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UNIT-DOSE PACKAGING IS LIKELY TO INCREASE IN RESPONSE TO PHARMACIST SHORTAGE, PCS EXEC PREDICTS TO NACDS: THIRD-PARTY PAYERS ARE "DEMANDING" DUR

Executive Summary

Unit-dose packaging for outpatient prescriptions likely will gain in popularity due to the increasing pharmacist shortage, PCS Chairman and CEO Robert Johnson predicted at the National Association of Chain Drug Stores' annual meeting in Palm Beach, Fla. April 27-May 1. Asked about the "collision course" of shortages in pharmacy manpower and the growing elderly population with its heightened use of prescription and OTC drugs, Johnson predicted that there will be a "technology explosion that will come about in many ways. Certainly, we're going to lots more unit of use packaging in this country. In Europe and throughout the world, most drug products are" packaged in unit doses. Information management through "proper utilization" of patient drug therapy information is another area that will be "critical to the future of this profession," Johnson told the chain drugstore association. The NACDS meeting theme was "Alliance and Progress," and Johnson appeared on a May 1 panel discussing alliance building between third-party payers and community drug stores. Johnson told the panel that health care payers now are "demanding" drug utilization review in their drug coverage programs. "I don't think there's any question that DUR is now firmly entrenched, it's here to stay," he stated. "Every contract that come into" PCS' offices "in the last 30 days, the big ones, are demanding drug utilization review." Efforts at directly controlling costs, such as mail-order pharmacy, "haven't worked," Johnson maintained. "They'll still be around, they'll be modified and so forth, but I think that what is really going to work, is going to get the results, is a sound drug utilization review system that really focuses on the outcomes that must be achieved if we're going to really contain costs and provide effective quality care." Asked whether DUR will be a surrogate for restrictive drug formularies, Johnson replied: "I don't think so." He explained that payers look to DUR "to assure that the patient is indeed receiving the proper medication, that the patient is being monitored properly, and the outcomes that are expected are achieved. I think this can be done absent a formulary if pharmacists are given the opportunity to assume a responsible role in that patient care." General Motors Health Care Plans Director Beach Hall agreed that a managed care approach "is the direction that most of the American third-party payers, certainly the self-insured plans, are going." The goal, he said is to "get a better handle on the entire delivery system.," Hall added that "we expect to see our utilization of pharmacy go up as more and more people move from an inpatient setting to an outpatient setting; however, I would have to say we're a little astonished at the rate our payment per [prescription] has gone up." Hall indicated mail-order pharmacy has stabilized at about 15% of GM's pharmacy expenditures, with the advantage being convenience more than savings. Mail order is "not particularly growing," Hall reported. "It's very popular with retirees" who frequently indicate "they get as good a service out of mail-order as they do out of a retail pharmacy where they can't really get to the pharmacist." Hall reported that mail-order for GM "is, at best, a breakeven operation. For the retirees, it saves them money, gives them some conveniences. I don't regard mail-order as the answer to any of our health care costs." While agreeing that DUR will have an important role in monitoring the entire episode of care and its outcome, the panel noted there are gaps in the data currently available. For example, American Drug Stores VP-Pharmacy Operations Donald Hoscheit and Purdue University Associate Professor Stephen Schondelmeyer pointed out that hospital and physician care databases have not been integrated with pharmacy databases. PCS' Johnson said there is growing recognition of "the fact that that data has got to be comingled." He said PCS is beginning to hear from hospital and physician managed care organizations that want to link with the company's pharmacy data. PCS currently has 52,000 pharmacies online nationwide with its Recap systems. A study of the retail marketplace in progress for NACDS by the research and consulting firm Health Economics Research forecasts that soon the "majority" of retail prescriptions will be paid directly by third-party payers. The study found that third-party insurers directly reimbursed 42% of scripts dispensed by retail pharmacies in 1989. The study concludes that the implication from this data is that successful retailers will be those that can negotiate a variety of third- party payer contracts, bill efficiently and review utilization at the point of purchase. An April 29 convention session focused on retailer alliances with manufacturers/suppliers, particularly in using new information technologies such as electronic data interchange. A separate study for NACDS by Management Horizons indicates that "manufacturers are generally ready to enter into information technology-based alliances while the nation's retailers as a whole have been less likely to do so." According to a video presentation that included preliminary findings from the study, "almost every manufacturer sees purchase orders as the simple first step to beginning computer-to-computer information exchange that will benefit both parties. Invoices are another area where manufacturers are ready as well as computerized funds transfer, shipping and promotional information. NACDS research has found that retailers are reluctant to move more aggressively into computer-to-computer information alliances in many cases because short-term investments must be made in systems and organization change." The presentation did not discuss specific product categories. NACDS President and CEO Ronald Ziegler said at a subsequent press briefing that the study, to be completed within a few months, will "evolve into a working tool," such as a software package, for chains, particularly smaller and medium sized businesses, to assess the benefits of investments in information technologies.
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