Pharmacy History Overview (U.S.A.)

  • Changing Health Priorities in America-
    • 1700-1800: sanitation in big cities
    • Mid1800’s-early 1900: immunizations, gov’t takes responsibility for public health
    • Early 1900 to 1970’s: Public health has large role in overall HC.  Lots of advancements such as transplants & high tech equipment.
    • Present:  Acute illnesses, financing for PH programs, PH is a high priority
    • Prior to 1985, the main form of payment was FFS
  • Reasons for the rise in prescription drug costs from 1993-2002
    • More expensive new drugs
    • Greater overall utilization (main reason)
    • Drug price inflation
    • Aging baby-boomers
  • Prescription drug expenditures increased at a rate twice that of doctors service costs
    • 14% vs. 7%
  • 1850-1900 HC:
    • All meds were OTC and more and more were being developed without any regulation
    • No regulation on drugs
    • Only rich went to doctors, hospitals were only a place for poor people to die
    • Germ theory of disease in the 1860’s greatly decreased the spread of infectious diseases.
  • Increase in life expectancy during the 20th century can be attributed to:
    • Changes in living standards
    • Increases in public (preventive) health measures
    • Progress in medical therapeutics
  • Cost shifting
    • Early days–cost shifting began as a result of increasing drug costs
      • PBM’s were able to push through lower pharmacy reimbursement terms in exchange for prescription volume
    • Today–PBM’s pretty much contract with all pharmacies
      • Higher patient copays hasn’t done anything for the overall inflation
    • 2000-2004 characterized by huge inflation in PBM costs
  • PhRMA (drug manufacturers) have responded to managed care in 3 phases:
    • Phase I: (Before 1985) FFS (fee for service)
      • Lower drugs prices
      • Indemnity era- nobody had veto power on doctors
      • Lack of economic controls
      • Doctors  prescribing was based solely on efficacy not cost
      • Visited a doctor multiple times to emphasize the efficacy of a particular drug
      • Channeling into generic substitution
      • Insuring pharmacists payment
      • Leads to more focused drug rep visits
      • Message is clinical & informational
      • PhRMA starts spending more time on isomers, salt forms, etc.
      • PhRMA were focused on advertising to the physician
      • Targeted high volume prescribers
    • Phase 2: (mid 1980’s-1990) Managed Care (Market Penetration)
      • Growth of managed care
      • Electronic claims
      • Increasing economic controls (generic dispensing required, more restrictive formularies)
      • Decreased PhRMA sales forces–in favor of more MBA reps
      • Sales messages begin to incorporate both clinical & education about formularies for PBM’s & MCO’s in the area
      • Advertising now includes PBM/MCO decision maker’s too (health plans)
    • Phase 3: (1990’s-present)  Managed Care (Mature market)
      • Managed care has a significant influence over prescribing
      • Marketing is focused & customized based on geography
      • PhRMA begins to purchase data from PBM’s
      • PhRMA members add PE departments
      • Marketing is still to both PBM’s & MCO’s
      • DTC advertising
      • Beginning of PE
      • Less & less new chemical entities being discovered every year
  • 1906 Pure Food & Drug Act
    • FDA is born to control food contamination
  • 1912- US Public Health Service came into being
  • Harrison Narcotic Act of 1914
    • Controlled the sale of these drugs & required people distributing them (doctors, pharmacists) to be registered & keep records of sales.
  • Long term  care really began as a result of the 1935 Social Security Act
    • Gov’t began oversight & financing of LTC
    • Originally seen as a place to die
    • Passage of Medicare & Medicaid in 1965
      • Provided more stable LTC funds
      • Established minimum standards of care
      • Made LTC more profitable
  • 1938 Federal Food, Drug & Cosmetic Act
    • Passed in response to sulfanilamide elixir disaster
    • New Drugs could only be marketed with the approval of the FDA
    • Drugs weren’t required to be effective, just safe
    • Allowed FDA to act before things went wrong
  • Hill Burton Act of 1946
    • After WWII doctors came home from the war and demanded that every town got a hospital
    • This led to an overpopulation of hospitals, but significantly better HC
  • 1962 Kefauver/Harris Amendment
    • Required safety & efficacy to be proven
    • Drug manufacturers were required to send adverse reaction to the FDA
    • Drug advertising was required to show risks & benefits
  • Medicaid was started by Title 19 of the Social Security Act in 1965
  • HMO act of 1973-
    • Favored putting people into managed care
    • 1st attempt by the gov’t to control HC costs
    • Provided start up grants and loans for HMO’s
    • Required large employers to offer at least one HMO plan
    • Patients bill of rights act of 1998 made it required for formularies to have this exception process.
  • OBRA 1987- resulted in more regulated & responsive  to LTC industry     (very successful)
    • Meant to increase the quality of life & care for residents in skilled nursing facilities
    • Established patient rights
    • Training requirements
  • Reforms in education were responsible for the professionalism movement in Pharmacy, medicine, nursing
    • The civil war greatly advanced the science of medicine to such a degree that doctors began to advocate for more hospitals and the regulation of who could be deemed a doctor.
    • Medicine was the 1st to adopt the professionalism movement as a result of the AMA commissioning Flexner to do a report on the state of medical education in 1908 which resulted in:
      • National accreditation of medical schools
      • Smaller class sizes
      • Closing of weaker med schools
      • Apprenticeship tutoring for pharmacy abandoned
      • As years went by the following became required:
        • 1923- High school graduation
        • 1932- 4 year grad school
        • 1930’s- clinical rotations
        • Present- doctor of pharmacy
  • Pharmacy history in 3 phases–
    • Pre-1940
      • Based on apprenticeship model
      • Prescription not always required
      • Counter prescribing common
    • 1940-1970
      • Characterized by over education & under utilization of pharmacists
      • Increased coverage & utilization of drugs
      • Decreased compounding
      • Increased dependence on physician, counter prescribing is prohibited (Humphrey-Durham amendment to the Food, Drug & Cosmetic Act of 1938…created prescription only drugs)
      • BS degree increased to 5 years
    • 1970’s-present
      • 6 year Pharm D programs
      • Greater emphasis on therapeutics
      • Emphasis on Pharmaceutical care
        • Identify potential & actual drug related problems
        • Resolving drug related problems
        • Preventing drug related problems
  • During the 1960’s-70’s there were several documented cases about abuses occurring in long term care (unsanitary conditions, untrained staff, etc)
  • Medicare PPS (prospective payment system) beginning in 1983 for hospitals
    • Payment determined in advance based on patient diagnosis
    • DRG’s created & hospital is paid a fixed amount (flat rate) for each DRG
    • Hospital has financial incentive to dismiss patients as soon as possible
    • Patient recovers at home, not at hospital
  • In 1993, the median time for a speedy drug review was 16 months, standard drug review 21 months
    • By 1995, it was 8 months & 16 months

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