BYO Is Not a Good Idea for Pharmaceuticals

In my July editor’s note, I discussed the significant patient practice and safety concerns over allowing payers and pharmacy benefit managers (PBMs) to dictate health-system formulary choices relative to biosimilars and other high-cost drugs. Another concerning and very common practice is permitting payers and PBMs to require that many high-cost drugs be provided from an outside pharmacy (so-called brown bagging and white bagging). For multiple important reasons, health systems should adopt policies that prohibit this practice when the drug is clinic administered.

First, accrediting agency standards and CMS conditions of participation require that hospitals be responsible for the acquisition and dispensing of all drugs administered within a facility. The hospital is responsible for assuring both the pedigree and integrity of all drugs administered to patients of the hospital, inpatient and outpatient. When the drug is provided directly to the patient from an outside pharmacy (brown bagging), assuring integrity is impossible because the storage of the drug is not under the control of the hospital prior to administration. For all the pharmacist knows, the drug could have been on the dashboard of a car for the past week. No health system should ever allow a drug provided by a patient to be administered in a clinic; the practice is just not reasonable or safe. Under the white-bagging scenario, the outside pharmacy ships the drug directly to the health-system pharmacy as a patient-specific supply. Although the assurance of integrity is improved, the “3 Ts” documentation to assure pedigree is not typically provided. The health system does not usually have a contractual relationship with the outside pharmacy holding it accountable for integrity and pedigree. Their provider contract is with the payer or the PBM, and the health system does not have direct recourse with the outside pharmacy. This does not meet our obligation to patients and should not be allowed.

The acceptance of drugs from outside pharmacies has several other important implications. Instead of managing a single inventory of drug, the pharmacy must now manage an inventory for every patient, which can mean hundreds of different inventories for a single drug. Multiply that by many different drugs, and the process becomes remarkably complex to manage, requiring human resources as well as expanded storage capacity (refrigerated and possibly hazardous drug storage). The pharmacy must also carefully coordinate the timely acquisition of each patient-specific supply to ensure the drug is available when the patient is scheduled. In addition, most outside pharmacies will not ship a drug until they receive payment, which has to be coordinated with the family or patient. This process of drug acquisition, often from multiple outside pharmacies, is very complex and requires further human resources to manage. The patient and the payer own the drug but fully expect the health system to prepare and store the drug appropriately. Who is responsible for the drug if it is not stored properly or is contaminated or otherwise adulterated during preparation? Who is responsible for replacing the wasted drug? I strongly argue that the answer is not the health-system pharmacy.

In the past, we had a specialty clinic allowing white bagging of specialty infusion drugs. One weekend, the clinic inadvertently left an unmonitored refrigerator door ajar for an entire weekend, and $320,000 worth of specialty drug was ruined. When our health-system pharmacy refused to replace the lost drug, the clinic had to work with patients and payers to resupply the products. Finally, the health system is agreeing to prepare the drug prior to administration. If this requires a clean-room facility, we will have to consider the cost of building and sustaining the clean-room environment. As the regulatory requirements continue to evolve, the cost of maintaining and staffing a compliant clean room has increased significantly. The payers and the PBMs expect the health system to provide this professional service at no cost.

In addition to all the risk and workload associated with permitting white bagging, the health system is agreeing to forgo reimbursement for providing the drug to the patient. The health system is entitled to the margin associated with providing the drug for clinic-administered therapy. This margin is needed to cover operating expenses, as well as to fund capital improvements. As the old saying goes, “no margin, no mission.”

The best way to appreciate the absurdity of white bagging is to consider a restaurant analogy. Imagine making a reservation at a fine-dining establishment but informing the management that you will be having your own cut of steak, red wine, and vegetables shipped to the restaurant the day before your reservation because you can get equal-quality food for less money than the restaurant plans to charge. You would like the restaurant to store your food under proper sanitary conditions and the chef to prepare the food exactly as you prefer and to have it served freshly prepared at the time of your reservation. You do not plan on paying anything for the preparation or storage of the food but will agree to pay for the food to be served (equivalent to the charge for an infusion visit). Of course, no existing restaurant is going to agree to such an arrangement. However, the payers and PBMs who insist that health systems accept the equivalent fail to understand why this is illogical, unfair, and unsafe.

Health-system pharmacy leadership should develop institutional policy forbidding the acceptance of drugs from an outside pharmacy. In addition, collaboration with finance staff members to assure contracts with payers and PBMs makes it clear that the health-system pharmacy will provide all clinic-administered drugs, to assure drug integrity, pedigree, and safe patient care. The health system should also have processes in place to assist patients with managing their out-of-pocket obligation for these high-cost drugs.