Strategies to manage rising drug costs

As major purchasers of prescription drugs, hospitals bear a heavy financial burden when drug costs rise. Escalating drug prices are disrupting the ability of hospitals and health systems to effectively treat their patients.

On January 15, 2019, and in conjunction with the American Hospital Association (AHA), the Federation of American Hospitals (FAH) and the American Society of Health-System Pharmacists (ASHP), the National Opinion Research Center (NORC) at the University of Chicago released its report detailing the resulting impact of the increasing cost of prescription medications on the delivery of patient care.[1]

According to AHA president and CEO Rich Pollack, “This report confirms that we are in the midst of a prescription drug spending crisis that threatens patient access to care and hospitals’ and health systems’ ability to provide the highest quality of care.”

The Impact on Hospitals

The report found that the continued dramatic increase in drug pricing often forces hospitals to reduce staff, identify alternative therapies and delay infrastructure investments in order to meet their budgets.

The report revealed the following:[2]

• Total drug spending per hospital admission increased by 18.5% between FY2015 and FY2017.
• Outpatient drug spending per admission increased by 28.7% while inpatient drug spending per admission increased by 9.6% between FY2015 and FY2017. This 9.8% increase was on top of the 38% increase in inpatient drug spending between FY2013 and FY2015.
• Increases over 80% of unit price were seen across different classes of drugs, including those for anesthetics, parenteral solutions and chemotherapy.
• Over 90% of surveyed hospitals reported having to identify alternative therapies to manage drug spending.
• One in four hospitals were forced to cut staff to mitigate budget pressures.

Strategies for Combatting High Prices

While the AHA is engaged in advocating for policies that will support sustainable prescription drug pricing, many hospitals are enacting their own internal strategies to manage the high cost of drugs. Some of these strategies include:

• Antibiotic stewardship – With a robust antibiotic stewardship program in place, a hospital can reduce its drug consumption. Focus on using the right drug, using it for a shorter amount of time, or not using it at all.
• Alternative medications – When searching out an alternative treatment protocol, make sure that your pharmacy team has done due diligence to confirm that the lower priced drug is clinically appropriate and that there is clinical support documentation to back up use of the alternate drug.
• Establish lower cost sites of care for infusions – Commercial payors are shifting patients and their reimbursement dollars from higher cost sites of care to lower cost sites of care, such as physicians’ offices, home infusions or stand-alone ambulatory infusion centers. To ensure full reimbursement from payors, be sure that your hospital is set up to administer infused drugs in a lower cost site of care.

Comprehensive Pharmacy Services (CPS) Can Help

CPS leverages nearly 50 years of pharmacy expertise to uncover opportunities for drug savings and drive clinical initiatives that fuel drug cost reductions through:

• Operational assessment - Our teams review more than 300 different points within the hospital pharmacy operation to identify opportunities for implementing drug savings. We not only provide a prioritized list of action items, we help implement items and support ongoing operations.
• Antibiotic stewardship – Our antibiotic stewardship program has been proven to help hospitals reduce their drug consumption by as much as 10 percent.
• Pharmacy analytics – Our proprietary analytics allow us to identify alternative, lower cost medications and provide the clinical documentation for each recommended protocol so the pharmacist can take that documentation to hospitals administrators to approve the change across the hospital.
• Lower cost sites of care – Our teams can help your organization establish effective lower cost sites of care in order to maximize reimbursements and keep patients in the system.

For more information on how CPS can help your hospital reduce the impact of high drug prices, email: contactus@cpspharm.com.

[1] https://www.aha.org/press-releases/2019-01-15-new-report-shows-impact-rising-drug-prices-and-drug-shortages-patients. Accessed 7.30.19.

[2] https://www.aha.org/system/files/2019-01/aha-drug-pricing-study-report-01152019.pdf. Accessed 7.30.19