Streamlining Pharmacy Purchasing and Procurement

PC: According to the latest “Hospital Pharmacy Operations Report” (HPOR) by Bluesight, 71% of hospital pharmacy participants noted that streamlining pharmacy purchasing and procurement was a priority for them this year. Why is mitigating the effect of rising costs a priority for the healthcare/pharma industry right now, and what other topics are on the docket?

MacDonald: The hospital pharmacy has always been managed by drug budget, and when you zoom out to the entire health system, the drug budget has always been the second largest operational spend. It’s something to take a look at. You combine that with the rise of specialty medications and the inflation of the price of specialty medications, and it's becoming a huge part of any health system budget. Being able to understand that, control that, and understand your margin profile and cost profile is super important. I think what we're seeing is just the natural extension of as the budget goes, you put more and more focus on it. But I also think what's happening is that you're seeing consolidation in the industry—where health systems are buying other health systems—they want to be able to control that spend and understand where it's going and make decisions that are going to move the needle. The drug budget is a place where they can do that.

PC: When it comes to giving pharmacy buyers full control over their procurement landscape, what opportunities are advanced analytics tools able to provide?

MacDonald: I think we've seen a step change in the past 24 months. There're still legacy products that are out there via your wholesalers and your GPOs that provide the basics of what it is offering me as the contracted best price, but in terms of the next generation of tools, we have one called CostCheck, and it provides a whole other level of analytics that allows for things like active price monitoring. If you think about the average health system, there's 50,000 NDCs where the prices change on a daily basis. And if you're a mid-size health system—if you have seven or eight sites—you're probably purchasing on 100 to 200 different accounts. And if you layer in your GPO, 340B pricing, what you’re doing with WAC purchasing—it's really complicated, and oftentimes, what's happening is a price changes on one account and not another account, and that can cost in some cases, hundreds of thousands of dollars, or millions of dollars.

Having the ability to monitor what's going on, not just on an account-by-account basis, but system wide, is a big step change. Beyond that, just being able to understand not just I'm going to buy Brand X versus Brand Y, but what do those decisions actually mean for me? Some changes are easy. For example, buying a five-pack versus a 25-pack, if the thing that's in the pack is cheaper. There's a lot of clinician-driven changes, where you might have to go through your P&T committee or something to approve it, and understanding how easy or how difficult the changes are is an important piece. Just looking not just in the acute space, but non-acute. you know,

What are we doing for contracts? A lot of hospitals have got their GPOs that they're working with that are driving best pricing. Some hospitals additionally do things like Civica, or they'll do one-off contracts with a handful of manufacturers, so how do I know that my people, first of all, even know that I have that contract, second of all, that it's loaded properly in my systems, and third, that I'm actually purchasing and complying with all of those contracts, because it can be incredibly difficult to understand that they're there, and when you start to stack requirements on requirements, making sure that you're actually hitting your compliance metrics can also be tricky.