Magazine article Drug Topics

Very Costly Drugs Will Force Price and Delivery Revamp

Magazine article Drug Topics

Very Costly Drugs Will Force Price and Delivery Revamp

Article excerpt

Some pharmacies will collapse under the economic weight of expensive and high-tech drugs unless the current financing and delivery systems are completely re-designed, according to a new study commissioned by the Michigan Pharmacists Association.

The impact of high-cost/high-tech drugs means that the ingredient cost plus a dispensing fee reimbursement mechanism will have to be revamped if pharmacies, especially small independents, are going to stay in business. That was the main finding of a major study conducted by Health Management Associates for MPA.

Further, current cost-containment efforts will not be able to cope with such drugs when they impact fully on the health-care system. And the potential for economic havoc is so great that such drugs may have to be restricted to specialized outlet networks.

SERIOUS ECONOMIC THREAT: The escalation of high-cost drug dispensing poses a serious economic threat to community pharmacists, researchers warned. Acquiring and carrying inventories of such drugs will translate into the need for much higher levels of working capital and more costs for borrowing. "Unless some action is taken to offset these higher costs, it is highly likely these changing business requirements will cause the least well-capitalized and credit-worthy pharmacies to find it impossible to continue," the authors wrote. "It also seems probable that the pharmacies most likely to suffer will be small, independent pharmacies."

Changes in the payment system and the pharmacist's role will lead to the need to review and redesign the system for reimbursement, which the study suggests be done jointly by pharmacists and the large purchasers and payers. Such a revamp would be based on incentives for pharmacists to work for restricting high-cost/high-tech drugs to appropriate circumstances. Such payment would also have to reflect the pharmacist's growing clinical role in delivering more sophisticated pharmaceutical care.

"It is in the interest of pharmacists, as a profession, to stimulate a thoughtful and systematic examination of these issues," the researchers advised. "In the absence of such an approach, the chances are good that the inevitable changes will be wrenching for all parties."

The study "forebodes more turbulent times ahead" for pharmacy, said Lou Sesti, CEO of MPA. "We will probably go down more rocky roads until organized pharmacy gets these messages out to the programs, and the programs redefine the benefit.

Health-coverage buyers are five years behind the curve on pharmacy, Sesti told Drug Topics, and they are so suspicious of drug companies that new, significant products may be viewed merely as schemes. "It foretells that we will continue to see a ratcheting down in a fashion that hurts pharmacy," he said. "We'll be confronted with more PPOs, mail order, and squeeze-the-fee. That scenario will work for the very short term. Generics get you savings, but as a total percent of dollars, they will decline. That's when the buyers will say they can't afford a drug benefit or their limited dollars will go to catastrophic coverage and workers will bear more of the cost."

BUYERS' WRATH: If pharmacy does not want to bear the brunt of buyers' wrath, the profession better make peace with the drugmakers and push the idea that programs cannot cover every legend drug, Sesti said. "Pharmacy and the pharmaceutical industry better sit down and come up with a way to rank new products as significant," he said. …

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