appropriate.
`
`An example of a situation in which more information would be needed in order to make sound,
`cost effective, clinical decisions would be for medications that are approved to treat more than
`one condition. For example, Botox is used to treat muscular disorders, but can also be used for
`cosmetic purposes (e.g., eliminate wrinkles). If the plan does not cover cosmetic products or
`procedures, the prior authorization program would ensure that Botox is covered only when it
`used for appropriate medical indications
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`A Tool to Promote Appropriate Drug Use and to Prevent Misuse:
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`Prior authorization can be used for medications that have a high potential for misuse or
`inappropriate use. For some categories, health plans may limit the coverage of drugs to FDA-
`approved uses and require a prior authorization for off-label indications. An example of an off-
`label use could be a physician prescribing a powerful opiate that has only been approved by the
`FDA to treat break-through cancer pain, in a patient that has chronic back pain. In this case there
`is insufficient clinical evidence supporting the use of the medication for non-cancer purposes and
`prescribing such a medication could pose a serious safety risk for the patient. Prior authorization
`would be used to limit coverage in this situation to those patients where safety and appropriate
`use has been documented.
`
`A prior authorization request for an off-label indication requires documentation from the
`prescriber to confirm the use for which the product was prescribed. The plan may require the
`prescriber to present evidence supporting the unapproved use or assign a pharmacist to conduct a
`medical literature review to search for evidence for that indication. A pharmacist would then
`evaluate the documentation to determine whether use of the prescribed drug for the indication
`provided is justifiable.
`
`In addition, prescribing access to select medications may be limited to specific physician
`specialists. Prior authorization guidelines may stipulate that only certain medical specialists may
`prescribe a given medication. This type of prior authorization requirement is appropriate for
`specialized medications that require a high level of expertise in prescribing and monitoring
`treatment. The prior authorization process will ensure that coverage for these select medications
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`will be granted when medically necessary and prescribed by the appropriate specialist (e.g.
`limiting the prescribing of chemotherapy medications to oncologists.)
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`Administration of Step Therapy:
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`Another prior authorization approach is step therapy. A step therapy approach to care requires
`the use of a clinically recognized first-line drug before approval of a more complex and often
`more expensive medication where the safety, effectiveness and value has not been well
`established, before a second-line drug is authorized. Step therapy requirements ensure that an
`established and cost-effective therapy is utilized prior to progressing to other therapies. If the
`required therapeutic benefit is not achieved by use of the first-line drug, the prescriber may
`request use of a second-line medication.
`
`For example, a step therapy approach may be used for non-steroidal anti-inflammatory drugs
`(NSAIDs), a drug class that is used to treat conditions such as arthritis pain and inflammation.
`Traditional NSAIDs are available in generic forms and offer an established option for treating
`pain and inflammation, but they can sometimes result in stomach irritation and side effects. A
`newer, more expensive branded NSAID also treats pain and inflammation, but may be a better
`option for patients who have experienced a gastrointestinal side effect with a traditional NSAID
`or who already have a gastrointestinal condition. An NSAID step therapy rule requires that a
`patient try a traditional, generic NSAID or provide documentation of a gastrointestinal condition
`prior to receiving approval to fill a prescription for the newer, more expensive branded product.
`
`The step therapy approach may utilize automated adjudication logic that reviews a patient’s past
`prescription claims history to qualify a patient for coverage at the point-of-sale without requiring
`the prescriber to complete the administrative prior authorization review process. If patients have
`the first-line drug in their claims history, they may automatically qualify for coverage of a
`second-line therapy without triggering a review for coverage. In addition, this type of logic may
`use other available patient data (e.g., age, gender, concomitant medications, diagnosis, and
`physician specialty) to qualify patients for coverage without the need for a prior authorization
`review. Utilization of this logic allows plans to manage the benefit without requiring
`unnecessary member or prescriber disruption. While this sophisticated “look-back logic” is
`often used for step therapy rules, it can be used for other types of prior authorization rules as
`well.
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`Administration of Quantity Management Rules:
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`The prior authorization process can be used to administer quantity management rules, including
`rules based on duration of therapy, quantity over a period of time and maximum daily dose edits.
`A plan may limit drug benefit coverage to quantities that are consistent with FDA-approved
`durations or dosing. There may be instances, however, where these limits should be overridden
`in the best interest of patient care. For example, proton pump inhibitors are effective in treating
`peptic ulcer disease. Most ulcers are healed within an eight-week duration of therapy; therefore,
`plans may limit the duration of treatment to minimize side effects and reduce inappropriate long-
`term use. Certain conditions, such as erosive esophagitis, however, may require chronic
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`administration of proton pump inhibitors. By employing the prior authorization process, plans
`can extend the duration of the therapy limit for patients who meet established parameters.
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`Exception Process for Closed Formulary Benefits:
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`The formulary is a key component of health care management and is a tool used to ensure that
`the medications available for use in a prescription drug program have been demonstrated to be
`safe, effective and affordable while maintaining or improving the quality of patient care.4
`Formulary administration generally falls into one of two categories - open or closed. Under an
`open formulary pharmacy benefit, the health plan or payer provides coverage at the point-of-sale
`for all medications covered under the prescription benefit, even those not listed on the formulary.
`
`Under a closed formulary pharmacy benefit, the health plan or payer provides coverage at the
`point-of-sale only for those drugs listed on the formulary. The prior authorization process can be
`used by prescribers and patients to request coverage for drugs that are not included on a plan’s
`formulary. As no formulary can account for every unique patient need or therapeutic eventuality,
`formulary systems frequently employ prior authorizations. . This process provides a mechanism
`to provide coverage on a case-by-case basis for medications otherwise not eligible for coverage.
`
`For example, to protect against cardiovascular disease, a patient may need significant
`reductions in LDL (bad) cholesterol levels that may not be achievable with a health plan's
`formulary drug and therefore a coverage exception for a high-potency non-formulary medication
`would be requested using the plan's exception process provided certain circumstances are met
`to ensure patient safety and appropriate utilization.
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`Conclusion
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`The Academy of Managed Care Pharmacy (AMCP) recognizes the role of prior authorization in
`the provision of quality, cost-effective prescription drug benefits. The fundamental goal of prior
`authorization is to promote the appropriate use of medications. Pharmacists in all practice
`settings must develop specific guidelines to ensure that the prior authorization process is
`administered in the most efficient manner possible, is fully compliant with statutory and
`regulatory requirements, and provides members, prescribers and pharmacists with an evidence-
`based, rational process to promote appropriate drug use.
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`The Academy of Managed Care Pharmacy’s mission is to empower its members to serve society
`by using sound medication management principles and strategies to achieve positive patient
`outcomes. AMCP has more than 4,800 members nationally who provide comprehensive
`coverage and services to the more than 200 million Americans served by managed care. More
`news and information about AMCP can be obtained on their website, at www.amcp.org.
`
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`1 Neil MacKinnon and Ritu Kumar. "Prior Authorization Programs: A Critical Review of the Literature." Journal of
`Managed Care Pharmacy 7 (July/August 2001): 297.
`2 Robert Navarro, Michael Dillon and James Grzegorczyk, "Role of Drug Formularies in Managed Care
`Organizations," in Managed Care Pharmacy Practice, ed. Robert Navarro, p. 249.
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`3 Academy of Managed Care Pharmacy. Concepts in Managed Care Pharmacy Series -- Formulary Management.
`2009. http://www.amcp.org/WorkArea/DownloadAsset.aspx?id=9298 (accessed March 28, 2012).
`4 Academy of Managed Care Pharmacy. Concepts in Managed Care Pharmacy Series -- Formulary Management.
`2009.
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