When is a rose not a rose? When pharmacoeconomics changes the rules of the game. Take a look at what's happening with drug formularies.
"State Medicaid agencies are supporting models that they hope will help them figure out what works best in other words, what provides acceptable care but costs them the least amount of money."
{ PROVIDING MORE SPECIALIZED PHARMACEUTICAL CARE
How are consultant pharmacists responding to an increasingly specialized market place? Many of them are specializing in particular areas such as mental health, or in specific disease states. Tobias suggests that consultant pharmacists who wish to specialize in a particular market such as subacute care should take time to broaden their knowledge about the clinical and payment aspects of their chosen niche. "You may very well have to reengineer the way you provide your services, "says Tobias. "In the case of many subacute-care niches, you may have to do a lot more on the phone and fax." Better pharmaceutical care can be the result of working within particular market niches. One pharmacist recalls that in the "old days," it was a matter of "here is the drug and here is what is dies to the body. But today's approach is very different, especially in niche markets. In today's environment, we look at the whole patient: what is happening with this patient, what actions do I have to take - and, of course, what is the most cost-effective way to care for this patient's overall needs?"** }
Formularies have been useful cost-containment tools for pharmacists for decades,
particularly in acute care. As managed and long-term care have translated these
precepts to other, quite different settings, the definitions, rules, and practices
relative to formularies have evolved into many different systems.
But all of these changes may become quite minor compared with the changes about
to be wrought by the application of pharmacoeconomic principles by managed care
payers and in capitated situations. Employee benefit managers and Medicaid administrators
are increasingly interested only in the real bottom line-the total cost of health
care. As a matter of fact, some far-sighted managers are including non-medical
costs in their calculations. What does it matter if a few dollars were saved
on a prescription for a child's otitis media if the employee has to miss a second
day to take the child to the doctor when the therapy fails? Does a Medicaid
plan really save money if inadequate drug therapy causes a nursing home resident's
transfer to the hospital? And how would a long-term care administrator view
savings if a therapeutic substitution caused a capitated resident to end up
on intravenous therapy? The answers to these and many other questions lie in
the techniques offered by pharmacoeconomics. Every clinical decisions - every
divergent point in the decision analysis tress discussed in last month's TCP
feature article - can be analyzed in economic, outcomes, or quality-of-life
terms using tools such as cost-benefit, cost effectiveness, cost utility and
cost minimization analyses.
MARCH'S WAKE-UP CALL
The new view of drug formularies exploded onto the health care scene in March.
The mass media were buzzing about a study of drug lists in six health-maintenance
organizations, three on the East Coast and three on the West Coast. Horn et
al. presented the data through two papers in the March issue of a new publication
American Journal of Managed Care.
The Managed Care Outcomes Project was funded by the six HMO's and the National
Pharmaceutical Council a trade organization of major research-oriented pharmaceutical
manufacturers. The prospective, observational, cross-sectional, longitudinal
study included 12,997 patients who had one or more of five diseases: hypertension,
otitis media, arthritis, ulcers, or asthma. Data were gathered concerning the
severity of illness at each of these points of care: 99,000 physicians office
visits, 480 emergency department visits, 1,000 hospitalizations, and 240,000
prescriptions.
In the first paper, important differences were uncovered in resource utilization
and severity of illness across age categories, disease groups, and organization
characteristics. The authors concluded; " The results identify important
differences inpatient mix, diseases, and organization structural factors and
cost-containment methods that must be considered when examining outcomes of
care."
The shocker for pharmacy came in the second article. One of the HMOs had no
formulary, but it had the lowest resource utilization of all organizations.
And the HMO with the most restrictive formulary had the highest rate of resource
use, exactly the opposite of that was expected.
Restrictiveness of the formulary was measured as the fraction of chemical entities on the formulary divided by the total number of chemical entities indicated for each disease. Statistical corrections ere identified among the HMOs noted as follows:
The authors qualified their results this way, "the apparent effects of HMO cost-containment practices on utilization of health care resources may have been caused by some unmeasured factor or factors at the sites other than, or in addition to the site variables included in the analyses. Possible causative or confounding factors are other pharmacy-management practices, patterns of prescribing and the culture or quantity of medical practice unique to the managed care organization, all of which are difficult to measure directly. "
The study was criticized immediately by the Academy of Managed Care Pharmacy on several accounts.
As a first attempt to broaden the analysis of drug formularies beyond their impact on pharmacy costs, the Horn et al study has some deficiencies and its results should be questioned. Nevertheless, it is important in that in shifts the focus to the effects of formulary decisions on total healthcare costs, an important adaptation with which pharmacy must deal quickly. No longer can the pharmacy's acquisition cost drive formulary decisions; the bigger picture will bring total costs into clear focus.
APPLICATIONS IN LONG-TERM CARE
Managed care and its principles continue to change the basic assumptions in
health care financing - including those pertinent to the nation's nursing homes
and other types of long-term care facilities. Since formularies are not well
established in most nursing homes, their development will be heavily influenced
at this point by managed care. Managed care, in return is driven by cost and
pharmacoeconomic analyses.
Some of the larger long-term-care-only pharmacies are developing techniques for influencing prescribing patterns, which means providing nurses with information they can share with physicians when clinical opportunities present themselves. Large providers such as Pharmacy Corporation of America and Omnicare, for instance have handbooks listing available therapeutic agents by class for placement in pharmacies, nursing units, and physicians' offices. Cost information is included.
Clinical decision trees (see April 1997 TCP feature article) can obviously be affected by formularies. It makes no sense to develop trees, practical guidelines, or treatment algorithms with non-formulary choices included (see ASCP draft policy statement in sidebar on page 000). Since safety and efficacy of marketed drug products are generally in question, published pharmacoeconomic analysis of alternative Pharmacotherapy approaches to treatment of a disease should form the basis of formulary decisions. These conclusions can be then institutionalized through practice guidelines, treatment algorithms and clinical decision trees easily interpretable by physicians, nurses, and pharmacists alike.
A final need in long term-care is for "teeth" in the formularies, without enforcement authorities for pharmacists- and without their desire to use the authority- a formulary is just another meaningless list of drugs. With the multiplicity of systems, prescribers, and patient in most long-term care faculties; inadequate enforcement of formulary decisions and policies is only too easy. Constant vigilance is needed, and the present emphasis on cost and quality mandate it.
ECONOMICS: IT'S THE NINTIES
Pharmacoeconomics provides valuable new tools pharmacists can use in many ways.
One of the best applications lies in assuring the best cost and the best quality
of care for residents of long-term care facilities. As economic analyses are
broadened to include the total cost of care -medical and non-medical and sometimes
direct and indirect costs - decisions reached by formulary committees, individual
prescribers, and consultant pharmacists, will become more and more reproducible
and logical. That has to be good for all concerned. ***