No Single Approach for Selecting Most Cost-Effective NDC in 340B Outpatient Pharmacies

According to recent research, given the volatility in 340B and wholesale acquisition cost (WAC) pricing, a strategy for purchasing the most cost-effective national drug code (NDC) is complex and requires visibility to system purchase volume and pricing. 

In 2015, McKesson Pharmacy Optimization was engaged to conduct an analysis to help evaluate the benefit for the University of Missouri Health System in order to standardize purchasing across nine outpatient pharmacies. The ongoing collaboration was aimed at improving NDC selection and implementation to maximize savings and improve inventory management for 340B eligible outpatient pharmacies. 

The initial analysis consisted of a comparison of the most cost-effective NDC from both 340B and WAC accounts in order to identify a recommended NDC and project the lowest acquisition cost based on historical purchase volume by class of trade. The second phase of the analysis aimed to improve pharmacy acceptance of purchasing recommendations, expand the number of items to implement, and validate items already implemented. The authors of the analyses, led by Rebecca Steel, pharmacy consultant at McKesson Pharmacy Optimization, and colleagues, performed financial monitoring post-implementation for both phases by calculating realized savings for the volume purchased of implemented NDCs comparing actual spend to average or median unit price for each class of trade.

The project, which extended over 2 years, resulted in over $1.5 million in realized savings to the University of Missouri Health System. During phase 1, 106 items identified resulted in $936,071 in savings with a 60% capture rate. In phase 2, 135 additional items were identified resulting in an additional savings of $459,295 over 5 months. Further, the capture rate increased to 71% in phase 2 and raw service level increased from 75% to 84.8% on implemented NDCs. The authors noted that 10% to 15% of items, on average, change because of significant price increases defined by the University of Missouri Health System as items with alternative NDC savings of more than $500 from implemented NDC. 

“The in-depth analysis clearly proves that a strategy for purchasing the most cost-effective NDC is complex given the volatility in 340B and WAC pricing and it requires visibility to system purchase volume and pricing,” Ms Steel and colleagues concluded. “There is not a single approach for pharmacy managers to select the most cost effective NDC to achieve optimal savings.”

The benefits not included in the savings calculations included improved service level based on proactive purchasing projections, improved operational efficiencies, and opportunity to decrease physical inventory by reducing the number of products to manage and centralizing the buying decision.

This research was presented at the 2018 ASHP Summer Meetings and Exhibition.

—Julie Gould