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C-Suite Survey: Health Care Leaders Use Generics, Tighter Formularies, Physician Education to Control Drug Spending

Most respondents anticipate increased drug expenses over the next five years

According to a new survey from Premier, Inc., a health-care improvement company, drug spending has increased among health care leaders––a trend that is expected to continue during the next five years. To counteract this drain on hospital budgets, health-system leaders are employing various methods and strategies to ease the burden.

Premier surveyed health-system C-suite leaders (CEOs, COOs, CMOs, CFOs, CIOs, and CTIOs) to understand the financial and care-delivery implications of rising drug prices.

Almost all of the respondents (96%) said their hospitals’ or health systems’ overall pharmacy spend has “somewhat” or “significantly” increased for their inpatient populations. Ninety-five percent reported increased drug prices, and 91% said increased use of expensive specialty drugs has contributed the most to their organization’s inpatient pharmaceutical spend.

Providers concerned about the financial impact of rising drug costs have put various strategies in place to contain spending, the survey found. These strategies include:

  • 89% increased the use of generic drugs, when available
  • 82% intensified the tightening of their formularies
  • 75% deployed pharmacists to provide guidance on the use patterns of expensive drugs and to offer alternatives that are therapeutically equivalent
  • 75% included physicians in a drug-use management capacity by educating them on high-cost drugs and by encouraging them to use generics and high-value therapeutic alternatives whenever possible
  • 73% expanded their specialty and retail pharmacy services
  • 66% put extra emphasis on leveraging contracts with group purchasing organizations to manage rising drug prices
  • 61% expanded their use of restrictive drug-prescribing protocols through electronic health record alerts
  • 59% used generic automatic substitutes
  • 55% adopted and used biosimilar drugs, when available

Most of the respondents (95%) expected drug expenses to increase by at least 10% over the next five years, with 16% of respondents estimating that drug prices will climb by 30% or more.

The survey was conducted online from April 18 to May 22, 2017, with the results based on responses from 47 health-care C-suite leaders. The participants were selected and invited to join the panel by Premier before the survey was conducted.

Source: Premier, Inc.; June 14, 2017.

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