How Cleveland Clinic saved $90M in drug costs

Pills in pill container
As healthcare costs skyrocket, providers are examining strategies that could reduce patients’ drug expenditures. (Getty/Viperfzk)

As healthcare costs skyrocket, providers are examining strategies that could reduce patients’ drug expenditures.

Cleveland Clinic was able to save $90 million in drug costs between 2010 and 2016, savings achieved in part by embracing a combination of traditional drug management approaches and creating a new tool that can allow hospital pharmacies to stay on top of price increases, according to an article from Hospitals & Health Networks.

About 45% of that was saved through an increased emphasis on traditional strategies like inventory control, formulary management and procurement. It went directly to manufacturers to negotiate costs and volume, and Scott Knoer, chief pharmacy officer, said that the key to the hospital’s negotiating power is its employed physicians and electronic health record.

RELATED: Study finds when hospitals limit pharma sales representatives, doctors prescribe more generics

“We have a lot of credibility with manufacturers because our employed physicians are part of drug decisions and we build those decisions into our EHR,” Knoer said.

Cleveland Clinic’s data analytics tool can offer results in 24 to 48 hours, work that would have previously taken days of digging through databases and spreadsheets, according to the article. It can calculate the impact of a price increase based on Cleveland Clinic’s annual use of a drug.

RELATED: Drug experts: Hospitals—not pharma—to blame for rising healthcare costs

Some experts have suggested that hospitals are to blame for rising drug costs instead of the pharmaceutical industry. Other providers looking to rein in drug costs can take several steps, according to a second article from H&HN, including:

  • Find and explore “gray areas": See if there are questions about whether providers can safely use a less expensive alternative medication.
  • Take a closer look at inventory management: Keep a closer eye on nursing dispensaries, and determine if any drugs are duplicates or unneeded.
  • Try a consignment service: A program like this would allow high-cost medications to be delivered on an as-needed basis, instead of keeping them on site.

RELATED: Health insurers go all in on value-based drug pricing

Payers are also working to reduce drug costs, as FierceHealthcare has previously reported; for instance, UPMC Health Plan created a center with the goal of “fundamentally” changing how it paid for drugs. Capital District Physicians’ Health Plan in Albany also deploys former pharmaceutical representatives to counteract their sales work.