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7 Ways Hospitals Can Fight Drug Price Hikes and Shortages

Analysis  |  By Tinker Ready  
   February 23, 2017

Working closely with clinical pharmacists, making evidence-based medication substitutions, and employing smarter dosing can curb costs without reducing quality.

Hospitals have opportunities to reduce the use of expensive or hard-to-get drugs and save money without compromising patient care, according to a hospital pharmacist who spoke at the American Association for the Advancement of Science meeting in Boston Saturday.

The session—which took place at the annual meeting showcasing a range of scientific topics—brought together the issues of drug shortages and high prices. Some of the solutions used at hospitals such as the 465-bed University of Illinois Hospital and Health Science System (UI Health) can address both.

Andrew Donnelly, director of pharmacy services at UI, said that by working closely with clinical pharmacists and setting up a team devoted to address the problems, the system has saved $2.5 million.

"You have to be as smart as you can in terms of using the really expensive medications," he said.

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Hospitals need to know that there may be feasible alternatives to medications that suddenly become much more expensive, he said. And if the alternative approaches are evidence-based, the effort won't impact on quality.

If there is no alternative, there should be clear guidelines for approved uses of expensive drugs.

"You don't necessarily have to continue using that very expensive medication in the same manner you do right now,' he said. 'Keep the expensive medication for when there is absolutely no other alternative."

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Steep hikes in generic drug prices and expensive new pharmaceuticals have generated much public outrage and are cited as a major factor in rising health costs. And, like shortages, the price hikes come with little warning, Donnelly said.

"I can't tell you how many times a purchaser comes in my office during the week and says 'Andy, we have another shortage' or 'Andy, you won't believe this price increase.' It just happens on a routine basis."

Both trends are likely to continue.

The number of drug shortages has gone down in recent years—from an estimated high of 267 in 2011. But, problems persist, with 120 new shortages reported last year, Donnelly said, citing research from the University of Utah Drug Information Service.

But in terms of costs, an American Hospital Association found that between 2013 and 2015, inpatient drug spending increased an average of 23.4% annually.

By working with a team made up of clinicians and representatives for pharmacy, finance and administrators, UI Health was able to develop strategies to substitute drugs, reduce waste, and develop guidelines, Donnelly said.

He offered the following suggestions:

  1. Determine if there are evidence-based alternatives available to the high-priced drug. If so, remove the high-cost drug from the formulary so it does not continue to be ordered by healthcare providers. Or have well developed guidelines for its approved uses.
  1. Reduce waste associated with the high-expense drugs. This may mean implementing dose rounding where the dose is reduced slightly to avoid having to use another vial for just a small amount of a drug. Some hospitals do this with intravenous immunoglobulin.
  1. Make sure the size of infusion bags does not contribute to waste and consider making multiple syringes out of one vial of the high-expense drug if only small doses are needed.
  1. Try to identify significant drug price increases in as real time as possible to avoid delays in taking action to minimize the financial impact.
  1. Keep as low an inventory of the high-expense drug as possible.
  1. Keep open lines of communication with senior administrations and let them know the impact that they are having on the drug budget.
  1. Use clinical pharmacists to educate prescribers about high drug prices.

All of the above is best handled by an interdisciplinary committee. Clinical pharmacists are key to the effort. Donnelly said he doesn't think most physicians have a good understanding of drug prices.

"Our clinical pharmacists are out in the hospital, they are in the patient units, they are rounding with the medical team," he said. "They are really being proactive with respect to making sure our medication therapy is appropriate."

Tinker Ready is a contributing writer at HealthLeaders Media.

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