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Formulary management activities are an essential component for effectively managing medication utilization, according to experts.

 of hospital CEOs found that 57% are concerned about the high prices and insufficient reimbursement for medications. Separately, 

 said innovative approaches to expense reduction was one of their top five priorities in 2019.

“As drug costs remain a fast-growing expense for hospitals, forward-thinking executives understand that effective formulary management has become table stakes in an effort to better manage drug expenses,” says Bonnie Lai, PhD, vice president, product management, Lumere, an organization comprised of clinicians, researchers, pharmacists, and strategic thought leaders focused on helping health systems eliminate unwarranted clinical variation and cut unnecessary costs. “The first step in advancing formulary management is to apply clinical evidence and analytics. This will ensure prescribers and pharmacists in charge of medication management are making decisions with both cost and outcomes in mind.”

®) talked to Lai; Onisis Stefas, PharmD, MBA, vice president and chief pharmacy officer, Northwell Health, New York State’s largest healthcare provider and private employer; and Russ Funk, PharmD, MHSA, chief executive officer, pharmacy services, Banner Health, one of the largest nonprofit healthcare systems in the country, headquartered in Phoenix, about approaches to formulary management, therapeutic areas to watch, key practical tactics that can be leveraged immediately to improve formulary management, and the role of data analytics in the formulary.

®: How should healthcare executives be approaching formulary management?

: We approach formulary management by establishing a standardized system formulary that is adopted by all hospitals, ensuring high-value medications are on formulary, thus driving best practice and promoting better patient outcome. We have a centralized system P&T committee that ensures real-time review of newly marketed medications is performed, to determine the potential value the drug provides to the patient population we serve in our organization for formulary inclusion. We assess a medication’s value by evaluating upfront cost and comparing expected versus actual outcome. Furthermore, we examine potential for revenue generation and reduction in total cost of care. Lastly, we implement formulary restriction and guardrails to make certain that medications are utilized in the most appropriate site of care.

: Organizations should strive to have a standardized formulary (including nonacute locations) within a health system. Formulary management is much more than what happens at a P&T committee meeting-it is both strategic and immensely granular at the same time. It is very resource intensive to do it well; organizations should ensure sufficient interdisciplinary resources are in place.

A strong physician leadership structure along with physician leadership support for formulary management activities is important for success. Formulary management activities should be highly integrated and well supported within the organization.

Related: Express Scripts Introduces Digital Health Formulary

®: What therapies should be on the radar of health executives?

: In the near future, we foresee innovative therapies including immunotherapies, biosimilars, and individualized medicine based on gene therapy becoming more prevalent in the marketplace. It is prudent that we ensure the right infrastructure is in place to support prescribing of these medications to patients that will truly benefit from these innovative therapies. In addition, it is essential that we have the appropriate process outlined to recoup the outlay of expense associated with these items.

: The cost of medications will be an issue for the foreseeable future, especially in the outpatient setting. Safety, efficacy, and cost have traditionally been at the core of formulary decisions. While this remains true for high-cost outpatient medications, there are additional considerations, such as reimbursement, the optimal site of care, and the organizations level of risk for the patients served (e.g., shared risk). Close collaboration between P&T activities and business line leaders will serve organizations well.

There is a robust pipeline of biosimilars coming to market. While this provides optimism, the overall uptake for biosimilars has been relatively slow, and it remains to be seen how this will affect the rising costs of medications.

Drug shortages will continue to be a challenge across the nation. They are disruptive to patient care, lead to increased drug spend, and can distract from other formulary management activities.

: As hospital revenue from outpatient services continues to increase, pharmacists are rapidly expanding their presence in this setting. Pharmacists are critical to affecting patients’ total cost of care, particularly under value-based payment models. Medications are an investment in patients’ care and well-being. It is of utmost importance that pharmacists and other clinicians have the information that they need to make the best decisions in a complex outpatient landscape: reimbursement and patient out-of-pocket cost, patient risk based on comorbidities, mitigating drug side effects, effectiveness of medication for that patient’s clinical outcomes, and medication adherence.

What are some practical tactics organizations are doing to improve formulary management?

: First, we build a dedicated interdisciplinary team, which includes pharmacy, physicians, IT [information technology], quality, revenue cycle management, and nursing leadership to focus on formulary management with principles outlined above to make comprehensive and collaborative decisions associated with formulary selection. Secondly, we continually monitor adherence to formulary decisions and initiatives adopted on an organizational wide level. Lastly, we partner with IT to create clinical decision support processes to assist and drive prescribers to select appropriate therapy that is supported by evidence-based medicine.

: Ensure formulary management activities are closely aligned with the EHR [electronic health record]. High-value formulary actions should be integrated into the EHR when possible.

Provide clear and actionable data to leaders responsible for implementing formulary actions (e.g., directors of pharmacy, front-line pharmacy managers).

Closely monitor newly approved drugs and dosage forms-be prepared to act quickly when there is an opportunity that aligns with your organizational goals (e.g., cost savings opportunity, new lower cost agent)

Follow a consistent evidence-based decision-making process-resist the temptation to bend for provider preference.

What are the main challenges in formulary management and how can they be addressed? What are the biggest cost challenges?

: The main challenge in formulary management is achieving consensus across the health system to meet the needs of our diverse patient populations and settings. We address this by establishing a robust system-standard formulary but permitting individual sites the opportunity to be more restrictive at the local level as well as allowing the sites to request formulary additions at the system level. In addition, we identify a physician champion to build consensus amongst various subject matter experts in various settings to gain buy-in for formulary selection via evidence-based practices.

Another challenge is maintaining continuity of care as patients’ transition from the acute care setting to the community setting. As a result, a robust medication reconciliation process must be in place.

The biggest cost challenge is utilization of high-cost medications outside of the intended purposes and indications as set forth by organizational committees and leaders. This can be best addressed by building guardrails and infrastructure to ensure appropriate use, and leveraging pharmacy assets (i.e., advance practice clinical pharmacists) and analytics to monitor the use.

: Many of the formulary decisions for high-cost medications are tied to assumptions about reimbursement, but line of sight into actual reimbursement is limited. Transparent reimbursement information, along with a feedback mechanism to the formulary review process, will add significant value to formulary management activities.

Many of the randomized controlled trials used to bring a medication to market don’t reflect real-world practice patterns or they study a nuanced patient population that doesn’t reflect where the medication will primarily be used. This complicates the formulary review process and can make the decision making ambiguous.

: There are three main barriers to successful formulary management:

Use of expensive, ‘designer’ medications outside of the narrow patient populations that they benefit

. Formulary policies must be designed to address costly, unwarranted variation. Many health systems add drugs to their formularies only to find that use is much broader than originally intended. Pharmacy leaders must take into account therapeutic alternatives for a given indication to gain a better sense of where variation is occurring and to what degree before they can begin to curb it.

A lack of organized and/or sophisticated compliance and performance tracking

. The first step in solving this challenge is to ensure your formulary is documented in a way that is easily accessible to all decision makers and requesters. Then you can be more disciplined in consistently reviewing compliance and performance analytics (e.g., dosing policies, restricted use, patient outcomes, cost savings) that will enable you to make quick adjustments to any given initiative or have multidisciplinary team discussions.

Bogged down Medication Use Evaluation (MUE) processes

. Clinicians have long used MUE initiatives, but they are often rife with inefficiency due to manual data analysis and chart review. Look for ways to use clinically oriented analytics tools to uncover opportunities for improving medication use and gauge local outcomes such as adverse events, treatment failures, non-formulary medication use or request, and pharmacist intervention. Additionally, collaboration with prescribers to develop criteria for medications and effective medication-use processes will help minimize variation and cost of therapy, improve patient safety, and bolster outcomes.

®: What is the role of data analytics in formulary management?

: There is an opportunity for pharmacy to impact decisions through data and analytics, moving from anecdotal to a more data-driven approach to identify, prioritize, and realize cost-containment efforts. We utilize retrospective  and real-time data to review previously approved medications, to compare perceived versus actual value, and hold system P&T accountable for decisions made based on clinical evidence. We also leverage analytics to build IT infrastructure, such as clinical decision support and order set development, ensuring compliance with system approved guidelines to meet expected outcomes. Finally, we can use analytics to assess the financial impact of formulary decision in the organization through procurement and reimbursement review.

: There are many use cases for data analytics in formulary management-measuring the impact of formulary decisions, forecasting the impact of high-cost formulary additions, identifying and triaging cost savings opportunities, monitoring compliance with the formulary, and managing medication shortages. Analytics can and should be incorporated into almost every aspect of formulary management.

: Organizations need to use analytics that combine spend and utilization data with an understanding of the clinical context to support data-driven, evidence-based formulary management. The most progressive organizations use analytics to dynamically understand “total cost of care”-drug costs are weighed against clinical (e.g., patient outcomes), operational (e.g., turnaround times), and financial outcomes (e.g., reimbursement) along clinical pathways and across the continuum of care. These analytics are critical for ensuring that the health system is realizing the intended value of a medication within their own patients. An additional benefit to this approach is it provides line of sight into supply shortages, enabling hospitals to make therapeutic interchanges faster and roll the decision out across an entire system before a shortage can be felt by providers and patients.

®: How do you manage the formulary across multiple stakeholders?

: We address formulary decisions through a collaborative approach, engaging subject matter experts and service line leads. In addition, we identify a physician champion to help identify these stakeholders and foster consensus amongst the group. We also identify centers of excellence where innovative therapies can be safely and effectively administered to our patients.

: We have a single system formulary that encompasses all hospitals, clinics, and urgent care locations. Formulary management activities are centrally coordinated and overseen by a single system P&T committee. Business leaders are largely responsible for implementing P&T actions, so close collaboration between P&T, business leaders, and subject matter experts is important to success.

®: How do you go about ensuring that you consistently engage the relevant stakeholders representing different sites, service lines, and specialties?

: There are multiple connections, both formal and informal, between formulary management activities and relevant stakeholders. All formulary monographs are reviewed by one or more of our clinical pharmacy workgroups prior to going to the system P&T committee . During this review, which includes pharmacy representation from all relevant facilities, pharmacists obtain informal feedback from their providers. We do rely heavily on facility clinical pharmacy engagement to reach out to providers for input. If we need further review before going to P&T, we will give the facilities additional time to seek feedback.

The system P&T has several physicians representing various specialties. If further specialty review/feedback is needed after initial presentation to the system P&Tcommittee, the formulary monograph will be presented at other System Clinical Committee meetings (e.g., infectious disease, cardiology, critical care).

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Bundled payment programs maintain or improve quality while lowering costs for hip and knee replacement, according to a new study.

However, “there is no evidence of benefit for other clinical episodes at the present time” like heart attacks or congestive heart failure, according to the 

, which is the first systematic review of bundled payment programs administered by CMS.

, which performs rapid, rigorous, systematic reviews to solve high-impact health policy problems.

“Given that CMS and the Trump administration are considering new bundled payment models as part of a shift toward value-based care, we felt that an objective evaluation of the existing literature would be of interest to policy makers, researchers, executives, and clinicians,” says lead study author Rajender Agarwal, MD, MPH, MBA, director, Center 

A Look at the Two Sides of Bundled Payments

For the study, Agarwal and colleagues reviewed 20 existing studies that evaluated the impact of bundled payments on healthcare spending, utilization, and quality, through search and screening processes that fit our inclusion criteria.

“We included all prospective or retrospective studies that compared a bundled payment approach with a fee-for-service reimbursement control group,” Agarwal says.

It is important for healthcare executives to understand that ‘while bundled payment has yielded favorable results for lower extremity joint replacement, it has yet to demonstrate similar benefits for other clinical episodes’ like medical conditions, according to Agarwal.

“A likely reason for this is that patients undergoing elective joint replacement ‘tend to be younger, with lower rates of poverty and disability than patients with medical conditions included in bundled payment’,” he says. “Healthcare executive may want to consider restricting participation ‘to those clinical episodes that may be an appropriate fit for such payment models.’”

Also, bundled payment was not associated with cost savings for conditions with higher patient complexity, such as spinal fusion procedures, according to the study.

It is possible that “given the penalty for cases that exceed the bundled payment target price, providers may be reluctant to accept these patients, which could in turn lead to decreased access to care,” according to the study.

A new study is the first systematic review of bundled payment programs administered by CMS.

Bundled Payments Cut Costs for Hip, Knee Replacement

A new study highlights the value of addressing veterans’ health concerns at the time that they leave military service.

“Currently, much of the transition support offered to separating veterans focuses on preparing them for civilian employment, and providing information on benefits,” says study lead author Dawne Vogt, PhD, research health scientist with the 

 and associate professor of psychiatry at 

, Vogt and colleagues investigated which of these challenges are most pressing to newly separated veterans. They surveyed almost 10,000 veterans from a population-based roster of all separating service members. All participants left the military in the fall of 2016. Veterans were surveyed about three months after their separation, and then six months after that, and weights were applied to enhance the applicability of findings to the larger veteran population.

There were three main findings of the study:

 Veterans demonstrate a high health burden as they separate from service, with almost one in every two veterans reporting physical health conditions and about a third reporting mental health conditions.

Most veterans reported relatively high well-being in occupational and social domains despite these health problems, with many veterans reporting that they had found jobs and were relatively well integrated within their communities within the first year after leaving service.

There were important differences in the health and well-being of veterans based on enlisted status (vs. officer status), gender, and deployment history, with enlisted veterans (vs. officers) reporting poorer well-being across all life domains assessed, female veterans reporting more mental health concerns than men, and deployed veterans reporting more health problems than their non-deployed peers.

“The finding that warfare-deployed veterans did not report poorer well-being in their occupational or social readjustment than those who were not deployed during their time of service was unexpected and is a testament to the resilience of deployed veterans,” Vogt says. “What remains to be seen is whether they will experience declines in their broader well-being if their health problems are not adequately treated.”

Community Organization Model Tackles Veterans’ Mental Health Issues

Although most aspects of veterans’ health and well-being did not change substantially over the first year after separation, the researchers found that veterans experienced a decline in their work functioning, which may be a consequence of untreated health conditions.

“Future research will examine this research question, as well as how veterans’ health and well-being changes over the full three years of the study timeframe,” Vogt says.

In addition, much of the post-transition support provided to veterans primarily addresses the needs of veterans with the most chronic or severe concerns, according to Vogt.

“The current study suggests the potential value of screening for commonly experienced health conditions in the first year after veterans leaving military service. Moreover, findings underscore the importance of applying individually tailored intervention strategies that can identify and support at-risk veterans,” she says.

The study was conducted as part of the Veterans Metrics Initiative (TVMI), a collaboration among researchers from multiple research settings, including the VA, that was managed by the Henry Jackson Foundation for the Advancement of Military Medicine.

“The purpose of the collaboration is to identify what type of support is needed to promote veterans’ health and well-being after they leave service,” Vogt says. “The current study addresses a number of important limitations of prior research, including the fact that no study has yet to provide a longitudinal examination of how veterans fare as they go through the transition from military service to civilian life and most of the research that is available has been based on samples that are not representative of the larger veteran population and thus cannot adequately inform allocation of resources at a national level.”

Veterans’ health concerns need to be addressed more proactively to ensure that they do not experience a decline in their broader well-being over time, according to a new study.

Health Burdens Plague Veterans After Leaving Military

Despite the threat of illness, the majority of young vape users still feel safe vaping, according to a new study.

To learn more about the habits and sentiments surrounding vaping, Harmony Healthcare IT, a healthcare data management company based in South Bend, Indiana, surveyed 1,800 users between the ages of 18 and 35. The 

 revealed young users are extremely attached to vaping, and half said they would find a way to obtain products even if they were banned. Of the users, 41% vape nicotine, 30% vape cannabis, and 27% vape both.

“The majority also believe that vaping is healthier than smoking cigarettes, cannabis, and drinking alcohol,” according to Collin Czarnecki, researcher for the Harmony Healthcare IT study. “However, when their level of awareness about vaping related deaths and illnesses was tested, 79% grossly underestimated the number of people who have fallen ill; 79% of respondents believe that fewer than 500 people have gotten sick from vaping-related illnesses, whereas 1,888 cases of e-cigarette/vaping-related illnesses were reported to the 

 at the time that the study was conducted.”

As of the end of 2019, more than 2,500 people had been hospitalized due to vaping-related illnesses, according to the CDC.

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“These results indicate that a significant portion of active vapers are not only attached to the nicotine and cannabis vaping products they ingest, but also believe that what they’re vaping is healthier than smoking or drinking,” Czarnecki says.

For healthcare executives, these findings shed light on attitudes of young consumers who are rapidly consuming vaping products (23% finish a cannabis cartridge in less than two days, 31% finish a nicotine cartridge in the same time frame), many of whom, are either not aware or are unphased by the threat of vaping-related illness.

While the study revealed most vapers feel save using vaping products, many indicated they’re looking to cut back on their habit. Nearly half (48%) said they plan to quit vaping altogether as part of a New Year’s resolution, and 56% have considered quitting due to news of recent illnesses and deaths related to vaping.

“The study also found that most vapers feel vaping brands should be held responsible, financially or otherwise, for illnesses related to vaping, and that brands are not doing enough to prevent illnesses in the future,” Czarnecki says.

Majority of young vape users are attached to vaping, according to a new study.

Author | Tracey Walker

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Three Experts Share Formulary Management Advice

Bundled Payments Cut Costs for Hip, Knee Replacement

Health Burdens Plague Veterans After Leaving Military

Negative Health Threats Don’t Stop Vapers