Health Services Research & Development

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2006 HSR&D National Meeting Abstract


3041 — Reversing Inflation of Outpatient Pharmaceutical Costs in a VA Medical Center

Author List:
Walsh JP (Endocrinology Section, Indianapolis VAMC)
Curtis JR (Clinical Pharmacist, Indianapolis VAMC)
Stavenger T (VISN 11 Pharmacy Benefits Manager)
Emmendorfer T (VISN 11 Pharmacoeconomist)
Jones MR (Pharmacy Service Chief, Indianapolis VAMC)

Objectives:
Per patient expenditures for outpatient pharmaceuticals in the VA system have increased an average of 4.75% per year over the last 5 years. Due to budgetary constraints, a comprehensive program to limit pharmaceutical expenditures was mandated at our VA facility in late 2004.

Methods:
The VA Pharmacy Benefits Management database was used to compare expenditures for individual drugs and drug classes at our facility to average expenditures at 15 facilities in our VA peer group. Both the percentage of patients treated and costs per treated patient were compared. Potential cost avoidance for each agent was calculated. Subsequent analyses included: 1) Reviews of electronic records at our facility; 2) Reviews of key literature and published guidelines; 3) Consultation with local experts; 4) Costs of alternate therapies; and 5) Determination of practices at VA facilities with low usage of targeted agents.

Results:
Twenty seven agents were identified in the peer group comparisons for which potential cost either exceeded $100,000 per year or was greater than 50% of total cost. Evidence-based criteria for use of twelve were developed together with procedures for therapeutic conversions. For five agents, patients were converted to an alternate therapy at the time of their next fill or next clinic visit. Where criteria for use were complicated, prior approval consults were required. Patients were evaluated at routine clinic visits and converted if they did not meet criteria. Clinical pharmacists assigned to each primary care team assessed patients and helped with completion of consults. As a result, total outpatient pharmaceutical costs declined from $33.8 million in FY04 to $31.1 million in FY05.

Implications:
After adjustments for increased patient numbers and pharmaceutical inflation in the VA system, the actual cost avoidance in FY05 was $4.2 million. The major cost of this initiative was $315,000 in annual salary and benefits for three new clinical pharmacists. Direct involvement of clinical pharmacists in primary care clinics was a critical factor in this outcome. There have been no major adverse events clearly related to these therapeutic conversions. More detailed analyses of clinical outcomes are ongoing.

Impacts:
Direct benefits of this cost avoidance at our facility included funding $1.2 million in previously deferred equipment requests and 42 previously deferred personnel requests for $3.1 million. Wide variation in usage of many high priced pharmaceuticals in the VA system suggests that aggressive application of evidence-based criteria may offer substantial cost savings system wide.