Step Therapy

Formulary Management · 5 min read

Step therapy, also called fail-first, is a utilization management protocol that requires patients to try and fail on one or more lower-cost medications before the plan will cover a more expensive alternative. It is among the most effective cost-control tools available to plan sponsors, but it requires careful design to avoid compromising patient care.

How Step Therapy Works

A step therapy protocol defines a sequence of medications within a therapeutic class. The patient must try the first-step drug, typically a generic, for a defined period. If the first-step drug is ineffective, causes adverse effects, or is contraindicated, the patient can advance to the next step, usually a preferred brand. Each step must be documented before the more expensive alternative is approved.

Clinical and Economic Impact

Step therapy reduces plan costs by ensuring that the most cost-effective option is tried first. In many therapeutic categories, generic first-step drugs are as effective as branded alternatives for the majority of patients. However, step therapy can delay access to the most effective treatment for patients who are unlikely to respond to first-step options based on their clinical profile.

State Protections

Many states have enacted step therapy reform laws that require exception processes for certain clinical circumstances, including situations where the patient has already tried and failed the required first-step drug under a previous plan, the required drug is contraindicated, or delaying treatment could cause irreversible harm. These protections balance cost management with appropriate clinical access.

Best PracticeDesign step therapy protocols with clearly defined exception criteria, reasonable trial periods, and clinical review processes that can accommodate non-standard patient situations without excessive administrative delay.