Drug Cost Containment at a Large Teaching Hospital

Summary

Faced with a reduction in the 1990–91 pharmaceutical budget despite escalating prices, decisive cost-saving measures had to be implemented in our 1500-bed state-funded teaching hospital. 15 drug categories were reviewed by the Medicines Control Committee in conjunction with specialist work groups based on a detailed audit of the previous year’s pharmaceutical expenditure. The usage of medicines was rationalised by paying particular attention to expensive agents, substitution of less expensive alternatives, deletion of nonessential drugs from the formulary, restriction of certain medicines and by imposing fixed budgets.

65 items were deleted from the hospital formulary. The previous trend of an increase in annual expenditure was reversed during the 1990 to 1991 financial year; for the first time, it was less than the allocated budget. The 20 Pharmaceuticals making the greatest contribution to the drug bill comprised 31% of total expenditure in the 1989 to 1990 financial year and 26% in 1990–91 and declined from R7.4 million to R5.7 million during this period, a decrease of 23%. A decrease in expenditure was realised in 14 of the 15 categories reviewed. Overall a 20% saving, or R3.3 million, was achieved for these categories.