Drug expenditure data help pharmacists plan ahead

October 10, 2016

A recent report projects an 11% to 13% increase in total drug expenditures in hospitals and health systems in 2016.

 A recent report projects an 11% to 13% increase in total drug expenditures in hospitals and health systems in 2016-which includes a 15% to 17% rise in clinic spending and a 10% to 12% growth in hospital spending.

Glen Schumock, PharmDData from the report published in the July issue of the American Journal of Health-System Pharmacy (AJHP) extracted information from the IMS Health National Sales Perspective (NSP) database to examine trends in drug expenditures and expected changes in the drug marketplace that may influence drug costs, including anticipated new drug approvals and patent expirations, to make their predictions.

Report author, Glen Schumock, Pharm.D. said it’s important that health system pharmacists keep track of rising drug expenditures.“Drugs are the largest expenditure category in a hospital pharmacy budget. If one is to provide appropriate financial management in a hospital pharmacy, then understanding trends, factors that influence expenditures, and ways to control drug costs is vital,” said Schumock.

Schumock, professor in the Department of Pharmacy Systems, Outcomes and Policy, at the University of Illinois at Chicago, noted that controlling drug spending takes a coordinated effort that involves not just managers but also staff pharmacists. 

“Individual pharmacists are in the best position to understand drug use in their particular clinical area and thus best able to identify strategies to reduce spending. Related to overall drug expenditures is the issue of individual drug costs and prices.”

According to Schumock, questions about drug costs are among the most common questions that pharmacists hear. Being able to explain intelligently to patients and physicians why these occur and how to deal with them is an important role of the pharmacist, Schumock asserted.

Gina Caliendo, BS, Pharm.D, BCPS, Director of Clinical Pharmacy Services at Mount Sinai Hospital in New York City explained that it’s extremely important that pharmacists have an idea of where the budgets are likely to go in the coming months in order to plan for next year’s budget. “If you don’t know you’re going to have an increase, then you’re not prepared for it. We need to be prepared so that we can make sure that all of our other activities are aligned with that. If my budget’s going to go up by 10%, then I may have to look for other options and other ways of cutting down my costs,” said Caliendo.

 

Schumock said that by understanding the key cost drivers, pharmacy leaders can implement programs to target them. He added that such strategies could include working with prescribers to use equally effective, but less expensive medications or developing programs such as antibiotic stewardship to reduce unnecessary use of drugs.

“This includes any effort that pharmacists take to reduce drug spending. It might be a simple as a recommendation to a physician to use a less expensing drug or to omit an unnecessary prescription. More coordinated programs, like antibiotic stewardship, generally result in improved clinical outcomes as well as reduced costs,” said Schumock.

According to Schumock, the types of programs that have been implemented include generic switching, therapeutic interchange, renal dosing, targeted drug programs, restricted drug programs and formulary management.

Mount Sinai’s Caliendo said that both pharmacy managers and staff pharmacists need to be aware of drug expenditures.

“Staff needs to be aware that something is extremely expensive so they minimize waste.  What’s also important is to be aware of any changes in prices.”

For example, certain drugs that are a few dollars suddenly go up to a few thousand dollars or in some cases, tens-of-thousands of dollars. “That’s a really important change.”

Caliendo added, “You have patients who are taking many more medications for much longer periods and the drugs that are being developed are monoclonal or are targeting specific genetic markers.” This greater personalization of medicine comes at a higher cost.

“We work closely with our practitioners to make sure they’re aware of the relative costs of drugs. We make sure that they’re picking the drugs in the right order and that the most appropriate drugs are used at the best possible time. We don’t want to use a drug that’s $50,000 as our first line agent, unless it’s actually indicated as the first line agent,” Caliendo said.