This article is sponsored by SRX. In this Voices interview, Skilled Nursing News sits down with SRX Senior Vice President of Business Development Paula Agoglia to get her take on all things pharmacy: how skilled nursing facilities can use technology to reduce their pharmacy spend, the top three areas that operators should look for in a pharmacy contract, and just how much they can save through technology, automation, and the guidance of the right partner.
Skilled Nursing News: Give us some background on SRX and your role at the company.
Paula Agoglia: I’m the Senior Vice President of Business Development at SRX. I am a registered pharmacist. I have over 20 years of experience in long-term care pharmacy. My interest and my focus has always been on analyzing and advising on all aspects of pharmacy spend in a skilled nursing facility to help lower that cost.
For years, I’ve seen facility administrators, directors of nurses, as well as regional directors take on the burden of trying to manage pharmacy spend, attempting to check their bills and enforce formularies. These are all nearly impossible tasks to accomplish successfully without automating the process, and without using technology developed specifically to do this.
That’s why I joined SRX. With our technology platform, we are able to automate the process, take control of pharmacy spend, and help lower net cost. When you factor in rebates and cost savings that come when we put programs and rules in place, our facilities see the results and the savings. In rebates alone, our clients see an average savings of $1,500 to $2,000 per month per facility, and another 10% to 20% average savings on overall pharmacy costs. That can add up to significant dollars.
How would you characterize the pharmacy landscape for skilled nursing operators right now?
Agoglia: Pharmacy continues to be one of the largest expenses for nursing facilities. It’s been that way for years. There’s intense focus on controlling costs without, of course, sacrificing resident care. Each facility is unique, so choosing the right pharmacy partners, integrating all the data and information, and helping evaluate the spend is very important, and very challenging as well.
Operators are beginning to look at pharmacy spend from various angles and are realizing that having insight and control helps them take charge of this spend. It’s important to know where their dollars are being spent and how they can put policies in place that can help reduce the cost. I think what clients are surprised to see is that there are ways to reduce that spend that they really haven’t focused on before.
Going along with that, what would you say are the top challenges your customers are facing, and how is SRX helping them address those challenges?
Agoglia: Facilities face a greater set of challenges now than ever before. They’re caring for residents with a higher acuity. Also, with the current changes in the payment model, they’re being asked to do more with less. That has become, I think, the top challenge. Operators are always looking for ways to reduce costs, and they must find ways to reduce costs in order to survive. Their first approach is usually reaching out to vendors and requesting additional price discounts.
While it’s important to lay the groundwork for a terrific contract, negotiating a couple of extra discount points only addresses a small piece when it comes to pharmacy. By using a more holistic approach to cost control, we are able to have a much greater impact on overall spend. Again, this is where we feel we add most value, by bringing to the attention of operators all the other options — in addition to price — that can help significantly reduce costs.
What are the top three areas that operators should look for in a pharmacy contract?
Agoglia: Pharmacy pricing is extremely complicated. There are so many variables that factor into pricing. There are different pricing schedules for brands and for generics — both single-source generics and multi-source generics. There’s different pricing for IVs, for over-the-counters, for compounds. The pricing schedule is also based on different benchmarks. There’s AWP, which is Average Wholesale Price; there’s WAC, Wholesale Acquisition Cost; there’s MAC, Maximum Allowable Cost; and NADAC, National Average Drug Acquisition Costs. We see all these benchmarks being used.
We also see pharmacy acquisition costs being used. There’s fee-for-service contracts, there are per diem rate contracts — and we see true-ups that need to be considered.
How does an operator know which pricing schedule is going to calculate to the lowest cost? It’s basically a guess. It’s next to impossible to determine this manually, without tools and technology that can automate it. Again, automation is key. Being able to take a facility’s utilization and run it through a different pricing option to see what the final cost is, that’s really the only way to determine the best option and the best pricing schedule in a contract.
They must express to you a great deal of relief and gratitude as you guide them through this.
Agoglia: Absolutely. It’s nice to have someone who is working with you who can actually take this out of your hands, and provide you with concrete information, as far as what your bill will look like, so that you’re confident that you’re choosing the best possible contract.
What are some of the different types of formulary management and how do they work?
Agoglia: It’s important to implement the formulary and to keep it updated. That’s fairly simple to do. The difficult part is managing and adhering to the formulary. Most facilities that we talk to, when we ask them, “Do you have formulary in place?” — the answer is usually yes. But when we look at the medication utilization, it doesn’t show that there’s any compliance. You need to choose the right medications for a therapeutic interchange program and launch the program, but maintaining it is just as important and really requires constant attention.
We’re hearing more about biosimilars in the market. How do they compare to the brands, and how are they different from generics?
Agoglia: In past years, we’ve seen biosimilars only in Europe, but they’re now being approved here in the U.S. A biosimilar product is approved based on data that demonstrates that the medication is highly similar to an already FDA-approved product, and it would have no clinically meaningful difference in safety or in effectiveness. Generics are actually copies of the synthetic drug, while biosimilars are drugs that are manufactured from living organisms, so they’re much more complex and they’re very difficult to replicate.
Since the FDA requires that biosimilars are similar but not identical to existing biological medications, what we see as the main benefit or drive in the use of the biosimilars is the reduced cost. They’re much less costly than the brand. In the past, for generic drugs, states have regulated and mandated that if a generic is available, it must be substituted for the brand name, unless the prescriber indicates, “Do Not Substitute” or ”Dispense as Written.” Now we’re looking to start the same process with biosimilars.
What are some of the other ways that facilities can manage their pharmacy spend?
Agoglia: In addition to discounts and formulary management, thankfully, there are several other key areas of focus when you’re looking to reduce pharmacy spend. First, it is important to check for payer source discrepancies so that the facility is not paying for medication that should have been billed to a third party. It’s also important to check for any missed split bill opportunities. Making sure that the facility is not paying for medications that were administered after a resident comes off a Part A stay. Making sure that all returnable medications are collected for return and sent to the pharmacy for credit, and following through to make sure that those credits are applied, is very important.
Reducing waste also results in significant savings. Facilities need to be able to identify waste so they can limit it by putting rules in place that address quantity limits, package size and days supply. A facility should also be optimizing savings and reducing that cost through pharmaceutical rebates. This is often overlooked, and therefore there are significant missed opportunities for substantial savings.
What do operators need to know about how they can capture and maximize their eligible rebates?
Agoglia: Working with reputable companies that have the ability to identify all of the medication that’s eligible for manufacturer rebates is important. That includes the ability to break apart ingredients in IV’s and in other compounded medications. It’s extremely important for maximizing savings.
Operators should also look for rebate guarantees that include timely submissions of claims and that guarantee the timely delivery of rebate payments.
Compliance is also very important. You want to rest easy knowing that there’s transparency and that what is being submitted is compliant with regulations. Operators really need to work with experts that know how to take full control of the pharmacy spend and that can deliver real results.
Editor’s note: This interview has been edited for length and clarity.
SRX is a data-driven technology platform for skilled nursing and long-term care facilities. Their technology automates all areas related to pharmacy spend, including rebates, prescription costs, and reconciliation and reporting. Learn more at SRX-Tech.com
The Voices series is a sponsored content program featuring leading executives discussing trends, topics, and more shaping their industry in a question-and-answer format. For more information on Voices, please contact [email protected]
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