What is Utilization Management Criteria (UM Criteria)?
Utilization management (UM) criteria are restrictions that payers put on drugs which restrict how and when they will pay for them for their beneficiaries. Criteria can take many forms including step edits in which certain other medications may be required to be tried prior to reimbursement for a particular drug and prior authorization requirements in which a provider must provide additional documentation justifying use of specific drug.
UM criteria are one of the ways that payers in the US manage their drug costs. Manufacturers will often negotiate with payers to reduce or ease certain UM criteria in exchange for higher levels of rebates. Many of these negotiations are driven by market power including underlying demand for the drug in question as well as the competitive landscape.