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Cost Containment Strategies

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.

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Cost Containment Strategies

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  1. Cost Containment Strategies CDR Denise M. Graham, MSC, USN PEC Director of Clinical Operations

  2. 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.

  3. 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

  4. 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.

  5. 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

  6. 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

  7. 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

  8. Antihistamines - $88M NSAIDS - $86M Lipotropics - $83M SSRIs - $64M PPIs - $61M Bisphosphonates - $45M CCBs - $45M ACEs - $43M Vaccines - $38M Anticonvulsants - $37M Total: $590M Advair - $31M TZDs - $30M Quinolones - $28M Antiplatelets - $27M Penicillins - $24M BG Strips - $24M Contraceptives - $23M Opiates - $22M AQ Nasal Steroids - $22M ARBs - $22M Total: $253M Top 20 MTF Expenditures FY03by Therapeutic Class $843M represented 52% of MTF total expenditures

  9. Antipsychotics - $15M Toxoid Vac - $14M Gram (-) Bacilli Vac- $13M Norepi & Dopamine - $13M Ophth Prostaglandins – $13M Ophth Beta blockers - $12M Insulins - $11M ADHD Drugs - $10M Antidepressants - $10M Sedative-hypnotics - $10M Total: $121M 21. Metformin - $22M 22. Leukotriene Ant. - $21M 23. Glucocorticoids - $20M 24. Macrolides - $19M 25. Antifungals - $19M 26. Antimalarials - $18M Hematinics - $17M Antimigraines - $17M Beta Blockers - $16M Estrogenics - $15M Total: $184M Next Top 20 MTF Expenditures FY03 by Therapeutic Class $1,148M represented 70% of MTF total expenditures

  10. Lipotropics - $101M NSAIDS - $98M PPIs - $84M SGAs - $81M Anticonvulsants - $53M CCBs - $51M Biphosphonates - $44M Beta Adrenergics - $43M Vaccines - $39M Antiplatelets - $38M Total: $606M TZDs - $34M Leukotriene Ant. - $33M ACE Inhibitors - $31M ARBs - $29M Penicillins - $28M AQ Nasal Steroids - $24M BG Strips - $23M Antifungals - $23M Narc Analgesics - $22M Contraceptives - $22M Total: $269M Top 40 MTF Expenditures for FY04

  11. 21. Glucocorticoids - $19M 22. Macrolides - $19M 23. Beta Blockers - $18M 24. Norepi & Dopamine - $17M 25. Quinolones - $17M 26. Atypical Antipsych - $17M Hematinics - $17M Estrogenics - $16M SSRIs - $16M ADHD - $15M Total: $171M Gram (-) Bacilli - $15M Beta Adrenergics - $15M Insulins - $15M Toxoid Vaccine – $14M Anti-migraine - $14M BPH - $14M Sedative-hypnotics - $13M Anti-inflam tumor - $13M Ophth prostaglandins - $13M Antispasmotics – $12M Total: $138M Top 40 MTF Expenditures for FY04

  12. TOP 10 MTF ExpendituresArmy, AirForce, Navy

  13. 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)

  14. 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

  15. Cost Avoidance Market Share Shift Use of best price = +

  16. 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!

  17. Cost Containment and the Prescriber – A Provider’s Perspective CAPT Don Nichols, MC, USN

  18. Objectives • What influences provider prescribing behavior • Changing provider prescribing behavior • Obstacles/Failures/Barriers • Opportunities

  19. 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 FACTORS for higher drug expenditures CA to AZ

  20. What Influences Physician Prescribing Behavior • Training and experience • Colleagues and opinion leaders • Pharmaceutical companies • Health plans and other payers • Patients

  21. Training and Experience • Medical education (an internist made an impression) • Training • Specialization • Relative youth

  22. Colleagues and Opinion Leaders • Input from colleagues • Local opinion leaders • Peer pressure • Professional leadership • Group styles of practice

  23. Pharmaceutical Companies Detailing • May be initial source of information about new drugs therapies • Rapid transition to new drugs • Decreased prescribing of generic drugs

  24. Health Plans and Other Players • Formulary management • Treatment protocols • Prescribing restrictions • Physician involvement is the key to success

  25. Patients • Powerful and increasingly influential • DTC • Internet information

  26. Changing Prescribing Behavior • Administrative interventions • Educational interventions • Feedback reporting and reminders • Financial incentives

  27. 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)

  28. Educational Interventions • CME • Academic detailing pharmacist/physicians

  29. Feedback Reporting and Reminders • Physician benchmarking reports • Drug utilization evaluations

  30. Financial Incentives • Patient co-payments • Physician bonus incentives • At-risk drug contractual arrangements

  31. 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

  32. 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

  33. Opportunities • Primary care survey • Targets of opportunity • Cost containment bullets • Cost containment tips

  34. 2nd Generation AntihistaminesSurvey Results (Rank Based on Cost) Percent of prescribers who would use agent as their first choice under the following cost scenarios:

  35. 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

  36. 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

  37. 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

  38. 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

  39. In Summary • ID targets of opportunity • It takes a team effort • Be good stewards of taxpayer dollars

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