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Continue LogoutDrug spending has grown steadily in recent years. The average total drug spending per hospital admission increased 18.5% between fiscal years 2015 and 2017. These costs can be especially difficult to manage when hospitals and physician practices within the same health system have different formularies and prescribing practices, which leads to inefficient purchasing and inconsistent clinical care.
Mayo Clinic is a nonprofit academic medical center based in Rochester, Minnesota. Mayo Clinic operates in five states and cares for more than one million people a year, with $14 billion in annual revenues and approximately 65,000 employees.
Mayo Clinic’s unified formulary has been around for more than 15 years, though it was spurred on by many of the same factors that organizations face today. The formulary is developed by a system-wide committee that is overseen by supply chain and finance leaders and is ultimately accountable to the dean of clinical practice and chief pharmacy officer. The committee is composed of 12 task forces that focus on different specialty areas.
Mayo Clinic’s overall annual drug spend is on average over $1 billion. The formulary’s impact is an estimated $50 million saved on medications annually. While the savings are significant, it is insufficient to completely stop the rise in overall drug spend. Still, the formulary has benefits beyond cost savings, including improving care quality and continuity.
In response to challenges with drug purchasing and care variation, Mayo Clinic’s supply chain department led a multi-stakeholder effort to create a single, systemwide formulary.
By implementing the two steps below, Mayo Clinic found that they could generate drug savings and better manage patient care.
Mayo Clinic’s formulary is developed by a system-wide committee. The Mayo Clinic Pharmaceutical Formulary Committee is primarily a policy-making body, composed of all Mayo Clinic chief pharmacy officers and the chairs of all pharmacy and therapeutics (P&T) committees. The group meets approximately three to four times per year and is overseen by supply chain and finance. In addition, the committee is accountable to the dean of clinical practice and the chief pharmacy officer.
The committee makes some formulary decisions for products that are used across many specialties (for example, immune globulin), but most formulary decisions are left to 12 specialized task forces that focus on formulary decisions for different specialty areas.
Each of the 12 specialty task forces meet monthly or as needed to make formulary decisions for drugs utilized by their specific clinical specialty. The task force membership is dynamic, which allows leaders to swap out clinical experts based on the expertise needed to evaluate each new set of medications.
For a binding vote, a quorum of three physicians (at least one from a non-Rochester site) and one pharmacist must be met. Any clinician with a conflict of interest, such as direct remuneration and/or research funding, does not count towards quorum. See below for a listing of the specialty task force members.
The Pharmaceutical Formulary Committee creates prescribing guidance to ensure that there is one set of rules across the hospitals and clinics. No safe drugs are excluded from the formulary, though guidance is given for appropriate use.
For each drug, the formulary does the following:
Aligns with health plan
Each drug is given a tier that corresponds with its copay and coinsurance levels.
Embeds care pathways
Dynamic prescribing algorithms are used to ensure appropriate and cost-effective care.
Allows flexibility for specialty variation
Guidance for each drug varies by specialty and site of care.
Mayo Clinic has seen several cost and quality benefits since implementing their unified formulary and specialty task forces. While the system is still experiencing annual increases in drug spend of around 8% to 12%, the formulary generates an estimated $50 million in savings. Other benefits of the system-wide formulary include:
By elevating formulary decisions to the system level, Mayo Clinic was able to standardize care, create strong prescribing guidance, and reduce drug spend.
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