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Transforming the Pharmacy Supply Chain
March 1, 2016 DeVere Day, PharmD
Pharmacy Automation and Technology Manager, Intermountain Healthcare
Conflict of Interest
DeVere Day, PharmD
Has no real or apparent conflicts of interest to report.
Agenda •Discuss the background of a centralized supply
chain model
•Describe financial challenges in the changing
pharmacy market
•Outline pharmacy distribution opportunities
utilizing a pharmacy supply chain
•Explain the role of the pharmacy supply chain in
decreasing pharmaceutical expenses
Learning Objectives 1. Assess the industry’s current challenges to
effectively manage medication inventory across
the healthcare enterprise
2. Discuss how Intermountain Healthcare took
advantage of opportunities for greater efficiency
3. Recognize the return on investment that
Intermountain Healthcare achieved by managing
mediation inventory across their enterprise
4. Identify prerequisites and core competencies for
successful implementation
http://www.himss.org/ValueSuite
Satisfaction
Patient
Engagement &
Population Mgt
Savings
Benefits of a Pharmacy Supply Chain
Treatment
Clinical
Supply Chain Center
• Opened September 2012
• 327,000 total square feet
• Acute Care Pharmacy 16,000 square feet
• Ships to each hospital at least twice per day
> 12,000 courier miles per day
• Gartner rank as the #3 Health Care Supply Chain
http://www.gartner.com/newsroom/id/3170117
Supply Chain Service Area
• 22 Hospitals
• 185 Medical clinics
• 25 community pharmacies
• 35,000 employees
39,406
110,134
487,645 506,454
0
100,000
200,000
300,000
400,000
500,000
600,000
InpatientSurgeries
AmbulatorySurgeris
ER Visits Acute PatientDays
Hospital Statistics 2014
Challenge of Managing Medications
• Pharmaceuticals expense
• Compliance to law & regulations
• Automation
• Sterile compounding
• Medication shortages
Mayo Clinic—average annual cost for
cancer drug therapy
• Before 2000 $5,000 to $10,000
• 2012 >$100,000
Analysis by Wall Street Journal
• 30 top drugs
• 5 years
• 76% increase
http://www.mayoclinicproceedings.org/article/S0025-6196(15)00101-9/pdf
http://www.wsj.com/articles/for-prescription-drug-makers-price-increases-drive-revenue-1444096750
Challenge of Managing Medications
NDC Medication Item
Description
Older Price
(Pkg)
Recent
Price
$ Change
Alert
$73.23 $2,039.56 2,785%
$2,077.70 $13,247.80 638%
Challenge of Managing Medications
Pharmacy % of Insurance Plan
24.3%
18.7% 32.5%
11.5%
13%
24.%
21.3% 28.5%
9.2%
17%
Inpatient
Outpatient
Professional
Other
Pharmacy
2010 2015
Zero Harm
Perpetual compliance
Adherence and extraordinary care
Costs (purchasing and utilization)
Goals of Pharmacy
https://m.intermountain.net/newsroom/
Pre-Packaging Savings • 6 large hospitals use a robot for cart fill
• Concerns about safety and liability
• Decision to internalize packaging at the supply chain center
• Average cost savings per dose = 9 cents
• 900 different medications packaged
• Software automatically generates order based on max and par levels
171,684
246,778
254,216
304,223
306,564
313,785
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
Unit Dose Packages
0
$23,894 $24,399
$27,918
$25,015 $24,263
$23,805
$23,195 $26,733
$27,909
$25,861
$26,422
$26,082
$305,496
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
$305,496
Pre-Packing Savings for Hospitals
2015
Opportunity Buys
• System level discount
• Bulk purchases
• Short dating
Opportunity Buys—Short Dating
$3.25
$5.54 $7.62
$15.25
$0.00
$2.00
$4.00
$6.00
$8.00
$10.00
$12.00
$14.00
$16.00
$18.00
Dose 1 Dose 2
Short Date Cost Regular Cost
$74,429 10,700
Doses
Population
Management
Treatment
Clinical
$1,187,792
$839,853 $520,096
$31,218
$200,000 $600,000 $1,000,000 $1,400,000 $1,800,000
2015
2014
Opportunity Buys—Bulk Purchase
2015
$1,219,010
Sterile & Non Sterile Compounding
•Sterile compounds made at the SCC = 9
•Non-sterile compounds = 80
•Focus on
–Medications used by multiple facilities
–Medications with high $$ savings
$35,990
$34,637
$40,273
$36,312
$45,081
$49,858
$43,616
$40,349
$40,653
$44,797
$44,968
$47,942 $504,474
$0
$100,000
$200,000
$300,000
$400,000
$500,000
Sterile Compounding Savings
2015
$504,474
Total Doses Dispensed from SCC
345,216
353,198
391,617
362,659
348,938
362,596
369,169 391,307
409,038
389,190
393,662 351,949
4,468,539
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
5,000,000
4,468,539
Doses Shipped
from SCC
Inventory Visibility
•40% of pharmacy inventory in automation
•Goal of putting a perpetual medication inventory in every hospital pharmacy
• Inventory system tested in a few hospitals
• Installed inventory software during 2015
Inventory Visibility
Challenges
•Pharmacy set-up needed improvement
•Hoarding/backroom storage
•Getting all NDCs into the software
•Change in distribution workflow
•Staff commitment to scanning in and out
Inventory Visibility
46% 45%
58% 62% 57% 59%
63% 66%
89%
102% 92% 91%
0%
20%
40%
60%
80%
100%
120%
Low Unit of Measure
$384,125
$628,325
$1,012,450
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
Jan-June July-Dec Total Savings
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000Expired Medication – Small Size Hospital
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
$90,000Expired Medication – Medium Size Hospital
Decrease Expired Medications
Decrease Expired Medications
Medical Group—Clinics
• Multiple avenues of purchasing medications
• Not maximizing supply chain contracts
• Not tracking 3 T’s for DSCA
• Ordering more than they needed
• Concern about controlled substances
Medical Group—Clinics
3,379
13,947
26,180
33,605
42,052
51,728 53,314
0
10,000
20,000
30,000
40,000
50,000
60,000
Ma
y-1
4
Ju
n-1
4
Ju
l-1
4
Au
g-1
4
Sep
-14
Oc
t-1
4
No
v-1
4
De
c-1
4
Ja
n-1
5
Feb
-15
Ma
r-1
5
Ap
r-1
5
Ma
y-1
5
Ju
n-1
5
Ju
l-1
5
Au
g-1
5
Sep
-15
Oc
t-1
5
No
v-1
5
De
c-1
5
Doses Filled per Month
http://www.himss.org/ValueSuite
Satisfaction
Savings
Central Fill Pharmacy
Treatment
Clinical
Patient
Engagement &
Population Mgt
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000Number of Prescriptions per Month
Home Delivery Community Refills
Central Fill Pharmacy
Central Fill Pharmacy Call Center
22,386
19,241
21,603
20,438
29,046 31,098
19 2 2,225
4,506 5,204 5,403
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
January 2015 February 2015 March 2015 April 2015 May 2015 June 2015
Total Inbound Calls Community Support Protocol
Patient
Engagement Adherence
http://www.himss.org/ValueSuite
2015 Savings
$1.4 Million
25 Community Pharmacies
• Many are affiliated with a hospital
• Multiple wholesalers
• Savings from volume wholesaler purchase
Central Fill Pharmacy
http://www.himss.org/ValueSuite
Satisfaction
Patient
Engagement &
Population Mgt
Supply Chain Prescription Verification
•35% of all new prescriptions are verified at the Supply Chain Center
•Community pharmacists spend more time with patient
Specialty Pharmacy
• Cystic fibrosis
• Growth deficiency
• Hepatitis C
• Hereditary angioedema
• HIV/AIDS
• Metabolic disorders
• Multiple sclerosis
• Oncology
• Osteoarthritis
• Osteoporosis
• Pulmonary HTN
• Transplant
http://www.himss.org/ValueSuite
Specialty Pharmacy
728
1,086
1,591
1,948 1,807 1,952
2,298
0
500
1,000
1,500
2,000
2,500
Ju
n-1
4
Ju
l-14
Au
g-1
4
Sep
-14
Oc
t-14
No
v-1
4
De
c-1
4
Jan
-15
Fe
b-1
5
Ma
r-15
Ap
r-15
May
-15
Ju
n-1
5
Ju
l-15
Au
g-1
5
Sep
-15
Oc
t-15
No
v-1
5
De
c-1
5
# of Prescriptions
http://www.himss.org/ValueSuite
Specialty Pharmacy
$73.93
$38.30
$31.84
$41.85
$36.81 $22.09
$18.15
$19.72
$16.46
$17.31
$9.27
$9.55
$-
$10
$20
$30
$40
$50
$60
$70
$80
Patient Copay
Avg Cost per Prescription $4,000
Patient
Satisfaction Population
Management
Clinical
care
http://www.himss.org/ValueSuite
Specialty Pharmacy
2,119
2,725
4,003
4,021
4,185
4,339
6,133 6,969
8,152
8,506
8,737
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
Outbound Calls
Patient
Engagement &
Population Mgt
Prerequisites and Core Competencies
• Leadership
• Strategy
• Data analysts
• Shipping plan
• IS/IT support
• Software
• Automation
• Communication
• Adaptability
Future Endeavors •Automated dispensing machine restocking
•High risk or chemotherapy compounding
•Sterility testing
•Antidote distribution
•High cost medication distribution
•Medication kit filling
•Expand customers: operating rooms, surgical centers, hospital clinics
•Mandatory 90 day prescription refills
http://www.himss.org/ValueSuite
Shortages
Top of License
Inventory Mgt
Budgets
Call Center
Better Care
Compounding
Volume discount
Opportunity buys
Pre-packaging
Expirations
LUM
Pharmacy Supply Chain STEPS Benefits
Shortages
Adherence
