Kelley A' CurtisFrancis, BS, PharmD, MBA

1
Hospital pharmaceutical expense
Where does the money go?

• Kelley A. Curtis-Francis, BS, PharmD, MBA
• Corporate Director, Contracting and Utilization,
  Clinical Services
• Catholic Healthcare Partners
• Cincinnati, OH
• kacurtis_at_health-partners.org

2
Catholic Healthcare Partners
Toledo
Lorain
Northeast PA
Youngstown/Warren
Lima
Springfield
Cincinnati

• 29 Hospitals
• 14 Long-Term Care/Nursing Homes
• 9 Hospice programs
• 9 Home Health Agencies
• 28,488 FTEs
• 7,438 Affiliated Physicians

Kentucky/Indiana
Tennessee

• 9 Regional Health Systems Emphasizes the local
  community and promotes integrated continuum of
  care
• System Office - Provides oversight and select
  centralized services.

3
Our objectives for this session

• Provide an overview to the hospital pharmacy
  budget including how we spend our drug supply
  dollars.
• Describe the trends in drug expense and
  utilization seen at acute care hospitals such as
  yours.
• Define some of the strategies being employed to
  optimize formulary and drug utilization.

4
Most hospital pharmacies spend much more for
drugs than labor.
Source Avg. Costs at CHP Facilities
5
UWHC Pharmacy Performance vs.UHC Peers
(Action-OI 4th Quarter 2004)
Tradeoff between pharmacist labor and total
pharmacy cost of care (labor drugs)
6
How did CHP spend its drug budget between 2005
and 2006?
based on 6-month data Nov 2005-April 2006
7
What factors have influenced our pharmaceutical
supply expense?

• Price
• Drug price inflation
• Volume discounts
• Dispensing fees
• Utilization
• Demographics
• Consumer demand
• Prescriptions per member
• Days supply per Rx

• Product
• New brand drugs
• Biotechnology
• Physician behaviors
• Plan Design
• Co-pay structures
• Deductibles
• Out of pocket
• maximum
• Generic substitution

8
CHP Top 20 Drugs June 2005-May 2006
Purchases
43 Total Drug Spend
9
CHP Top 20 Drugs June 2005-May 2006 Pharmacy
Supply Chain Initiatives
KEY Both Contract and Utilization
Improvement Initiative Contract Only
Utilization Improvement Only No
Contract/No Utilization Initiative
Purchases
10
(No Transcript)
11
Our expense for generic drugs is small when
compared to branded products
12
Spending decisions controlled by physicians exert
a substantial influence
Source Sager A, Socolar D, Health Costs Absorb
One-Quarter of Economic Growth, 2000-2005,
Boston University School of Publich Health, 2005.
13
Drug savings initiatives must be focused
comprehensively and collaboratively
Selection Utilization
Price, Contracts Inventory
14
Phenomenon affecting inflationary growth in
medications
18.3
17.0
16.0
14.2
13.9
11.9
11.1
9.7
10.1
Source IMS HEALTH
15
How does typical inpatient drug expense get
distributed?
16
Oncology drugs can account for 15 of overall
pharmacy supply expense.

• Growing range of evidence-based new Rx programs
  Clinical Trials (Curative Palliative)
• Anticipated short-fall of Med Oncs Nurses
  Pharmacists
• Cancer drug expenditures are growing at 20-30
  per year
• The numbers of patients receiving active
  treatment are growing at 7 per year
• Ambulatory chemotherapy services are reporting
  15-25 increases in patients
• Minimal Contracting Available
• Focus on ancillary medications used in this area
  (CSFs and nausea and vomiting drugs)

17
Increasingly more patients receive chemotherapy
for their treatment
18
Anti-infective drugs can account for 16 of
overall pharmacy supply costs
Unlike oncologypharmacists can document a
significant impact on reducing anti-infective
medication expense

• Pharmacists on Rounds
• Prevent ADE Allergy Review
• Following up on Labs
• Micro and Renal
• IV to Oral Conversion Program
• Contracting
• Protocol and Guideline Development