Overcoming Non-Formulary Status in VA

Bottom Line:

The VA's Non-Formulary (NF) designation can be overcome through broad, compelling clinical justification demonstrating undeniable medical necessity, particularly for non-interchangeable, therapeutically unique, or orphan drugs.

Both the Department of Veterans Affairs (VA) and commercial health insurers face the same challenge: how to ensure patients receive medically necessary pharmaceutical care while simultaneously managing costs and championing evidence-based practice. Despite their divergent organizational structures, there is an obvious commonality in their shared control mechanism of the medical necessity process for non-formulary drugs.

At the core of both the VA's National Formulary (VANF) and commercial insurer drug formularies lies utilization management. These curated lists of preferred medications are developed by internal expert committees serving the overarching objective to identify and prioritize pharmaceutical agents that are demonstrably safe, clinically effective, and cost-efficient for the general patient population. This universal principle guides the decision to include or exclude specific drugs based on robust clinical trial data, comprehensive comparative effectiveness research, and widely accepted treatment guidelines.

In a divergence from its commercial counterparts, the VA's pharmaceutical management system is based on clear access distinctions between a product being "F” (Formulary), “PA-F” (Prior Authorization – Facility), and "NF” (Non-Formulary):

• Drugs designated “F” are fully on the VANF, which means they are universally available across all VA facilities. These products are almost exclusively generic medications with favorable safety and efficacy profile, supported by extensive clinical evidence and real-world experience.

  
  

• While products designated “PA-F” are technically on the VANF, the “PA-F” status does not guarantee local stocking. Instead, the status allows for sophisticated top-down utilization management, requiring providers to submit documentation to local VA pharmacies confirming adherence to nationally-set “Criteria for Use” (CFU) guidelines, which typically list both inclusion and exclusion guidelines. These drugs often treat complex or rare conditions but the VA determined the need for additional oversight due to their cost, specialized use, or monitoring requirements.

  
  

• NF signifies that a drug is generally not routinely available. All new branded products are immediately assigned NF status until the VA determines a formal review is appropriate. The decision to review the drug but leave it in the NF status could be due to high cost, an anticipated low demand by general VA patient population, or other factors that suggest the product does not represent the "best value" for national inclusion status. For NF products, a VA provider must present a broad, compelling clinical justification on the product’s medical necessity.

To note, NF status means different things to different products. For most generics and drug classes with existing VA National Contracts, approval is highly unlikely. Conversely, products with undeniable, well-documented clinical necessity are typically approved. Products that typically overcome NF status include those not directly interchangeable with other formulary options (F or PA-F), drugs lacking a therapeutically equivalent, and orphan drugs for highly specific diagnoses.

The concept of medical necessity underpins both the VA and commercial insurer approach to processing non-formulary drug requests. Simply because a product has a NF designation does not mean a VA patient cannot access the product. Much like in the commercial environment, the singular goal of any gatekeeping is to verify that the clinical circumstances precisely align with the established criteria for an exception to the standard formulary to optimize the allocation of healthcare resources without compromising the quality or efficacy of patient care. Unlike the commercial environment, providers work with their co-located colleagues and can have thoughtful discussions on both the request as well as any initial denials. Pharmaceutical manufacture can differently support utilization of NF designated drugs in the VA by implementing the correct initiatives that assist prescribers in developing