Annual Formulary Exclusions Force Mid-Treatment Drug Switches

Each year, PBMs publish updated formulary exclusion lists that remove previously covered medications, effective January 1. A patient who has been stable on a medication for years can discover — often in December — that their drug will no longer be covered in the new plan year. They must either switch to the PBM's preferred alternative, go through a lengthy prior authorization process, or pay full out-of-pocket cost for their existing medication. This happens to millions of patients every year across all major PBMs. The clinical harm is not theoretical. Medication switches for stable patients carry real risks: side effects from the new drug, loss of disease control during transition, and psychological distress from being forced to change what was working. For psychiatric medications in particular, switching a stable patient to a "therapeutically equivalent" alternative can destabilize their condition for weeks or months. A 2022 study in the Journal of Managed Care & Specialty Pharmacy found that formulary-driven switches in depression and bipolar patients were associated with 23% higher rates of emergency department visits in the 90 days following the switch. PBMs add roughly 100-200 drugs to exclusion lists each year. Express Scripts' 2024 exclusion list removed over 130 medications. CVS Caremark's excluded over 100. These decisions are ostensibly based on clinical equivalence and cost, but PBMs face no accountability for adverse outcomes when patients are forced to switch. The PBM captures formulary rebates from the preferred manufacturer; the patient and their physician bear the clinical consequences. Formulary exclusions persist because they are the primary mechanism through which PBMs negotiate rebates. A PBM tells Manufacturer A: "Give us a 50% rebate or we will exclude your drug and put Manufacturer B's drug in the preferred position." This leverage generates billions in rebate revenue, but it subordinates clinical decision-making to commercial negotiation. The physician who prescribed the original medication based on the patient's specific clinical profile is overridden by a PBM formulary committee making population-level cost decisions. The root cause is that formulary design in the U.S. is a business negotiation, not a clinical process. While PBMs employ Pharmacy & Therapeutics committees, these committees operate within financial parameters set by the PBM's rebate strategy. There is no requirement that formulary changes be evaluated for patient-level clinical impact, no mandatory transition period for stable patients, and no liability for adverse outcomes caused by forced switches. The patient is the product being leveraged, not the customer being served.