Expensive drugs bust’ pharmacy budgets: Is there any recourse?

Guidelines for use, assistance programs provide some control

Lynn Uber, PharmD, was concerned when she saw a form from a physician requesting the drug NovoSeven (recombinant human coagulation Factor VIIa). The Medical University of South Carolina (MUSC) in Charleston, where Uber is a clinical associate professor and helps oversee pharmacy contracts, is an indigent care center, and the patient needing this drug had no insurance.

NovoSeven is expensive; one course of treatment costs about $100,000. Uber contacted the physician, who said the situation was life-or-death. The patient ended up receiving the drug and subsequently has been back in the hospital for a second course of therapy.

"At the end of the year, this drug could break the $1 million mark on its own," Uber says. "That’s cost, not charge."

The financial impact of NovoSeven caught Uber by surprise. She’s not alone in being caught off-guard by the cost and utilization of a drug. Most pharmacists are struggling to pay for drugs that can "bust" their budgets but improve patient outcomes.

The expense can happen in several different ways, says Daniel Albrant, PharmD, president of Pharmacy Dynamics, a health care consulting business based in Arlington, VA. "Any time a new drug comes out, it is always expensive, depending on the market forces. If the drug is a first compound in a class or a brand-new type of agent that everyone is excited about, the market will bear a higher price. A significant period of time will pass before there is any competition; you won’t have the options for price shopping." (Pharmacists may discover that taking a wait-and-see approach to using new drugs could reap both financial savings and improved patient outcomes. See "The new drug is out: Should you order it now?" in this issue.)

At the same time, many pharmacists responsible for purchasing the drug are receiving pressure from physicians to buy it. "[They might say], If you don’t get it, you are ethically negligent,’" Albrant says. "It doesn’t matter what your budget says." Pharmacists also can be required by the government to offer a certain drug, such as Prevnar, the pneumococcal 7-valent conjugate vaccine for children, without being offered any options for paying for it, some pharmacists say.

In other situations, pharmacists have entire categories of expensive compounds to use, as in the realm of cancer chemotherapy, where many of the compounds have received FDA approval within the last few years and are the standard of care for different cancers. "Then the compounds are combined, so you may be using two or three, maybe four, expensive agents in one patient every month or so. It may go on for many months to years," says Albrant. "You get a situation where not only are you spending a lot of money, but you are spending a lot of money consistently."

Because MUSC also is a transplant/oncology center, Uber faces this problem. "If you look at our top 25 drugs, you would see a lot of transplant drugs and a lot of oncology drugs," she says. "They eat up a ton of our budget."

The surprise factor of a new drug can present a tough budgetary issue, as well. "Until the product is approved by the Food and Drug Administration (FDA), launched by the drug company, and is available for use from the wholesaler, you don’t know how much it is going to cost," Albrant says. "You don’t have an idea of what the utilization is going to be. You don’t know if you are going to use it in one patient a month or 100 patients a month. That takes a while to figure out. So you can’t predict the impact from a budgetary standpoint."

Even a lower-cost drug can make a dent in the budget if it has a high utilization rate. At MUSC, albumin use got out of control. "People used albumin instead of normal saline because it was there," notes Uber. The institution regained control by implementing strict use guidelines.

Guidelines for use are just one way pharmacists try to cover the cost of expensive drugs. To see what drugs might benefit from such guidelines, Uber first has to identify which drugs are causing the problems. Some she finds through her yearly report, which she runs to determine the top drugs used at the institution and the amount spent on them.

One problem drug Uber found through her report was iohexal. The increased cost of the contrast dye used in diagnostic medical imaging meant that the institution was running more tests. "We are taking a look at that to see if we can either get a better price or if we can reduce the number of tests," Uber says. "It’s hard, however, to get physicians not to do tests."

Uber runs these reports as part of MUSC’s Pharmaceutical Outcomes Management Program. The program, which she heads, is made up of teams from different specialties. Each team reviews the charges from its area and looks to see if it can improve its outcomes. The teams also have access to UHC (University of HealthSystem Consortium) benchmarks. These benchmarks allow the teams to compare their charge data to other hospitals, even analyzing it by individual procedures, says Uber.

The impact of a drug such as nonformulary NovoSeven was obvious the minute the order request was made. After the cost of the drug "hit a nerve," Uber says, guidelines for use were under development and now require physicians to obtain special permission before the first dose is dispensed. "That means checking for appropriate use and financial burden to the patient and institution," she explains.

If no insurance or government assistance is available, pharmacists sometimes turn to indigent care replacement or patient assistance programs. "If an unfunded patient gets the drug, the drug company will replace the drug for no cost," explains Uber. MUSC is in the process of setting up an indigent care replacement program for its expensive drugs. (To learn where to find information on these programs, see "Find help defraying some medication costs," in this issue.)

Other measures that MUSC has taken to control drug costs include capitalizing on:

Volume-driven contracts. "If there are two or three drugs that are considered therapeutically equivalent, it behooves the hospital to get the best price on one and make it the preferred drug on the formulary," Uber says.

Generic drugs. "If there is an AB-rated generic substitution, then we purchase it," she says. "That’s another way you can help to control costs these days."