Economic Evaluations of Clinical

Pharmacy Services 2001–2005

Fred Doloresco, PharmD, MS

Clinical Assistant Professor

frediii@buffalo.edu
Objectives

• Discuss literature examining the clinical and financial

benefits of clinical pharmacy services.

• Identify opportunities for implementing financially

viable clinical pharmacy services in multiple practice
settings.

• Identify resources available to assist with the

development of a business plan for clinical pharmacy
services.
 Background
` Over the past 40 years there has been dramatic
changes in the practice of pharmacy.
` Most notable is the transition from a product orientation
to a patient orientation.
◦ Clinical pharmacy services (1970s)
◦ Consultant pharmacy services (1980s)
◦ Pharmaceutical care (1990s)
◦ Medication therapy management (2000s)
◦ Medical home/patient-centered care (2010s)
Background Improve Outcomes

• The value of the pharmacist in product-related

functions has been closely tied to the price of the
prescription.
• However, pharmacists clinical services have been
more difficult to put value on. We believe that clinical
pharmacy services can:
• Improve outcomes.
• Save money.
• Make money (i.e., bill for clinical pharmacy
services, where applicable).
Bill for CPS
Save money
Value of Clinical Pharmacy Services

• Value = Quality ÷ Cost

• Where Quality = Outcomes
• We can measure economic, clinical, or humanistic
outcomes (ECHO)

Thus, the value of clinical pharmacy is defined by

ability to improve clinical, humanistic, and/or
economic outcomes, given the cost to provide such
services.
 How to Evaluate Value of CPS
Intervention
Input (CPS)
Output
No intervention
Input (control or comparator) Output

Measurement Measurement
COSTS CONSEQUENCES
Resources consumed (outcomes, effect)
Cost of providing service clinical outcome
“investment” humanistic outcome
economic outcome

Units = $ Units = depends on outcome

Metrics
• Cost-effectiveness
• Compare average cost-effectiveness ratios ($C:E, e.g. cost per life
saved) or compute incremental cost-effectiveness
($C1-$C2)/(E1-E2).
• Cost-utility
• Compare average cost-utility ratios ($C:U, e.g., cost per quality-
adjusted life year) or compute incremental cost-effectiveness ($C1-
$C2)/(U1-U2).
• Cost-benefit
• Compare average benefit-to-cost ratios ($B:$C, e.g. cost per dollar
invested) or compute incremental benefit-to-cost
($C1-$C2)/(B1-B2).
• Net benefit ($B-$C).
• Return on investment ($B-$C)/($C).
Evidence from Literature

Humanistic

ECHO Model =
Clinical

Economic
Literature
 Clinical Outcomes of CPS
Nkansah et al. Cochran Database Syst Rev 2010; 7.
• Systematic review of studies investigating the health-
related outcomes of CPS.
• Time-period: 1966-2007.
• Pharmacist interventions resulted in improvement in
most clinical outcomes (not always statistically
significant).
• Meta-analysis of studies measuring effect of CPS on BP:
-6.32 mmHg/-3.12 mmHg (P<0.001).
• Meta-analysis of studies measuring effect of CPS on
blood glucose: -0.75% HbA1c (P=0.03).
 Clinical Outcomes of CPS
Kaboli et al. Arch Intern Med 2006;166:955-64.
• Systematic review of studies investigating the clinical
effectiveness of CPS in inpatient medical care.
• Time-period: 1985-2005.
• 36 studies included; evaluated medical rounds
participation, medication reconciliation, drug-specific
services.
• Adverse drug events or medication errors reduced in
7 or 12, medication adherence improved in 7 of 11
studies.
 Humanistic Outcomes of CPS
Pickard, Hung. Ann Pharmacother 2006; 40: 1623-34.
• Systematic review of studies of the humanistic impact of
CPS
` Time period: Mar 1999-Dec 2004.

` Number of studies that evaluated HRQOL outcomes

more than tripled.
` Study designs improved (longer length of follow-up and
a wider breadth of CPS types).
` For certain services (asthma management) evidence of
HRQOL benefit is most convincing.
 Humanistic Outcomes of CPS
Nkansah et al. Cochran Database
Syst Rev 2010; 7.
• Systematic review of studies
investigating the health-related
outcomes of CPS.
• Time-period: 1966-2007.
• 8 studies report QOL outcomes, 3
showed improvement in at least 3
sub-domains in patients with
asthma and high risk medication-
related problems.
Economic Outcomes of CPS

• 1988-1995: Schumock GT, Meek PD, Ploetz PA, Vermeulen LC.

Economic evaluations of clinical pharmacy services—1988–1995.
Pharmacotherapy 1996;16:1188–208.

• 1996-2000: Schumock GT, Butler MG, Meek PD, Vermeulen LC,

Arondekar BV, Bauman JL; Evidence of the economic benefit of
clinical pharmacy services: 1996-2000. Pharmacotherapy.
2003;23(1):113-32.

• 2001-2005: Perez A, Doloresco F, Hoffman JM, Meek PD,

Touchette D, Vermeulen LC, Schumock GT. Economic evaluations
of clinical pharmacy services 2001-2005. Pharmacotherapy
2009;29(1):128.
Why are CPS important?

• Quality and safety of medication therapy

• Cost reduction (cost effectiveness)
• Growing role of pharmacists (provider status)
• Medicare Prescription Drug Improvement and
Modernization Act of 2003
• Healthcare reform
• Development of Current Procedural Terminology
codes
• Growing health care costs
• Importance of cost justification of CPS
 USD (Billions)

Doloresco F, et al. Projecting Future Drug Expenditures – 2011. AJHP. Publication pending.
Clinical Outcomes of CPS (Inpatient)
Mortality Drug Total Cost Length Medication
Rate Costs of Care of Stay Errors

Drug Information

Admission
Medication
Histories

ADR Management

Drug Protocol
Management

Medical Rounds
Participation
?
Bond CA, Raehl CL, Patry RL. Pharmacotherapy 2004;24:427-440.
Importance of Continued Economic
Evaluations
• Rise in pharmaceutical costs
• Pharmacist salaries
• Evaluation of Medication Therapy Management
programs (Medicare Part D)
• Effect of outpatient CPS in long-term outcomes
Results
Results
→ 3793 hits

→ 3217 articles excluded after title review

→ 297 articles excluded through abstract review

→ 186 articles excluded after

full review

→ 93 papers included
→ 15 papers included in benefit:cost ratio
calculation (Calculated by reviewers when data available)
Economic Outcomes of CPS
% of Studies
Economic Outcomes of CPS

General Pharmacotherapeutic
Management
% of Studies

Target Drug Monitoring

Pharmacokinetics
Study Perspective

Unspecified,
4%
Societal, 4%
Various, 10%

Provider, 58%
Payer, 24%

N=93
Benefit:Cost Ratios (pooled)
(Financial benefit per dollar invested, $benefit :$1 invested)

1988-1995 1996-2000 2001-2005

N=7 N=5 N=15

Lowest 1.08:1 1.7:1 1:1

Highest 75.84:1 17.01:1 34.60:1

Median 4.09:1 4.68:1 4.81:1

Mean 16.70:1 5.54:1 8.00:1

Summary: Clinical, Humanistic, Economic
Outcomes of CPS
• CPS are likely to improve clinical and humanistic
outcomes, particularly for certain services or
diseases, effect size and statistical significance may
depend on many factors.

• CPS likely to improve economic outcomes, reduce

healthcare utilization, save money.
Literature – Conclusion

• CPS continue to be economically viable

• Pharmacist wages
• Although improvement has been observed:
• Studies with more rigorous design need to be
conducted
• Reporting of input costs is lacking
Opportunities
Considerations

• Some factors to consider (regardless of setting):

• Patient population (which patients?)
• Your organization’s focus and strategic initiatives
• Overall feasibility
• Evidence/experience to indicate the service works
• May want to consider evidence for effectiveness
versus feasibility in your specific situation.

• Patient desires?
Considerations

• Partnerships available

• Funding sources
• Internal
• Payers (Part D plans)
Who are the stakeholders?
• Loans What do they care about?

• Grants
Decision Matrix
HIGH Level of Evidence LOW

HIGH

Feasibility

LOW
Practical Approaches to Justify CPS

• Possible strategies
1. Interpret/generalize from other studies
2. Economic modeling/projection
3. Prospective evaluation
• Advantages and disadvantages exist
Less difficult More difficult

1 2 3
Less reliable More reliable
Practical Approaches to Justify CPS

• Possible strategies
1. Interpret/generalize from other studies
2. Economic modeling/projection
3. Prospective evaluation
• Advantages and disadvantages exist

Less difficult More difficult

1 2 3
Less reliable More reliable
Strategy 1: Generalize from
published studies
• Advantages • Disadvantages
• Quick • External validity
• Inexpensive • Study quality?
• Peer reviewed • Available applicable
• Variety of services studies?
and results • Available studies may
• Information available not be convincing to
before implementation decision makers
Practical Approaches to Justify CPS

• Possible strategies
1. Interpret/generalize from other studies
2. Economic modeling/projection
3. Prospective evaluation
• Advantages and disadvantages exist

Less difficult More difficult

1 2 3
Less reliable More reliable
Strategy 2: Modeling/Projection

• Combine evidence from literature with own internal

estimates (costs)
• Costs
• Benefits (in financial terms, if possible)

• Determine when/if program will break even

• Incorporate sensitivity analysis in projections (what if…?)

• Patients miss appointments
• Pharmacist wage increases/other cost increases over time
Advantages/Disadvantages

• Advantages • Disadvantages
• Inexpensive • Results depend on
• Quick assumptions
• Yields organization • Potential for bias
specific results • Decision makers may not
• Sensitivity analysis can be accept results of projection
used to confirm results
• Data collection is
unobtrusive
• Can be conducted pre-
implementation
Practical Approaches to Justify CPS

• Possible strategies
1. Interpret/generalize from other studies
2. Economic modeling/projection
3. Prospective evaluation
• Advantages and disadvantages exist

Less difficult More difficult

1 2 3
Less reliable More reliable
Strategy 3: Prospective Evaluation

• Implement program (perhaps on a trial basis)

• Measure actual costs
• Measure actual benefits
• Compare to “no service” or next best opportunity
Advantages/Disadvantages
• Advantages
• Flexible
• Organization specific data
• High internal validity
(when appropriately
designed)
• Reflects “usual care” or
effectiveness
• More likely to be accepted
by decision makers
• Disadvantages
• Expensive (time and
money)
• Design challenges
(control/randomization may
not be feasible)
• Potential for selection bias
• Need adequate sample
size
• Need resources and
authorization to start
Business Planning for CPS

• May be helpful to develop a business plan.

• Includes financial analysis as well as other
considerations.
PDCA
 Eleven Steps in Prospective Evaluation
of CPS
1. Define the problem and determine your perspective
2. State your specific objectives
3. Design your intervention
P
4. Identify the alternatives for evaluation
5. Choose a study design
6. Determine the cost and consequences of interest
7. Implement, measure the costs and consequences D
8. Analyze the data
9. Summarize the data and present the results
C
10. Decide on implementation A
11. Follow-up analysis
Stakeholders

• Who are the stakeholders?

• What motivates them?
Stakeholders in Different Settings

• The “Ps”
• Patients
• Prescribers
• Pharmacists
• Payers
• “Penny pinchers”
• Policy makers
Possible Motivators

•Patients •Prescribers
•Health/quality of life •Patient outcomes
improvement • Clinical
•Out of pocket savings • Satisfaction
•Convenience •Throughput
• Billing
•Specific goals
•Quality of care
• Guidelines
Possible Motivators

• Pharmacists
• Patient outcomes
• Clinical
• Satisfaction
• Financial
• Job satisfaction
Possible Motivators

•Payers •“Penny Pinchers”

•Patient outcomes •Financial
• Clinical • Cost-saving
• Satisfaction • Revenue producing
•External reporting • Market share
• NCQA/HEDIS
•Financial
NCQA and HEDIS
Possible Motivators

• Policy makers
• Who are they?
• “Boss” or payers
• CEO, Director, etc.
• Revenue versus cost-saving
• Quality
• Patient outcomes – satisfaction
• Accreditation
• Core measures (hospitalcompare.gov)
Hospital Compare Core Measures

• The hospital process of care measures include:

• 7 - heart attack care
• 4 - heart failure care
• 6 - pneumonia care
• 8 - surgical care improvement project
• 3 - asthma care for children only
Generated via www.hospitalcompare.gov
Top Hospital Lists

• Thompson-Reuters
• http://www.100tophospitals.com/

• US-News and World Reports

• http://health.usnews.com/best-hospitals
 US News and World Reports

From http://health.usnews.com/best-hospitals
Side Note: Process versus Outcomes

• Some quality scoring systems look at process,

outcomes, or both
• Process – Measures desirable actions
• % of patients on a beta-antagonist post-MI
• Outcome – measures desirable outcomes
• 30-day readmission rate
Quality reporting is nice, but…

• What argument can I build around it?

• Inpatient setting
• “Never events”
• Financial benefit of reporting
• Hospitals docked 2% of CMS reimbursement
• The future: Top/bottom hospital reimbursement
changes?
• Payer
• NCQA accreditation
• Community
• PQA – MPR and gaps in coverage for specific
medications
http://www.pqaalliance.org/measures.htm
Resources for Business Plans
• Find articles similar to the service you want to offer:
• Perez A, et al. ACCP White Paper: Economic
Evaluations of Clinical Pharmacy Services 2001 –
2005. Pharmacotherapy. 2008;28:285e-323e

• Business plan resources

• Harris IM et al. Developing a Business-Practice
Model for Pharmacy Services in Ambulatory
Settings. Pharmacotherapy 2008;28(2):7e–34e.

• How to Develop a Business Plan for Pharmacy

Services. Glen T. Schumock and JoAnn
Stubbings; 2007;
ISBN:978-1-932658-57-6; ACCP Product Code: PD_01HDBP
Conclusions

• Clinical pharmacy services provide value

• Cost-reducing or revenue generating
• Median of > $4 per $1 invested
• Next review expected to be published late 2011

• Justification and business plan presentations should

focus on benefits that will appeal to the decision-
makers

• Resources are available to assist with developing the

business plan and proposal
Questions?