1. Why Pharmaceutical Prices are
Rising and How We Can Fight
Against Them?
Goldina Erowele, PharmD, MBA
Harris Health System
Director, Dept of Pharmacy
Pharmacy Operations & Clinical Support Services
May 19th, 2017

9. Trends in drug
expenditures

12. Source: https://www.cambiahealth.com/newsroom/resources/cost-prescription-drugs-then-now

13. Health-system expenditures for all drugs
will continue to increase
•12–14% in clinics
•5–7% in hospitals
•7–9% across all settings
Annual price
increases
predicted to
range from
SOURCE: 2016 National trends in prescription drug expenditures and projections by American Journal of Health-System Pharmacists (AJHP)

14. • Growth in unit price = total
inpatient drug spending
• Inpatient drug spending
increased an average 23.4%
annually
• Spending on drugs rose 8.5 %
in 2015, total prescriptions
dispensed increased by only
1%
Trend
Unsustainable
SOURCE: 2016 Study by the American Hospital Association and the Federation of American Hospitals
http://www.aha.org/content/16/aha-fah-rx-report.pdf

15. • 6.5% price inflation for acute care
facilities for the upcoming year
• 6% price inflation for DSH-eligible
institutions
• Incorporating values for inflation
due to mix/volume (0.5%) and new
drugs (2.6 %), the predicted inflation
rates on total drug expenditures are
9.1 % for DSH hospitals
Drug
Spend
Projections
by Premier
(GPO)
Premier (GPO) Analysis & Report - Drug procurement & Spend data (2016)

17. Why skyrocketing
drug costs and
prices?

18. Why Skyrocketing Drug Costs in the US?
Minimal
government
regulations
No Competition
in the
marketplace
The end of the
“Generic Wave”
Supply
disruptions &
consolidation
Population
growth & chronic
conditions
Economy-wide
inflation
1. American Journal of Managed Care, “The Growing Costs of Specialty Pharmacy—Is This Sustainable?”, Feb 8, 2013. 2. FiercePharma Special Report: Top
10 Drug Patent Losses in 2014. 3. Am J Health Syst Pharm July 15, 2016 vol. 73 no. 14 1058-75

19. Why Skyrocketing Drug Costs in the US?
Expansion
and use of
Specialty
Drugs
Patent Expiration
• Citizen petitions
• Authorized generics
• Restricting access to brand
samples for testing
1. American Journal of Managed Care, “The Growing Costs of Specialty Pharmacy—Is This Sustainable?”, Feb 8, 2013. 2. FiercePharma Special Report: Top
10 Drug Patent Losses in 2014. 3. Am J Health Syst Pharm July 15, 2016 vol. 73 no. 14 1058-75

22. Negative Impact of Rising Drug Costs
Increased hospital stays resulting from untreated or undertreated conditions
Hospitals, health systems & Payers forced to make formulary changes
Nonadherence often leads to more expensive therapies
Rationing of filled medications
Low prescription fill rate
Public health issue
1. American Journal of Managed Care, “The Growing Costs of Specialty Pharmacy—Is This Sustainable?”, Feb 8, 2013. 2. FiercePharma Special Report: Top
10 Drug Patent Losses in 2014. 3. Am J Health Syst Pharm July 15, 2016 vol. 73 no. 14 1058-75

23. Possible
Solutions

24. Fixing The Problem
Policies to Manage Pharmaceutical Costs: Market
based
Increasing transparency & more education
Price
Transparency
Parity
Ensuring a
Better Return
on Taxpayer
Investments
Continued
Assessment of
Direct-to-
Consumer
Advertising
Requirements
Provider &
Patient
Education
Source: The Pew Charitable Trusts Research & Analysis Policy Options to Manage Drug Spending, April 11 2017

25. Fixing The Problem
Policies to Manage Pharmaceutical Costs: Market
based
Increasing Competition
Reduce Backlog
of Generic
Applications
Foster
Competition for
Branded Drugs
Curb Misuse of
REMS for
bioequivalence
testing
Strengthen Post-
Market
Surveillance
Source: The Pew Charitable Trusts Research & Analysis Policy Options to Manage Drug Spending, April 11 2017

26. Fixing The Problem
Policies to Manage Pharmaceutical Costs: Insights
From Other Countries
Restricting off-label
prescribing
forbidding the use of medicines for
purposes other than those
approved by regulatory
authorities—could produce savings
when employed to restrict use of
drugs for which lower-cost, Food
and Drug Administration-approved
alternatives exist.
Payer-seller
agreements
in which payers negotiate with
pharmaceutical companies to
reduce drug prices through
discounts or rebates—have had a
sizable effect on prices in many
countries.
Internal
benchmarking
setting a payment rate for a drug
based on the cost of clinically
comparable products
Source: The Pew Charitable Trusts Research & Analysis Policy Options to Manage Drug Spending, April 11 2017

27. Fixing The Problem
Policies to Manage Pharmaceutical Costs: Insights
From Other Countries
Denying coverage for
medicines deemed
unaffordable
Could reduce costs, but this
approach would face significant
sociocultural and legal barriers
in the United States
External
benchmarking
Determining how much to pay
for a drug by using a formula
that takes into account what
other countries pay—could lead
to short-term cost savings in
Medicare
Value-based
benchmarking
Setting a price based on a drug’s
effectiveness—could help
reduce the use of high-cost
drugs that offer minimal
additional benefits compared
with other available therapies
Source: The Pew Charitable Trusts Research & Analysis Policy Options to Manage Drug Spending, April 11 2017

28. Fixing The Problem
Policies to Manage Pharmaceutical Costs: Legislation
Change
S. 297 and H.R.
749
Expedite approval of an
Abbreviated New Drug
Application (ANDA) when a
drug is in short supply or
little or no competition
exists
S. 124
Prohibit brand companies
from paying generic
manufacturers to delay
introduction of a generic
version, otherwise known as
“pay for delay
S. 92 and S. 183
Allow drugs to be imported
from other countries, such
as Canada, where prices are
significantly lower
Source: The Pew Charitable Trusts Research & Analysis Policy Options to Manage Drug Spending, April 11 2017

29. Cost Control Strategies at Harris Health
Drug
Selection
Closed
formulary
Formulary
Restrictions – Prior
authorization,
Nonformulary
process, Service
line
Medication
utilization
evaluations
Procurement
Pharmaceutical
Contracting
• Wholesaler –
Morris & Dickson
• GPO – Premier
• Pharmaceutic
Bids – Apexus
Prime Vendor
• Individual
contract
renegotiations
Procurement
via “Free
Drug”
Programs
In-house/State /
Federal Programs
• Patient
Assistance
Programs (PMAP)
• AIDS Drug
Assistance
Program (ADAP)
• Vaccine for
Children (VFC`)
• HarborPath
• Adult Safety Net
(ASN) - New
Physician
Detailing
Education on
drug costs
Cost
Transparency
Project
(exploratory
stage with EPIC)
Manufacturer
Supply
Recovery
Failure to
Supply Program
Interruptions in
drug supply
(Drug
shortages)
Key Highlights – Collaborative efforts – Pharmacists, Medical Staff

30. Cost Control Strategies at Harris Health
FY16 Total estimated cost savings and avoidance = $4.3M. These P&TC + MEB approved recommendations were evidence-
based, recommendations based on clinical guidelines, efficacy, outcomes and cost effectiveness. 65% of nonformulary
medications ($6M) were recouped via PMAP
Lantus to
Levemir
Switch
$1.2M per
year
Switching
Bloxiverz to
generic to
compounde
d product
$825K per
year
Trivalent
versus
Quadrivalent
Flu Vaccine
$565K per
year/season
Streamlining
premedication
for
chemotherapy
$421K per
year
Switching
from
Seroquel XR
to generic
quietaipine
$312K per
year
Therapeutic
Interchanges,
Brand to
generic/Generic
to brand
substitution,
Dose
optimization,
Prior
authorization
$313K per
year
Nonformulary
(NF) Program
65% of NF
medications
obtained via
PMAP
Highlights of Formulary Programs & Strategies

31. Cost Control Strategies at Harris Health
FY16 total cost savings/avoidance from all PAP= ~$60M. Cost info for FY16. This a multidisciplinary efforts on PMAP team,
formulary management team, MDs, PharmDs, RNs. *Program started in 8/15
Patient
Medication
Assistance
Program
(In-house
program)
$38M
AIDS Drug
Assistance
Program
(ADAP)
$19.2M
Vaccine for
Children
(VFC)
$3.4M
*Haborpath
Program
$1.03M
Adult Safety
Net (ASN)
program
New program
• ~ cost
avoidance =
$6- 13M per
year
Highlights of Patient Assistance Programs (PAP) – FY16

32. Cost Control Strategies at Harris Health
FY16 total cost savings/avoidance from all PAP= ~$60M. Cost info for FY16. This a multidisciplinary efforts on PMAP team,
formulary management team, MDs, PharmDs, RNs. *Program started in 8/15
Patient
Medication
Assistance
Program
(In-house
program)
$38M
AIDS Drug
Assistance
Program
(ADAP)
$19.2M
Vaccine for
Children
(VFC)
$3.4M
*Haborpath
Program
$1.03M
Adult Safety
Net (ASN)
program
New program
• ~ cost
avoidance =
$6- 13M per
year
Highlights of Patient Assistance Programs (PAP) – FY16

34. Questions