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Executive Summary

Prime vendors were used for pharmaceutical purchases by 95.9% of respondents, and, on average, 87.3% of all pharmaceuticals obtained by hospital pharmacies came from wholesalers, the survey indicated. The mean cost of drug purchases per patient day was $22.12, compared to $4.22 for I.V. fluid purchases, and $3.53 for all inventory costs. Surveyed hospitals reported an annual inventory turnover rate for drugs of nine turns, versus 11.2 turns for fluids. "We calculated based on the responses the average annual pharmacy expenses per occupied bed," ASHP Director of Scientific Affairs Stephanie Crawford said at the press conference. "In 1987, the average amount was $11,385. In 1990, it was $14,709." ASHP VP-Professional Affairs William Zellmer cautioned that the increase, including roughly a 25% increase in expenses for drugs and I.V. fluids, should be taken in context: "If you look at what happened to medical commodities during the same period," he said, "they went up 22%, so that puts that 25% increase in better perspective." The proportion of pharmacy expenses devoted to drug products and to personnel "has been virtually unchanged over the past three years," Crawford reported. "In 1987 almost 68% of the average pharmacy expenses were for drugs and I.V. fluids," she said, "In 1990, that is 65%. In 1987, 26% of the dollars went to personnel, this year it is 28%." Zellmer called these results " this era of Medicare prospective pricing...when many people thought that financial incentives were going to be to cut back substantially on pharmaceutical services." He attributed the lack of personnel cutbacks to the ability of hospital pharmacists to make "the effective argument to hospital administrators that if you want us to help you in the effort of attaining cost and delivering high-quality care, this is not the time to retrench in the pharmacy department." At another press conference two days earlier, ASHP President James McAllister predicted rising drug costs may provide "opportunities for pharmacists to really contribute to the bottom line." He added: "I'm not talking about the drug bottom line, but I'm talking about the healthcare bottom line." McAllister pointed out that his department at Duke University currently employs 88 pharmacists. "We continue to grow because we expect our drug budget probably to double in the next five years, along with the expansion of our patient population," he noted. Formulary management techniques were another subject of the survey, Crawford reported. "What we found were very similar results to what was found in 1987," she said. The 1990 survey found that 32% of hospitals employed prescribing restrictions, 49% used therapeutic interchange, 62% used drug utilization reviews based on medical staff criteria, and 72% sought to enhance physician awareness of drug costs. Crawford added that 58% of hospitals had a "well-controlled formulary" defined as a formulary with "almost no duplication of generic equivalents and minimal duplication of therapeutic equivalents." Zellmer said that "if you simply asked hospitals, 'Do you have a formulary?' 90% or more will say yes. But when you begin defining a well-controlled formulary...the percentage begins to drop down." Zellmer called this "an area where we need to improve." The ASHP survey was conducted by mail between May and July 1990, and included a random sampling of "community" (short-term, nonfederal) hospitals. ASHP mailed out 881 survey forms to directors of hospital pharmacies, and received responses from 582 (66%) of the hospitals. The 1990 survey was ASHP's sixth: the first was done in 1975, and the most recent in 1987.

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