Leveraging NADAC to Steer Drug Formularies in Resource-Limited Clinics

Abstract

Objectives: Free medical clinics provide healthcare to populations with limited options for insurance coverage and are thus key medical safety nets. Such clinics have limited operating budgets due in part to their lack of revenue streams through insurance reimbursements. Thus, pharmaceutical acquisitions can impose significant financial burdens in light of rising and volatile prices [1]. The goal of this study was to provide clinics with a real-time comparison of national retail pharmacy acquisition prices against clinic purchasing prices to determine potentially overpriced drugs. Methods: Historical ledger data from the East Harlem Health Outreach Program (EHHOP) at Mount Sinai was used to determine the clinic's average price and volatility for specific drugs over time. Average prices were cross-referenced against the publicly available National Average Drug Acquisition Cost (NADAC) database, which outlines the average acquisition cost of drugs by retail pharmacies across the United States. Results: This analysis demonstrated that 36% (16/45) of EHHOP drug price averages were significantly different than relative NADAC values, with 9% (4/45) more expensive and 27% (12/45) cheaper. Price volatility between EHHOP and NADAC acquisition prices varied. Assuming the NADAC benchmark for significantly more expensive EHHOP purchases resulted in potential savings of $4,424 (6% of budget) over the projected period. Conclusions: Clinic drug acquisition price comparison to NADAC database prices serves as an effective benchmark for cost reduction. In order to implement change after expensive drug identification, we developed a decision-tree model that outlines several steps that can reduce drug expenditures. Using this process can potentially save financial resources for medical clinics.