When a health plan changes its formulary of covered prescription drugs, it cannot limit or exclude previously covered drugs that were prescribed for its enrollees before the formulary was changed. That’s the law, thanks to a CMA-sponsored measure passed almost 10 years ago.

HMOs are constantly negotiating for better prices on prescription medications. Often when a plan negotiates a cheaper price on a comparable drug, it changes its formulary. Thanks to the CMA-sponsored law passed in 1997 (AB 974), physicians cannot be forced to change their patients’ prescriptions every time a plan changes its formulary.

If a physician believes that a nonformulary drug is medically indicated, health plans are required by law to maintain an expeditious process for obtaining authorization for medically necessary, nonformulary prescription drugs.

Physicians should not, however, automatically reject a plan’s formulary or its recommendation to prescribe an alternate medication. Drug prices are soaring and there is no reason to prescribe an expensive drug if a lower-cost medication is just as effective. Physicians are encouraged to work with plans to prescribe the least expensive medication that is medically appropriate.

For more details, see CMA ON-CALL document #0507, “Drug Formularies and Pharmacy Benefit Managers.” ON-CALL documents are free to members at CMA's members-only website. Nonmembers can purchase ON-CALL documents for $2 per page in CMA's online bookstore.

Contact: CMA’s legal information line, 415/882-5144 or legalinfo@cmanet.org.