In the third quarter of 2014, PP&P polled a random, nationwide sampling of health system pharmacy directors on the factors impacting their generic purchasing decisions. We asked about the process for selecting a generic manufacturer, drivers of off-contract purchasing, satisfaction with negotiated prices, processes for adding biosimilars to formulary, current budget support, and future spending projections. We received a total of 356 responses, yielding a confidence interval of 5.03 (95% +/-5.03).
The survey results underscore pharmacy’s continuing concern with ensuring a reliable supply of generic products. In fact, the vendor’s ability to deliver a consistent supply and the availability of product in bar coded unit dose now rival price as key purchasing considerations for many pharmacy directors. Shortages remain a challenge, although the number of products on shortage has diminished and more facilities have improved their internal processes for managing this ongoing problem. Nonetheless, shortages continue to require increases in drug expenditures and pharmacy workloads.
Pharmacies remain more likely to conduct the majority of their generic purchasing through their wholesaler rather than their GPO, despite the high marks GPOs receive for their cost containment strategies. To leverage the aggregate purchasing power of their GPOs, most pharmacies endeavor to avoid off-contract purchasing, which generally occurs in response to a shortage or a product’s lack of availability in unit dose.
Looking forward, specialty medications are a serious and growing concern for pharmacy as their high costs will continue to pressure drug budgets. Health systems with a certified specialty pharmacy remain in the minority, but we will watch to see if this approach begins to trend upward. Pharmacy’s interest in biosimilars also is increasing, although there are persistent concerns about how to develop an appropriate formulary review process for this new class of product. While drug budgets saw relatively modest increases this year, driven largely by efforts to control generic costs, the vast majority of health systems expect both their generic and overall drug spending to increase over the next few years.
GPOs vs Wholesalers
Growth in generic spending is projected to closely match the growth of overall drug spending and the vast majority of health systems are expected to benefit from increased spending in both areas. There are few complaints about current generic budget allocations—most facilities find their budgets adequate—although it is important to note that just a small minority deem their generic budget well-funded.
Gray Market Purchasing
The number of facilities relying on the gray market to source medications continues to decline, particularly in the largest facilities, which are the most likely to have established written policies forbidding utilization of medications with an uncertain pedigree. Even those facilities without an official policy banning gray market purchases are very unlikely to source drugs in this manner. This diminishing interest in the gray market mirrors the decline in the number of products on shortage and a parallel increase in facilities’ ability to manage those shortages.
Click here to download the Gray Market Purchasing Survey Results.
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