Stephanie Peters

Brian Brady

Scooter Plowman

CERC Fellows Tackle Medication Costs with a Little Help from New Zealand

­­­­Challenged to discover new approaches to medication use that would substantially lower US health spending and improve health, a three-person team from Stanford’s Clinical Excellence Research Center (CERC) launched a global search. Stephanie Peters, PsyD, Scooter Plowman, MD, MBA, and Brian Brady, MD, all fellows at CERC, were intrigued by the national success of New Zealand. In the flattened world of Skype, they quickly connected to the national pharmaceutical management agency, PHARMAC. Intensively engaged by the CERC team, the PHARMAC group invited them to visit and learn firsthand. 

First, the backstory.

Professor Arnold Milstein, MD MPH (general internal medicine), established CERC in the Department of Medicine in 2010. A national figure in the design and deployment of clinical service innovations that both improve quality of care and help offset the costs associated with population aging and valuable biomedical technologies, he established CERC to mobilize science to provide much better care with much less.

CERC design fellows usually spend their fellowship year on a single project, beginning with a month-long speaker series in August that both coincides with and informs their literature search within their assigned topic. In the case of Peters, Plowman, and Brady, the assigned topic was prescription medications. Specifically, according to Brady, their question was “how do we use prescription medications to substantially reduce national total per capita healthcare spending while improving health?” The US currently spends far more money on prescription drugs per capita than any other developed country.

During the autumn of 2016, as the team set out to learn the landscape of their topic, they followed the guidance of leaders from the value-based health care sector, talking with people who were recommended to them and searching the literature for examples of clinical “bright spots.” Visiting bright spots – health systems that provide exceptionally high quality health care while keeping costs in check – has been an important part of the fellowship curriculum since its inception. Brady fills in the story about what they discovered.

“As we were going through our literature search to find centers that were doing good work, we came upon the PHARMAC group in New Zealand, which has used an innovative approach to assessing the use of prescription medications at a governmental level since the 1990s. We recognized that this government-driven approach to value may not apply broadly to the US as we lack a single payer system, but we wondered what might happen if we brought some of the ideas from New Zealand and applied them to an incentivized health system in the US–one that bears financial risk for all aspects of patient care– with the explicit goal of improving quality and reducing cost.”

Conversations with PHARMAC ensued, including both designers of the national formulary and economists who study the cost effectiveness of drugs there. “While we study pharmaceutical cost-effectiveness in the US, we do not routinely apply these data when designing formularies for health systems or insurance plans,” according to Brady. “Here we design our formulary tiers mainly by using pricing schemes which the manufacturers set out for companies. It was enlightening to learn how an entire country approaches a common issue so differently from us.”

From left: Brian Brady, Stephanie Peters, PHARMAC’s Chief Executive Steffan Crausaz, and Scooter Plowman.

A Trip to New Zealand

Ultimately the New Zealand PHARMAC program invited the CERC team to visit and discuss their formulary program in more depth. Site visits are a fundamental part of the CERC fellowship and, while this one was unique in that it involved international travel, the leadership approved it after agreeing that the team could learn more on the ground and in person than through video conferencing and phone conversations. The team flew there in early November.

The team’s goals were to learn about how a value-driven formulary is developed, continuously managed, and employed while also gaining insight into how patients and prescribers on the frontline of clinical care view the impact of these policy-level decisions.

It was a busy one-week visit in which the team first met with the PHARMAC group to learn about the process of getting the best health outcomes for the most people within funding parameters. They were also able to visit community clinics to learn about how the system works on the ground for physicians who prescribe and patients who receive the medications. 

From their conversations with community clinic leaders, practitioners, and patients, the team experienced firsthand how the policy decisions made at PHARMAC translated into higher value patient care. “Patients were pleased with how easily available medications were,” said Brady. “We found it remarkable how patients’ overall attitudes towards health, while understandably focused on their individual stories, acknowledged the importance of the public’s health at large and respected the policy decisions for their intent to achieve good health for all New Zealanders.”

As a bonus to their original trip aims, the CERC team also learned about an inspiring aspect of New Zealand’s national health care initiative involving efforts dedicated to the health of the country’s indigenous population, the Maori. Brady explains that “as part of the New Zealand government, PHARMAC operates as a “Crown Entity” and has obligations to partnership, participation, and protection of the Maori to improve the group’s community-specific health outcomes. Based on data gathered by PHARMAC, they mount specific public health campaigns and apportion money for the Maori. There is an entire wing of the public health agency that deals with diseases specific to this population and finds ways to improve them. They are not only stewards of the public health dollar, but they also look out for people with fewer means to do it for themselves. PHARMAC data demonstrate that they have been able to reduce the Maori’s disproportionately high rate of rheumatic mitral heart disease through such public health efforts.” 

Taking Next Steps

The next step in the CERC process is to take the results of their didactic series, literature search, and site visits such as this one and build a delivery model that can be implemented in a US health system. The team’s first prototype was presented in December. It was refined weekly until being considered for adoption by US delivery system leaders in April. While working on improved iterations of this initial model, Peters, Plowman, and Brady are engaged in cost-modelling work to determine the specifics of how their model might reduce national per capita healthcare spending.

We design health care delivery models which health care systems or payers could implement in the real world.

There are still a few more steps in the CERC fellowship year. Brady defines those steps: “We design health care delivery models which health care systems or payers could implement in the real world. In March and April, interested audiences come to our center and hear us discuss our proposals. Once a health system asks to trial our model, CERC’s implementation teams work with our partners to carry out proof-of-concept studies over subsequent years.”

The final step for fellows in the Clinical Excellence Research Center is to submit by June a summary of their discovery and an estimate of national savings if adopted to an influential journal read by clinicians and policy-makers. Three summaries of prior care innovations discovered by CERC fellows were published during 2016 and triggered commitments by pilot testing sites.