Drug formulary rejections jump 67%

Insurers may exclude drugs from formularies or impose utilization management to control healthcare costs while safeguarding the quality of care. Although such practices have been shown to reduce drug spending, they also may decrease access to certain drugs and increase costs for patients taking nonpreferred or excluded products.

“Critics argue that these policies impose undue barriers to care, including placing onerous administrative burdens on prescribers and pharmacies,” according to a new JAMA Network report. “Proponents contend they are necessary to curb wasteful spending.”

These concerns have made utilization management policies an active focus of recent federal and state policymaking. For example, federal policymakers recently announced efforts to increase the accuracy and speed of prior authorization processes for drugs, while states have introduced such policies as limiting review times, exempting physicians with low rejection rates and requiring insurance plans to honor existing authorizations after coverage changes.

See also: Specialty drugs now consume over half of total drug spend

Researchers analyzed pharmacy transactions to determine the frequency and consequences of formulary restrictions throughout all major types of insurance. Across all payer types, formulary rejections were common, increased substantially over time and frequently resulted in delayed or no dispensing of the prescribed drug or another medication in the same therapeutic class.

These findings have several implications for policymakers, prescribers and patients:

First, the 67% documented increase in formulary rejections from 2018 to 2024, driven largely by prior authorization and step therapy requirements, signals a continued shift toward more utilization management of covered drugs in the United States rather than formulary exclusion alone. Although this also partly reflects changes in the mix of products entering the sample over time, it nevertheless indicates a rising administrative burden that prescribers and patients must navigate, even for covered products.

Second, differences in regulatory environments across insurance markets contribute to significant variation in how often products are rejected because of formulary. For example, although Medicaid may have preferred drug lists, it generally is required to cover all drugs if they are prescribed for a medically accepted indication.

Third, nearly half of the patients included in this analysis received no medication in the same therapeutic class within 90 days following a rejection. The remainder ultimately either filled the originally prescribed medicine or another medication in the same class.

“Formulary-based prescription rejections are frequent, increasing and often consequential for patients’ access to prescribed therapies,” the report concluded. “Across payer types, these policies commonly result in delayed or absent treatment rather than timely substitution. As utilization management continues to expand, policymakers and regulators should weigh its effects on real-world treatment initiation more directly, alongside its role in controlling drug spending.”

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