Hospitals deploy generics, tighter formularies, physician education to control drug spending

generic drugs
Increased use of generics is one strategy to cut pharmaceutical costs. (The Photographer under Creative Commons license)

To control spending on prescription drugs, hospital leaders are deploying tactics like better staff training and tighter formularies.

Ninety-six percent of the 47 healthcare executives who responded to a survey (PDF) from Premier Inc. said their overall pharmacy spend has increased for inpatients. Ninety-five percent say increasing drug prices play a major role, and 91% also blame increasing use of costly specialty medications. Most (95%) of respondents expect drug prices to increase by 10% over the next five years, with 16% predicting an increase of 30% or more.

Rising drug prices were the top concern for healthcare leaders in a Premier survey earlier this year, and the cost of pharmaceuticals has been a consistent problem for providers. The issue is also a concern for congressional leaders, and this week the Senate held the first of three hearings on prescription drug costs

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“In this environment, healthcare leaders must think creatively and optimize prescribing protocols to ensure a positive outcome at a manageable cost,” said Michael J. Alkire, chief operating officer at Premier, in an announcement.

The most commonly used tactic was to increase prescriptions for generic drugs, with 89% of respondents saying their facilities use this approach. Eighty-two percent tightened their formularies, and 75% employed pharmacists to offer guidance on patterns of costly drug use and potential alternatives.

Other solutions included educating physicians on high-cost drugs and training them to use more generics or high-value options (deployed by 75% of respondents) and greater use of restricted prescribing protocols through electronic health record alerts (used by 61%).

Pharmaceutical price hikes have been significant in recent years. Spending on prescriptions increased by more than 12% in 2015, up from just over 2% in 2014. Some of the pharmaceutical industry’s biggest names have levied double-digit percentage increases for the prices of their drugs.

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But pharma tells a different story. Patients are more exposed to drug costs, so they’re more likely to have a negative view of pharmaceutical prices, even though hospital fees are often higher, Kirsten Axelsen, vice president of worldwide policy for Pfizer, said. Drugmakers have also suggested that pharmacy benefit managers should shoulder some of the blame for drug price hikes.