22 Policy
Pharmacy Practice News • December 2009
Spotlight on: Generics
P
harmacy Practice News introduces the “Spotlight On” feature, which will cover innovations in clinical care and hospital pharmacy operations. This first installment focuses on generic drugs and features a look at how a new purchasing program offered by Premier Inc., can help hospitals maximize savings and patient safety. Also on tap is a roundup of legislation affecting the availability of “biosimilars,” or generic biologic agents (page 24), and an inside look at generic drug purchasing at the Cleveland Clinic (page 25).
New Initiatives From Premier Focus on Cost, Safety P
harmacy directors know that group purchasing organizations (GPOs), like Premier Inc., negotiate better savings for member hospitals than practically any individual facility or even health system could get on its own. Indeed, pharmacy experts could name only one institution—Duke University Hospital—that even tries the do-it-yourself approach. With regard to generic drug pur-
chasing—just one of many services that GPOs provide—the volumes they represent are powerful hammers for wringing costs out of the supply chain. For example, Premier’s most recent generic bid effort produced 36-month contracts for 10,500 different drugs priced to deliver an average savings of 2.8% over the previous 36-month contracts—savings valued at $60 million to
‘For the vast majority of generics, it’s not an issue to switch manufacturers. However, with narrow therapeutic index drugs such as phenytoin, we have to make sure drugs are therapeutically equivalent when changing brands.’ —Fred Pane, RPh
The Role of GPOs
T
o clarify for pharmacists who haven’t been involved in drug acquisition, a GPO negotiates low prices for member hospital and health-system pharmacies, with member input. The GPO then turns that master agreement price list over to the nation’s wholesalers, which stock the contracted items for their pharmacy members and distribute to them. A pharmacy buyer accesses his wholesaler’s system and enters the drug name. The GPO-contracted drug usually pops up first. The buyer selects it, orders the necessary quantity and receives daily invoices for what is ordered. GPOs save a collective $6.8 billion annually on hospital pharmaceuticals, according to a study, The Value of Group Purchasing 2009: Meeting the Needs for Strategic Savings, by Eugene S. Schneller, PhD, principal, Health Care Sector Advances, Inc. The average hospital purchases 88% of its pharmaceuticals through a GPO, saving as much as 15% over what its own contracting would yield, the study found.
Innovations From Other GPOs
B
etween 96% and 98% of U.S. hospitals use GPO contracts for their purchasing functions—and GPOs range widely in their size and ownership and the services they offer to members, said the Health Industry Group Purchasing Association (HIGPA). The innovations they bring suit the needs of their memberships. A few examples follow: • Novation recently launched two distinct portfolios—one tailored to academic medical centers and the other to medical research departments. • Broadlane enhanced its BroadLink reporting suite to provide spending analytics based on up to 75% of a member’s purchase order transactions in real time. • MedAssets introduced Service Line Analytics that enables hospitals and health systems to compare their purchasing and performance with facilities that have a similar patient mix, and more. The GPO launched a separate program that helps hospitals develop defensible pricing strategies.
$70 million per year for its 2,200-member U.S. hospitals and more than 63,000 members from other health care sites. The new contracts run from July 1, 2009 to June 30, 2012. “In a year when prices are expected to increase by nearly 6%, these savings are urgently needed by hospitals struggling every day with a troubling economic outlook and declining reimbursements,” said Mike Alkire, president, Premier Purchasing Partners, LP.
Quality, Supply Outrank Price In Bidder Evaluation Yet Premier’s negotiation and bidder selection process involves more than low price. To be a winning single-, dual- or multiple-source bidder requires a nearly spotless record when it comes to drug quality, consistent supply and good manufacturing practices, according to Fred Pane, RPh, BSP, FASHP, senior director of pharmacy affairs at Premier Inc. Mr. Pane said that bidders are evaluated on several criteria. For example, has the company had any major recalls? If so, why? Any 483 (FDA inspection) reports? If the company ever failed to supply product, what were the reasons? Who owns the active ingredient? (It may be the manufacturer, or a supplier to the manufacturer.) Due diligence with respect to bidders and their suppliers narrows the list of candidates. Because some bidders seek to bundle 20 or so products together rather than offer single-line items, Premier Inc. runs utilization reports on specific medications and dosage sizes. This reveals what members actually use and pinpoints the most important products in a bid bundle. “A small community hospital might want a 10-mL size that’s ready to dispense, but a larger facility might prefer a bulk vial they can break down into individual doses,” Mr. Pane said. Premier Inc. also expanded its generic auto-substitution program to 350 injectable pharmaceutical products, giving an average added savings of at least 10% off Premier Inc.’s contract pricing. Under such a program, “for the vast majority of generics, it’s not an issue to switch manufacturers,” Mr. Pane said. “However, with narrow therapeutic index drugs such as phenytoin, we have to make sure drugs
are therapeutically equivalent when changing brands.”
New Tools Maximize Patient Safety, Member Savings In what it claims to be an industry first, Premier Inc. has designed a Scorecard Safety Tool that addresses core measures of patient safety, with product identifiers that instantly show: • Whether or not the manufacturer barcodes its medications, for hospitals that have bedside bar coding. Premier Inc. belongs to a GS1 subcommittee aiming to develop internationally standardized bar codes for medications. Hoping this will be achieved by 2011, Mr. Pane says the goal is “to develop an international pedigree, with end-toend tracing from country of origin to patient use.”; • If vaccines are free of thimerosal (a mercury-based preservative); • If an injectable is latex-free (due to
•
see INITIATIVES, page 24
NEW “Spotlight On” Sections
T
his new feature focuses on key clinical and operational aspects of hospital pharmacy practice. Each “Spotlight On” section includes: • Q&A with a key opinion leader • Meeting coverage, other late-breaking research news • Exclusive reader surveys • And more
2010 TOPICS • • • • • •
Cardiology Critical Care Hem/Onc Pharmacy Pharmacy Automation Blood Factors Generic Drugs