Prior authorization of newer insomnia medications in managed care: is it cost saving?

Abstract

Study objectives: New pharmacotherapeutic treatment options are available to treat patients with 1 or more insomnia symptoms. However, these new pharmaceuticals are subject to a variety of managed-care tools, such as prior authorizations, that may restrict access to these medications. The objective of this study was to evaluate the economic consequences to a health plan that requires prior authorization for nonbenzodiazepine medications approved for the treatment of insomnia characterized by difficulties both falling and staying asleep.

Methods: An economic model was constructed to determine the effects of a typical prior-authorization program across a hypothetical managed-care population. Model parameters were derived from national estimates and a literature review.

Results: Economic consequences of a prior-authorization program were based on a hypothetical managed-care plan with 500,000 insured patients. An estimated acquisition cost of $300 per 100 tablets of medication requiring prior authorization, $40 to process each priorauthorization request, and prior-authorization rejection rates of 2% to 5% were considered. Using the default-model inputs of the hypothetical plan characteristics and costs, the economic model estimated a loss of $600,000 to $700,000 per year to the health plan. In a 3-way threshold sensitivity analysis when prior-authorization rejection rate was increased to 5%, the cost of each request in the prior-authorization program was decreased to $20, and the cost of a first-generation nonbenzodiazepine was decreased to a generic price (i.e. $100 per prescription), the model continued to show a net loss to managed care in each case.

Conclusions: This model showed that requiring prior authorization for newer sleep treatments might not be a cost-saving strategy for managed-care organizations.

Figure 1

Annual costs to a health maintenance organization (HMO) with and without prior-authorization (PA) requirements for Medication X (a new insomnia medication—eg, zolpidem extended-release, a second-generation nonbenzodiazepine). Where, N_A= Number of prescriptions of second-generation nonbenzodiazepines for which PA was approved in the entire year (20000 x 98% PA approval rate= 19,600) C_x= EAC of second-generation nonbenzodiazepine per member per prescription (PMPP) C_{prior-authorization}= Costs of PA for each prescription ($40) Nt = Total number of prescriptions of medication X prescribed in entire year N_Alt = Number of alternative medication prescribed for entire year (assuming 25% of medication X prescriptions for which PA was rejected and patient received first-generation nonbenzodiazepine) C_Alt = EAC of first-generation nonbenzodiazepine prescription PMPP N_gen= Number of generic medication prescribed for entire year (assuming 75% of medication X prescriptions for which PA was rejected and patient received less-expensive generic medication) C_gen = EAC of generic prescription PMPP