How Pharmacy Management Systems Support Generic Product Opportunities

Post by QuicksortRx on November 29, 2023
How Pharmacy Management Systems Support Generic Product Opportunities

Generic drugs can represent a significant financial savings opportunity for hospitals. In fact, one could argue that brand-to-generic switching is the oldest cost-savings tactic in medication purchasing and a key component of any pharmacy business strategy 

Changing from brand to generic sounds easy on the surface. A drug goes off patent and soon there are one or more generics that are therapeutically equivalent and available at a lower price. But there are many potential challenges here in areas including patient safety, availability, purchasing compliance, and, perhaps surprisingly, cost. 

That's why it is imperative for hospital pharmacies to not only have the ability to recognize when those opportunities exist and capitalize on them when appropriate, but to also understand what is required to properly operationalize switching from brand to generic.  

Pharmacy management systems can play a key role in helping hospitals fully realize generic product opportunities, and we'll explain how next. Then we'll identify potential risks and tripping points hospitals and their pharmacies must understand when pursuing brand-to-generic switching as a pharmacy business strategy. By factoring in these risks, decisions around switching to generics can have positive impacts on the bottom line without negatively affecting other areas of a hospital's operations. 

5 Ways Pharmacy Management Systems Support More Intelligent Generic Purchasing

Here are five of the ways the right pharmacy management technology can help hospitals achieve success with generic drug opportunities.   

1. Identifying and ranking generic drug savings opportunities 

Pharmacy management systems capture a hospital pharmacy's existing medication purchasing data, analyze the purchases, then reflect it back to the pharmacy to reveal generic savings opportunities that exist.  

For example, if a hospital was looking at its generic product swap opportunities, the pharmacy management solution will evaluate the hospital pharmacy's current purchasing habits/processes associated with its brand-name medications. The system will then calculate the savings opportunity that exists if the pharmacy changed from a brand to a generic and identify the reason(s) why the savings exist. The reasons for savings can vary from hospital to hospital. For example, the generic could have a better 340B price. This could be appealing to a 340B-covered entity with a robust outpatient program, whereas another 340B-covered entity with a very limited outpatient footprint may not see the same level of savings. 

Pharmacy management systems supported by pharmacy purchasing experts with a dedication to customer service can also help hospital pharmacies identify savings opportunities. Even if the system does not indicate that a generic is available at an attractive price, the pharmacy management technology company's personnel may know about one or more customers that have successfully engaged a generic manufacturer to secure a better price. With this information, the personnel can collaborate with the hospital pharmacy to see if a similar contract agreement is available and worth pursuing. 

2. 340B generic opportunities  

From a 340B perspective, pharmacy management systems can expose deficits in existing generic drug purchasing that might happen within a hospital system. Oftentimes, a deficit can be small or associated with low volume that can be easily overlooked.  

However, using pharmacy management technology, this deficit data can be displayed over time, thus revealing an unfavorable trend and highlighting an opportunity to save money simply by changing how the generic product is managed from a 340B perspective. For example, a hospital pharmacy has been purchasing a common generic with the best 340B price in its class for a year. However, the hospital's electronic health record (EHR) was not updated when the pharmacy switched to the generic over a year ago.  

This oversight commonly results in WAC purchases. The difference between the 340B price and WAC price may only be a dollar per unit. But if 10,000 units are purchased in a quarter, this becomes a $40,000 annual savings opportunity by simply updating the EHR settings.  

3. GPO compliance

Group purchasing organization (GPO) compliance is an important consideration when considering whether to switch from a brand to generic or making any other product swap. Pharmacy management systems should have the capability to display the products a hospital pharmacy could switch to and whether the hospital should exercise caution because the product currently being purchased — and under consideration for a change — might be the contracted GPO product.  

The pharmacy management solution should recognize those GPO contracts, display how much savings could be achieved with a switch, and clearly state the hospital might experience a dip in GPO compliance percentage as a result. In some instances, changing from a brand to a generic or changing from a generic to another generic may lead to such significant savings that it's worthwhile to take the GPO compliance percentage hit. In other instances, the percentage decline may not be worth the savings. 

4. Sticking with or switching back to brand  

Sometimes brand medications aren't more expensive than their generics. We see this often when a drug has been off patent for an extended period, but the manufacturer still produces it.  

Consider a brand medication with four generics all readily available in the marketplace. When you look at blended pricing, the generics may appear vastly superior in their price points. However, the 340B, GPO, or wholesale acquisition cost (WAC) price for the brand medication may be quite attractive.  

Pharmacy management systems should empower hospitals to easily see those opportunities when they arise — to know that, based on how the pharmacy has been purchasing drugs in the class, if it goes back to brand, it will save money as long as that price point and purchasing pattern remains static. This ability further points to the value of pharmacy management technology that enables pharmacy buyers to be nimble and jump on cost savings opportunities when they arise, even if they might only be worthwhile for a short period (e.g., one quarter). Being able to assess savings, pivot quickly, and, when the price point goes back up, reassess the best generic options, is a valuable pharmacy management strategy 

5. Manage and measure generic product initiatives 

As with any project, you should manage and measure what happens after you switch from a brand to generic or undertake any other generic product opportunities. This is another feature of the right pharmacy management system. The technology will capture the intervention and then determine over time whether the intervention was successful and its level of success.  

Success can be measured by the amount of money saved. It can also be measured by savings that were missed for one reason another, such as when the decision to make a switch is not properly conveyed to or misunderstood by a hospital's pharmacy buyers, so the drug selection process is not updated appropriately. 

These pharmacy management issues can be captured and corrected, but only if you have a detailed view of your hospital's purchasing data. This capability takes on increased importance for organizations with multiple pharmacy locations and numerous accounts. It's not possible for pharmacy management professionals to check every intervention on an account unless they have a solution that will aggregate and analyze their purchasing data and reflect it back in a meaningful way. 

Key Considerations for Generic Product Opportunities

When you're weighing whether to make a switch to a generic drug, there are important matters to consider before proceeding that may negate any potential savings.  

Patient safety. Switching to a generic can introduce potential patient safety risks because of visual differences between the brand and generic. Even in the modern-day pharmaceutical market, there are still look-alike, sound-alike (LASA) medications. While the generic may look different from the brand, it may look very similar in size, shape, and color to another, completely different medication.  

Any drug switches need to be communicated clearly and in advance to all potential stakeholders, so they know the change is happening and understand the reasons why. Getting your clinicians on board is key, and not just for safety reasons. If you start making unilateral changes, you're likely to get significant pushback, especially when the change affects a sensitive department like the operating room where safety measures, such as barcode scanning, may not be available.  

Preparation, storage, and other differences. Just because a generic medication is listed as therapeutically equivalent to the brand medication does not mean the generic is exactly the same as the brand. The brand may already be in solution, while the generic could be in a powder form. That's going to require an operational impact assessment due to the additional step in the preparation of the drug.  

In addition, the excipients and/or preservatives may be different. It is important to be aware of the subtle nuances that can translate into operational issues. For example, the brand name medication may not require refrigeration while the generics within the class may need to be stored in a refrigerator. While there may be a cost savings associated with moving to the generic, there are storage and distribution strategy costs that could outweigh the per unit savings.  

Lastly, all those factors need to be evaluated clinically to ensure you are not potentially putting somebody at risk for the sake of cost savings. 

Availability. Before you proceed with a switch, determine that there is enough of the generic drug in-channel. In other words, assess the current availability of the generic and review any historical supply issues prior to pivoting from the brand to generic (or from one generic to another). Otherwise, making the switch may end up leading to your organization needing to address yet another shortage issue in the near future.  

Compliance. We already talked about GPO compliance, but that's not the only pharmacy management compliance issue to focus on when entering a new generic market. 340B compliance can come into play here. As you move from one NDC to another, all under the auspices of trying to save money, you need a nimble infrastructure within your hospital, so your IT team must understand how and when to pivot on some of the charging schemas. You need to make sure you are charging your patients appropriately for the medications they're being administered.  
Other compliance issues to keep in mind include the Drug Supply Chain Security Act (DSCSA), which is currently scheduled to take effect November 2024, and Drug Enforcement Administration (DEA) rules when you are considering changes involving a controlled substance. 

Make Smart Generic Decisions With QuicksortRx, the Leading Pharmacy Management System

Hospitals looking to make timelier and data-driven generic drug purchasing decisions are increasingly turning to QuicksortRx. The QuicksortRx pharmacy management system analyzes everything a hospital purchases to find operationally equivalent NDCs to decrease costs and optimize savings. When prices change or new generic alternatives launch, the solution's "Product Change Alerts" show the best course of action.  

In addition, QuicksortRx pharmacist experts meet with hospitals weekly to help clients capitalize on opportunities, including those involving generics, and achieve strategic goals.  

Take advantage of QuicksortRx's offer of a free savings analysis. You'll get a complete picture of your current pharmacy spend, learn about changes you can make immediately that will improve your bottom line, and find out how much money QuicksortRx is likely to save your organization. 

Post by QuicksortRx on November 29, 2023
QuicksortRx provides timely, transparent, and actionable guidance to help health systems make better pharmacy procurement decisions.