Premier Inc. C-Suite Survey: Healthcare Leaders Expanding Use of Generics, Educating Physicians on Therapeutic Alternatives to Control Drug Spending Last Updated: June 14, 2017
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Respondents report increasing drug costs, greater use of specialty drugs as sources of higher pharmaceutical spend; anticipate pharmaceutical spend to steadily increase over next five years

CHARLOTTE, N.C. – A new Premier Inc. (NASDAQ: PINC) survey finds drug spending has increased among healthcare leaders, a trend expected to continue over the next five years. To counteract this significant drain on hospital budgets, health system leaders are employing various methods and strategies to ease the burden.

Premier, a leading healthcare improvement company, surveyed health system C-suite leaders to understand the financial and care delivery implications of rising drug prices.

“Unhealthy, uncompetitive drug markets are not only straining consumer budgets, but they are leading to serious financial repercussions for providers,” said Michael J. Alkire, chief operating officer at Premier. “System loopholes are allowing pharmaceutical companies to take full advantage by raising prices on life-saving drugs – creating a perfect storm for healthcare spending. Now is the time for policymakers to address flaws in the system that enable drug monopolies and directly contribute to unsustainable pharmaceutical expenses.”

Key survey findings include:

  • Increased spending on drugs: 96 percent of respondents said their hospital or health system’s overall pharmacy spend has somewhat or significantly increased for their inpatient population.
  • Drug prices and use of specialty drugs are culprits of rising pharmaceutical spend: 95 percent report increased drug prices and 91 percent said increased use of expensive specialty drugs have contributed the most to their organization’s inpatient pharmaceutical spend.
  • Strategies to help manage drug spending: Providers concerned about the financial impact of rising drug costs, and its overall viability, have put various strategies in place to contain spending.
    • 89 percent increased use of generic drugs, when available
    • 82 percent intensified the tightening of their formulary
    • 75 percent deployed pharmacists to provide guidance on expensive drug use patterns and offer alternatives that are therapeutically equivalent
    • 75 percent include physicians in a drug use management capacity by educating them on high-cost drugs, and encouraging them to use generics and high-value therapeutic alternatives whenever possible
    • 73 percent expanded their specialty and retail pharmacy services
    • 66 percent put extra emphasis on leveraging group purchasing organization (GPO) contracts to manage rising prices
    • 61 percent expanded use of restrictive drug prescribing protocols through electronic health record alerts
    • 59 percent used a generic auto substitute
    • 55 percent adopted and used biosimilar drugs when available
  • Anticipation of increased spending on pharmaceuticals over next five years: 95 percent of respondents estimate drug expenses to increase by at least 10 percent over the next five years, with 16 percent of respondents estimating drug prices will climb by 30 percent or more.

“In this environment, healthcare leaders must think creatively and optimize prescribing protocols to ensure a positive outcome at a manageable cost,” said Alkire. “Premier works closely with our members to strategically deploy solutions to ensure the right drug is used at the right time. We work tirelessly on behalf of members to negotiate best possible pricing, source lower cost therapeutic alternatives, employ comparative effectiveness to inform evidence-based clinical decisions, help them understand utilization and remove waste, ensure medication adherence to create optimal patient outcomes, and connect patients in need of financial assistance.”

The findings come on the heels of newly-released recommendations by Premier, detailing nine suggested actions Congress and the administration should take to create healthier and more competitive pharmaceutical markets. The plan highlights a holistic approach to achieving a high-quality, cost-effective pharmaceutical industry, while correcting regulatory loopholes that impede competition and directly lead to unsustainable price increases.

Survey Methodology

The survey was conducted online, with the results based off responses of 47 healthcare C-suite leaders (CEO, COO, CMO, CFO, CIO or CTIO) from April 18 – May 22, 2017. Participants were selected and invited to join the panel by Premier prior to survey administration.

About Premier Inc.

Premier Inc. (NASDAQ: PINC) is a leading healthcare improvement company, uniting an alliance of approximately 3,750 U.S. hospitals and more than 130,000 other provider organizations. With integrated data and analytics, collaboratives, supply chain solutions, and advisory and other services, Premier enables better care and outcomes at a lower cost. Premier, a Malcolm Baldrige National Quality Award recipient, plays a critical role in the rapidly evolving healthcare industry, collaborating with members to co-develop long-term innovations that reinvent and improve the way care is delivered to patients nationwide. Headquartered in Charlotte, N.C., Premier is passionate about transforming American healthcare. Please visit Premier’s news and investor sites on; as well as Twitter, Facebook, LinkedIn, YouTube, Instagram and Premier’s blog for more information about the company.


Kate Enos,   |   |   202.879.4105