Reacting to all-time record growth in the pharmaceutical industry, health plans are trying harder than ever to control prescription drug use.
U.S. prescription drug sales jumped 12.6% to $81.2 billion in 1997, matching the unprecedented growth rate recorded in 1996, according to IMS America, which is part of London-based IMS Health. Key to the rapid increase, according to IMS America, were new products and higher utilization.
As a result, more HMOs appear to be warming to the idea of shifting the risk for drug benefits to physicians. And some medical groups and independent practice associations are happy to accommodate.
HMO formularies are complex and often dictated by short-term financial considerations, such as manufacturer's rebates. Providers, they argue, have more incentive to manage care over the long run because patients switch health plans more often than they switch doctors.
But even the most advanced physician organizations and health systems face an arduous and expensive task: assessing the impact of drugs on overall costs and outcomes, and presenting the data so that physicians can easily use it.
Costs are rising for a number of reasons:
- Doctors are struggling to keep up with an astonishing number of new drugs (see graphic).
- The aging of the population and the increased emphasis on maintaining a healthy lifestyle by focusing on wellness and prevention have boosted prescription drug use.
- The advent of direct-to-consumer advertising has pressured physicians to prescribe medication based on patient requests. More than ever, doctors need objective, evidence-based data, experts say.
"There are probably a couple of handfuls of markets where specific HMOs and medical groups have been able to transfer the drug benefit," says Perry Cohen, vice president of the Pharmacy Group in Glastonbury, Conn. But "it's pretty clear that to manage pharmacy successfully, you've got to have timely and accurate data."
Toward that effort, health systems and medical groups have begun to invest in software to track prescribing patterns. Some even employ pharmacists to educate doctors.
Database and software vendors are working to meet the new demand. For example, IMS America, which tracks pharmacy sales data for drug companies, is piloting its first product for medical groups, Physician Feedback. It uses the company's database of 75% of all prescriptions dispensed nationwide to produce reports that measure the prescribing patterns of individual physicians and then benchmarks them with other groups or physicians in the market. The cost to medical groups varies by the type and frequency of the reports, class of drugs tracked and number of physicians, the company says.
Later this year, Tarrytown, N.Y.-based Advanced Health Corp., a physician practice management company, plans to introduce electronic prescription management software that automates prescription writing and promotes appropriate medication use.
Another electronic option, still in its infancy, is integrated, accessible programs that tell physicians not only which drugs are cheapest, but also how particular drugs affect overall costs and outcomes.
"When physicians started taking on (pharmacy) risk, they only cared about the drug bill," says Jack Guinan, president of Fort Lauderdale, Fla.-based ProxyMed, which sells software that allows physicians to prescribe drugs online and access formulary and drug-interaction databases.
"There's been a shift to gather information about how it relates to the total healthcare dollar. People are looking for systems that can track outcomes back to prescribing habits," he says.
Guinan speculates that medical groups, particularly capital-rich physician practice management companies, might win more opportunities to shoulder drug benefits if the federal government makes it more difficult for drug companies to own pharmacy-benefit management companies.
At Nashville-based PhyCor, the prescribing patterns of physicians in some of its markets are compared with peers in the same medical group. PhyCor would like to give its physicians decision-support software that would inform them about possible drug interactions, efficacy and cost implications before they write a prescription. But company officials say the software is expensive and still untested.
Significant strides also need to be made in integrating the components of clinical software, including those related to drugs. Cost and ease-of-interface are big barriers, according to PhyCor officials.
"It's something that we're still trying to evaluate," says PhyCor Chief Medical Officer Ron Loeppke, M.D.
Pharmacists also are playing a growing role at medical groups and IPAs.
According to survey data from the Medical Group Management Association, 14 multispecialty medical groups employed at least one pharmacist in 1996, up from eight in 1994. The Pharmacy Group's Cohen says a physician organization needs to be managing pharmacy risk for at least 50,000 patients to justify the cost of hiring a clinical pharmacist.
Denver-based Pacific Health Dimensions, which manages four independent practice associations with 1,600 physicians in Colorado, hired a full-time pharmacist last year to further its goal of tying outcomes to drug expenditures.
The pharmacist, Tony Singletary, has provided physicians with easy-to-read charts covering their most-often prescribed and most expensive drugs. The charts indicate which are covered on various formularies and which are the most cost-effective. He also presents them with reports on drug utilization.
Health systems, too, are starting to look at overall cost of care and outcomes rather than focusing on the pharmacy budget alone, says Bonnie Senst, vice president of clinical services at Plymouth, Minn.-based MedManagement, which provides pharmaceutical services to hospitals.
Such services include measuring how much drugs contribute to shorter hospital stays, reduce readmission and improve quality of life.
MedManagement is trying to turn its pharmacy departments into drug information sources as well as distributors. And, increasingly, pharmacists are screening medical orders and educating physicians and patients about the best use of drugs, Senst says. Pharmacists also have begun to track prescribing patterns for entire health systems to capture resistance patterns for antibiotics.
Physicians are not threatened by the increasing clinical role of pharmacists, Senst says. "From my experiences, physicians are looking for objective sources of medication information because of the overwhelming number of new medications that are coming out," she says.
Singletary agrees. Often, he says, physicians ask to meet with him one-on-one. "That's proof they want the data and they need help."
A key challenge for providers is measuring the true cost of a new drug. It's tough to put a price tag on improved quality of life, for example. Also, often overlooked is the cost of hospitalizing patients who react adversely.
Pacific Heath Dimensions is developing guidelines for drugmakers to submit data that is not filed with the FDA, such as outcomes for off-label uses and efficacy studies. Having such data in a standard format would help determine a drug's ultimate cost-effectiveness for its patient population.
"We need to have more complete information about the true outcomes profile and cost impact of pharmaceuticals brought to market," Singletary said. "Then we can decide the true niche of a drug."
Some fear that if drug utilization isn't better controlled, particularly in Medicare, HMOs might remove them from benefit packages, thereby lessening the ability of physician groups to manage the cost and quality of care.
"Eventually these drug benefits are going to go away if the costs don't come under control," says Pat Pingitore, M.D., PhyCor's medical director for managed-care operations.