5 supply chain strategies to control hospital drug spending

As drug prices continue to rise, many U.S. hospitals are implementing aggressive strategies to reduce pharmaceutical spending, reports The Wall Street Journal.

Hospital pharmacy costs jumped 11 percent in 2015 to $33.6 billion, largely due to increasing drug prices, according to a study published in the American Journal of Health-System Pharmacy in July.

Here are five strategies hospitals are taking to cut drug spending.

1. Pulling supplies from hospital floors
While Salt Lake City-based University of Utah Health Care stocked its hospital crash carts with the blood pressure drug vasopressin for years, price hikes caused the health system to remove the drug from all 100 of its carts, according to WSJ. Now, the drug is dispatched from hospital pharmacies when needed. University of Utah Health Care hopes the change will help limit the amount of doses that go unused and expects to cut its $1 million annual budget for vasopressin by 6 percent, according to the report.

2. Monitoring price hikes
Earlier this year, Cleveland Clinic developed a set of algorithms to analyze the wholesale prices of 38,000 drugs each week, according to Jeffrey Rosner, senior director of pharmacy sourcing and purchasing for the hospital. The algorithms detect surprise price hikes and allow the hospital to quickly alter ordering decisions, said Mr. Rosner.

3. Repackaging a medication
In 2015, Valeant raised the price of the heart drugs Nitropress and Isuprel by as much as 500 percent. In response, Salt Lake City-based Intermountain Healthcare started extracting eight doses of Isuprel from a single glass vial, storing the drug in syringes for later use. The health system estimates it cut annual spending on the drug by $1.1 million, reports WSJ.

4. Switching to cheaper alternatives
MedStar Washington (D.C.) Hospital Center addressed Valeant's heart drug price hikes by replacing Nitropress with the cheaper generic heart drug nicardipine.

5. Using stricter prescribing practices
After the price of the intravenous pain drug Ofirmev drastically rose in March 2014, physicians at the University of Utah Health agreed to limit use of the drug only to those who need it the most — like patients with trouble swallowing — according to Erin Fox, who oversees the hospital's medication policy. Other patients receive the drug in pill form or as a suppository, both much cheaper options. The health system has limited Ofirmev spending to about $400,000 annually using the new strategy, reports WSJ.

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