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Teaching clinic lowers pharmacy costs: how to achieve more cost-effective prescribing. (Prescription Drugs).

There's a new drug war in America and skyrocketing pharmacy costs are the enemy. The nation's drug bill has been rising 14 to 18 percent a year (1) and in 2003 it will exceed $160 billion.

What's more, pharmaceutical expenditures continue to escalate at a rate faster than the increase in total health care costs. (2) As a result, it is a hot socioeconomic and political issue getting constant attention by the media.

The lack of a pharmacy benefit in Medicare coverage is of particular concern to Congress as the baby boomer generation ages and costs continue to climb. Unfortunately, a political solution may be delayed or elusive.

In the interim, providers and consumers need to be better educated about their options in this market-based pharmaceutical economy.

While other measures have failed, (3,4) Providence Ambulatory Care and Education (PACE) in Oregon demonstrated that a comprehensive, resident-driven education program in a resident-faculty teaching clinic can successfully increase cost-effective prescribing. By relying upon evidence-based methods for prescription choices, marked reductions in pharmaceutical spending were achieved.

The medical setting

The PACE center is a medical clinic that is vital to the internal medicine residency program at Providence Portland Medical Center. As an urban teaching clinic, PACE cares for a large population of Medicaid (Oregon Health Plan) and charity patients for whom the clinic is at full financial risk. Pharmacy losses exceeded $350,000 in 2000, which were offset by the health system.

Pharmacy utilization data provided by the InterHospital Physicians Association (IPA) showed that in 2000, PACE had significantly higher prescription costs and lower rates of cost-effective prescribing compared to other regional clinics.

The IPA represents more than 1,500 physicians in the Portland metropolitan area, including those at the PACE clinic. A rigorous interactive Web site is used to present medical utilization data to physicians in an actionable format. The IPA employs a clinical pharmacist whose role includes supporting IPA physicians in disease management and cost-effective prescribing.

The health system administration felt it was imperative to reverse the pharmacy trend and improve clinic performance. PACE residents and faculty were informed of this situation and the need to take action. The group chose to utilize the format of an existing Population Based Health (PBH) rotation (5) as a way to address this issue.

PBH rotation introduces continuous quality improvement (CQI) principles to interns who then use the model to improve physician practices, with first year residents taking the leadership role.

The CQI model employed is based upon the Plan, Do, Study, Act (PDSA) model popularized by the Institute for Health Care Improvement. (6) The fundamental tenets of CQI are particularly applicable in resident education clinics because they encourage development of a practical approach to the challenges of clinical practice variance. (7)

Taking action

The intervention began with intense education of the faculty and residents about the clinic's financial performance and the urgent need to reduce pharmacy and medical losses while continuing to provide quality medical care to patients.

Presentations were scheduled with faculty, residents and clinic staff to increase awareness and understanding of cost-effective prescribing (CEP). In a broad sense, the term "cost-effective" means efficiency and value for resources spent. In some cases, prescribing a more expensive agent could be considered cost-effective, if the more expensive agent is more efficacious or avoids costly monitoring or side effects.

For this project, CEP was defined by medication cost, but only after similar efficacy and safety measures were evaluated for each drug class. For example, in the proton pump inhibitor class, no evidence exists that one agent is therapeutically superior or more safe, so the program encouraged the physicians to start with the least costly agent, Protonix[C](pantoprazole), which became available to the market in 2000.

The project also promoted the use of half-tablet dosages for appropriate medications, with a 40 to 50 percent savings potential for each prescription. In this situation, a double-dose tablet is prescribed and then split in half for each dose.

Peer comparison data, as well as the most cost-effective choices, were shared with the residents in the PBH rotation and reinforced at noon conferences and in pre-clinic teachings.

Faculty preceptors also encouraged the concepts of cost-effective prescribing during every clinic session by asking residents about medication choices for each patient. This form of education was borrowed directly from a pharmaceutical marketing practice called academic detailing. While the pharmaceutical industry uses the technique to maximize the sales of a particular drug, physician organizations can modify it to regulate excessive costs by promoting more cost-effective prescribing behavior.

In sequential order, while participating in the PBH rotation, each resident made contributions to the project, applying the principles of CQI. Techniques developed by the residents and clinical pharmacist included:

* A questionnaire assessing physicians' awareness of cost-effective prescribing choices

* Development of cost-comparison charts for several drug classes

* Distribution of pocket-sized laminated cards with cost-effective choices

* Progress reports to faculty and senior residents at noon conferences

* Educational posters on display in the clinic, describing suggestions for cost-effective prescribing, with regular utilization updates to demonstrate progress

* Follow-up meetings between the IPA clinical pharmacist and the residents to review data reports and assess progress

* Letters to physicians in the clinic indicating their current prescribing patterns with calculated savings for switching to a more cost-effective alternatives

* Notation in the electronic medical record reminding physicians to consider cost-effective alternatives for appropriate patients

* Letters to selected patients describing cost-effective prescribing concepts and suggestions for changes in their prescription regimen

Clear benefits for patients

Physician prescribing at PACE and the IPA was measured by comparing average prescription costs for a 30-day supply of five different medication classes. These five classes were the focus of the CEP educational message.

Figures 1 and 2 show the results comparing the Pre (1/1/2000-6/30/2000) to Post (1/1/2001-6/30/2001) intervention period. There was a significant increase in cost-effective prescriptions and a reduction in most prescription costs.

During this same period, pharmaceutical price hikes were increasing the cost of these medicines by an average of seven percent. The most dramatic savings were seen in the proton pump inhibitor class with a significant decrease in expenditures for both commercial and Medicaid claims.

The project was a resounding success. The initial PACE and IPA educational initiatives were adopted by other Portland area clinics and parts of the program were promoted by the health plan. This contributed to an estimated $1 million in annual savings that was passed on to patients with an unprecedented reduction in the health plan pharmacy benefit premiums.

Within the PACE clinic there were multiple changes in policies and focus--including this GQI project--that helped reduce pharmacy losses by more than $300,000.

This project demonstrates that physicians in a residency practice setting can achieve significant reductions in pharmacy expenditures by utilizing a CQI format of education and academic detailing.
Figure 2

 Average Average $
 Cost/ Change per
 30day Rx at

Proton Pump C PACE $116.30 - $38.52
Inhibitors IPA $98.92 - $9.13

 M PACE $132.53 - $23.36
 IPA $136.59 - $11.81

HMGCOA Reductase C PACE $51.44 - $3.24
Inhibitors IPA $46.51 - $1.64

 M PACE $83.25 - $4.87
 IPA $65.73 + $0.47

Second-Generation C PACE $44.08 - $3.70
Antihistamines IPA $41.52 + $0.15

 M PACE $59.18 + $2.27
 IPA $63.23 + $4.97

ACE Inhibitors C PACE $19.30 - $1.55
 IPA $17.33 - $1.02

 M PACE $39.69 - $0.25
 IPA $30.76 + $0.03

Selective Serotonin C PACE $53.10 + $5.19
Reuptake Inhibitors IPA $56.37 - $0.85

 M Data not available

* OB: Line of Business, C=commercial, M=Medicaid (OHP)

** A 7% price increase would have been expected, based on average
pharmaceutical price increases for the Post intervention period.

Percent Cost-Effective Prescriptions PRE (1st-2nd Qtr 2000) to POST
(1st-2nd Qtr 2001) Program


IPA 49.0% 56.2%
PACE 32.0% 61.4%

Note: Table made from bar graph


(1.) Carey, J. and Barrett, A. "Drug Prices What's Fair?" Business Week. Dec 10, 2001.

(2.) Shah, N., Lee C. and others. "Projecting Future Drug Expenditures-2002" Am. J. Health Syst Pharm. 2002, 59(1): 131-42.

(3.) Bligh, J. and Walley, T. "The UK Indicative Prescribing Scheme; Background and Operation," Pharmacoeconomics. 1992, 2(2): 137-52.

(4.) Brewer, D. "The Effect of Drug Sampling Policies on Residents' Prescribing." Family Medicine. 1998, 30(7): 482-6.

(5.) Patmas, M., Rosenberg, M. and Gragnola, T. "A Rotation in Population-Based Health for Internal Medicine Residents." Academic Medicine, 2001, 76(5): 557.

(6.) Langley, G., Nolan K. and others. The Improvement Guide: A Practical Approach to Enhancing Organizational Performance. Jossey-Bass, 1996.

(7.) Friedmann, P. and Selbovitz, LG. "Continuous Quality Improvement and Physician Training." Quality Management in Health Care. 1992, 1(1).

Michael Patmas, MD, MMM, FACP, FACPE, CPE, is medical director of Providence Ambulatory Care and Education in Portland, Ore. He can be reached by phone at (503) 215-6600 or by e-mail at

Nicole O'Kane Pharm.D. is the clinical pharmacy specialist for the InterHospital Physicians Association in Portland, Ore. She can be reached by phone at (503) 215-7521 or by e-mail at

Jonathan Reitzenstein is a graduate student applying to medical school who contributed to this article while volunteering and shadowing at PACE. He can be reached by e-mail at
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Article Details
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Author:Reitzenstein, Jonathan
Publication:Physician Executive
Geographic Code:1USA
Date:Jan 1, 2003
Previous Article:25 health care trends: what's hot, what's not, and what does the future hold? (2003 and Beyond).
Next Article:Pros and Cons of prescription drug benefit changes. (Prescription Drugs).

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