Towards value-based healthcare: Establishing baseline pharmacy care costs for diabetes management.

The prevalence of diabetes has increased by three folds over the last 20 years, and the global cost of diabetes mellitus surpassed one trillion US Dollars (USD) or 1.8% of the global GDP in 2015. Generally, prescription medication to treat complications of diabetes makes up nearly 30% of diabetes medical expenditures. To facilitate value-based decision-making at national and organizational levels, we analyzed the cost drivers of pharmacy services in a diabetes care institute by developing a flexible costing model that accounts for pharmaceuticals and labour costs of pharmacy processes. We calculated the direct pharmaceutical costs and the indirect labour costs at the activity level from electronic health records and observational data. On average, the cost of pharmacy services over 1 year was equivalent to 1246 USD per diabetes patient. Approximately 98% of the pharmacy costs were pharmaceutical costs, while 2% were attributable to labour. The flexible costing model and cost estimates are essential for value-based comparisons of interventions and care redesign. The outlined costing framework and findings carry implications nationally and organizationally to accelerate the path towards value-based healthcare delivery and provider reimbursement schemes through agile cost estimation, efficiency improvements, and higher value of care.

A procurement-based classification of pharmaceutical supplies for diabetes disease management.

Background and Aims: Diabetes is among the most prevalent noncommunicable chronic diseases globally and carries a substantial expense in worldwide health care. Pharmaceutical supplies related to diabetes management account for 20%-40% of the disease's management cos, and this percentage continues to increase. This study examines the pharmaceutical expenses associated with one of the most common chronic diseases: diabetes. Specifically, we measure the extent to which patient health and demographic factors drive the annual cost of pharmaceutical supplies for diabetes management. Second, the study applied a procurement-centric classification scheme to pharmaceutical items involved in diabetes treatment. Methods: Data on 98,648 pharmaceutical-dispensing transactions (related to 2828 patients) over 1 year were collected from a specialized diabetes health center. Pharmaceutical prices from the sample were compared internationally to ensure that the findings apply to other countries. The association between the item cost and the number of unique patients prescribed pharmaceutical products was estimated at the category and subcategory levels. Results: Approximately 80% of total pharmaceutical expenditures were attributed to 20% of patients. Two of 20 pharmaceutical categories-anti-diabetes drugs and insulin-accounted for 34% of products dispensed and 57% of total pharmaceutical expenditures. Age, body mass index, and diabetes type were essential factors in predicting supply cost per patient. Conclusion: Applying the portfolio purchasing model also suggested that some clinically similar items, like insulin types, are best procured through divergent procurement strategies or vendors for optimal cost efficiency. A better understanding of the diverse array of diabetes supplies can reveal opportunities for better strategic supply management. This supply classification approach can also be applied in other supply-intensive specialties, such as orthopedics.