APPENDIX D
Glossary
Adverse Drug Event (ADE)—
An injury caused by medical management rather than by the underlying disease or condition of the patient.
Adverse Drug Reaction (ADR)—
Unwanted or unintended effects of a medicine that occur during its proper use.
Average Wholesale Price (AWP)—
The standard charge for a pharmacy item, derived by a pricing service from the average charge of a large representation of wholesale suppliers. Actual wholesale prices may differ; discounts are common.
Bioavailability—
The extent to which the active ingredient or active moiety is available from a drug product.
Bioequivalent Drug Products—
Chemically equivalent drug products that display comparable bioavailability when studied under similar experimental conditions.
Blanket Purchase Agreement—
A VISN (or local) agreement with manufacturers on terms of drug purchasing.
Clinical Guidelines or Drug Treatment Guidelines—
Systematically developed statements to assist practitioner and patient decisions about appropriate health care for specific clinical circumstances.
Closed Class—
A drug class in which the number of members listed on the formulary is limited.
Drug Class—
The grouping of drug products based on various criteria, which may include similarity of chemical structure, clinical indications, pharmacology, and therapeutic activity.
Drug Efficacy Study Implementation (DESI) Drugs—
A group of drugs of insufficient efficacy based on decisions resulting from a review by the National Academy of Sciences and the Food and Drug Administration (FDA) pursuant to federal law. These drugs are not reimbursable by U.S. government programs.
Drug Utilization Review (DUR; also called drug use evaluation, or medication use evaluation)—
A formal performance improvement program for assessing data on drug use against explicit, prospective standards (criteria) and, as necessary, introducing remedial strategies to achieve some desired end.
Federal Supply Schedule (FSS)—
A manufacturer-level price catalog with about 23,000 drug products (includes the same drugs in different dosage and package sizes) administered by the National Acquisition Center (NAC) for drug (and other) purchases by federal agencies. The Veterans Health Care Act of 1992 requires “covered” drugs (innovator single- and multiple-source drugs, insulin, and biological products) to be sold through the FSS to the four largest federal agencies (the VA, DOD, PHS, and Coast Guard) with a statutorily required discount amounting to no more than 76% of the nonfederal average manufacturer price. Manufacturers must also list their brand name drugs on the FSS to be eligible for Medicaid coverage. The VA accounts for about 70% of FSS pharmaceutical purchases annually.
Formulary—
A continuously revised list of pharmaceuticals that meet pharmacopoeial standards. A list of preferred drugs that are considered by physicians and other professional staff of a health care organization to be the most useful in caring for the patients served by the organization.
-
Open or Unrestricted Formulary—An open formulary is a very comprehensive listing of medications typically offering almost every commercially available product in each therapeutic category. Physicians who prescribe from an open formulary are not restricted and may prescribe virtually any drug. Payers, including employers, health plans, and third-party administrators, provide coverage for all medications since there are no restrictions.
-
Closed Formulary—Closed formularies are exclusive lists of specific drugs that often limit prescribers to only some of the commercially available products in each therapeutic class. Drugs that do not appear on the list of approved products (nonformulary drugs) are not covered by the health plan, PBM, or employer, and patients must pay additional out-of-pocket expenses to obtain nonformulary prescriptions (or use a prior approval or nonformulary exceptions process).
-
Partially/Selectively Closed Formulary—These are formulary hybrids that limit prescribing choices within certain therapeutic classes and offering unlimited choice within other drug classes. Such formularies direct prescribers to preferred agents within therapeutic classes, which may be in
-
cluded in a treatment protocol or clinical guideline. In some cases, entire categories, such as drugs used solely for cosmetic purposes, may be closed to prevent payment for those drugs that are excluded from coverage. In the VA system, drugs not listed may be available through the nonformulary process, and only very rarely is a drug excluded (that is, not available through the system under any circumstances).
Formulary System—
A method whereby the medical staff of an organization, working through a P&T committee or an equivalent group of physician and pharmacy experts, objectively evaluates, appraises, and selects from among numerous available drug entities and drug products those that are considered most useful in patient care—the management of a formulary.
Generic Drug—
A nonproprietary drug approved by the FDA that is tested against a standard of bioavailability and bioequivalence.
Generic Substitution—
The substitution of drug products that contain the same active, chemically identical ingredient(s) and are identical in strength, concentration, dosage form, and route of administration to the drug product prescribed.
Medical Advisory Panel (MAP)—
A committee that is part of the management and medical decision-making structure of the VA PBM. The committee consists of 11 physicians in practice at VA medical centers and 1 DOD physician.
Medicare—
A federal program of health insurance for the elderly enacted in 1965 as Title XVIII of the Social Security Act. Part A is primarily a hospital benefit to which beneficiaries are automatically entitled. Part B is primarily a physician benefit, which requires beneficiaries to enroll and pay a monthly premium.
National Acquisition Center (NAC)—
A combined contracting activity within the VA responsible for purchasing drugs and medical supplies for the VA as well as other government agencies and administering the Federal Supply Schedule, National Contract, and Prime Vendor Distribution Programs.
Nonformulary Request—
The process by which a drug product not on the formulary is approved for dispensing.
OBRA (Omnibus Budget Reconciliation Act, 1990) Drugs—
These are drugs that may be excluded from Medicaid formularies: for example, drugs for anorexia; weight loss or gain; fertility; cosmetic purposes or hair growth; symptomatic relief of cough and colds; smoking cessation; prescription vitamins and minerals (except prenatal); nonprescription drugs; covered outpatient drugs that require associated tests purchased from the manufacturer; barbiturates; and benzodiazepines.
Off-Label Prescribing—
The prescribing of medications for conditions not approved by the FDA.
Open Class—
A drug class that contains numerous drug products, all of which are covered.
Over-the-Counter (OTC) Drugs—
Drugs that are available from retail stores without a prescription.
Pharmaceutical and Therapeutics (P&T) Committee—
An advisory committee of the medical staff that represents the official, organizational line of communication and liaison between the medical staff and the pharmacy department; its recommendations are subject to medical staff approval.
Pharmacopoeia—
A compendium of drug standards for purity and strength.
Preferred Class—
A drug class listed in a formulary in which specific drugs are named as the “preferred agent” for use.
Prescription Drugs—
Any drugs or biologics that by federal or state law, rule, or regulation require a written prescription to dispense and that are listed as Federal Legend Drugs, State Restricted Drugs, or compendial medications.
Prior Approval or Authorization—
A cost-containment procedure that requires a prescriber to obtain permission to use medications prior to prescribing.
Step Protocol—
A treatment protocol that recommends beginning a trial of drug therapy for a medical condition with one drug or class of drugs (often of lower cost or risk) before proceeding to other drugs or drug classes.
Therapeutic Alternates—
Drug products differing in composition or in their basic drug entity, but of the same pharmacological and/or therapeutic class, that are considered to have very similar pharmacological and therapeutic activities and adverse reaction profiles when administered to patients in therapeutically equivalent doses.
Therapeutic Equivalence—
Similar pharmacological and therapeutic activity of drugs.
Therapeutic Interchange—
Authorized exchange of various therapeutic alternates by pharmacists under arrangement between pharmacists and authorized prescribers who have previously established written guidelines or protocols within a formulary system and jointly agreed on conditions for interchange or who give permission individually at the time of exchange.
Veterans Integrated Service Network (VISN)—
One of 22 regional health systems created under the VA reorganization of 1994–1995. This reflected a shift of funding from facilities to population and a shift of emphasis from hospital to ambulatory and community-based settings. Over time, these VISNs have evolved to become analogous to a managed care organization.
