Managing Treatment With New and Expensive Drugs: What Pharmacy Leaders Need to Know

The introduction of new and expensive drugs into health care markets presents both opportunities and challenges for health care systems. These medications often promise significant advancements in patient care but come with high costs that can strain hospital budgets and place significant financial burdens on patients and their families. Effective management of these drugs requires a strategic approach that balances clinical benefits with financial sustainability, especially in the hospital and hospital-outpatient department (HOD) settings. We have highlighted in this article what pharmacy leaders should know to successfully navigate this complex landscape.

Understanding Specialty Drugs

Specialty drugs, such as biologics and cellular or gene therapies, are among the most expensive medications on the market. These drugs often target complex, chronic conditions such as cancer, rheumatoid arthritis, multiple sclerosis, Crohn disease, and rare genetic disorders like cystic fibrosis and hemophilia. While they offer significant therapeutic benefits, their high costs can be prohibitive. For this reason, it can be important for pharmacy leaders to stay on top of new approvals and drugs in the pipeline to ensure they are prepared for the financial and logistical challenges these drugs present. A proactive approach can allow for better management of budgets, earlier opportunities to negotiate with manufacturers, and provision of the best possible care for patients.

Regulatory Environment

The regulatory environment for new drugs is continually evolving. Pharmacy leaders must stay informed about changes in FDA approvals, patent expirations, and the introduction of biosimilars or other therapeutic alternatives. Additionally, market dynamics such as drug shortages, pricing strategies by pharmaceutical companies, and loss-of-exclusivity events can impact drug availability and costs. Other regulatory and reporting requirements such as risk evaluation and mitigation strategies programs may also impact operations related to new drugs. Understanding these dynamics is crucial for making informed decisions about drug procurement and utilization.

Financial Management and Budgeting

Accurate budgeting and forecasting are vital in managing the financial impact of these new drugs. Image Credit: © Geekminds - stock.adobe.com

Accurate budgeting and forecasting are vital in managing the financial impact of these new drugs. Pharmacy leaders can benefit from working closely with finance departments to provide cost projections and allocate resources effectively. This includes analyzing historical data, understanding patient demographics, and anticipating future trends. By developing detailed financial models, pharmacy leaders can better predict the budgetary impact of new drugs and plan accordingly.

Manufacturer Contracts and Price Discounts

Exploring opportunities to obtain price discounts are important strategies for pharmacy leaders to manage the high costs of these drugs. By leveraging purchasing power and building strong relationships with manufacturers, pharmacy leaders may be able to secure more favorable terms and lower prices. This often involves understanding market trends, staying informed about competitor pricing, and being prepared to negotiate on volume commitments and purchasing agreements. This may be coordinated through a Group Purchasing Organization, mandated through the 340B Drug Pricing Program, or negotiated directly with drug manufacturers. Failure to supply policies should also be discussed as these may provide protection against or compensation for future shortage situations. Effective negotiation not only helps in reducing costs but also ensures a steady supply of essential medications.

Value-Based Models

Many payors have begun adopting value-based models to help manage their costs related to expensive drugs. These models tie reimbursement to patient outcomes and encourage the use of medications that provide the best value in terms of safety, efficacy, and total costs of care. However, because no drug is 100% effective, these models may mean decreased reimbursement when a patient does not have a successful outcome. Pharmacy leaders should work to understand these types of contracts as they continue to grow in popularity.

Evidence-Based Use

For pharmacy leaders, in conjunction with other stakeholders, it is important to ensure that the use of new drugs is based on robust clinical evidence. This involves staying current with the latest research and guideline recommendations. Implementing evidence-based protocols and formulary restrictions can help optimize patient outcomes, maximize value, and justify the use of high-cost medications while providing access to those who need them most.

Relationships With Physicians

Building strong relationships with physician leaders is a critical aspect of effective evaluation and communication of new drug information. These relationships facilitate collaborative decision-making and ensure that drug evaluations are thorough, based on clinical expertise, and appropriately supported. Additionally, having physician leaders on board helps enforce formulary status, adherence to restriction criteria, and alignment with established guidelines and protocols.

Local and Patient-Specific Evaluations

For larger systems, it’s essential to recognize that while adherence to system-level policies is important, local and patient-specific evaluations are equally crucial. Each patient has unique needs and circumstances that may require an equally unique approach or even deviations from standard protocols. In this way, wholesale standardization may not be possible. Instead, the goal should be reasonable consistency with allowance for appropriate flexibility. By emphasizing the importance of individualized assessments, pharmacy leaders can ensure that treatment plans are tailored to achieve the best possible outcomes for each patient.

Clinical Trials

Clinical trials also offer significant clinical and financial benefits for both patients and hospitals. Clinically, patients gain access to cutting-edge treatments that may not yet be widely available, potentially improving their health outcomes. Financially, trial sponsors often cover the cost of investigational drugs and related medical care, thus reducing the financial burden on patients and hospitals. Clinicians also gain valuable experience with emerging treatment options and are better equipped to evaluate them when and if they become commercially available. Additionally, hospitals that participate in clinical trials can enhance their visibility as leaders in medical research and innovation, which can in turn attract additional funding opportunities.

Safety and Efficacy

Monitoring the safety and efficacy of new drugs is essential. Pharmacy leaders should establish pharmacovigilance programs to track adverse events and therapeutic outcomes. These data can inform clinical decision-making and support negotiations with payers and manufacturers. Effective programs involve regular monitoring, reporting, and analysis of drug-related data to identify potential safety concerns and optimize treatment protocols. With these data, hospitals may also be able to contribute to the compilation and evaluation of real-world evidence, thereby enabling even further assessment of clinical and economic outcomes.

Inventory Management

Effective inventory management can reduce waste and control costs. Pharmacy leaders should implement systems for tracking drug usage, managing stock levels, and minimizing spoilage and expiration-related losses. Technology, such as automated dispensing systems and inventory management software, can be leveraged to enhance efficiency. These systems provide real-time data on drug inventories, usage patterns, and expiration dates, thereby enabling pharmacy leaders to make informed decisions about Periodic Automatic Replacement levels and reorder points.

Staff Training and Education

Ensuring that pharmacy, nursing, and other staff are well-trained in the handling and administration of new drugs is also critical. Ongoing education programs can keep staff updated on the latest developments and recommended practices. This not only improves patient care but also enhances operational efficiency. Training programs should cover topics such as drug preparation procedures, administration techniques, monitoring parameters, and safety protocols.

Settings of Care

The setting in which a drug is administered can significantly impact both cost and reimbursement. Pharmacy leaders must evaluate whether a drug should be administered in an inpatient or outpatient setting, considering factors such as acuity, safety, patient satisfaction, monitoring, and reimbursement structures. For example, the 340B Drug Pricing Program can provide significant cost savings for eligible hospitals, making it an attractive option for administering expensive drugs. Inpatient, diagnosis-related group based-settings may have less favorable reimbursement structures than outpatient, fee-for-service–based settings. By managing the setting of care where these drugs are administered, pharmacy leaders can minimize financial risks that these drugs might pose.

Payor Coverage and Reimbursement

Payor coverage and reimbursement policies can vary widely, making it essential for pharmacy leaders to stay informed about the latest developments. Prior authorization is an essential step to ensuring that treatments will be covered and to maintaining positive financial stewardship practices. Additionally, by working closely with payer contracting teams, pharmacy leaders can negotiate favorable terms and obtain single case agreements when necessary. Likewise, understanding the availability of outlier payment models, such as the new technology add-on payment offered through the Centers for Medicare & Medicaid Services, is also critical to ensuring the financial well-being of an organization. Lastly, enrolling patients in medication assistance programs can help mitigate the financial burden of expensive drugs on patient and can ensure that they have access to the treatments they need.

Collaboration With Health Care Professionals

Collaboration with other health care professionals is vital for the successful integration of new drugs. Pharmacy leaders should work closely with physicians, nurses, and other stakeholders to develop comprehensive review processes and treatment plans. Interdisciplinary teams can provide a holistic approach to patient care, ensuring that new drugs are used appropriately and effectively. Regular meetings and communication channels can facilitate collaboration and ensure that all team members are aligned regarding care goals and treatment protocols.

Public Policy and Advocacy Efforts

Pharmacy leaders should also engage in advocacy efforts to influence health care policy and drug pricing regulations. By participating in professional organizations and policy discussions, they can help shape a more sustainable and equitable health care model. Advocacy can also involve working with patient groups to ensure access to necessary medications. By raising awareness of the challenges and opportunities associated with new and expensive drugs, pharmacy leaders can drive positive change and ultimately improve patient outcomes.

Relationships With Finance Leaders

Building strong relationships with finance leaders is essential for securing the necessary resources to manage new and expensive drugs. By clearly communicating the clinical benefits and potential revenue opportunities associated with these drugs, pharmacy leaders can justify the costs and gain support for initiatives. Regular meetings and financial reviews can help ensure that all stakeholders have visibility to budgetary priorities and financial goals.

Reimbursement Data

Effective tracking and analysis of reimbursement data are crucial for managing the financial impact of new drugs. Pharmacy leaders should develop tools and systems to monitor reimbursement, profit margins, and denial rates. These data can inform decision-making and help identify opportunities for cost savings or improvement of net financial impact.

Conclusion

The introduction of new and expensive drugs presents both challenges and opportunities for hospital pharmacy leaders. By adopting strategic financial management practices, ensuring evidence-based clinical decision-making, optimizing operational efficiency, and engaging in collaboration and advocacy, pharmacy leaders can effectively navigate this complex landscape. Ultimately, the goal is to provide the best possible care for patients while maintaining financial sustainability. By staying informed about the latest developments, building strong relationships with key stakeholders, and implementing robust tracking systems, pharmacy leaders can successfully manage new and expensive drugs.