Cost Containment Strategies

1
Cost Containment Strategies

• CDR Denise M. Graham, MSC, USN
• PEC Director of Clinical Operations

2
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.

3
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

4
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 drugsto 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.

5
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

6
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

7
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

8
Top 20 MTF Expenditures FY03by Therapeutic Class

• Antihistamines - 88M
• NSAIDS - 86M
• Lipotropics - 83M
• SSRIs - 64M
• PPIs - 61M
• Bisphosphonates - 45M
• CCBs - 45M
• ACEs - 43M
• Vaccines - 38M
• Anticonvulsants - 37M
• Total 590M

• Advair - 31M
• TZDs - 30M
• Quinolones - 28M
• Antiplatelets - 27M
• Penicillins - 24M
• BG Strips - 24M
• Contraceptives - 23M
• Opiates - 22M
• AQ Nasal Steroids - 22M
• ARBs - 22M
• Total 253M

843M represented 52 of MTF total expenditures
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Next Top 20 MTF Expenditures FY03 by
Therapeutic Class

• Antipsychotics - 15M
• Toxoid Vac - 14M
• Gram (-) Bacilli Vac- 13M
• Norepi Dopamine - 13M
• Ophth Prostaglandins 13M
• Ophth Beta blockers - 12M
• Insulins - 11M
• ADHD Drugs - 10M
• Antidepressants - 10M
• Sedative-hypnotics - 10M
• Total 121M

• 21. Metformin - 22M
• 22. Leukotriene Ant. - 21M
• 23. Glucocorticoids - 20M
• 24. Macrolides - 19M
• 25. Antifungals - 19M
• 26. Antimalarials - 18M
• Hematinics - 17M
• Antimigraines - 17M
• Beta Blockers - 16M
• Estrogenics - 15M
• Total 184M

1,148M represented 70 of MTF total expenditures
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Top 40 MTF Expenditures for FY04

• Lipotropics - 101M
• NSAIDS - 98M
• PPIs - 84M
• SGAs - 81M
• Anticonvulsants - 53M
• CCBs - 51M
• Biphosphonates - 44M
• Beta Adrenergics - 43M
• Vaccines - 39M
• Antiplatelets - 38M
• Total 606M

• TZDs - 34M
• Leukotriene Ant. - 33M
• ACE Inhibitors - 31M
• ARBs - 29M
• Penicillins - 28M
• AQ Nasal Steroids - 24M
• BG Strips - 23M
• Antifungals - 23M
• Narc Analgesics - 22M
• Contraceptives - 22M
• Total 269M

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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
• Hematinics - 17M
• Estrogenics - 16M
• SSRIs - 16M
• ADHD - 15M
• Total 171M

• Gram (-) Bacilli - 15M
• Beta Adrenergics - 15M
• Insulins - 15M
• Toxoid Vaccine 14M
• Anti-migraine - 14M
• BPH - 14M
• Sedative-hypnotics - 13M
• Anti-inflam tumor - 13M
• Ophth prostaglandins - 13M
• Antispasmotics 12M
• Total 138M

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TOP 10 MTF ExpendituresArmy, AirForce, Navy
Army Air Force Navy
1 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
13
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
  PT Committee for UF)
• UF and BCF/ECF considerations
• Review utilization data (MTF management
  opportunity MTF utilization data shows
  opportunity for savings while still meeting
  patients clinical needs)

14
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

15
Cost Avoidance
Market Share Shift
Use of best price


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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
• Youll never know what your efforts are worth
  anything unless you measure them!

17
Cost Containment and the Prescriber A
Providers Perspective

• CAPT Don Nichols, MC, USN

18
Objectives

• What influences provider prescribing behavior
• Changing provider prescribing behavior
• Obstacles/Failures/Barriers
• Opportunities

19
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

20
What Influences Physician Prescribing Behavior

• Training and experience
• Colleagues and opinion leaders
• Pharmaceutical companies
• Health plans and other payers
• Patients

21
Training and Experience

• Medical education
• (an internist made an impression)
• Training
• Specialization
• Relative youth

22
Colleagues and Opinion Leaders

• Input from colleagues
• Local opinion leaders
• Peer pressure
• Professional leadership
• Group styles of practice

23
Pharmaceutical Companies Detailing

• May be initial source of information about new
  drugs therapies
• Rapid transition to new drugs
• Decreased prescribing of generic drugs

24
Health Plans and Other Players

• Formulary management
• Treatment protocols
• Prescribing restrictions
• Physician involvement is the key to success

25
Patients

• Powerful and increasingly influential
• DTC
• Internet information

26
Changing Prescribing Behavior

• Administrative interventions
• Educational interventions
• Feedback reporting and reminders
• Financial incentives

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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)

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Educational Interventions

• CME
• Academic detailing
• pharmacist/physicians

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Feedback Reporting and Reminders

• Physician benchmarking reports
• Drug utilization evaluations

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Financial Incentives

• Patient co-payments
• Physician bonus incentives
• At-risk drug contractual arrangements

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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

32
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

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Opportunities

• Primary care survey
• Targets of opportunity
• Cost containment bullets
• Cost containment tips

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2nd Generation AntihistaminesSurvey Results
(Rank Based on Cost)
Percent of prescribers who would use agent as
their first choice under the following cost
scenarios
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
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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

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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

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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

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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

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In Summary

• ID targets of opportunity
• It takes a team effort
• Be good stewards of taxpayer dollars