Drug expenditures can be contained

13 years' experience of a large health maintenance organization (HMO) in Israel

Abstract

Background

Drug expenditure has been growing at an accelerated rate in Western countries with recent annual change of 2-10%. The Maccabi Health Services (MHS), a large health maintenance organization in Israel has implemented a “smart policy” that includes a wide range of steps aimed at reducing non-essential drug costs while maintaining maximum quality of health services.

Methods: We evaluated the contribution of the implemented methods on the annual drug expenditure values from 2007 to 2019. The results were standardized to the "Israeli Health value index" of 2019 and calculated per insured per MHS member. (detail smart methods and statistics). The main steps were selecting only one generic, restricting expensive drug by pre-authorization .

Results

Implemented policy included The rate of increase in drugs expenditures (2007 to 2020) per year was approximately 0.4% (x).

Conclusions

A “smart comprehensive cost-containing policy” successfully control the expenditures of healthcare services/ organizations that operate their own formularies of drugs.

Background

Healthcare costs comprise a significant share of the global expenditures of countries, as well as of medical insurance companies, hospitals and other medical/ healthcare organizations.

The annual Health expenditure in Israel is about 65 Billion.

These expenditures include the cost of medicines (around 20%), which represent a significant share of the budgets of health maintenance organizations (HMO) and insurance companies. The HMO get its budget from the government according to The National Health law from 1995.

Countries and organizations whose budgets are limited must be more efficient in providing new drugs and medical technologies whose costs cannot be met by budgets that are often not updated in the needed proportion.

Maccabi Health Services (MHS established in 1940), the second largest health organization in Israel, currently insures about 2.5 million members. The average growth in the number of new HMS members is 3.2-3.7% per year.

MHS has limited resources directed towards medication expenditure which included annual updated increase from the Israeli Ministry of Health directed to support inclusion of new medications and technologies and supply them to members per National Health Bosket law.

The financial participation of the MHS members is a very small fraction of the actual costs (around 30% of the expenditures).

Until 1995 the HMO was private and excepted only selected members) health and rich) a later on because of the National Health Law, it was forced to except every Israeli citizen with no conditions.

That’s caused a budget crisis that happened in the MHS in 2001, expenses for health services especially drugs exceeded the first time in many years. In response, the MHS management began to implement “smart steps” for optimal use of medical equipment and supplies, especially that of drugs The management of the NHS decided to plan steps that will cost contain the growth in the drug expenditures, while keeping the high level of quality in the services.

In our previous article (our article), we had discussed the trends in drug usage at MHS according to pharmacologic classes (statins' Ace inhibitors' PPI etc.). The objective of the current work was to evaluate the impact of the steps implemented in the NHS to cost contain the drugs starting from 2001 and later.

The first step was to map the drugs dispensed for the HMO members into main 3 categories:

a. Very expensive drugs that cost annually more than 10000ISH per patient given to relatively small groups of patients.

b. relatively expensive drugs that cost annually 1000-10000 ISH per patient in comparison to other drugs in same therapeutical groups.

c. non-expensive drugs.

The implementation of the steps was planned by a team that comprised with: pharmacists, physicians, computer person.

The steps that were implemented to achieve drugs expenditure containment were in main three arms as followed:

1. Activities regarding the physicians

choosing "a drug of choice" – we selected in selected pharmacologic groups, such as: calcium channel blockers, ACE inhibitors, statins, protein pump inhibitors, etc. Those treatments are chronic drugs, and "same group" agents are proposed if they have similar efficacy, safety and ease of use for the patient. The table is displayed in the physician's computer while he/she is selecting a drug to a naive patient, from the most "preferred" drug to the one that was not prefer by the NHS, requesting the "preferred" alternatives.
A-priori supplying a single generic alternative as decided by the HMO formulary was introduced to patients who experienced either reduced effectiveness or adverse events (including intolerance) were entitled to receive the original drug or a “non-preferred” generic alternative (defined as more expensive substitute).
Providing "specialist's" medicines was initiated for the purpose of quality control as well as for cost containment. Some medicines were defined as "specialist's" drugs, and a recommendation from a suitable specialist was required (e.g., oncologist for oncology agents, pulmonologist for combined inhalers) in order to prescribe them for naïve patients. This step avoided the misdiagnosis of conditions for which the general practitioner is not an expert, and identified the prescription of medications indicated for certain conditions according to most updated guidelines.
Managing “out-of-sequence” authorization recognized that there is a preferred sequence of the provision of drugs in some medical conditions. For instance, "first-line” drugs are intended to be prescribed only after the completion of treatment, after which the patient will be entitled to receive "second-line” drugs.
Pre-Authorization center – It authorize very expensive drugs prescribe by the physicians Applications for approval of a change in sequence for a new patient are entered into the physician's recommendations section on an online system that forwards the requests to a national pre-authorization center. There, pharmacists, physicians and clinical pharmacologists consider and approve or reject the applications according to criteria defined by the HMO specialists. This procedure saved around 300 million shekels per year.
Applications for approval of a change in sequence for a new patient are entered into the physician's recommendations section on an online system that forwards the requests to a national pre-authorization center. There, pharmacists, physicians and clinical pharmacologists consider and approve or reject the applications according to criteria defined by the HMO specialists. This procedure saved around 300 million shekels per year.
Implementing computerized decision support systems made it possible to alert for drug-to-drug interactions or inappropriate dosing. This capability prevents adverse drug events and reduces costs by optimizing the drugs combination to the patient by preventing worsening the patient's condition and preventing hospitalizations.
Limiting the duration of approval of hematologic/oncologic drugs was especially important for a disease that is characterized by a relatively rapid progression. The pre–authorization center limits the approval to a specific period of time according to the usual follow-up interval specified in clinical guidelines. Later on, the patients receive an extension of the authorization according to the results of their disease status
Analyzing physicians’ prescribing preferences became part of the control of a given physician's prescribing profile. and it was done by comparing it to those of colleagues in the same specialty. The results are periodically made available to each physician. This is intended to motivate the physicians not to be at the top of the list. The algorithm calculates the expenses accrued by a given physician by prescribing "preferred drugs", and the total is divided by the number of patients that started treatment with the designated drug.
Establishing an expert “Exceptions Committee” was part of the goal to expand the range of treatments to be included in the health basket and to address the management of patients for whom no drug solution could be found in the National Health Basket and MHS formulary. For each applying patient, the committee discusses a wide range of aspects, such as the evidence supporting the effectiveness of a non-included drug for the specific condition, the treatment and collateral costs, the availability of alternatives that can be offered as well as alternatives with which the patients experienced treatment failure, economic aspects and more. This pathway enables the individualization of additional treatment not mandatory by law for the benefit of patients with rare and/or severe conditions without wide HMO use.
Consulting Clinical Pharmacists (pharmacists with an MA or PhD degree who specialize in consulting on issues pertaining to therapeutics) are hired in order to advise physicians about their patients. Pharmacists perform vital clinical analyses of drug treatments in unbalanced patients in order to recommend optimization of the regimen in order to achieve and maintain balance in terms of the clinical goals. Eighteen years of the HMO’s experience has shown that patients with polypharmacy have an average of 2-3 unnecessary medications that require discontinuation or replacement, as well as 2-3 drugs that need to be added to their treatment regimen.
Electronic prescriptions that have a digital signature were implemented in the HMO in 2015. This practice significantly reduced the number of prescriptions that were given to patients who claimed having lost or misplaced theirs. The new system checks that the patient does not already have any valid prescriptions. When the doctor produces a new prescription for the same drug and dose of an existing prescription, the latter is deleted from the system and only the most recent prescription remains in the system. This prevents double and unnecessary drug usage as well as unwanted supply. This step reduced the number of actives prescriptions produced by around 18% of the total needed/
Monitoring of the patient's compliance is by a system that calculates the rate of medication purchases from the total number of prescriptions for a given drug and shows the compliance rate to the prescribing physician according to a “traffic light” code in which red = low, yellow = medium, and green - good. This enables the treating physician to easily identify the compliance level and to discuss the situation with patients defined as having low compliance. A similar interaction takes place at the pharmacy.
Limiting the doses of very expensive drugs authorized by the drug pre-authorization center is implemented into the system as is limiting the recommended dosage. This system monitors the dispensing practices in the pharmacies so that they do not supply more than the maximal authorized dose. It also allows the hospital to achieve better use of the stock of medicines and reduces the amount of waste due to the hospital’s having patients from numerous health funds and other health insurance companies. This method was proven to reduce the volume of waste of oncologic drugs from about 12% of the volume of expenditure on such drugs to about 5%. When it comes to a market of many hundreds of millions and sometimes billions, it becomes a matter of a very significant amount of savings and without additional cost to either the HMO or the hospital.
Prescribing medicines in Israel is limited to those with registered indications. A physician who wants to prescribe a medication for a non-registered indication it needs to submit special documentation which the pre-authorization center can approve or reject.
Containing the expenditure of adding an expensive drug to the HMO formulary is accomplished by sharing the cost with the drug companies.

2. Activity concerning with the pharmacies

Opening MHS's owned chain of pharmacies in order to compete with independent pharmacies and chains.
Payments to private pharmacies- agreements to pay the independent pharmacies as Fee per service of each dispensing "line".
Implementation of an "undercover customer" was required to contend with the small number of service providers who may attempt to defraud the HMO, such as by reporting the dispensing of a drug that was not actually supplied to the members! Covert representatives carry out attempts to "defraud the HMO" at the private pharmacies by trying to substitute products specified on the prescriptions by other products. The contract between the HMO and any pharmacy that is found guilty of such frauds is terminated, thus removing any incentive to commit them. Moreover, the extent of drug dispensations in each pharmacy is compared statistically to previous periods as well as to similar-sized pharmacies, thus further excluding suspicious sales characteristics. Suspected findings undergo intensive investigation.
Limiting the quantities of dispensing became essential because a patient can theoretically go to a number of physicians and receive and accumulate multiple prescriptions for the same medication. Abnormal drug consumption is now detected by computerized vigilance of the members’ purchasing behavior, and further acquisition is blocked at the level of the dispensing pharmacies accordingly.

Agreements with the service's suppliers such as drug companies and hospitals.

Formulating global procurement agreements was carried out in recognition that by its being the second largest HMO in the country, MHS has considerable negotiating power, which affords good procurement agreements with pharmaceutical companies. Specifically, the price is agreed upon between the HMO and the supplier (i.e., the manufacturer or the importer). The supplier sells the drugs to the private pharmacies at the full list price. The pharmacy supplies the product to the HMO members and receives the full list price from the HMO plus a fee for its services. The HMO receives a discount from the supplier according to the quantities that had been supplied to the HMO. This step created a saving of an average of around 50% saving in comparison to the market prices,
Devising consignment arrangements was designated for parenteral oncologic and hamate-oncologic agents that are generally very expensive. They have a short shelf-life after opening an ampule and the required doses that need to be administered at a certain frequency are often not an exact match to the content of the ampoules, leading to potential waste. Accordingly, agreements were made with hospitals and specialist clinics in which the HMO's medical stock is maintained for the treatment of the HMO’s patients. At the end of each month, the amount of payment is returned to the hospitals/clinics according to the quantities administered to the HMO's patients, in addition to an agreed percentage that is defined as "operational loss". Special agreements are made for oncologic and hamate-oncologic drugs. The mismatch between package contents and dosing causes a surplus of wasted drugs and results in high expenditures to the HMO. A hospital, however, can achieve an optimal use of the stock of medicines and reduce the amount of waste because it serves patients who are members of numerous health funds and have other sources of remuneration such as private insurance companies, etc. By using this method for distributing the medications, the volume of waste of oncologic drugs was reduced from about 12% of the volume of expenditure on these drugs to about 5%. In a market of many hundreds of millions and sometimes billions of dollars, this represents highly significant savings and without additional cost to either the HMO or to the hospital. The estimated savings for 2020 was around (7/100*400=28M) 30 million IS.

3. Steps involving the patients

Increasing co-payment was considered for members who are not entitled to receive a the more expensive substitute agent and were unable to bear the costs in full price. This resulted in a net expenditure similar to that for the preferred and cheaper alternative at a lower co-payment.
Providing a "complementary insurance" which is affordable and has a wide coverage is made possible by the HMO’s maintaining a non-profit insurance program with minimal costs for members. It contains a wide variety of drugs that are not included in the national health basket. The percentage of HMO members who are members of that complementary insurance is around 88%. This insurance includes medicines for "serious illnesses" that are dispensed without co-payment, while medicines for non-serious illnesses are dispensed with a deductible that is charged to the members (around 100 euros per month). The complementary program saves to the HMO members around 50% of the premium they have to pay for private insurance companies in order to get the same coverage (a total saving of 10 billion shekels for the members participating in that program).

Material and Methods

We analyzed the database of HMS that it's database has been operational since 1998 and currently includes medical history and medication consumption of 2.4 million individuals. Maccabi has developed a computerized information system fully employed at all levels of the organization.

A nationwide network of over 3500 independent physicians and 150 branches uses its medical practice computer system. The medications are supplied via 120 Pharmacies owned by the HMO as well as 730 independent pharmacies. Computerized patient consultations and prescription records are downloaded daily to a central computer. In addition, the database is automatically updated with every hospitalization, specialist visit, prescription drug purchase, drugs prices and other procedures. The HMO’s member’s drug supplied are stored in the central data base including the date of purchase, quantities. The analysis was performed retrospectively using a large unnamed database and has been approved by the HMO’s ethics committee with a waiver of informed consent. In the present study, we included all drugs supplies to the NHS's member during the years 2007–2019.

The data of annual expenditure on medicines at current prices were retrieved for each year from 2007-2019 in order to evaluate the impact of all the above-mentioned steps on the expenditures on medicines. Those were divided by the average number of standardized members of the HMO each year. “Standardized” is defined by the average drug expenditure divided by the number of standardized insures of each year. The annual expenditure was factorized by the Consumer price index in order to let us compare the data.

The data on the quantities of drugs dispensed to the HMO members were retrieved for the years 2007 to 2020. The annual expenditures were divided into the 5 districts that comprise the HMO. Additional data were analyzed to separate expenditures between the basic formulary and the additional insurance held by 88% of the HMO members in that insurance. The costs of a given medication to the HMO were calculated according to the date it was dispensed. The summary of the expenditures each year were factorized via the price index. The parameters that were calculated were the total drug expenditures (Israeli shekels), the total of the co-payments paid by the HMO members according to the government-approved co-payments plan. The annual net expenditure was calculated by deducting the co-payments from the total cost of the drugs.

The following evaluation were made in order to quantltlfy the results of the different steps in order to contain the raising costs of drugs expenditures:

choosing "a drug of choice" – We investigated the data during the years of 2002-2008 and retrieved the first drug that a patient started a treatment from a therapeutically group.
The results shown that the percentage of patients that started chronic treatment with the "preferred" drugs of choices was around 90%.
A-priori supplying a single generic alternative – we analyzed the data in the years of 2010- 2012 and retrieved for each molecule the quantities of the "preferred" generic and the original brand. We calculated the market share of the generics from the total packages of all items supplied of each dosage form. The rate of most chronic "prefer" drugs was 90-100% of the market share via our NSH. While the rest was the share of patients that received the brad because of clinical considerations. Only in very few drugs we observed bigger market share that was around 80% that were Losec, Lipitor and Fosalan and Seroxate.
Providing "specialist's" medicines – we retrieved the expert that prescribed the initiation of these drugs that were included as "specialist drugs". We calculated the rate of treatments starting via the expert that we decided that is "aloud" to start such treatment which was done according to the ability to determine that indication.
Managing “out-of-sequence” authorization recognized that there is a preferred sequence of the provision of drugs in some medical conditions. For instance, "first-line” drugs are intended to be prescribed only after the completion of treatment, after which the patient will be entitled to receive "second-line” drugs.
Pre-Authorization center- We evaluated the data of the year of 2019 in order to quantify the effect of the pre-authorization. We retrieved the request that were not approved by the pre-authorization center and multiply each drug's request by the average expenditure per one "average" patient on same drug.
Increasing co-payment was considered for members who are not entitled to receive a the more expensive substitute agent and were unable to bear the costs in full price. This resulted in a net expenditure similar to that for the preferred and cheaper alternative at a lower co-payment. We evaluated the use of the drug of the year before the co-payment was elevated and the quantities in the 12 month from the specific date the co-payment was changed/ We calculated the reduction pf quantities supplied the year after the co-payment elevation/
Formulating global procurement agreements was carried out in recognition that by its being the second largest HMO in the country, MHS has considerable negotiating power, which affords good procurement agreements with pharmaceutical companies. Specifically, the price is agreed upon between the HMO and the supplier (i.e., the manufacturer or the importer). The supplier sells the drugs to the private pharmacies at the full list price. The pharmacy supplies the product to the HMO members and receives the full list price from the HMO plus a fee for its services. The HMO receives a discount from the supplier according to the quantities that had been supplied to the HMO.
We calculated the difference between the listed official price and the reduced price that was agreed with all the suppliers and multiplied the quantities of each drug of the year 2019 with the difference in prices. The result was divide by the listed price multiplied by the 2019 quantities minus 1 and multiply by 100 to get percentage.
Q 1-n = the quantities of each drug during 2019
P11- n = the listed official price
P2 1-n = the reduced price agreed with the companies
R- the rate of reduction in the average price of the drugs supplied the NHS – in %
R= (((P1-n x P1-n) x Q1-n / P11-n x Q1) – 1) x100%
want medicine and This step created a saving of an average of around 50% saving in comparison to the market prices,
Implementing computerized decision support systems - It was not possible to calculate the exact result of that move but we had evaluated the efficiency of the alerting system. We have demonstrated that that system "blocked" around 20% of the prescribing detected and alarmed by the system.
Devising consignment arrangements was evaluated as followed:
Q1-n = the quantities of each of oncological / hematological drugs supplied to the treating clinics.
D11-n = the dose of each patient while treated with the total quantities the whole ampules contain (mg).
D21-n = the exact dose that was actually to each patient (mg) price of 1 mg of the drugs administered during the year of 2019.
W1-n = the percent that was agreed between the NHS and the treating clinics as additional percent for each dose given to the patient.
P1-n = the price of each drug.
R- the actual reduction on the medication supplied to the clinics treating the NHS patients.
R= ((P1-n x (D11-n- D21-n) / P1-n x D1-n)- 1) x 100%
By using this method for distributing the medications, the volume of waste of oncologic drugs was reduced from about 12% of the volume of expenditure on these drugs to about 5%. In a market of many hundreds of millions and sometimes billions of dollars, this represents highly significant savings and without additional cost to either the HMO or to the hospital. The estimated savings for 2020 was around (7/100*400=28M) 30 million IS.
Limiting the duration of approval of hematologic/oncologic drugs was especially important for a disease that is characterized by a relatively rapid progression. The pre–authorization center limits the approval to a specific period of time according to the usual follow-up interval specified in clinical guidelines. Later on, the patients receive an extension of the authorization according to the results of their disease status. It was hard to quantities the effect of that step/ In principle we stipulated the approval of the drugs treated patients with fast developing illnesses. For oncologic stage 3-4 degree for 3 months in order to evaluate the efficacy of the treatments. We evaluated the approvals and found that many drug changes were done in the time the approval was expired (in 3 months, 6 months etc.). When we made a trial and gave the approval each 4 months we observed that many treatments where switched at these points (4 months, 8, 12 month) with the same drugs and same patients.
Analyzing physicians’ prescribing preferences became part of the control of a given physician's prescribing profile. and it was done by comparing it to those of colleagues in the same specialty. The results are periodically made available to each physician. This is intended to motivate the physicians not to be at the top of the list. The algorithm calculates the expenses accrued by a given physician by prescribing "preferred drugs", and the total is divided by the number of patients that started treatment with the designated drug. We could not quantify that step.
Providing a "complementary insurance" which is affordable and has a wide coverage is made possible by the HMO’s maintaining a non-profit insurance program with minimal costs for members. It contains a wide variety of drugs that are not included in the national health basket. The percentage of HMO members who are members of that complementary insurance is around 88%. This insurance includes medicines for "serious illnesses" that are dispensed without co-payment, while medicines for non-serious illnesses are dispensed with a deductible that is charged to the members (around 100 euros per month). The complementary program saves to the HMO members around 50% of the premium they have to pay for private insurance companies in order to get the same coverage (a total saving of 10 billion shekels for the members participating in that program). We estimated the payments to private insurance companies in comparison to the payments may to our complementary insurance for all the member that participate in that program. We evaluated the average payments for a private insurance with same coverage in comparison to the complimentary insurance for 12 months for 2.1 million members that pay for the NHS insurance.
Implementation of an "undercover customer" was required to contend with the small number of service providers who may attempt to defraud the HMO, such as by reporting the dispensing of a drug that was not actually supplied to the members! Covert representatives carry out attempts to "defraud the HMO" at the private pharmacies by trying to substitute products specified on the prescriptions by other products. The contract between the HMO and any pharmacy that is found guilty of such frauds is terminated, thus removing any incentive to commit them. Moreover, the extent of drug dispensations in each pharmacy is compared statistically to previous periods as well as to similar-sized pharmacies, thus further excluding suspicious sales characteristics. Suspected findings undergo intensive investigation.
Limiting the quantities of dispensing became essential because a patient can theoretically go to a number of physicians and receive and accumulate multiple prescriptions for the same medication. We dreaming the maximal quantities that can be supplies per time period as much as the highest doses that are acceptable by the EBM literature.
Consulting Clinical Pharmacists (pharmacists with an MA or PhD degree who specialize in consulting on issues pertaining to therapeutics) are hired in order to advise physicians about their patients. Pharmacists perform vital clinical analyses of drug treatments in unbalanced patients in order to recommend optimization of the regimen in order to achieve and maintain balance in terms of the clinical goals. Eighteen years of the HMO’s experience has shown that patients with polypharmacy have an average of 2-3 unnecessary medications that require discontinuation or replacement, as well as 2-3 drugs that need to be added to their treatment regimen. We estimated the advantage of clinical pharmacies advising at hospital set up. We know from our experience that clinical pharmacies discover many errors in physician prescribing habits. We had chosen polypharmacy patients (define as potions that are treated with more than 8 chronic drugs permanently). We collected the data from the year of 2014 for polypharmacy patients and calculated the number of recommendation made by the clinical pharmacies while evaluate 200 polypharmacy patients.
Electronic prescriptions that have a digital signature were implemented in the HMO in 2015. This practice significantly reduced the number of prescriptions that were given to patients who claimed having lost or misplaced theirs. The new system checks that the patient does not already have any valid prescriptions. When the doctor produces a new prescription for the same drug and dose of an existing prescription, the latter is deleted from the system and only the most recent prescription remains in the system. This prevents double and unnecessary drug usage as well as unwanted supply. This step reduced the number of actives prescriptions produced by around 18% of the total needed. The evaluation was done by retrieving the number of medication line prescribed in the year before implementation the electronic prescription and three years after.
Monitoring of the patient's compliance is by a system that calculates the rate of medication purchases from the total number of prescriptions for a given drug and shows the compliance rate to the prescribing physician according to a “traffic light” code in which red = low, yellow = medium, and green - good. This enables the treating physician to easily identify the compliance level and to discuss the situation with patients defined as having low compliance. A similar interaction takes place at the pharmacy. We could not evaluate the real result of that step but we know that about 50% of the patients have a compliance rate of 50% and lower for the drugs they get are prescribed.
Limiting the doses of very expensive drugs authorized by the drug pre-authorization center is implemented into the system as is limiting the recommended dosage. This system monitors the dispensing practices in the pharmacies so that they do not supply more than the maximal authorized dose. It also allows the hospital to achieve better use of the stock of medicines and reduces the amount of waste due to the hospital’s having patients from numerous health funds and other health insurance companies. This method was proven to reduce the volume of waste of oncologic drugs from about 12% of the volume of expenditure on such drugs to about 5%. When it comes to a market of many hundreds of millions and sometimes billions, it becomes a matter of a very significant amount of savings and without additional cost to either the HMO or the hospital. We evaluated that step in the consumption of the FSH / LH drugs supplied to woman trying to get pregnant. We tested the total units on the drugs supplied before the semi nation of the limiting system and 12 moth later on the same numbers of woman treated via same hormones.
Prescribing medicines in Israel is limited to those with registered indications. A physician who wants to prescribe a medication for a non-registered indication it needs to submit special documentation which the pre-authorization center can approve or reject. We could not evaluate that step in a quantitate method but we opened a center for non- registered indications and we get around 100 applications a year. And because many physicians do not want to "waste" time on filling application many requests are saved.
Containing the expenditure of adding an expensive drug to the HMO formulary is accomplished by sharing the cost with the drug companies. We implemented in the year of 2019 Twenty-four risk agreements with the companies including most expensive drugs. As a results of this agreements we save around 138M ISH IS which was 26% of the total expenditures for these drugs that year.
Payments to private pharmacies- agreements to pay the independent pharmacies as Fee per service for each dispensing "line". Before that the pharmacist were paid according as percentage form the price of the dispensed drug.
Opening MHS's owned chain of pharmacies in order to compete with independent pharmacies and chains. Before that the MHO did not have owned pharmacies and because of that it was weak in the negotiation in the payments agreements.

Results

Figure 1 displays the MHS’s drug expenditures from 2007 through 2019.

Fig 1. Expenditure for medications for each of the years.

It can be seen that drug expenditures were elevated by a total of 5% that presents an average of 0.4% per year. The net expenditures grew up by 28% that is an average of 2.3% per year.

Table 1 compares the drug expenditures in the different regions of the NHS supplied in the basic formulary and in the complementary insurance between 2007 and 2019.

It can be seen that the drugs expenditure per standardized NHS member was 1217 IS per year. The maximal expenditures were in 2019 (1280 IS) and it was reduced in 2020 because of the corona effect. The income from co-payment was 570 IS in 2007 and grew up to 434 IS in 2019. The net expenditures (that is the different from the dugs expenditure minus the co-payments received from the patient) was 647 IS in 2007 and grew to 829 IS in 2019.

We calculated the average growth in the drugs expenditures from 2007 to 2019 because 2020 was not a regular year. The expenditures grew by 5% for the period of 12 years (2007-2019) that brings us to an average of 0.4% per year.

A summary of the 21 steps (Methods) taken over the years has led to cost containment of spending on medications for the MHS HMO patients. Figure 1 shows the development of expenditure on medications for a standardized insured member when the expenditure is factorized according to the Israel Health Cost Index for 2020. The results showed that the growth of expenditures increased during the last 13 years by 5.2%, representing an average increase of 0.4% per year. This result is excellent by any scale in developed countries. The growth of the net expenditure, i.e., the expenditure for the purchase of medicines minus the members' co-payments, also increased during the period by approximately 28.1%, representing an average of 2.2% per year.

The results in Table 1 and Figure 1 are expressed as an expense on the revised insure in every year. The expenses are presented at current prices that promote in the cost of health dimension for that year in relation to the first year in which the expenditure on drugs was measured (2007). The results show that the annual regular expenditure for medications borne by a standardized member increased by about 0.2% per year.

The proportion of expenditures between 2007 and 2019 is shown in Table 2. Comparison of the expenditures for medications between the different districts of the HMO for 2007 and 2019 is shown in Table 3. The results show that the expenditure per insured member grew among the different regions within a range of 12.4- 21%. The ratio of the expenditures between the complementary insurance and the basket formulary was determined as being within the range of -28% to +8.6% in the different regions of the HMO.

The results of the evaluation of the steps implemented to reduce the medicine cost were as a followed:

choosing " a drug of choice" – The results show that the percentage of patients that started chronic treatment with the "preferred drugs of choices" was around 90%.
A-priori supplying a single generic alternative –The step of choosing a single generic alternative had reduced the costs of such drugs by 50-90% of the brand drug.
The rate of use of most chronic "prefer" generic chosen by the NHS was 90-100% of the market share via our NSH. While the rest was the share of patients that received the brad because of clinical considerations. Only in very few drugs we observed bigger market share that was around 80% that were Losec, Lipitor and Fosalan and Seroxate. The savings for 2019 was about 1.2 billion IS.
Pre authorization – The rate of rejected of requests during 2019 was 15% of ask the request received The value of such treatments was about 300 Millions IS in 2019.
Increasing co-payment - That step gave a solution to the patient that did not want to receive the "preferred" drug without growth in the dugs expenditures.
Achieving global procurement agreements- This step created a saving of an average of around 8% saving in comparison to the market prices, 240miloons IS in 2019.
Implementing computerized decision support systems made it possible to alert for drug-to-drug interactions or inappropriate dosing. This capability prevents adverse drug events and reduces costs by optimizing the drugs combination to the patient by preventing worsening the patient's condition and preventing hospitalizations. It was not possible to evaluate the result of that move but we had evaluated the efficiency of the alerting system and it reduced as much as 68% prescription under contraindications. The clinical literature shows that treating via drug combination that create unwanted clinical effect elevates the expenditures on such patient due to side effects etc.
Devising consignment arrangements
By using this method for distributing the medications, the volume of waste of oncologic drugs was reduced from about 12% of the volume of expenditure on these drugs to about 5%. The calculated savings for 2019 was around (7/100*400=28M) 30 million IS.
Limiting the duration of approval of hematologic/oncologic drugs reduced the expenditures on the current treatment line since the oncologist make the evaluation of the patient's condition according to the interval stipulated in the approvals made by the preauthorization center. That make the oncologist to observe more closely the patient and to discover the disease progress sooner.
Providing a "complementary insurance" – the rate of member that are included in the complementary insurance program is 88% (out of 2.4 million members). The complementary program saves to the HMO members around 50% of the premium they would have to pay for private insurance companies in order to get the same coverage a total saving of 600 million IS annually (which is by 56% lower than the private one).
Consulting Clinical Pharmacists Eighteen years of the HMO’s experience has shown that patients with polypharmacy have an average of 2-3 unnecessary medications that require discontinuation or replacement, as well as 2-3 drugs that need to be added to their treatment regimen. It is impossible to quantitate the actual meaning of that services but it is clear that right medicine is always cheaper as it prevents using unnecessary health services.
Implementing Electronic prescriptions reduced the number of medication lines prescribed
Containing the expenditure of adding an expensive drug to the HMO formulary is accomplished by sharing the cost with the drug companies. We implemented in the year of 2019 24 risk contracts with the companies about most expensive drugs. The results of this agreements have shown a refund 0f 140 million while the expenditures on the drugs that were included in the agreement was 540 million IS. This result by an actual reduction on the active price by 26%. The drugs are shown in Table No 3.

Discussion

The growing expenditures on Health services is a main issue in governments that try to reduce that burden. A meaningful share of the Health care expenditures is the drug usage, the data in the literature describe the global annual growth in medicine expenditure of 3% between 2014 and 2019 and a growth rate of 4% between 2009-2014 (IQVIA INSTITUTE FOR HUMAN DATA SCIENCES). The same trend was shown by the publications of the OECD countries. The average annual growth of expenditures for medications in selected countries is shown in Table 3.

Table 3. Average annual growth in expenditure for medications

in selected OECD countries between 2007-2019

This annual rate of growth in drug expenditure was between 7.1% to a reduction of -1.2% in Mexico. It can be seen that annual drug expenditure growth in Israel was 3.65. It need to be said that Israel is a western country that is an early adopter of new technologies including new drugs and indications. Our NHS had shown annual growth of 0.4% that it's also lower than Israel.

A survey in the literature show some attempts to control the growing rate of medicine expenditures. For example, attempts to reduce the reimbursement of drugs to the patient led to reduction in the use of some drugs. The requirement of prior authorization for pregabalin yielded savings of only about 1% to 2% across a variety of scenarios??? because of the relatively low pregabalin market share (about 10%). The impacts of national centralized drug procurement drug utilization and drug expenditures was evaluated in the case of Shenzhen, China, and the results showed that a reduction of 36% was achieved by a centralized process for the procurement of 25 drugs. An additional attempt to reduce pharmaceutical expenditures was made in China by using the “Chief-Pharmacist and Rational Drug Use System”. That project was carried out to allow pharmacists be a responsible part of the multidisciplinary care team. The main outcome measures were healthcare quality indicators, drug expenditures, and selected drug use indicators of outpatient and antibiotic use. The results of the implementation of the system and the participation of pharmacists in pharmaceutical care showed significant reduction in drug expenses. Another work examined the impact of formulary drug exclusion policies on patients and healthcare costs. The conclusions of that work showed that although there were important exceptions, most studies found that drug exclusion policies reduced costs and did not negatively impact patients.

A trial to reduce drug expenditures in east London tested the influence of reducing prophylactic prescribing of medications for asthma and the related costs. The authors concluded that the step brought about a reduction of the cost of asthma prescribing which lead to a lowering of the ratio of prophylactic to bronchodilator treatments. However, they also noted that reducing prophylactic prescribing would run contrary to the British Thoracic Society guidelines and might worsen the quality of asthma care.

The impact of pharmaceutical cost containment policies on the range of medicines available and subsidized in Finland and New Zealand was tested in 2010. The New Zealand, experience showed that medicines are heavily subsidized across therapy groups, but those uniquely subsidized were older entities? In Finland, more "newer" medicines are reportedly subsidized and available, but the level and coverage of the subsidies were lower, whereupon the patient’s payments for the drugs were higher. The adopted cost containment policies seemed to affect patients' access to medicines mainly by availability in New Zealand and by affordability in Finland.

Another trial that was made in South Korea to reduce the anticancer price as the quantities prescribed to patients. The result showed a reduction in 23 cancer drugs out of 100 supplied. The reduction was around 20%.

The policy of a time-limited authorization obliges the physician to follow the progress of the disease under a given drug treatment. An outstanding example of this is treatment with blood factors (the most expensive medicines) for patients with hemophilia. The fact that the patient needs to undergo annual blood-factors tests are made in order to determine the current dose of the very expensive blood factors can reduce the cost of the factors as well as other medical expenditures. As mentioned, all this??? during the period when very expensive drugs came into use, among them biological drugs for autoimmune and rheumatological diseases, oncologic and heamato-oncologic drugs, modern drugs for hepatitis C and many other effective and expensive drugs.

Taken together, these data show that the drug management system in Israel in general and in MHS in particular is conducted in a very efficient manner and can be a role model for all countries where there is a problem of an accelerated increase in drug spending.

Cap??? and co-payment polices may reduce the use of medicines and reduce medicine expenditures for health insurers. However, they may also reduce the use of life-sustaining medicines or that of medicines that are important in treating chronic conditions, including symptomatic ones and consequently increase the use of healthcare services. Fixed co-payment with a ceiling and tiered fixed co-payment may be less likely to reduce the use of essential medicines or to increase the use of healthcare services. However, index pricing may reduce the use of brand drugs, increase the use of generic drugs, and may also slightly reduce the price of the generic drug when compared with no intervention.

Patients, physicians, pharmacists, formulary managers, and policymakers play an important role in generic drug use. Understanding the factors influencing generic drug use can help guide future policy, education, and practice interventions to increase their application. We showed a major rate of implementing generic in our NSH.

Prescription drug spending decreases by 2% to 6% for each 10% increase in cost sharing, depending upon the class of drug and condition of the patient. The reduction in use associated with a benefit cap???, which limits either the amount of coverage or the number of covered prescriptions, is consistent with other cost-sharing features. For some chronic conditions, greater cost sharing is associated with increased use of medical services, especially for patients with congestive heart failure, lipid disorders, diabetes, and schizophrenia. The main outcome we can learn from the literature that health organization implemented steps to reduce the cost of dugs expenditures but not a whole package of steps that cover many aspects of drug usage.

We can summarize the main steps that were implemented in our NHS as followed:

The most meaningful move was the decision to implemented aggressively generics. Another step that donated to the cost reduction was implementing pre-authorization center for drugs because it doesn’t let the physician go out of the boundaries stipulated by the NHS in its formulary.

Global procurement agreements also contributed to the containment of the drug expenditures. The other steps contributed a less powerful contribution to the cost containment and some were impossible to evaluate. It's important to point out that some steps had influence that we could evaluate because of non-direct effects. For example, in drugs that are authorized in the pre-authorization center prevents more applications from the physicians because if they know that they do not meet the criteria they do not apply.

Conclusions

The main conclusion was that in order to cost contain there is a need of implement various of steps in all frontiers. PhicitiThe analysis of the results taken together with the data in the literature on expenditure on drugs in various countries worldwide validates the steps taken at NHS to have led to a very modest increase in the expenditure on drugs. Such containment of costs has allowed the HMO to provide its members many drugs that are unavailable in the national health basket and prevented a meaningful debit to the NHS that is not allowed by the government to create deficit.

Abbreviations

HMO:

Healthcare maintenance organization

MHS:

Maccabi healthcare services

NIS:

New Israeli Shekel