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LANDSCAPE: REALITY ON THE GROUND
The Sustainability of Prescription Drug Prices
Mitchell Katz, M.D.
Director, Los Angeles County Department of Health Services
Los Angeles County Department of Health Services
Pharmaceutical Pricing Categories
39%
22%
39% Outpatient 340B
Outpatient non-340B
Inpatient GPO
$35 million
Fiscal Year 2015/16
Los Angeles County Department of Health Services
Pharmaceutical Costs - Five Year Trend
Outpatient-340B
Outpatient-340B Outpatient-340B Outpatient-340B Outpatient-340B
Outpatient-GPO
Outpatient-GPO
Outpatient-GPO Outpatient-GPO Outpatient-GPO
Inpatient-GPO
Inpatient-GPO
Inpatient-GPO Inpatient-GPO Inpatient-GPO
$0.00
$20,000,000.00
$40,000,000.00
$60,000,000.00
$80,000,000.00
$100,000,000.00
$120,000,000.00
$140,000,000.00
$160,000,000.00
$180,000,000.00
FY 11-12 FY 12-13 FY 13-14 FY 14-15 FY 15-16
12 %
2.5%
2.8%
5.5%
ACA- resultant reduction in pharmaceutical PAP
Los Angeles County Department of Health Services Top
Drug Classes- by Drug Spend
23%
5%
4%
4%
3%
3%
0% 5% 10% 15% 20% 25%
Antineoplastics
Insulins
Vaccines
Serums
Antiretrovirals
Hematopoietic agents
% of total
Newer High Cost Pharmaceutical Therapies
 Pompe Disease (glycogen storage disease)- Lumizyme
(alglucosidase alfa)
 $500,000 per patient year
 Morquio Syndrome (mucopolysaccharide storage disease)-
Vimizim (elosulfase alfa)
 $1.1 million per patient year
 Paroxysmal Nocturnal Hemoglobinuria- Soliris (eculizumab)
 $300,000 per patient year
Inflation Trends- Examples of Older Generic Agents
with Skyrocketing Prices
 Neostigmine
 Vasopressin
 Nitroprusside
 Isoproterenol
Neostigmine Inflation- Unit Cost
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
Sep2013
Oct2013
Nov2013
Dec2013
Jan2014
Feb2014
Mar2014
Apr2014
May2014
Jun2014
Jul2014
Aug2014
Sep2014
Oct2014
Nov2014
Dec2014
Jan2015
Feb2015
Mar2015
Apr2015
May2015
Jun2015
Jul2015
Aug2015
Sep2015
Oct2015
Nov2015
Dec2015
Jan2016
Feb2016
Mar2016
Apr2016
May2016
Jun2016
Jul2016
Aug2016
Cholinesterase inhibitor commonly used in
treatment of myasthenia gravis and
anesthesia reversal
Vasopressin Inflation- Unit Cost
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Jun-16
Jul-16
Aug-16
Antidiuretic hormone commonly used in the critical care
setting
Nitroprusside Inflation – Unit Price
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Jun-16
Jul-16
Aug-16
Vasodilator commonly used to treat heart failure
and hypertensive emergencies
Isoproterenol Inflation- Unit Price
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Jun-16
Jul-16
Aug-16
Commonly used for cardiac arrest and heart block
HRSA 340B Drug Pricing Program
 Established in 1992
 Requires drug manufacturers to provide outpatient drugs
to eligible health care organizations at significantly
reduced prices
 For Los Angeles County DHS:
 Only hospitals and grant-funded HIV + family planning sites
qualify for 340B pricing access
 Approximately 40% of prescriptions prescribed at clinic
medical homes do not qualify for 340B pricing access
What is the Value of 340B Pricing Access to Los
Angeles County Department of Health Services?
340B Purchases
Relative Cost of
Same Purchases
without 340B
pricing access
$0
$50,000,000
$100,000,000
$150,000,000
$200,000,000
$250,000,000
FY 2015/16
Fiscal Year Savings
$170 Million
DHS Pharmaceutical Management Strategies
1. Maximize 340B pricing access
2. Active formulary management
3. Access to pharmaceutical manufacturer patient assistance
programs
4. Pharmaceutical contracting (sub-340B prices)
5. Centralized purchasing and trending of costs
6. Centralized pharmacist therapy review of high cost specialty
therapy use
7. eHR guidelines/protocols for high cost agents
8. Formulary collaboration with health plans
Centralized Pharmacy Therapy Review
High Cost Specialty Therapy Use
 Utilized for restricted/non-formulary high cost specialty
pharmaceutical therapy use; highly trained pharmacist
reviews therapy options with provider
 Focus is on ensuring appropriate system use of high cost
therapies by all providers
 Approximately 7% of initial therapy requests are modified by
provider after pharmacist consultation and discussion of
therapeutic alternatives available
 Cost avoidance= $2.9 million over past year
Ongoing Balancing Act
Maximizing 340B Pricing
Access
Active System
Pharmaceutical
Management Strategies
Prescription Drug Price
Increases

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2016 Forum: "Landscape Reality on the Ground" - Dr. Katz

  • 1. LANDSCAPE: REALITY ON THE GROUND The Sustainability of Prescription Drug Prices Mitchell Katz, M.D. Director, Los Angeles County Department of Health Services
  • 2. Los Angeles County Department of Health Services Pharmaceutical Pricing Categories 39% 22% 39% Outpatient 340B Outpatient non-340B Inpatient GPO $35 million Fiscal Year 2015/16
  • 3. Los Angeles County Department of Health Services Pharmaceutical Costs - Five Year Trend Outpatient-340B Outpatient-340B Outpatient-340B Outpatient-340B Outpatient-340B Outpatient-GPO Outpatient-GPO Outpatient-GPO Outpatient-GPO Outpatient-GPO Inpatient-GPO Inpatient-GPO Inpatient-GPO Inpatient-GPO Inpatient-GPO $0.00 $20,000,000.00 $40,000,000.00 $60,000,000.00 $80,000,000.00 $100,000,000.00 $120,000,000.00 $140,000,000.00 $160,000,000.00 $180,000,000.00 FY 11-12 FY 12-13 FY 13-14 FY 14-15 FY 15-16 12 % 2.5% 2.8% 5.5% ACA- resultant reduction in pharmaceutical PAP
  • 4. Los Angeles County Department of Health Services Top Drug Classes- by Drug Spend 23% 5% 4% 4% 3% 3% 0% 5% 10% 15% 20% 25% Antineoplastics Insulins Vaccines Serums Antiretrovirals Hematopoietic agents % of total
  • 5. Newer High Cost Pharmaceutical Therapies  Pompe Disease (glycogen storage disease)- Lumizyme (alglucosidase alfa)  $500,000 per patient year  Morquio Syndrome (mucopolysaccharide storage disease)- Vimizim (elosulfase alfa)  $1.1 million per patient year  Paroxysmal Nocturnal Hemoglobinuria- Soliris (eculizumab)  $300,000 per patient year
  • 6. Inflation Trends- Examples of Older Generic Agents with Skyrocketing Prices  Neostigmine  Vasopressin  Nitroprusside  Isoproterenol
  • 7. Neostigmine Inflation- Unit Cost $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 Sep2013 Oct2013 Nov2013 Dec2013 Jan2014 Feb2014 Mar2014 Apr2014 May2014 Jun2014 Jul2014 Aug2014 Sep2014 Oct2014 Nov2014 Dec2014 Jan2015 Feb2015 Mar2015 Apr2015 May2015 Jun2015 Jul2015 Aug2015 Sep2015 Oct2015 Nov2015 Dec2015 Jan2016 Feb2016 Mar2016 Apr2016 May2016 Jun2016 Jul2016 Aug2016 Cholinesterase inhibitor commonly used in treatment of myasthenia gravis and anesthesia reversal
  • 8. Vasopressin Inflation- Unit Cost $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Antidiuretic hormone commonly used in the critical care setting
  • 9. Nitroprusside Inflation – Unit Price $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Vasodilator commonly used to treat heart failure and hypertensive emergencies
  • 10. Isoproterenol Inflation- Unit Price $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Commonly used for cardiac arrest and heart block
  • 11. HRSA 340B Drug Pricing Program  Established in 1992  Requires drug manufacturers to provide outpatient drugs to eligible health care organizations at significantly reduced prices  For Los Angeles County DHS:  Only hospitals and grant-funded HIV + family planning sites qualify for 340B pricing access  Approximately 40% of prescriptions prescribed at clinic medical homes do not qualify for 340B pricing access
  • 12. What is the Value of 340B Pricing Access to Los Angeles County Department of Health Services? 340B Purchases Relative Cost of Same Purchases without 340B pricing access $0 $50,000,000 $100,000,000 $150,000,000 $200,000,000 $250,000,000 FY 2015/16 Fiscal Year Savings $170 Million
  • 13. DHS Pharmaceutical Management Strategies 1. Maximize 340B pricing access 2. Active formulary management 3. Access to pharmaceutical manufacturer patient assistance programs 4. Pharmaceutical contracting (sub-340B prices) 5. Centralized purchasing and trending of costs 6. Centralized pharmacist therapy review of high cost specialty therapy use 7. eHR guidelines/protocols for high cost agents 8. Formulary collaboration with health plans
  • 14. Centralized Pharmacy Therapy Review High Cost Specialty Therapy Use  Utilized for restricted/non-formulary high cost specialty pharmaceutical therapy use; highly trained pharmacist reviews therapy options with provider  Focus is on ensuring appropriate system use of high cost therapies by all providers  Approximately 7% of initial therapy requests are modified by provider after pharmacist consultation and discussion of therapeutic alternatives available  Cost avoidance= $2.9 million over past year
  • 15. Ongoing Balancing Act Maximizing 340B Pricing Access Active System Pharmaceutical Management Strategies Prescription Drug Price Increases

Editor's Notes

  1. Provides an overview of the various pricing types that DHS access for pharmaceuticals. 340B is for hospital outpatient drugs, as well as for HIV/family planning clinics with MLK and the ACN. Non 340B outpatient is for outpatient drugs dispensed and administered throughout MLK and the ACN Inpatient GPO is not currently eligible for 340B pricing access- we access group purchasing organization (GPO) pricing for hospitalized patients
  2. Provides a 5-year trend of overall costs for DHS, by pricing type) Note the big increase in FY 13-14, which was due to loss of access to pharmaceutical patient assistance programs, as our previously uninsured patients became insured and no longer eligible. The arrows demonstrate the % increase (or decrease) from the previous year. Note that the inpatient costs are increasing in the last two FY.
  3. Examples of three high cost pharmaceutical treatments. While these are not high in number, the cost per patient is very high Pompe disease is a progressive neuromuscular disorder. Morquio A is a genetic disease that results in missing or low levels of the N-acetylgalactosamine-6 sulfatase (GALNS) enzyme that breaks down glycosaminoglycans (GAGs).
  4. Overview of 340B program. 50% of DHS prescriptions do not qualify for 340B pricing access. However, these are the ACN and MLK sites. With the exception of oncology, most of the medications that are dispensed at the non-hospital sites are primary care agents- not higher cost specialty drugs.
  5. The first column represents total 340B expenditures in FY 2015-16. The second column represents the costs had we not accessed 340B pricing. The difference is $170 million for this fiscal year.
  6. Each of these steps is critical in controlling our overall costs. These are strategies that provide a high rate of return for DHS. PAP programs are providing DHS approximately $8 million in savings per year.
  7. Within DHS, high cost and non-formulary drug requests go to our central team of clinical pharmacists. These pharmacists review the proposed request, ORCHID notes, and identify potential for alternative formulary options, and discuss with the provider. This is critical in our teaching facilities. If no formulary option is possible and the drug is medically necessary, the pharmacist validates patient insurance status. If the patient is uninsured, the issue is referred over to our Cardinal PAP coordinators to process for PAP access.
  8. Overall, we have done well with the balancing act. Besides the 12% increase around the time of the ACA transition, we have contained FY spends at about 3%. It is important to note that over the last two years we have also lost some outpatient pharmacy volume given that insured patients have choices of outpatient pharmacy selected.