Controlling Prescription Drug Expenditures: A Case Report of Success

August 9, 2007

WINSTON-SALEM, N.C. – As national spending on prescription drugs rose faster than any other segment of health care spending, the health plan at Wake Forest University Baptist Medical Center was able to maintain constant spending, resulting in savings of more than $6.6 million over three years.
Four health plan interventions not only averted increases in prescription drug spending but also preserved members’ use of medications for chronic conditions, according to a manuscript published this week in The American Journal of Managed Care.
“Other studies have found that single cost-control strategies such as increasing co-payments can decrease prescription drug spending,” said lead author David P. Miller, M.D., assistant professor in the Section of General Internal Medicine at Wake Forest University School of Medicine. “However, we present the results of a combination of strategies used in concert.”
The manuscript describes a three-year observational study conducted at the Medical Center, comprised of Wake Forest University Health Sciences and North Carolina Baptist Hospital. The institution, with more than 11,000employees, ranks among the top 15 largest employers in North Carolina. Employees of both organizations are members of the health plan.
“One reason for this success may be that the plan was careful to avoid shifting costs to its members,” said Miller. “Whenever a drug was changed to a more expensive tier or removed from the formulary, the members’ out-of-pocket costs were the same or less if they changed to the less-expensive alternative.”
The interventions included reclassifying select brand-name drugs to non-preferred status (resulting in approximately half of the annual savings), followed by (in descending order of savings) the removal of non-sedating antihistamines from the prescription-drug formulary, the introduction of pill-splitting, and the limitation of quantities of select medications not intended for daily use.
The health plan’s goal, according to the study’s authors, was to control prescription drug spending while preserving high quality medical care. An advisory outpatient prescription drug committee, which included physicians and pharmacists, was formed to review the literature and ensure that proposed strategies wouldn’t have a negative impact on health care quality.
According to co-author Curt D. Furberg, M.D., Ph.D., professor of public health sciences, “The study demonstrated that much of what we spend on prescription drugs is wasteful, and that other institutions, hospitals, health plans, state and federal governments can learn from our experience.”
The study’s authors wrote that preventing the rise of prescription drug costs allowed the health plan to invest in new initiatives to improve the health outcomes of patients with chronic disease, such as reducing the co-payments for insulin and diabetic testing supplies to encourage medication adherence and monitoring.
Another co-author, Ronald H. Small, M.B.A., vice president for quality outcomes, noted that the collaboration between physicians and the hospital worked well to ensure not only that cost savings could be achieved but also that employees received pharmaceuticals that are shown by evidence to be effective.
Besides Miller, Furberg, and Small, the authors of the study include Franklyn M. Millman, M.D., Walter T. Ambrosius, Ph.D., Julia S. Harshbarger, PharmD, and Christopher A. Ohl, M.D., all with Wake Forest.
Media Contacts: Karen Richardson,; Shannon Koontz,; at 336-716-4587

Wake Forest University Baptist Medical Center is an academic health system comprised of North Carolina Baptist Hospital and Wake Forest University Health Sciences, which operates the university’s School of Medicine. The system comprises 1,154 acute care, psychiatric, rehabilitation and long-term care beds and is consistently ranked as one of “America’s Best Hospitals” by U.S. News & World Report.

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