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Pharmacy Optimization: Providing the Best Value for the People We Serve

By Dr. David C. Pate, News and Community
April 29, 2014

Here is a continuation in our blog series of initiatives being undertaken by SELECT Medical Network, our clinically integrated network of physicians, by SELECT Communications Coordinator Chereen Langrill: 

The pharmacy optimization initiative is about choosing the best medications for use within our patient population and using them in the most cost-effective manner. 

A medication formulary is a list of drugs that are available for prescribing and use. At St. Luke’s, we have had individual drug formularies at each hospital. In outpatient environments, payers typically have their own formularies as part of covered insurance benefits.   

"Open formularies" refer to a wide selection of drugs that are available for prescribing. Closed or restrictive formularies refer to a narrower list of drugs available for prescribing as part of a benefits package. These closed formularies are associated with prior authorizations, where prescribers must complete justification to order a particular drug, or step therapy, where another drug(s) precedes the prescribed medication. 

Why is it important?

According to a report published by the IMS Institute for Healthcare Informatics, more than $200 billion is spent annually in the United States on medication misuse. These avoidable drug costs occur when patients don’t receive the right medications at the right time or in the right way, for example, when medications are not taken correctly in the home or other ambulatory setting, leading to complications such as unplanned care or readmissions.

We are using evidence-based approaches to standardize formularies, creating greater value for consumers and healthcare organizations. Value does not always mean purchasing the lowest-cost option, but consideration is given to the benefit conferred in relation to the cost. The same principles apply to a value-based formulary selection process. The goal is to select medications that are high-quality, safe, and have a reasonable cost. When quality and safety are equal, a less costly medication provides a better value when compared with a similar medication.

Medication costs can add up quickly for certain groups. This is especially applicable to people who must take multiple medications, are elderly, or who live on a fixed or low income. The quest to find affordable medication connects to the general idea behind the pharmacy initiative, which focuses on providing the best value for the people we serve.

What is the challenge?

Medical literature can provide lots of information about particular drugs, but the quality of the data may vary greatly, and costs can vary widely, depending on the setting of care (inpatient compared with outpatient settings) or insurance coverage. 

When a drug is reviewed by the Food and Drug Administration (FDA), it must show that it works for the condition being studied (often compared with a placebo), and that it is relatively safe for patients receiving the drug. Cost information is not determined by the FDA, but is up to the manufacturer.   

It is then up to healthcare entities like St. Luke’s to determine whether a newly-approved drug should be added to a formulary, and if so, at what level (open or restricted).  Newer is not always better. 

It can also be a challenge to make decisions based on best practices across many settings because of the sheer size of the organization.

What is the goal?

A St. Luke’s System Formulary Workgroup comprised of clinicians from across the health system formed in January 2013 to address the medication formulary standardization initiative and to work on:

  • Alignment of inpatient formularies.
  • Standardization in preparation for expansion of our electronic health records system.
  • Integration across ambulatory and inpatient environments.
This workgroup has been systematically reviewing all medication classes to recommend the best-value medications to be on formulary while eliminating other low-value drugs. This work helps support the initiative’s mission to incorporate an evidence-driven formulary process that reduces unnecessary variation. The review process includes the following criteria:
  • Lead with quality: This focuses on the quality of data available to compare medications within a class.
  • Maximize safety: This includes factors such as a drug’s adverse effects, possible drug or food interactions, and the likelihood for errors.
  • Consider usage: This includes consideration for the frequency with which a drug is prescribed or ordered.
  • End with costs: Finally, consideration is given to the drug’s cost to the patient and to the healthcare provider.
The group has worked its way through the drug classes and is assessing new drugs to determine if they fit in with already-approved medications and whether they provide additional value. 

How will it make a difference for patients? What changes will they see?

There is a common theme with all of our clinical integration initiatives: patient-centeredness. This is the idea that people deserve to have care that is individualized and appropriate for their lifestyle and needs.

An example of this is when a pharmacist has a conversation with a patient and learns that he or she hasn't been taking medication properly due to hurdles such as side effects or costs. The pharmacist can then communicate this information to the person’s physician, leading to a medication change to improve efficiency, increase adherence, or lower costs.   

When formulary standardization is done well, it assures people that the medication they receive has been selected using a standard set of criteria. And that criteria aims to put safety and quality first, while also being mindful of costs.

These initiatives also help ensure that people work with an entire health care team to determine the medication that is part of their treatment is used in the best way possible.

What are the next steps?

The communication process is improving when it comes to transitions of care, and this will benefit patients. Our electronic health records also feature a streamlined communication process to ensure that patients receive the consistent guidance and care that is necessary during a transition from the hospital back to their homes or to another facility, and use of this feature will expand over time.

What’s the measure of success?

The formulary standardization project supports the pharmacy optimization initiative. Every resource available can maximize the patient experience, and while this often includes the latest and greatest technological advances, it will never replace the value of one-on-one communication. This valuable, vital face-to-face interaction can occur between a patient and any caregiver: a pharmacist, physician, nurse, or other healthcare provider. By effectively managing formulary standardization, we can improve health, improve care, and ultimately, lower costs for the patients we serve. 

Editor’s note: This is the ninth installment of a 10-part series introducing clinical integration initiatives that St. Luke’s is involved in.

Clinical integration is a term used to describe health care providers working together in an interdependent and mutually accountable fashion to pool infrastructure and resources. By working together, providers develop, implement and monitor protocols, “best practices,’ and various other organized processes that enable them to furnish higher quality care more efficiently than could be achieved working independently.

St. Luke’s Health System is a participating provider in the SELECT Medical Network of Idaho, Inc. SELECT is a network of healthcare providers in southwest Idaho that is focused on a coordinated model of care delivery focused on providing enhanced quality and better value to individuals, employers, and insurers.  

In keeping with the clinical integration effort, 10 initiatives were developed for 2013 to help establish the standards of enhanced quality meant to help create a new vision for health care.

The initiatives are:

  • Diabetes
  • Tobacco cessation
  • Back program
  • Advance directives
  • Patient-centeredness
  • Care management
  • Medicine reconciliation
  • Hand hygiene
  • Pharmacy optimization
  • Shared analytics

About The Author

David C. Pate, M.D., J.D., is president and CEO of St. Luke's Health System, based in Boise, Idaho. Dr. Pate joined the System in 2009. He received his medical degree from Baylor College of Medicine in Houston and his law degree from the University of Houston Law Center.