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Cost Containment Strategies. CDR Denise M. Graham, MSC, USN PEC Director of Clinical Operations. Objectives. Outline DoD cost containment strategies used during the last year to control MTF pharmaceutical costs.

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Cost containment strategies

Cost Containment Strategies

CDR Denise M. Graham, MSC, USN

PEC Director of Clinical Operations


  • Outline DoD cost containment strategies used during the last year to control MTF pharmaceutical costs.

  • Outline methods used to determine what pharmaceutical cost containment strategies will get you the biggest bang for your buck.

Analyzing the effectiveness of cost containment efforts
Analyzing the Effectiveness of Cost Containment Efforts

  • CAPT Don Nichols, MC: a providers perspective

  • LtCol Dave Bennett, BSC: 2nd Generation Antihistamines

  • Shana Trice, Pharm.D.: COX-2 inhibitors

  • Dave Bretzke, Pharm.D.: potential cost containment tips

Rationale for publishing cost containment tips
Rationale for Publishing Cost Containment Tips

  • FY04 = tight budget situation for MTFs.

  • Opportunity to have MTFs “help themselves” by prescribing less expensive drugs that are essentially therapeutically equivalent to more expensive drugs…to the extent the therapeutically equivalent drug will meet the clinical needs of the patient

  • Pharmacy consultants requested assistance from the PEC in developing cost containment strategies.

Cost containment tips published march 2004 by the dod pec
Cost Containment Tips Published March 2004 by the DoD PEC

  • Purchasing/logistics tips

    • Buy generic, buy generic, buy generic!!!

    • Buy contract drugs

  • Therapeutic Class Cost Containment Tips

    • Statins

    • Second Generation Antihistamines

    • Proton Pump Inhibitors

    • NSAIDs

    • SSRIs

Cost containment tips published by the dod pec
Cost Containment Tips Published by the DoD PEC

  • Therapeutic Class Cost Containment Tips continued:

    • Bisphosphonates

    • Triptans

    • Thiazolidinediones

    • ACE Inhibitors vs. ARBs

    • Calcium Channel Blockers

    • LHRH Agonists for Prostrate Cancer

    • Oral Fluoroquinolones

Pec strategy for identifying cost containment strategies
PEC Strategy for Identifying Cost Containment Strategies

  • MTF high use, high total cost

  • Procurement initiatives already in place for the therapeutic class

  • Generic equivalent available

  • MTF utilization data shows opportunity for savings while still meeting patients’ clinical needs

Top 20 mtf expenditures fy03 by therapeutic class

Antihistamines - $88M


Lipotropics - $83M

SSRIs - $64M

PPIs - $61M

Bisphosphonates - $45M

CCBs - $45M

ACEs - $43M

Vaccines - $38M

Anticonvulsants - $37M

Total: $590M

Advair - $31M

TZDs - $30M

Quinolones - $28M

Antiplatelets - $27M

Penicillins - $24M

BG Strips - $24M

Contraceptives - $23M

Opiates - $22M

AQ Nasal Steroids - $22M

ARBs - $22M

Total: $253M

Top 20 MTF Expenditures FY03by Therapeutic Class

$843M represented 52% of MTF total expenditures

Next top 20 mtf expenditures fy03 by therapeutic class

Antipsychotics - $15M

Toxoid Vac - $14M

Gram (-) Bacilli Vac- $13M

Norepi & Dopamine - $13M

Ophth Prostaglandins – $13M

Ophth Beta blockers - $12M

Insulins - $11M

ADHD Drugs - $10M

Antidepressants - $10M

Sedative-hypnotics - $10M

Total: $121M

21. Metformin - $22M

22. Leukotriene Ant. - $21M

23. Glucocorticoids - $20M

24. Macrolides - $19M

25. Antifungals - $19M

26. Antimalarials - $18M

Hematinics - $17M

Antimigraines - $17M

Beta Blockers - $16M

Estrogenics - $15M

Total: $184M

Next Top 20 MTF Expenditures FY03 by Therapeutic Class

$1,148M represented 70% of MTF total expenditures

Top 40 mtf expenditures for fy04

Lipotropics - $101M


PPIs - $84M

SGAs - $81M

Anticonvulsants - $53M

CCBs - $51M

Biphosphonates - $44M

Beta Adrenergics - $43M

Vaccines - $39M

Antiplatelets - $38M

Total: $606M

TZDs - $34M

Leukotriene Ant. - $33M

ACE Inhibitors - $31M

ARBs - $29M

Penicillins - $28M

AQ Nasal Steroids - $24M

BG Strips - $23M

Antifungals - $23M

Narc Analgesics - $22M

Contraceptives - $22M

Total: $269M

Top 40 MTF Expenditures for FY04

Top 40 mtf expenditures for fy041

21. Glucocorticoids - $19M

22. Macrolides - $19M

23. Beta Blockers - $18M

24. Norepi & Dopamine - $17M

25. Quinolones - $17M

26. Atypical Antipsych - $17M

Hematinics - $17M

Estrogenics - $16M

SSRIs - $16M

ADHD - $15M

Total: $171M

Gram (-) Bacilli - $15M

Beta Adrenergics - $15M

Insulins - $15M

Toxoid Vaccine – $14M

Anti-migraine - $14M

BPH - $14M

Sedative-hypnotics - $13M

Anti-inflam tumor - $13M

Ophth prostaglandins - $13M

Antispasmotics – $12M

Total: $138M

Top 40 MTF Expenditures for FY04

Top 10 mtf expenditures army airforce navy
TOP 10 MTF ExpendituresArmy, AirForce, Navy

Mtf strategy for identifying cost containment strategies
MTF Strategy for Identifying Cost Containment Strategies

  • Market Drivers

  • Generic equivalents available instead of more expensive brand name drugs

  • Current contracts in place for therapeutic classes

  • Other incentive agreements in place either DoD or local (will remain in place until reviewed by DoD P&T Committee for UF)

  • UF and BCF/ECF considerations

  • Review utilization data (MTF management opportunity = MTF utilization data shows opportunity for savings while still meeting patient’s clinical needs)

Monitoring cost containment strategies
Monitoring Cost Containment Strategies

  • Requires monitoring and responding to changing environment

    • Modulating prices

    • Generic availability

    • Changes in Rx/OTC status

    • Scientific literature

    • Detailing/Counter detailing

    • Perceptions

  • Opportunity to educate existing patient and medical staff of changes in market

  • Cost containment strategies

    Cost Avoidance

    Market Share Shift

    Use of best price



    Measuring your success
    Measuring your success

    • Single agent cost avoidance: delta between Big 4 FSS and current price for each drug

    • Overall class cost avoidance: measure the change of products within a class

    • PMPM

    • You’ll never know what your efforts are worth anything unless you measure them!

    Cost containment and the prescriber a provider s perspective

    Cost Containment and the Prescriber – A Provider’s Perspective

    CAPT Don Nichols, MC, USN

    Objectives Perspective

    • What influences provider prescribing behavior

    • Changing provider prescribing behavior

    • Obstacles/Failures/Barriers

    • Opportunities

    Factors for higher drug expenditures

    Price increases* Perspective

    Longer life spans

    Rising prevalence of chronic diseases

    Advent of “lifestyle medications”

    Increased spending on drug promotion

    Aging population

    Improved diagnosis and treatment of diseases

    Increased number of new drugs*

    Direct to consumer advertising

    “Shiny new toy” syndrome

    FACTORS for higher drug expenditures

    CA to AZ

    What influences physician prescribing behavior
    What Influences Physician Prescribing Behavior Perspective

    • Training and experience

    • Colleagues and opinion leaders

    • Pharmaceutical companies

    • Health plans and other payers

    • Patients

    Training and experience
    Training and Experience Perspective

    • Medical education

      (an internist made an impression)

    • Training

    • Specialization

    • Relative youth

    Colleagues and opinion leaders
    Colleagues and Opinion Leaders Perspective

    • Input from colleagues

    • Local opinion leaders

    • Peer pressure

    • Professional leadership

    • Group styles of practice

    Pharmaceutical companies detailing
    Pharmaceutical Companies Detailing Perspective

    • May be initial source of information about new drugs therapies

    • Rapid transition to new drugs

    • Decreased prescribing of generic drugs

    Health plans and other players
    Health Plans and Other Players Perspective

    • Formulary management

    • Treatment protocols

    • Prescribing restrictions

    • Physician involvement is the key to success

    Patients Perspective

    • Powerful and increasingly influential

    • DTC

    • Internet information

    Changing prescribing behavior
    Changing Prescribing Behavior Perspective

    • Administrative interventions

    • Educational interventions

    • Feedback reporting and reminders

    • Financial incentives

    Administrative interventions
    Administrative interventions Perspective

    • Formulary management

    • Prescribing restrictions

    • Therapeutic interchange, use of generic products, prior authorization, preferred status, restricted use and variable co-payment structures

      (N of 6)

    Educational interventions
    Educational Interventions Perspective

    • CME

    • Academic detailing


    Feedback reporting and reminders
    Feedback Reporting and Reminders Perspective

    • Physician benchmarking reports

    • Drug utilization evaluations

    Financial incentives
    Financial Incentives Perspective

    • Patient co-payments

    • Physician bonus incentives

    • At-risk drug contractual arrangements

    Obstacles in changing provider prescribing behavior real and perceived notions
    Obstacles In Changing Provider Prescribing Behavior (real and perceived notions)

    • Physician attitudes

      (the phone call)

    • External pressures

    • Lack of resources for making drug decisions

      PDAs/Preferred Agents/Price Impact

    Barriers to cost effective medicine
    Barriers To Cost Effective Medicine and perceived notions)

    • Society unwilling to acknowledge limited resources

    • Patients unrealistic expectations of medicine

    • Physician unaware of the cost of medical interventions

    • Physicians unwilling to refuse patients’ demands

    • Little or no risk involvement

    Opportunities and perceived notions)

    • Primary care survey

    • Targets of opportunity

    • Cost containment bullets

    • Cost containment tips

    2 nd generation antihistamines survey results rank based on cost
    2 and perceived notions)nd Generation AntihistaminesSurvey Results (Rank Based on Cost)

    Percent of prescribers who would use agent as their first choice under the following cost scenarios:

    Targets of opportunity
    Targets Of Opportunity and perceived notions)

    • Select drug classes

      • High cost; high utilization

    • Evidence Based Medicine

      • Demonstrates similar clinical effectiveness

        • i.e., therapeutic interchangeability

    • Cost benefit analysis

      • How much more are we willing to pay for an incremental benefit of a drug

    • Old drugs work too

    Provider effect
    Provider Effect and perceived notions)

    • Necessary influence – nothing happens without provider support “The DoD credit card”

    • Communicate targets of opportunity to providers

      • Clinical relevance

      • Economic relevance

    • Include patients in decision process

    • Maintain clinical discretion

    Benefits and perceived notions)

    • Increases resources available to MTFs

    • Creates opportunities for improved price negotiation

      • Contract

      • Price tier benefit

    • To be a better model for cost-effective medical care

    Discussed cost or cost effectiveness with patients
    Discussed Cost or Cost-Effectiveness With Patients and perceived notions)

    • 30% Frequent or always

    • 21% Never do

    • 45% Patients get angry or upset if discussed

    • 49% Accept explanations that incorporate costs, once they understand that the intervention would waste resources

    In summary
    In Summary and perceived notions)

    • ID targets of opportunity

    • It takes a team effort

    • Be good stewards of taxpayer dollars