22 Operations & Management
Pharmacy Practice News • January 2021
Finance
5 Strategies for Controlling Drug Formulary Costs
M
onitoring FDA approvals, forecasting potential price spikes and having good team communication are activities that hospital pharmacists can do to manage high-cost drugs in their formularies, an expert said during the American College of Clinical Pharmacy (ACCP) 2020 virtual annual meeting. Few laws address drug prices, said Erin R. Fox, PharmD, the senior director of drug information and support
‘Use the same strategies that you use to manage a shortage to manage a price spike, because at the end of the day, you’re just going to need to use less so that you can still afford that product.’ —Erin R. Fox, PharmD
services at the Universityy o off Utah Health, in Salt Lake City. ty. And there’s not much help p from the various regulatory agencies that have some oversight over therapeutics. For example, Medicare, the he he largest payor, is forbidden from negotiating prices. The Federal Trade Commission has some influencee on pricing, but it focuses its pricing efforts primarily around the narrow area of antitrust laws and “pay-to-delay” deals in which brandname and generic drug companies pay others to delay the introduction of cheaper alternatives. The FDA cannot consider drug pricing in its approval decisions. However, its approvals have indirect results on pricing, whether it is for me-too drugs, orphan drugs or those with slight changes in formulation that extend patents. As for the states, although they often have price gouging laws, those typically apply to price hikes of items such as gas, not medications.
Focus on the Patient When managing your formulary, Fox said, beyond considering a drug’s efficacy and therapeutic use, think about its intended patient population. If it’s a targeted treatment or product that will be used in a small number of patients, budgeting it may be very difficult. In an inpatient setting, “even one to two patients can really knock your budget out of whack,” she said. Also bear in mind any administration and monitoring challenges brought by products, including what setting is most appropriate. In many cases, new specialty products are for chronic illnesses; because they are not given on a daily basis, they could wait until a patient is in the outpatient setting, which shifts the costs to a different site of care. Finally, don’t forget about Risk Evaluation and Mitigation Strategy (REMS) requirements; you may need to develop specific procedures for how your organization will handle REMS. In addition, Fox said, try to prepare for potential spikes in drug prices. There are a number of risk factors to watch. One important consideration is whether the drug is subject to the Unapproved Drugs Initiative, which the FDA created in 2006 to reduce the number of “grandfathered” drugs on the market that didn’t go through a formal FDA approval process. (Before 1938, drugs weren’t required by law to be approved by the FDA.) The initiative offered manufacturers market exclusivity for drugs they took through the regulatory process, but
