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Why Pharmaceutical Prices are Rising and How We Can Fight Against Them?

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Prescription drug prices are rising and a pharmacist discusses strategies to resist this trend

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Why Pharmaceutical Prices are Rising and How We Can Fight Against Them?

  1. 1. Why Pharmaceutical Prices are Rising and How We Can Fight Against Them? Goldina Erowele, PharmD, MBA Harris Health System Director, Dept of Pharmacy Pharmacy Operations & Clinical Support Services May 19th, 2017
  2. 2. Trends in drug expenditures
  3. 3. Source: https://www.cambiahealth.com/newsroom/resources/cost-prescription-drugs-then-now
  4. 4. Health-system expenditures for all drugs will continue to increase •12–14% in clinics •5–7% in hospitals •7–9% across all settings Annual price increases predicted to range from SOURCE: 2016 National trends in prescription drug expenditures and projections by American Journal of Health-System Pharmacists (AJHP)
  5. 5. • Growth in unit price = total inpatient drug spending • Inpatient drug spending increased an average 23.4% annually • Spending on drugs rose 8.5 % in 2015, total prescriptions dispensed increased by only 1% Trend Unsustainable SOURCE: 2016 Study by the American Hospital Association and the Federation of American Hospitals http://www.aha.org/content/16/aha-fah-rx-report.pdf
  6. 6. • 6.5% price inflation for acute care facilities for the upcoming year • 6% price inflation for DSH-eligible institutions • Incorporating values for inflation due to mix/volume (0.5%) and new drugs (2.6 %), the predicted inflation rates on total drug expenditures are 9.1 % for DSH hospitals Drug Spend Projections by Premier (GPO) Premier (GPO) Analysis & Report - Drug procurement & Spend data (2016)
  7. 7. Why skyrocketing drug costs and prices?
  8. 8. Why Skyrocketing Drug Costs in the US? Minimal government regulations No Competition in the marketplace The end of the “Generic Wave” Supply disruptions & consolidation Population growth & chronic conditions Economy-wide inflation 1. American Journal of Managed Care, “The Growing Costs of Specialty Pharmacy—Is This Sustainable?”, Feb 8, 2013. 2. FiercePharma Special Report: Top 10 Drug Patent Losses in 2014. 3. Am J Health Syst Pharm July 15, 2016 vol. 73 no. 14 1058-75
  9. 9. Why Skyrocketing Drug Costs in the US? Expansion and use of Specialty Drugs Patent Expiration • Citizen petitions • Authorized generics • Restricting access to brand samples for testing 1. American Journal of Managed Care, “The Growing Costs of Specialty Pharmacy—Is This Sustainable?”, Feb 8, 2013. 2. FiercePharma Special Report: Top 10 Drug Patent Losses in 2014. 3. Am J Health Syst Pharm July 15, 2016 vol. 73 no. 14 1058-75
  10. 10. Negative Impact of Rising Drug Costs Increased hospital stays resulting from untreated or undertreated conditions Hospitals, health systems & Payers forced to make formulary changes Nonadherence often leads to more expensive therapies Rationing of filled medications Low prescription fill rate Public health issue 1. American Journal of Managed Care, “The Growing Costs of Specialty Pharmacy—Is This Sustainable?”, Feb 8, 2013. 2. FiercePharma Special Report: Top 10 Drug Patent Losses in 2014. 3. Am J Health Syst Pharm July 15, 2016 vol. 73 no. 14 1058-75
  11. 11. Possible Solutions
  12. 12. Fixing The Problem Policies to Manage Pharmaceutical Costs: Market based Increasing transparency & more education Price Transparency Parity Ensuring a Better Return on Taxpayer Investments Continued Assessment of Direct-to- Consumer Advertising Requirements Provider & Patient Education Source: The Pew Charitable Trusts Research & Analysis Policy Options to Manage Drug Spending, April 11 2017
  13. 13. Fixing The Problem Policies to Manage Pharmaceutical Costs: Market based Increasing Competition Reduce Backlog of Generic Applications Foster Competition for Branded Drugs Curb Misuse of REMS for bioequivalence testing Strengthen Post- Market Surveillance Source: The Pew Charitable Trusts Research & Analysis Policy Options to Manage Drug Spending, April 11 2017
  14. 14. Fixing The Problem Policies to Manage Pharmaceutical Costs: Insights From Other Countries Restricting off-label prescribing forbidding the use of medicines for purposes other than those approved by regulatory authorities—could produce savings when employed to restrict use of drugs for which lower-cost, Food and Drug Administration-approved alternatives exist. Payer-seller agreements in which payers negotiate with pharmaceutical companies to reduce drug prices through discounts or rebates—have had a sizable effect on prices in many countries. Internal benchmarking setting a payment rate for a drug based on the cost of clinically comparable products Source: The Pew Charitable Trusts Research & Analysis Policy Options to Manage Drug Spending, April 11 2017
  15. 15. Fixing The Problem Policies to Manage Pharmaceutical Costs: Insights From Other Countries Denying coverage for medicines deemed unaffordable Could reduce costs, but this approach would face significant sociocultural and legal barriers in the United States External benchmarking Determining how much to pay for a drug by using a formula that takes into account what other countries pay—could lead to short-term cost savings in Medicare Value-based benchmarking Setting a price based on a drug’s effectiveness—could help reduce the use of high-cost drugs that offer minimal additional benefits compared with other available therapies Source: The Pew Charitable Trusts Research & Analysis Policy Options to Manage Drug Spending, April 11 2017
  16. 16. Fixing The Problem Policies to Manage Pharmaceutical Costs: Legislation Change S. 297 and H.R. 749 Expedite approval of an Abbreviated New Drug Application (ANDA) when a drug is in short supply or little or no competition exists S. 124 Prohibit brand companies from paying generic manufacturers to delay introduction of a generic version, otherwise known as “pay for delay S. 92 and S. 183 Allow drugs to be imported from other countries, such as Canada, where prices are significantly lower Source: The Pew Charitable Trusts Research & Analysis Policy Options to Manage Drug Spending, April 11 2017
  17. 17. Cost Control Strategies at Harris Health Drug Selection Closed formulary Formulary Restrictions – Prior authorization, Nonformulary process, Service line Medication utilization evaluations Procurement Pharmaceutical Contracting • Wholesaler – Morris & Dickson • GPO – Premier • Pharmaceutic Bids – Apexus Prime Vendor • Individual contract renegotiations Procurement via “Free Drug” Programs In-house/State / Federal Programs • Patient Assistance Programs (PMAP) • AIDS Drug Assistance Program (ADAP) • Vaccine for Children (VFC`) • HarborPath • Adult Safety Net (ASN) - New Physician Detailing Education on drug costs Cost Transparency Project (exploratory stage with EPIC) Manufacturer Supply Recovery Failure to Supply Program Interruptions in drug supply (Drug shortages) Key Highlights – Collaborative efforts – Pharmacists, Medical Staff
  18. 18. Cost Control Strategies at Harris Health FY16 Total estimated cost savings and avoidance = $4.3M. These P&TC + MEB approved recommendations were evidence- based, recommendations based on clinical guidelines, efficacy, outcomes and cost effectiveness. 65% of nonformulary medications ($6M) were recouped via PMAP Lantus to Levemir Switch $1.2M per year Switching Bloxiverz to generic to compounde d product $825K per year Trivalent versus Quadrivalent Flu Vaccine $565K per year/season Streamlining premedication for chemotherapy $421K per year Switching from Seroquel XR to generic quietaipine $312K per year Therapeutic Interchanges, Brand to generic/Generic to brand substitution, Dose optimization, Prior authorization $313K per year Nonformulary (NF) Program 65% of NF medications obtained via PMAP Highlights of Formulary Programs & Strategies
  19. 19. Cost Control Strategies at Harris Health FY16 total cost savings/avoidance from all PAP= ~$60M. Cost info for FY16. This a multidisciplinary efforts on PMAP team, formulary management team, MDs, PharmDs, RNs. *Program started in 8/15 Patient Medication Assistance Program (In-house program) $38M AIDS Drug Assistance Program (ADAP) $19.2M Vaccine for Children (VFC) $3.4M *Haborpath Program $1.03M Adult Safety Net (ASN) program New program • ~ cost avoidance = $6- 13M per year Highlights of Patient Assistance Programs (PAP) – FY16
  20. 20. Cost Control Strategies at Harris Health FY16 total cost savings/avoidance from all PAP= ~$60M. Cost info for FY16. This a multidisciplinary efforts on PMAP team, formulary management team, MDs, PharmDs, RNs. *Program started in 8/15 Patient Medication Assistance Program (In-house program) $38M AIDS Drug Assistance Program (ADAP) $19.2M Vaccine for Children (VFC) $3.4M *Haborpath Program $1.03M Adult Safety Net (ASN) program New program • ~ cost avoidance = $6- 13M per year Highlights of Patient Assistance Programs (PAP) – FY16
  21. 21. Questions

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