VHA helps members trim pharmacy costs

October 24, 2005

VHA has resurrected a familiar method for hospitals to save money: Trim pharmacy costs. But instead of urging its 2,400 member hospitals to simply slash pharmacy budgets, the not-for-profit hospital alliance is helping members save by shifting prescribing practices.

VHA has resurrected a familiar method for hospitals to save money: Trim pharmacy costs. But instead of urging its 2,400 member hospitals to simply slash pharmacy budgets, the not-for-profit hospital alliance is helping members save by shifting prescribing practices.

"VHA found $1.4 million in potential pharmacy savings in our institution last year," said Craig Coumbe, pharmacy director at Tallahassee Memorial Hospital (TMH). "Our CFO was skeptical, I was skeptical. But we are on target to save about $1.5 million, with another month left in our fiscal year. In 2004, we were $1.4 million over budget on drug purchases. This year, we are $750,000 under budget."

TMH may be an extreme example of how well the VHA program can work, Coumbe said. The hospital had lost about $55 million in the previous four years and had just gotten a new CEO and COO in an effort to stem the red ink. "I heard a presentation by Bruce Weiner, R.Ph., head of VHA's pharmacy division, and asked to get a pharmacy assessment," Coumbe said. "It was no surprise that changes were needed."

"There are really only two ways to affect costs-through operations and through clinical programs," Weiner said, "with the greatest impact always obtained in the clinical area."

Any pharmacy director can put a similar program to work. Stephen Melvin, Pharm.D., clinical pharmacy coordinator at Bay Medical Center in Panama City, Fla., and former VHA consultant, has distilled the alliance analysis into five strategic questions:

"We take a clinician-to-clinician look at the evidence," Melvin said. "We are really counterdetailing what the drug reps are telling physicians. We achieve cost savings by leaning on the science and the evidence that point to the most effective patient care."

Much of VHA's pharmacy analysis deals with standardization and formulary issues. A hospital may not need 50 antibiotics when 15 will cover almost any conceivable contingency, Weiner noted. There are also potential savings from simple steps such as switching patients from intravenous dosing to oral dosing. Antibiotics, antifungals, proton pump inhibitors, and H2 blockers are typical problem products. "The sooner you can get a patient off that IV and onto an oral formulation, the better for them clinically," Weiner said. "It's a bonus that oral therapies run about 10% of the cost of the same drug administered IV."

Weiner's survey team suggested a total of 26 clinical changes for TMH. After talking with pharmacy service heads and the medical staff, Coumbe implemented 14 of the recommended programs, with projected annual savings of $700,000. VHA also helped the hospital create systems needed to qualify for discount drug purchases under the federal 340B program.

One of the biggest single utilization changes was settling on Levaquin (levofloxacin, Ortho-McNeil) as the house antibiotic of choice. That one change trimmed $225,000 from the annual antibiotics bill. Consolidating antiemetic orders to a single drug, Anzemet (dolasetron, Aventis), saved $190,000.

Pharmacy saved another $172,000 by switching Epogen (epoetin alfa, Amgen) from IV to subcutaneous dosing. Changing the route of administration is more protective of kidney function, Coumbe explained, and reduces dosing by a third. VHA also suggested rescheduling all patients on Remicade (infliximab, Centocor) for infusion on the same day. Consolidating treatment saved $83,000 by reducing drug waste.