Health insurance companies increasingly employ cost management strategies as more expensive, specialized drugs enter the market. The use of step therapy is one of these cost-control strategies. The goal of step therapy is for patients to try low-cost medications before moving on to more costly ones.
Patients must first “fail” on the lesser-priced drug before they can “step up” to more expensive drugs. As a result, step therapy is also known as the “fail first policy.” Step therapy will increase in the next two years as more biosimilars enter the market. Biosimilars are typically less expensive versions of biologics, which are the most expensive drugs on the market.2
Prior authorization (prior auth or PA) is also a managed care process designed to reduce healthcare costs. PAs require patients to obtain approval from the payer before coverage, i.e., payment, is granted for a particular healthcare service (medication, diagnostics, imaging, etc.). While PAs and step therapy are both utilization management tools, payers use them as two distinct cost control strategies.
With insurance companies increasingly using step therapy and prior authorizations for cost control, understanding the details of step therapy is essential for prior authorization specialists, medical science liaisons (MSLs), and market access specialists. This guide provides the fundamental knowledge necessary to understand step therapy in today’s complex healthcare system.
What Is Step Therapy?
Step therapy is a type of prior authorization and utilization management tool. Patients must try the most cost-effective medication before “stepping up” to more costly options. The following are the key points to know about step therapy:4
- Is also called the “fail-first policy.”
- Protocols vary by payer and disease state.
- Only applies when patients use public or private health insurance companies for drug coverage.
The four key step therapy stakeholders (patients, physicians, pharmacists, and payers) have different perspectives on step therapy. According to professional medical associations and patient advocacy groups, step therapy use is a critical issue and urgently needs reform.
However, pharmacy benefit managers (PBMs) and payers (private and public health insurance companies) insist step therapy is necessary to control healthcare costs.5 While payers maintain step therapy does not harm patients, physicians, patients, and pharmacists disagree.
According to stakeholders, a step therapy program has both benefits and disadvantages.
Benefits
On January 1, 2019, the Trump administration approved the use of step therapy for Medicare Advantage (MA) plans Part B drugs. MA covers over 20 million people.
According to the Centers for Medicare and Medicaid Services (CMS), MA step therapy is beneficial for the following reasons:
- Improves negotiations and allows payers to obtain the best price for medications.
- Promotes better clinical decisions by covering the most preferred drug therapy.
- Provides patients a “reward” by reducing the cost of medications.
Disadvantages
Physicians, patients, and pharmacists agree that step therapy is harmful for the following reasons:1,3
- Interferes with the physician-patient relationship.
- Reduces patient drug adherence.
- Reduce treatment effectiveness.
- Increase overall healthcare costs.
Increases patients’ risk of side effects and adverse events.
How Does Step Therapy Work?
Step therapy involves classifying drugs into at least two steps:
- First-step drugs are generic or lower-cost, brand-name drugs.
- Second-step drugs are more expensive treatment options.
If a patient’s prescription requires step therapy, the pharmacy reviews the patient’s medication history to determine if the patient tried the first-step therapy. If a patient hasn’t attempted the first-step treatment, the payer can deny coverage and request for the prescriber to change the prescription or file a step therapy exception request form. The patient will receive second-step drug coverage if the request form is approved or if the patient “fails” on the first-step therapy.
For a therapy to fail, the patient must experience side effects, reduced quality of life, or adverse events. A 2021 study revealed only 34% of step therapy protocols adhered to evidence-based guidelines.4
By not following evidence-based guidelines, a patient is more likely to fail the first-step therapy. Rather than consider the heterogeneous nature of disease states, some payers have created an arbitrary step therapy drug list with little regard for personalized medicine.
Which Drugs Require Step Therapy?
According to Blue Cross Blue Shield, a payer creates step therapy protocols for medications with the following characteristics:
- Have dangerous side effects
- Harmful when combined with other drugs
- Limited to specific health conditions
- Have the potential for abuse
- Prescribed when preferred drugs are available with equivalent efficacy.
What Is the Difference Between Prior Authorization and Step Therapy?
The major difference between PAs and step therapy is time. While PAs can delay appropriate care for 5-10 days, step therapy can delay optimal treatment for weeks or months.
What Is the Future of Step Therapy?
In 2021, the “Safe Step Act”, a bipartisan bill, was introduced. The “Safe Step Act” follows the American Medical Association’s Prior Authorization and Utilization Management Reform Principles, a list of 21 recommendations on PA reform. Congress has not voted on the “Safe Step Act” as of July 2022. Other reform initiatives are occurring at the state level.
With the growth of biosimilars and expensive medications, step therapy will continue to be an issue within the life sciences community. It is vital that PA specialists, MSLs, and market access specialists keep up to date with step therapy in order to be successful and navigate the complicated U.S. health care system.
For additional information and education on step therapy, visit the following resources:
Step Therapy Resources
- National Infusion Center Association (NICA): Learn about step therapy issues.
- Xcenda Step Therapy White Paper: Understand the impact of step therapy on patients.
- National Organization for Rare Disease (NORD): Discover state step therapy laws.
- Prior Authorization Certified Specialist (PACS) Certification: Establish yourself as a prior authorization expert.
References
1. Boytsov, N., Zhang, X., Evans, K.A. et al. Impact of Plan-Level Access Restrictions on Effectiveness of Biologics Among Patients with Rheumatoid or Psoriatic Arthritis. PharmacoEconomics Open 4, 105–117 (2020). https://doi.org/10.1007/s41669-019-0152-1
2.Chen BK, Yang YT, Bennett CL. Why Biologics and Biosimilars Remain So Expensive: Despite Two Wins for Biosimilars, the Supreme Court’s Recent Rulings do not Solve Fundamental Barriers to Competition. Drugs. 2018;78(17):1777-1781. doi:10.1007/s40265-018-1009-0
3. Howell S, Yin PT, Robinson JC. Quantifying the economic burden of drug utilization management on payers, manufacturers, physicians, and patients: Study examines the economic burden of drug utilization management on payers, manufacturers, physicians, and patients. Health Aff (Millwood). 2021;40(8):1206-1214. doi:10.1377/hlthaff.2021.00036.
4.Lenahan KL, Nichols DE, Gertler RM, Chambers JD. Variation in use and content of prescription drug step therapy protocols, within and across health plans: Study examines variation in the use and content of step therapy protocols, within and across health plans. Health Aff (Millwood). 2021;40(11):1749-1757. doi:10.1377/hlthaff.2021.00822
5. Sachs RE, Kyle MA. Step Therapy’s Balancing Act – Protecting Patients while Addressing High Drug Prices. N Engl J Med. 2022;386(10):901-904. doi:10.1056/NEJMp2117582
