GM is looking to manage costs by improving quality

Detroit automaker visits Drug Topics to push a quality agenda



GM is looking to manage costs by improving quality

Alarmed that high health costs—especially drug costs—are poised to make the company less competitive vis-à-vis its global rivals, General Motors is on a mission to spread the word that improved quality spells lower costs. Although GM is a megapurchaser of health care in this country, covering more than one million lives, the company feels other employers need to care about quality too, to cut health-care costs. To get this message across, several GM executives paid a visit to Drug Topics' headquarters recently.

According to James C. Cubbin, executive director, Health Care Initiatives, GM reported an 11.5% increase in its health costs in 2000, driven largely by prescription drugs, which accounted for a whopping $1 billion in spending for the automaker. To contain costs, GM believes that pushing quality, rather than curbing access to drugs via a formulary, is the answer. In other words, cost will go down "if you do the right thing." Doing the right thing means proper utilization.

To ensure proper utilization, GM hired a pharmacy director to manage its drug costs last year (Drug Topics, Feb. 7) and has put a number of programs in place, Cubbin revealed. What are these programs?

Independent pharmacists won't like this, but GM believes chains can do as good a job as their smaller counterparts on patient care; chains also have computer systems in place to warn about drug interactions. So, of the 36,000 pharmacies the automaker deploys across the country, most are chains, unless there's no pharmacy within five miles of an employee's home or work site, in which case an independent pharmacy is tapped. "Unfortunately for small independents, this is a business they have a hard time competing in," commented Cubbin about his company's national pharmacy contract. The dispensing fee GM offers probably won't cover independents' overhead, he explained.

Just as GM has a preference for chains, it also sees value in mail order. With Merck-Medco as its pharmacy benefit manager, the carmaker is convinced that mail order can reduce its administrative and ingredient costs and offer good quality control. So it encourages its employees to order drugs by post via a lower co-pay.


Similarly, the Detroit firm charges a smaller co-pay for generic drugs, which it believes are comparable to their brand-name cousins. Cubbin said GM has been working with Merck-Medco to advance the Generics First program (Drug Topics, Dec. 11), which provides physicians with generic samples. Actually, he said, drug samples distributed through physician offices are not GM's first choice. The firm prefers physicians to give patients generic vouchers to be redeemed at their pharmacy. This is a safer approach, since the drugs then get entered into the pharmacy's computer system. He added that GM has been meeting with drug companies to push for a switch to vouchers, and some are amenable to this approach.

Another strategy GM is implementing is changing prescribing habits to achieve optimal dosing. Instead of giving patients, say, two doses at 50 mg a day, physicians are encouraged to prescribe one 100-mg dose per day. This improves compliance, lowers cost, and is equally effective. Cubbin said GM has advocated this agenda with Merck and Pfizer.

Also, GM is now taking a closer look at whether the right drug is being given to the right patient. For instance, Prilosec for ulcers has been one of GM's leading drugs by dollars spent in 1999. GM is now trying to limit the drug to patients who really need it, rather than everyone with gastrointestinal disease, Cubbin said.

GM's commitment to quality is evident as well in the Leapfrog group, 70 Fortune 500 companies that have joined forces to improve patient safety. GM helped form the group. One drug-related recommendation Leapfrog is calling for is computerized physician order entry (CPOE), which has been shown to reduce drug errors. GM believes that, while cost is a barrier to CPOE in many hospitals, they will be able to get a return on their investment through capital budgeting.

GM will take the following four steps to boost CPOE:

  • Stress that there's good science behind the practice.

  • Educate everyone that hospitals with CPOE are safer.

  • Disclose which hospitals have installed the system and to what extent their doctors are actually using it.

  • Help employees choose hospitals that are exemplars.

To show that the company means business, GM ranks health plans on their performance from the best to the worst. Plans with the highest performance cost GM employees the least to enroll in, to encourage them to join the best programs out there. The worst plans carry the costliest premiums and are eventually dumped.

Given GM's avowed willingness to support appropriate drug therapy management, would it pay R.Ph.s for disease management and other nondispensing services? "We're not willing to pay pharmacists for providing information that doesn't have any impact," Cubbin replied. Reimbursement depends on whether appropriate management is rendered and improved patient outcomes are achieved, he said.

Judy Chi


Judy Chi. GM is looking to manage costs by improving quality.

Drug Topics