Cost Containment Strategies

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

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.


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


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.


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


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


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


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


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


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


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


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


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)


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


Market Share Shift

+ Use of best price

= Cost Avoidance


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!

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


Objectives

• What influences provider prescribing behavior

• Changing provider prescribing behavior

• Obstacles/Failures/Barriers

• Opportunities


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


What Influences Physician Prescribing Behavior

• Training and experience

• Colleagues and opinion leaders

• Pharmaceutical companies

• Health plans and other payers

• Patients


Training and Experience

• Medical education

(an internist made an impression)

• Training

• Specialization

• Relative youth


Colleagues and Opinion Leaders

• Input from colleagues

• Local opinion leaders

• Peer pressure

• Professional leadership

• Group styles of practice


Pharmaceutical Companies Detailing

• May be initial source of information about new drugs therapies

• Rapid transition to new drugs

• Decreased prescribing of generic drugs


Health Plans and Other Players

• Formulary management

• Treatment protocols

• Prescribing restrictions

• Physician involvement is the key to success


Patients

• Powerful and increasingly influential

• DTC

• Internet information


Changing Prescribing Behavior

• Administrative interventions

• Educational interventions

• Feedback reporting and reminders

• Financial incentives


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)


Educational Interventions

• CME

• Academic detailing

pharmacist/physicians


Feedback Reporting and Reminders

• Physician benchmarking reports

• Drug utilization evaluations


Financial Incentives

• Patient co-payments

• Physician bonus incentives

• At-risk drug contractual arrangements


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


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


Opportunities

• Primary care survey

• Targets of opportunity

• Cost containment bullets

• Cost containment tips


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:


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


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


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


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


In Summary

• ID targets of opportunity

• It takes a team effort

• Be good stewards of taxpayer dollars

Cost Containment Strategies

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