11 healthcare pharma leaders offer advice on controlling drug spend

Controlling drug spending is top-of-mind for many healthcare leaders, especially as declining reimbursements and increasing drug costs cut into hospital margins.

Below, 11 healthcare pharmacy leaders share their best advice on controlling drug spend:

Editor's Note: Responses were lightly edited for length and clarity.

Onisis Stefas, PharmD, MBA, vice president and chief pharmacy officer for New Hyde Park, N.Y.-based Northwell Health
"Leverage subject matter experts in diverse areas of practice to achieve evidence-based consensus. These physician champions serve as conduits to communicate formulary selection criteria across the service line and gain system-level pharmacy and therapeutics [P&T] committee approval.  Formulary preferences and clinical decision support are employed in our computerized provider order-entry system to promote appropriate medication selection and reduce drug spend. Concurrent medication use evaluation with review by our enterprise-level P&T committee is essential for identification of inappropriate utilization and development of corrective action plans."

Jon Albrecht, RPh, vice president of pharmacy for the Methodist Health System in Dallas
"While spend is important, it is imperative that pharmacy leaders understand that today’s healthcare environment is not all about the spend. Pharmacy leaders must also teach their healthcare leaders and C-suite that it is not all about the spend. Focusing on drug spend alone may result in lost opportunities to generate revenue or reduce overall spend by improving overall efficiency or outcomes."

Charles Daniels, BS Pharm, PhD, chief pharmacy officer and associate dean of UC San Diego Health and Skaggs School of Pharmacy and Pharmaceutical Sciences
"Find or create the tools in your organization to identify high-cost drugs patients' use every day.  The sooner those patients are identified, the sooner you can begin to de-escalate the costs. Looking at month-end numbers that come from finance are a fine way to look at the big picture, but much too late to intervene. An example of that is finding patients on blood-clotting factors instantly.  An extra day or two of use is very impactful on a pharmaceuticals budget. Working with our hematologists on a patient- specific basis can often optimize use quickly and discontinue use as soon as possible. We can reduce our costs by thousands of dollars if we get to them immediately."

Susan Kokura, PharmD, is the corporate clinical pharmacy manager at New York City-based NewYork-Presbyterian
"When it comes to managing drug spend, my advice is to have a tight grip on your inventory and storage by using machines and technology.  This technology can secure the drugs so you have control over what you have on hand and can help manage what is going in and out of your pharmacy. It is also important to allow those individuals involved in the prescribing process to have a role in the inventory process."

Yi-Chih Peng, PharmD, inpatient pharmacy supervisor at Oakland, Calif.-based Alameda Health System
"Using formulary drug use controls and preventing medication waste. In addition, I would say it is important to stay up to date on drug-pricing projections. Lastly, I would say remain proactive and strategize with the team on any potential medication shortages."

Jordan Spillane, PharmD, ambulatory pharmacy director for Wauwatosa, Wis.-based Froedtert Hospital and the Medical College of Wisconsin 
"Use your resources and get creative.  It is important to determine the most helpful, value-added resources when managing contracting, wholesaler relationships, shortage challenges and recalls. From a creativity standpoint, I think it is important to have nonpharmacy personnel involved in the drug spend process, as these individuals can have diverse backgrounds and experiences, which can provide a completely new perspective to the process."

Jake Thompson, PharmD, CEO of Elevate340B, a company dedicated to helping hospitals and clinics optimize pharmaceutical purchasing
"First and foremost, pharmacy leaders need to understand the pharmacy business. They must know where drugs are purchased and how. Additionally, it is key to understand how those drugs are reimbursed. Are they reimbursed on a fee-for-service contract, or are they not reimbursed because it is part of a bundled payment? This is often different for different settings and payers. Once all of this is understood, then the pharmacy leader needs to assess if this is the right drug for the right patient in the right setting. There often are more economical options available that will result in the same high-quality outcome for patients."

Joe Vargas, regional director of pharmacy operations for CompleteRx, a pharmacy management, consulting and operations improvement provider
"I believe there are three basic ways to managing drug spend. First, verify that the department is purchasing based on current GPO contract pricing and that those prices have been loaded correctly at the wholesaler level. Second, review the wholesalers 80/20 report to determine which medications are driving the department's drug costs. Finally, review that list to look for opportunities to drive clinically appropriate, cost-effective utilization of those high cost medications. This can be done by implementing therapeutic interchange and through the development and implementation of evidence-based protocols approved by the medical staff through the pharmacy and therapeutics committee."

David Martin, PharmD, clinical director of the pharmacy department at the 346-bed Gadsden (Ala.) Regional Medical Center
"Make sure you avoid duplicates. This means looking at medication data and using analytics to inform decisions."

Snehal Doshi, PharmD, vice president of pharmacy services for Marietta, Ga.-based WellStar Health System
"When managing drug spend, do not just look at controlling costs. Instead, attempt to increase value. Engage with your vendors and partners in value-based contracts and risk-share models. Also, if possible, attempt to insource pharmacy services. This will also help expand the pharmacy scope of practice at your organization. In addition, conduct medication-use evaluations frequently for appropriate utilization of medications."

Hillary Blackburn, PharmD, director of pharmaceutical services for Dispensary of Hope
"Estimates suggest that $100 billion to $300 billion of annual avoidable healthcare costs are attributed to medication nonadherence in the U.S., accounting for 3 percent to 10 percent of overall healthcare spending.  In turn, pharmacies make up to 20 percent of the average hospital's budget. There is a big opportunity for the pharmacy department to bring value to manage that budget and ultimately control overall healthcare spending. 

The integration of pharmacy analytics allows the monitoring and assessment of drug spend trends.  Pharmacy leaders can monitor trends through benchmarking themselves to other organizations and by identifying the top spends that could indicate a deeper analysis is needed.  A drug cost analysis should include the data source, purchase data and volume adjustment — all of which are trends that should be tracked continuously. There are many analytic tools available to analyze purchases to inform the strategy for drug purchasing.  These tools can also identify and predict drug prices, which can trigger a review and possible change in the formulary.

As health systems endeavor to find a "true north" in population health, the consistent focus for all organizations centers on the Triple Aim in healthcare: to enhance the care experience for patients and their families; to improve the overall health of a population; and to reduce per capita costs to manage the health of that population. 

The pharmacy department can play a critical role in reducing the overall health system budget by helping patients get access and adhere to their medications.  Comprehensive medication access programs that include patient assistance programs, 340B [if eligible] and Dispensary of Hope, can help to address the three goals of population health management leaders:  reducing unnecessary utilization, trading high cost services for low cost services and enhancing patient engagement and care coordination. Providing access to medications, even free of charge to patients most in need, leads to decreased emergency department visits, inpatient visits and length of stay."


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