cost containment strategies
DESCRIPTION
Cost Containment Strategies. CDR Denise M. Graham, MSC, USN PEC Director of Clinical Operations. Objectives. Outline DoD cost containment strategies used during the last year to control MTF pharmaceutical costs. - PowerPoint PPT PresentationTRANSCRIPT
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Promoting high quality, cost effective drug therapy throughout the Military Health System
Cost Containment Strategies
CDR Denise M. Graham, MSC, USN
PEC Director of Clinical Operations
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2DoD Pharmacoeconomic Centerwww.pec.ha.osd.mil
Objectives
• Outline DoD cost containment strategies used during the last year to control MTF pharmaceutical costs.
• Outline methods used to determine what pharmaceutical cost containment strategies will get you the biggest bang for your buck.
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3DoD Pharmacoeconomic Centerwww.pec.ha.osd.mil
Analyzing the Effectiveness of Cost Containment Efforts
• CAPT Don Nichols, MC: a providers perspective
• LtCol Dave Bennett, BSC: 2nd Generation Antihistamines
• Shana Trice, Pharm.D.: COX-2 inhibitors
• Dave Bretzke, Pharm.D.: potential cost containment tips
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4DoD Pharmacoeconomic Centerwww.pec.ha.osd.mil
Rationale for Publishing Cost Containment Tips
• FY04 = tight budget situation for MTFs.
• Opportunity to have MTFs “help themselves” by prescribing less expensive drugs that are essentially therapeutically equivalent to more expensive drugs…to the extent the therapeutically equivalent drug will meet the clinical needs of the patient
• Pharmacy consultants requested assistance from the PEC in developing cost containment strategies.
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5DoD Pharmacoeconomic Centerwww.pec.ha.osd.mil
Cost Containment Tips Published March 2004 by the DoD PEC
• Purchasing/logistics tips
– Buy generic, buy generic, buy generic!!!
– Buy contract drugs
• Therapeutic Class Cost Containment Tips
– Statins
– Second Generation Antihistamines
– Proton Pump Inhibitors
– NSAIDs
– SSRIs
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6DoD Pharmacoeconomic Centerwww.pec.ha.osd.mil
Cost Containment Tips Published by the DoD PEC
• Therapeutic Class Cost Containment Tips continued:
– Bisphosphonates
– Triptans
– Thiazolidinediones
– ACE Inhibitors vs. ARBs
– Calcium Channel Blockers
– LHRH Agonists for Prostrate Cancer
– Oral Fluoroquinolones
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7DoD Pharmacoeconomic Centerwww.pec.ha.osd.mil
PEC Strategy for Identifying Cost Containment Strategies
• MTF high use, high total cost
• Procurement initiatives already in place for the therapeutic class
• Generic equivalent available
• MTF utilization data shows opportunity for savings while still meeting patients’ clinical needs
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8DoD Pharmacoeconomic Centerwww.pec.ha.osd.mil
Top 20 MTF Expenditures FY03by Therapeutic Class
1. Antihistamines - $88M
2. NSAIDS - $86M
3. Lipotropics - $83M
4. SSRIs - $64M
5. PPIs - $61M
6. Bisphosphonates - $45M
7. CCBs - $45M
8. ACEs - $43M
9. Vaccines - $38M
10. Anticonvulsants - $37M
Total: $590M
11. Advair - $31M
12. TZDs - $30M
13. Quinolones - $28M
14. Antiplatelets - $27M
15. Penicillins - $24M
16. BG Strips - $24M
17. Contraceptives - $23M
18. Opiates - $22M
19. AQ Nasal Steroids - $22M
20. ARBs - $22M
Total: $253M$843M represented 52% of MTF total expenditures
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9DoD Pharmacoeconomic Centerwww.pec.ha.osd.mil
31. Antipsychotics - $15M
32. Toxoid Vac - $14M
33. Gram (-) Bacilli Vac- $13M
34. Norepi & Dopamine - $13M
35. Ophth Prostaglandins – $13M
36. Ophth Beta blockers - $12M
37. Insulins - $11M
38. ADHD Drugs - $10M
39. Antidepressants - $10M
40. Sedative-hypnotics - $10M
Total: $121M
Next Top 20 MTF Expenditures FY03 by Therapeutic Class
21. Metformin - $22M
22. Leukotriene Ant. - $21M
23. Glucocorticoids - $20M
24. Macrolides - $19M
25. Antifungals - $19M
26. Antimalarials - $18M
27. Hematinics - $17M
28. Antimigraines - $17M
29. Beta Blockers - $16M
30. Estrogenics - $15M
Total: $184M$1,148M represented 70% of MTF total expenditures
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10DoD Pharmacoeconomic Centerwww.pec.ha.osd.mil
Top 40 MTF Expenditures for FY04
1. Lipotropics - $101M
2. NSAIDS - $98M
3. PPIs - $84M
4. SGAs - $81M
5. Anticonvulsants - $53M
6. CCBs - $51M
7. Biphosphonates - $44M
8. Beta Adrenergics - $43M
9. Vaccines - $39M
10. Antiplatelets - $38M
Total: $606M
11. TZDs - $34M
12. Leukotriene Ant. - $33M
13. ACE Inhibitors - $31M
14. ARBs - $29M
15. Penicillins - $28M
16. AQ Nasal Steroids - $24M
17. BG Strips - $23M
18. Antifungals - $23M
19. Narc Analgesics - $22M
20. Contraceptives - $22M
Total: $269M
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11DoD Pharmacoeconomic Centerwww.pec.ha.osd.mil
Top 40 MTF Expenditures for FY04
21. Glucocorticoids - $19M
22. Macrolides - $19M
23. Beta Blockers - $18M
24. Norepi & Dopamine - $17M
25. Quinolones - $17M
26. Atypical Antipsych - $17M
27. Hematinics - $17M
28. Estrogenics - $16M
29. SSRIs - $16M
30. ADHD - $15M
Total: $171M
31. Gram (-) Bacilli - $15M
32. Beta Adrenergics - $15M
33. Insulins - $15M
34. Toxoid Vaccine – $14M
35. Anti-migraine - $14M
36. BPH - $14M
37. Sedative-hypnotics - $13M
38. Anti-inflam tumor - $13M
39. Ophth prostaglandins - $13M
40. Antispasmotics – $12M
Total: $138M
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12DoD Pharmacoeconomic Centerwww.pec.ha.osd.mil
TOP 10 MTF ExpendituresArmy, AirForce, Navy
Army Air Force Navy1 NSAIDS Lipotropics Lipotropics
2 Lipotropics NSAIDS PPIs
3 SGAs PPIs SGAs
4 PPIs SGAs NSAIDS
5 SSRIs SSRIs SSRIs
6 Viral Vaccines CCBs Anticonvulsants
7 Anticonvulsants Anticonvulsants CCBs
8 CCBs Biphosphonates Biphosphonates
9 Beta Adrenergics Beta Adrenergics Beta Adrenergics
10 Biphosphonates Antiplatelets Antiplatelets
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13DoD Pharmacoeconomic Centerwww.pec.ha.osd.mil
MTF Strategy for Identifying Cost Containment Strategies
• Market Drivers
• Generic equivalents available instead of more expensive brand name drugs
• Current contracts in place for therapeutic classes
• Other incentive agreements in place either DoD or local (will remain in place until reviewed by DoD P&T Committee for UF)
• UF and BCF/ECF considerations
• Review utilization data (MTF management opportunity = MTF utilization data shows opportunity for savings while still meeting patient’s clinical needs)
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14DoD Pharmacoeconomic Centerwww.pec.ha.osd.mil
Monitoring Cost Containment Strategies
• Requires monitoring and responding to changing environment
• Modulating prices
• Generic availability
• Changes in Rx/OTC status
• Scientific literature
• Detailing/Counter detailing
• Perceptions
• Opportunity to educate existing patient and medical staff of changes in market
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15DoD Pharmacoeconomic Centerwww.pec.ha.osd.mil
Market Share Shift
+ Use of best price
= Cost Avoidance
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16DoD Pharmacoeconomic Centerwww.pec.ha.osd.mil
Measuring your success
• Single agent cost avoidance: delta between Big 4 FSS and current price for each drug
• Overall class cost avoidance: measure the change of products within a class
• PMPM
• You’ll never know what your efforts are worth anything unless you measure them!
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Promoting high quality, cost effective drug therapy throughout the Military Health System
Cost Containment and the Prescriber – A Provider’s Perspective
CAPT Don Nichols, MC, USN
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18DoD Pharmacoeconomic Centerwww.pec.ha.osd.mil
Objectives
• What influences provider prescribing behavior
• Changing provider prescribing behavior
• Obstacles/Failures/Barriers
• Opportunities
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19DoD Pharmacoeconomic Centerwww.pec.ha.osd.mil
FACTORS for higher drug expenditures
• Price increases*
• Longer life spans
• Rising prevalence of chronic diseases
• Advent of “lifestyle medications”
• Increased spending on drug promotion
• Aging population
• Improved diagnosis and treatment of diseases
• Increased number of new drugs*
• Direct to consumer advertising
• “Shiny new toy” syndrome
•CA to AZ
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20DoD Pharmacoeconomic Centerwww.pec.ha.osd.mil
What Influences Physician Prescribing Behavior
• Training and experience
• Colleagues and opinion leaders
• Pharmaceutical companies
• Health plans and other payers
• Patients
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21DoD Pharmacoeconomic Centerwww.pec.ha.osd.mil
Training and Experience
• Medical education
(an internist made an impression)
• Training
• Specialization
• Relative youth
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22DoD Pharmacoeconomic Centerwww.pec.ha.osd.mil
Colleagues and Opinion Leaders
• Input from colleagues
• Local opinion leaders
• Peer pressure
• Professional leadership
• Group styles of practice
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23DoD Pharmacoeconomic Centerwww.pec.ha.osd.mil
Pharmaceutical Companies Detailing
• May be initial source of information about new drugs therapies
• Rapid transition to new drugs
• Decreased prescribing of generic drugs
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24DoD Pharmacoeconomic Centerwww.pec.ha.osd.mil
Health Plans and Other Players
• Formulary management
• Treatment protocols
• Prescribing restrictions
• Physician involvement is the key to success
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25DoD Pharmacoeconomic Centerwww.pec.ha.osd.mil
Patients
• Powerful and increasingly influential
• DTC
• Internet information
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26DoD Pharmacoeconomic Centerwww.pec.ha.osd.mil
Changing Prescribing Behavior
• Administrative interventions
• Educational interventions
• Feedback reporting and reminders
• Financial incentives
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27DoD Pharmacoeconomic Centerwww.pec.ha.osd.mil
Administrative interventions
• Formulary management
• Prescribing restrictions
• Therapeutic interchange, use of generic products, prior authorization, preferred status, restricted use and variable co-payment structures
(N of 6)
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28DoD Pharmacoeconomic Centerwww.pec.ha.osd.mil
Educational Interventions
• CME
• Academic detailing
pharmacist/physicians
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29DoD Pharmacoeconomic Centerwww.pec.ha.osd.mil
Feedback Reporting and Reminders
• Physician benchmarking reports
• Drug utilization evaluations
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30DoD Pharmacoeconomic Centerwww.pec.ha.osd.mil
Financial Incentives
• Patient co-payments
• Physician bonus incentives
• At-risk drug contractual arrangements
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31DoD Pharmacoeconomic Centerwww.pec.ha.osd.mil
Obstacles In Changing Provider Prescribing Behavior (real and
perceived notions)
• Physician attitudes
(the phone call)
• External pressures
• Lack of resources for making drug decisions
PDAs/Preferred Agents/Price Impact
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32DoD Pharmacoeconomic Centerwww.pec.ha.osd.mil
Barriers To Cost Effective Medicine
• Society unwilling to acknowledge limited resources
• Patients unrealistic expectations of medicine
• Physician unaware of the cost of medical interventions
• Physicians unwilling to refuse patients’ demands
• Little or no risk involvement
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33DoD Pharmacoeconomic Centerwww.pec.ha.osd.mil
Opportunities
• Primary care survey
• Targets of opportunity
• Cost containment bullets
• Cost containment tips
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34DoD Pharmacoeconomic Centerwww.pec.ha.osd.mil
2nd Generation AntihistaminesSurvey Results (Rank Based on Cost)
Loratadine Fexofenadine Cetirizine Desloratadine
Equal Cost 21% 42% 34% 3%Cetirizine $0.96 Desloratadine $0.89 Fexofenadine $0.85 Loratadine $0.38
56% 25% 17% 2%
Cetirizine $0.96 Desloratadine $0.89 Fexofenadine $0.85 Loratadine $0.10
64% 19% 15% 2%
Percent of prescribers who would use agent as their first choice under the following cost scenarios:
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35DoD Pharmacoeconomic Centerwww.pec.ha.osd.mil
Targets Of Opportunity
• Select drug classes
– High cost; high utilization
• Evidence Based Medicine
– Demonstrates similar clinical effectiveness
• i.e., therapeutic interchangeability
• Cost benefit analysis
– How much more are we willing to pay for an incremental benefit of a drug
• Old drugs work too
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36DoD Pharmacoeconomic Centerwww.pec.ha.osd.mil
Provider Effect
• Necessary influence – nothing happens without provider support “The DoD credit card”
• Communicate targets of opportunity to providers– Clinical relevance
– Economic relevance
• Include patients in decision process
• Maintain clinical discretion
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37DoD Pharmacoeconomic Centerwww.pec.ha.osd.mil
Benefits
• Increases resources available to MTFs
• Creates opportunities for improved price negotiation– Contract
– Price tier benefit
• To be a better model for cost-effective medical care
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38DoD Pharmacoeconomic Centerwww.pec.ha.osd.mil
Discussed Cost or Cost-Effectiveness With Patients
• 30% Frequent or always
• 21% Never do
• 45% Patients get angry or upset if discussed
• 49% Accept explanations that incorporate costs, once they understand that the intervention would waste resources
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39DoD Pharmacoeconomic Centerwww.pec.ha.osd.mil
In Summary
• ID targets of opportunity
• It takes a team effort
• Be good stewards of taxpayer dollars