Posts Tagged: drug spend

The Pandemic and Prescription Drug Spending

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prescription drug spending

ASHP (American Society of Health-System Pharmacists) released a new report regarding the pandemic’s influence over prescription drug spending. While spend did grow at a moderate rate, analysts attribute the growth to increased usage. The shifts and changes the healthcare system experienced over the last year caused these shifts. They will continue to do so as the pandemic continues and the delivery of care evolves. 

A Look at the Numbers

Prescription drug spending rose 4.9% in 2020, reaching $553.3 billion. Of that, 2.9% was due to greater utilization. New drug spending added in 1.8%, while price changes accounted for a mere .3%. 

That’s the overall number, but there are other trend insights by type uncovered in the report, such as:

  • Nonfederal hospitals spent 4.6% less: There was a spike in March 2020, then 19 weeks of decreases before a rebound. 
  • Home health increased its spend by 13%: Home health services grew tremendously during the pandemic. 

Pandemic Effects Will Linger in 2021

The lead author of the report, Eric Tichy, PharmD, MBA, believes that effects from COVID-19 will persist. This will impact drug spending this year and next. Tichy urges hospital and health-system pharmacists to prepare for further consequences, such as the commercial availability of new high-cost drugs and changes in site of care. 

With vaccines prevalent, hospital pharmacies can also expect to see a revitalization of acute care services. Preventive care, screenings, and elective procedures took a nosedive in 2020. With utilization expected to rise, hospital pharmacies will see a rebound in drug expenditures. 

New Drug Approvals Will Also Impact Market

There are other factors influencing cost beyond the pandemic. The report also suggests that biosimilars will be a big driver of prescription spending for 2021 and beyond. The industry expects approvals for new drugs in this category. 

There is also a healthy pipeline of drugs for cancer treatment, rare diseases, and other specialties. The FDA should be providing approvals for these this year. Specialty drugs have been fueling increased expenditures for several years, compared to other classifications. 

Read the Complete Report

You can read the complete report, National Trends in Prescription Drug Expenditures and Projections for 2021. The report’s predictions include an expectation that overall spend will increase 4-6%. For clinics and hospitals, they forecast 7-9% and 3-5%, respectively. 

Drug Spend Analytics: Why Hospital Pharmacy Should Leverage this Data

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drug spend analytics

As a hospital pharmacy, you probably are consistently encouraged if not mandated to reduce operating costs. In addition to less spend, you also have to consider new streams of revenue. To do this effectively, you’ll need to understand drug spend analytics. Only with this focus can you accomplish your top objectives.

Tracking Drug Spend

Tracking drug spend isn’t simple, as there are many ways to do this. You may look at reports from your drug ordering system. Or, pull information from your pharmacy software system. Ideally, you’d have a central hub for drug spend data, which aggregates all sources.

By carefully tracking drug spend, you’ll be able to capture data from each facility across the health system as well as have visibility into drug purchases made through all distributors.

Benchmarking and Looking for Drivers

Once you have aggregated your data, it’s time to develop an internal benchmark on spending. From there, you’ll keep monitoring this information to spot trends and variances. Use analytics to identify the drivers of drug costs. You’ll find that most costs related to changes in drug prices, patient volume, dosages, types of patients, and the severity of illnesses.

With this data in one central hub, you can review shifts over time relating to specific drugs, facilities, and more. With this clarity, you’ll be able to understand anomalies better.

How to Use Drug Spend Analytics

When you have a wealth of knowledge about drug spend, you can use this to take advantage of financial benefits. Containing drug spend is easier when you can view issues in real-time.

For example, if you see an unexpected increase in the cost of a drug, then you can determine if a less costly alternative will be acceptable. You can also keep track of drug ordering to ensure that it’s done so per the agreement you have with your distributors or manufacturers. Finally, you may also see a surge in drug usage, which could lead to conversations with prescribers about appropriate dosages and length of therapy.

Drug Spend Analytics Could Enhance Patient Care

To improve patient care, you’ll need analytics to be integrated with other systems like a pharmacy management system, EHR, or other software. By connecting these systems, you can have a better picture of the lifecycle of a medication. This lifecycle includes what you spent on the drug, who it was dispensed to, and the reimbursement received by payers.

With this comprehensive picture, you can start asking deeper questions:

  • Is the medication appropriate for the diagnosis?
  • Are there more cost-effective alternatives?
  • Does the length of therapy make sense for the patient?
  • Should dosages be adjusted?
  • What are the most prescribed drugs?
  • What is the percentage of drugs prescribed that are controlled substances (especially opioids)?

With drug spend analytics, your hospital pharmacy can learn, on a granular scale, what impacts the numbers. With careful analysis, you can use that information to reduce costs, manage trends, and find revenue opportunities.