Description and Analysis of the VA National Formulary (2000) / Chapter Skim
Currently Skimming:
What are the Potential Costs to VA Health Care Associated with the National Formulary for Drugs?
What are the Potential Costs to VA Health Care Associated with the National Formulary for Drugs?
Pages 72-119
The Chapter Skim interface presents what we've algorithmically identified as the most significant single chunk of text within every page in the chapter.
Select key terms on the right to highlight them within pages of the chapter.
From page 72... ...
The NAC defines savings as the difference between its estimate of actual spending and what it estimates would have been spent on the affected pharmaceuticals in the absence of these activities. This estimate includes savings achieved from generic drug contracts but does not include savings achieved through all blanket purchase agreements (BPAs)
|
From page 73... ...
In examining the cost impact of the VA National Formulary, this IOM analysis focuses narrowly on savings associated with prices negotiated for closed and preferred drug classes. As a result, this analysis produces a conservative estimate of the effects of VHA bargaining power associated with the National Formulary and national purchasing.
|
From page 74... ...
Nevertheless, as described elsewhere in this report, a nonformulary exceptions process is administered at each VA medical facility to permit the use of nonformulary agents in closed classes if medically necessary. In preferred classes, a limited number of drugs within a class are listed as preferred agents on the National Formulary.
|
From page 75... ...
Such market share objectives can foster therapeutic interchanges with the BPA drug. Since the National Formulary's adoption, the MAP has conducted 14 drug class reviews in order to decide whether to change the status of a class on the National Formulary from open to closed or preferred (see Table 1.2~.
|
From page 76... ...
The National Formulary has specific features that serve to move market share and, as a result, may enhance the VHA's bargaining position with manufacturers of prescription drugs. The presence of the National Formulary and the enhanced bargaining power it confers on the VHA may also affect, to some extent, classes of drugs that are neither closed or preferred.
|
From page 77... ...
For this reason they are likely to be more responsive to directives regarding prescribing policy than similar physicians in the private sector who contract with a number of health plans. As discussed above, there are several specific features of the VA National Formulary that are used to move market share and enhance the VHA's bargaining power with manufacturers of prescription drugs, including closed classes, preferred classes, and BPAs.
|
From page 78... ...
Although the VA PBM does not explicitly track differences in Formulary content across VISNs and medical centers, the PBM estimates that the 22 VISN formularies include approximately 5,500 separate forms and dosages of pharmaceuticals that are not on the National Formulary (GAO, 1999~. VISNs and medical centers are prohibited from altering the closed classes, but they have some flexibility in how quickly they implement national class closures.
|
From page 79... ...
Regression analyses were conducted to estimate the impact of the National Formulary on outpatient pharmaceutical spending per VHA user for closed and preferred classes, controlling for changes in the VHA system and its user population over time. Finally, the committee explored whether changes in Formulary policy resulted in an increase in utilization elsewhere in the VHA system by studying discharge data for diagnoses of conditions likely to be affected by drugs in closed or preferred classes.
|
From page 80... ...
Aggregate data on the total number of inpatient discharges were collected. Data on the number of discharges for selected diagnoses that might be treated by drugs in certain closed or preferred classes by month by VISN for FY 1994 through July 1999 were examined.
|
From page 81... ...
the natural logarithm of outpatient pharmacy spending per outpatient VHA user and (2) the natural logarithm of discharges for selected diagnoses potentially linked to closed or preferred classes divided by the number of veteran outpatient users.5 The unit of observation for each model was a VISN-month.
|
From page 82... ...
How Has the National Formulary Affected Prescribing Patterns Within the Closed and Preferred Classes? After examining the effect of the National Formulary on prices, the committee assessed the effect of the National Formulary on market share for each 7The most commonly prescribed product among CCBs was not the preferred agent (felodipine)
|
From page 83... ...
83 o o o o o o o o o o o o o o o o o o o o o o o o o O O O O O O O O rid ~ ~ N 0 0 ~ ~ N `_1 66-~°0 -lnr L 66-3d~ L 66-tier L 86-~°0 L 96-lnr L 96-3d~ 36-uer 6-~°0 96-1d~ be uer J L ~6-lnr L 16-d~ it; a' L ,,6-Uer ~ a' L 96-~°0 ~ g ._, ._, 96-tier S6-~°O ~ S6-1nr . a' S6- dot o b6-~°O a' b6-lnr t6-3d~ issuer Em £6-~°0 swan ~ua!
|
From page 84... ...
84 66-A°N 66-das -lnr 66-Aew 66-~ew 66-tier 86-A0N 7 86-das s6-lnr s6-Aew s6-~ew 6-uer -AoN 6-das ~ ~6-lnr 1~ ~6-Ae 6-~ew -suer 96-A°N s6-das ~ s6-lnr N~ s6-Aew ~ s6-~ew =~ g6-ue ~ S6-A0N ~ s6-das i, s6-lnr =4 s6-Aew ~ s6-~ew 0 s6-uer b6-A°N b6-d0S ~ -lnr c;!
|
From page 85... ...
85 v ~ ~ 3 ~ CD ~ EI3 ~ o o o o o o U. o U. o U. ~ ~ Cal Cal ., o o o U. o U
|
From page 86... ...
86 o o o ~ o o 0 ~ tad o o o o o ~ U
|
From page 88... ...
88 Cod o A _ ~ ~ ~ t 1 .: .
|
From page 89... ...
ID to 89 } ~ ~ _ r i u' ~ E o 0 CO Cal ~ o o o o o o S~011°G 66-lnp 66-Aew 66-~ew 66-uep 86-AON s6-des 86-lnp a' s6-Aew 13 s6-~ew ~ s6-uer C%]
|
From page 90... ...
9o ~ - ~ ~ . ~ o E (D ~ in N O 66_Uer 86-AON s6-des 86-lnr a' s6-Aew 13 s6-~ew ~ or g6-uer — -A°N 6-des -lnr .s _' AeW ~ -~ew ¢0 V ~ 6 96-AO s6-des ~ g6-1nr 0 96 AeW ~ 96-~eW a' s6-uer 5~, 96-A°N 96-des s6-lnr 96-Ae ID o o swallow N O A s6-~ew lo, 96-uer ~
|
From page 91... ...
- ~ R ~7 o xi f ;' l ~ 1 at, UP N N U-) sallow UD A o 91 66-lnC 66-Aew 66-e 66-uer 86-AON s6-das 86-lnC s6-Aew ¢ ~Q 86- em a' g6-uep En, Ct 6-A° ~ 6-das 0 [6-lnC a' o 5 o ~6-uep Em, 96-Ao 96-das ~ 96-lnC 0= 96-Aew ~ o s6-~ew g6-uep ~ con 96-AO s6-das a' 96AeW ~ 6-AeW ~6-~ew 96-lnC s6-~ew ON 96-uef z
|
From page 93... ...
CCBs 85.1 94.9 96.5 Data not available 77.1 23.2 agent within the closed or preferred classes. The level of compliance with the National Formulary in terms of prescribing behavior and the utilization shift to the closed or preferred agents were considered.
|
From page 94... ...
94 lo lo 66 unr 66-)
|
From page 96... ...
96 ~ 66 unit ~ 66-q02 ~ 8666-)
|
From page 98... ...
98 ~ 66-unr 6666 -- tad 86-Oao 86-~0 86-6nN1 ~ g6-unr 86-]
|
From page 100... ...
Trends in average outpatient pharmacy spending per outpatient VHA user are presented in Figures 3.17-3.22 for the closed and preferred classes. Trends for two additional classes that remained open throughout this period, SSRIs and beta-blockers, are provided in Figures 3.23 and 3.24 for comparison.
|
From page 102... ...
102 ~ 66-lnr 'I _>— o o o o o o o o o o o o s~ello~ 66-Aew 66-~ew L 66-tier 86-AON s6-des s6-lnr s6-Aew s6-~ew 86 Uer -A°N 6-des -lnr 16-AeW 6-~ew ~ 6-uer 96-AON s6-des s6-lnr s6-Aew s6-~ew 96 Uer g6-AoN g6-des s6-lnr 96-Aew o o o o N ~ (* a' o o o ;^ 5a' 5a' r, ;^ Ct Ct a' ._, o a' Ct a' s6-~ew o° 96-tier
|
From page 103... ...
103 3 C ap ~ 8 ~ O ~ 66-lnp 66-Aew 66-~ew 66-uep 86-AON 86-d9S 86-lnp s6-Aew s6-~ew g6-uep L6-A°N L6-d9S L6-lnp L6-AeW L6-3eW L6-uep 96-AON 96-d9S 96-lnp s6-Aew s6-~ew g6-uep 96-AON 96-d9S 96-lnp s6-Aew a' o Ct Ct o o ;^ 5a' a' Ct o 5a' ;^ Ct a' ._, o a' Ct 5 s6-~ew °N g6-uep ~ o o o o o U)
|
From page 104... ...
104 _` 1 _% ~ ~ o U) —° O Cal G O O O O O O O O O O 0 A- (D LO swallow 66-lnr 66-Aew 66-~ew 66_Uer 86-AON 86-des 86-ln r s6-~ew 86 uer ~ 6-A°N 16-ln 6-~ew ~ 6-uer 96-des s6-lnr s6-Aew s6-~ew 96 uer 96-A°N 96-des s6-lnr g6-AeW ° ~o ;^ a' 6-des ~ a' r .~ Ct A o a' 96-A°N ~ a' ;^ Ct a' Ct o a' Ct a' 96-Ae s6-~ew 96-uer o o CO O O O O
|
From page 105... ...
105 _` o ~ g g I . o o o o o o o o o o as oD A- (D 66-lnr 66-Aew 66-~ew 66 Uer 86-AON s6-des s6-lnr s6-Aew s6-~ew 86 Uer -A°N 6-des s~ello~ o o o o o o .
|
From page 106... ...
106 an ~ = .~m (D O .` lo lo C`i o lo lo o o o o oD (D s~ello~ 66-lnr 66-/LeW 66-~ew 66 Uer 86-AON 86-dGS s6-lnr s6-/iew m v v o s6-~ew 86 uer L6-A°N L6-dGS L6-lnr L6-/[eW L6-JeW L6-uer 96-AON 96-dGS s6-lnr 96-/Lew s6-~ew 96 uer 96-A°N 96-dGS s6-lnr 96-/Lew s6-uer lo lo lo lo a' a' g 5a' ;^ Ct Ct a' o a' Ct a' 96-~e
|
From page 108... ...
108 66-lnr 66-Aew 66-~ew 66 Uer 86-AON 86 das ~ s6-~nr ~ ~ 96-AeW O ~ ~6-~eW 'd s6-uer 16-A°N ~ ~ 6-das ~ ~ ~6-~nr ~ Mt L6-AeW ,$ ~ L6-~eW f L6-ue 96-A°N ~ in g6-das i f 96-1nr ~ g6-AeW I
|
From page 109... ...
The committee also reports the statistical significance level of the estimated effects and the overall explanatory power of the statistical model. Table 3.3 shows that for the five closed drug classes studied, closure was associated with a significant decrease in average per-user outpatient pharmacy spending in the class.
|
From page 110... ...
TABLE 3.3 Outpatient Pharmacy Spending per Outpatient VHA User* Estimated Impact (%)
|
From page 112... ...
112 66-lnr 66-Aew u)
|
From page 113... ...
The second set of results on Table 3.4 reports the estimated effect of closing the PPI class on ulcer-related hospitalizations. Once again the dependent variable is the logarithm of ulcer-related discharges divided by the total number of veteran outpatient users in each VISN.
|
From page 114... ...
, and $900,000 each year from FY 1997 to FY 2000 (the PBM's total budget was $1,919,000 each year for FY 1997 to FY 1999 and $2,099,000 for FY 2000~.~° This estimate is limited to PBM expenditures and does not include a number of other costs, including time spent by VISN leaders and personnel in implementing and managing the National Formulary at the VISN level, time spent by the NAC in negotiating contracts for the National Formulary closed and preferred classes, procurement costs for the National Formulary closed classes, any extra staff that might have been added at the VISN or local facility level to handle increased pharmacy duties, and time spent at the local level administering nonformulary exceptions, therapeutic interchanges, and seeing patients again regarding prescription changes, among others. As a result, the committee could not provide a complete estimate of total administrative costs associated with implementing and managing the VA National Formulary.
|
From page 115... ...
Table 3.5 summarizes the savings estimates for each of the six closed or preferred drug classes that were studied. The estimate for each class represents savings that accrued to the VHA beginning on the date the class was designated as closed or preferred and ending on either July 3 1, 1999 (the last date for which there were pharmacy spending data)
|
From page 116... ...
Both estimated nominal savings and real savings for alpha blockers were approximately $1.8 million. Thus, the total savings associated with closing five of the six closed classes (that is, all but LHRHs)
|
From page 117... ...
One possible outcome of class closure could be increased expenditures for other drug classes that include drugs treating the same conditions as those in the closed classes. To explore this hypothesis, the committee examined data on spending for beta-blockers to assess whether any changes were associated with closure of the ACEI class.
|
From page 118... ...
The statistical analyses conducted showed that the National Formulary's closed classes are associated with reductions in average outpatient pharmacy spending per outpatient VHA user relative to what spending would have been absent the National Formulary. After controlling for secular trends in pharmaceutical utilization, time-invariant unmeasured differences between VISNs, and the changing demographic composition of VHA users, the statistical analyses yielded estimates that the National Formulary resulted in decreases in per-user outpatient pharmacy spending of between 7 and 41% for the closed classes.
|
From page 119... ...
The committee's more generous, upper-bound estimate of $100,000,000 in National Formulary savings over the 2 years in question is about 3% of total pharmacy expenditures, therefore, (or stated another way, about 15% of the cost of the six analyzed drug classes) a real, but perhaps not dramatic savings, nor one that likely approaches the potential if more preferred or closed classes were created.
|
Key Terms
This material may be derived from roughly machine-read images, and so is provided only to facilitate research.
More
information on Chapter Skim is available.