How increasing patient safety while reducing costs in pharmacy purchases is possible.
Pharmacy executives have known for some time that 2008 is not the year of the generic. There simply aren’t that many drugs coming off patent. So much for low prices. Despite that, 2008 may be the year of opportunity – opportunity to become further educated on therapeutic possibilities that promote optimal patient safety and care, and, in the process, reduce costs.
“Patient safety is, and always has been, a primary concern, but now we have greater opportunity to select products that enhance it,” says Michele Russic, RPh, director of pharmacy, Somerset Hospital (Somerset, Pa.). “Properly managing market share contracts can present a big cost-reduction opportunity,” she continues. “But, we must consider everything from patient demographics, to hospital demographics, product presentation, clinical aspects of a drug, the staff’s time (e.g. must a drug be mixed before administering it, or must it be administered several times a day?) and supply issues.” Neglecting to consider all of these factors can be a big mistake, she adds.
As Russic sees it, contracting for the pharmacy presents two major opportunities for directors and vice presidents of pharmacy. First, can they better utilize their GPO’s software tools, such as price auditing and price management, and hence free up their time to focus on factors that influence product selection? Second, can they integrate product selection with available technology, such as barcode and automated cabinets, which facilitate patient safety?
Fred Halvachs, senior vice president of pharmacy services for Broadlane, agrees that the focus on patient safety is at an all-time high. Recent drug recalls on generic products have included an international focus on safety and manufacturing, he says. “There will continue to be an even greater awareness of product integrity. We should see more product testing at all levels of the manufacturing process, including testing by manufacturers when the raw materials leave the manufacturing facility, when they arrive at the production plant and when the finished, packaged product leaves the production plant.
“Indeed, we saw the FDA implement additional testing requirements last March using spectroscopy and electrophoresis, in an effort to detect the presence of counterfeit ingredients,” he continues. “Furthermore, opportunities for patient safety and cost reduction often go hand in hand. There are opportunities for safety initiatives within the medication formulary, which can be educational and reflect new dosing standards, as delineated by the new CMS guidelines for erythropoiesis-stimulating agents (ESAs). Antibiotics represent another therapeutic category that is primed to optimize safety and clinical guidelines by ensuring the correct and appropriate use of antibiotics, particularly with regard to Methicillin-Resistant Staphylococcus Aureus (MRSA) infection, septic patients and nosocomial infections.”
To accomplish this, Halvachs recommends three strategies for pharmacy executives to follow. First, IDNs should consolidate their purchasing and utilize a prime vendor. “Hospitals can educate their prime vendor on their consistent utilization needs and maximize their prime vendor discount,” he says. “Also, working with a prime vendor [leads them to consider] such factors as historical usage, which ensures consistent inventory and results in a greater level of control over product integrity.”
Pharmacy directors and vice presidents “need to be receptive to more education and a nimble therapeutic attitude,” he continues. Secondly, pharmacy directors and vice presidents “need to be aware of the changing clinical information and regulatory guidelines.” This requires more communication with specialty clinicians and manufacturers. Armed with this information, the director of pharmacy can foster an educational and nimble therapeutic attitude among professional staff,” he continues.
The third strategy is to focus on compliance, says Halvachs. “With less opportunity for savings through new generics, this is a good year for IDNs to optimize pricing through compliance with their GPO contracts. When they do not [do so], they are leaving money on the table.”
Many pharmaceuticals are in short supply today, adds Gary Freeman, vice president of pharmacy, Amerinet. “Short-supply products could be marked up as much as 400 or 500 percent over [standard prices], and we can’t always be sure of their quality,” he says. So, pharmacy directors must keep their medical staff apprised of product availability. In some cases, therapeutic alternatives are available, and sometimes one hospital can borrow from another within the IDN. “It’s all about managing expectations and sticking with authorized distributors of products,” he says.
Pharmacy executives may have a difficult job, but they should not be working in a vacuum, experts point out. In fact, they should be communicating and working closely with their supply chain counterparts. “There are always initiatives that supply chain directors can help pharmacy directors with, and vice versa,” says Freeman. Pharmacy automation is one such example. If the pharmacy is looking to purchase equipment for dispersing products, it may discover that supply chain management executives can utilize the same solution, he explains.
“We have always worked closely with supply chain and materials management,” says Russic. “Several years ago, we began looking closely at what the materials management department was purchasing and ordering.” By aligning many of her department’s product selections with those of materials management, Russic found she could reduce inventory and obtain better pricing. She also saved the pharmacy, accounting and materials management staffs a lot of time, she adds.
Pharmacy executives have important contacts outside of their system as well, and strong lines of communication are key to facilitating and maintaining relationships. “We encourage the directors of pharmacy [at our member hospitals] and their buyers to meet quarterly with their wholesalers to evaluate issues identified both at the hospital and wholesaler [levels],” says Halvachs. “Better communication means more opportunity for the wholesaler to provide consistent products the pharmacy director needs.” This, in turn, should drive costs down as wholesalers avoid stocking multiple SKUs of products for their customers.
Russic considers herself lucky to have a dedicated account representative at the wholesaler center, who works closely with her buyer. “That relationship has helped improve our wholesaler service,” she says. And, while she likes to take advantage of online ordering, she appreciates the “human contact” as well. “We want [to rely on] someone who knows our account and can work toward resolving any problems that arise,” she says.
Maintaining close communication with their manufacturer partners is equally important for directors of pharmacy, notes Halvachs. “With multiple clinical categories and therapeutic opportunities, it is imperative for the director of pharmacy to work closely with [his or her] manufacturers to learn about the best clinical solutions and educational processes available to ensure that therapeutic optimization is achieved,” he says. Again, good communication and strong education facilitate optimal patient care, he adds. And, oftentimes, reduced costs follow.
Future of pharmacy
A strong focus on patient safety is expected to continue to guide pharmacy executives in their purchasing decisions, according to policy makers. “To do so, they must continue to educate physicians and nurses on product supply and cost, and “make products consistently available to them, day after day,” says Halvachs. “A significant number of errors occur when variability on product selection enters the medication delivery system. Consistent product selection helps educate and familiarize staff with products, and it decreases errors.”
Along these lines, it is very important to involve both doctors and nurses in formulary creation. “Of course, pharmacy directors should lead this effort and provide clinical literature to ensure the proper review of products, but they should do so with these stakeholders in mind,” he adds.
Indeed, formulary has evolved from evaluating the drug itself to looking at a slew of related factors, which impact patient safety, says Russic. “Today, we still consider the indications and cost of a product, but we also focus on patient safety issues, such as barcode, look-alike/sound-alike issues, drug interactions, product availability [and more].”
Flexibility and creativity on the part of pharmacy directors is critical, says Halvachs. “They will have to consider new solutions and additional processes [in the selection of products], such as autosubstitution,” he explains. “Also, they may have to adopt a more creative attitude toward inventory. For instance, they may have to do more bulk buying on high-use products so that the pharmacy buyer isn’t scurrying around, trying to stock inexpensive items. On expensive items for which utilization patterns are inconsistent, we will see more consignment. Or, pharmacy directors will have to rely more on prime vendors who can deliver products expeditiously.”
“I think hospitals are just starting to use price management and price auditing tools” to this effect, says Russic. “These tools will be available through the GPO, so it will be more important than ever for pharmacy directors to work closely with their GPO.”