1. “Saving the Outpatient Pharmacies” HCSD Retail Pharmacy Operations Review April 17, 2012 Danny Jackson, PD, FABC System Director of Pharmacy Louisiana State University Health Care Services Division Djacks5@lsuhsc.edu

2. #Rx/ YR HIVPAPSELFMEDICAREMEDICAID 3RD PARTY Total 2009522731687011346667487115512258376,936 2010608562132111664909777173883284471,006 2011554132302202032828629191735062521,779 Rx Mix 10.62% 44.12% 38.96% 1.65% 3.67% 0.97% Drug Cost HIVPrisoner PAP Purchased SELF MEDI- CARE MEDI- CAID 3RD PARTY Total 200915,484,2883,109,9921,135,5811,255,646719,5481,579,059349,154 $23,633,272 201020,218,3013,602,6441,074,4661,349,1941,109,0432,565,048473,320 $30,392,019 201116,961,8763,382,216911,6431,524,749953,7932,013,8731,547,909 $ 27,296,061 PAP Non Purchased – $36M FY10, $40M FY11, $21M FY12 (6 months)

3.  All Costs (direct and indirect) associated with outpatient pharmacy are unallowable. State general funds and self generated funds are used to support the operation.  Direct Costs – include drug cost, supplies, and staffing.  Indirect Cost/allocated cost – All other costs associated with the operation of the facility and/or pharmacy. (utilities, maintenance,housekeeping, administration, etc.)

4.  FY10 ◦ Direct Cost $33,753,333 ◦ Indirect/Allocated Cost $10,128,941 ◦ Total Cost $43,882,274 ◦ Revenue $30,382,337 ◦ Net Revenue $13,499,937  FY11 ◦ Direct Cost $32,308,823 ◦ Indirect/ Allocated Cost $ 8,618,371 ◦ Total Cost $40,927,194 ◦ Revenue $26,536,718 ◦ Net Revenue $14,390,476

5.  How do we reduce cost without reducing the number of prescriptions filled or services provided?  How do we increase revenue?

6.  Drug Cost ◦ HIV drugs cost - $17M (FY11) $4M (allocated)  Utilization of Contract Pharmacy Model ◦ Patient Assistance Programs/Nominal Price Drugs/Therapeutic Substitution (without negatively impacting patient care) ◦ Stopped filling Medicaid Prescriptions  Cost Report Review  Operations ◦ Staffing - $3M (FY10) $2.2M (FY11) ◦ Efficiency – Central Fill Processing

7.  Renegotiated ADAP dispensing fee  Increase dispensing fees  Increase participation by 3 rd party payers

8.  Cost Reductions ◦ Drug cost – 69% reduction (# Rx down by 5%) ◦ Allocated cost – 28% reduction ◦ Savings - $12.7M  Revenues ◦ Net +$1,718,633

9.  FY11 ◦ Direct Cost $32,308,823 ◦ Indirect/ Allocated Cost $ 8,618,371 ◦ Total Cost $40,927,194 ◦ Revenue $26,536,718 ◦ NET Revenue $14,390,476  FY12 - Projected ◦ Direct Cost $10,705,798 ◦ Indirect/Allocated Cost $ 2,453,769 ◦ Total Cost $13,159,566 ◦ Revenue $16,105,794 ◦ Net Revenue $ 2,946,228

10.  LSU Pharmacies Remain Open  Over 60,000 patients continue to get prescriptions filled by an LSU pharmacy  Disease Management Programs continue to be supported by a drug benefit  Implement a Central Fill Pharmacy Model that will allow LSU pharmacies to increase volume without increasing cost.