Financial Effect of a Drug Distribution Model Change on a Health System

Abstract

Drug manufacturers change distribution models based on patient safety and product integrity needs. These model changes can limit health-system access to medications, and the financial impact on health systems can be significant. The primary aim of this study was to determine the health-system financial impact of a manufacturer's change from open to limited distribution for bevacizumab (Avastin), rituximab (Rituxan), and trastuzumab (Herceptin). The secondary aim was to identify opportunities to shift administration to outpatient settings to support formulary change. To assess the financial impact on the health system, the cost minus discount was applied to total drug expenditure during a 1-year period after the distribution model change. The opportunity analysis was conducted for three institutions within the health system through chart review of each inpatient administration. Opportunity cost was the sum of the inpatient administration cost and outpatient administration margin. The total drug expenditure for the study period was $26 427 263. By applying the cost minus discount, the financial effect of the distribution model change was $1 393 606. A total of 387 administrations were determined to be opportunities to be shifted to the outpatient setting. During the study period, the total opportunity cost was $1 766 049. Drug expenditure increased for the health system due to the drug distribution model change and loss of cost minus discount. The opportunity cost of shifting inpatient administrations could offset the increase in expenditure. It is recommended to restrict bevacizumab, rituximab, and trastuzumab through Pharmacy & Therapeutics Committees to outpatient use where clinically appropriate.

Inclusion in limited distribution drug network reduces time to dalfampridine access in patients with multiple sclerosis at a health-system specialty pharmacy

“…14,24 Conversely, health systems have voiced concerns regarding the negative effect of LDNs on patients, providers, and health systems. 14,15,24,25 LDNs introduce a potential to fragment care and, as demonstrated by our results, may prolong time to medication access for patients. Pharmacists at integrated HSSPs are well positioned to coordinate care, streamline medication access, and facilitate communication among clinic providers, manufacturers, insurers, and patients.…”

Specialty pharmacist integration into an outpatient neurology clinic improves pimavanserin access

“…Motivating factors for a manufacturer-implemented LDN include ensuring safe use and reducing internal costs. [8][9][10] However, this model has several implications for patients, providers, and health care institutions. Literature 8 highlights the potential for LDNs to cause fragmentation of care and increase institutions' costs.…”

Exploring healthcare providers’ experiences with specialty medication and limited distribution networks

“…This qualitative data corroborates previous findings showing that access time is significantly longer for specialty medications with LDNs compared with non-limited distribution, and that medication access time is reduced after the IHSSP is included in the LDN for multiple sclerosis, hematology, and neurology clinics [ 10 – 12 ]. Conversely, when a LDN that excluded the IHSSP was imposed, one health system found delays in drug acquisition and more variable and unreliable medication delivery times [ 2 ].…”

“…Healthcare providers rate higher satisfaction with IHSSPs than external [ 13 ]. Moreover, health systems have voiced concerns regarding negative impact of LDNs, including fragmented patient care, higher clinic burden, and delayed patient access to therapy [ 1 , 2 , 14 ]. However, no known study has investigated healthcare providers’ experiences with specialty medications in LDNs.…”

“…Some drug manufacturers employ limited distribution networks (LDNs), mandating that the drug can only be dispensed by select specialty pharmacies included in the network. LDNs can help manufacturers ensure product integrity and monitor its handling and administration, but also can benefit the manufacturer financially and may impede or delay medication access [1][2][3]. Patient access to specialty medications can be delayed by restrictions in insurance coverage or LDN requirements, which may create time-consuming and burdensome barriers for clinic staff to navigate [4,5].…”