**The Indian Health Service**

**National Core Drug Formulary**

**The National Core Drug Formulary**

**Work Group**

# October, 2002

# The Indian Health Service

# National Core Drug Formulary

# Contents

> I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . .
> [1](#i.-introduction-why-a-national-formulary)

II\. Benefits of a National Core Formulary . . . . . . . . . . . . . . .
[3](#ii.-benefits-of-a-national-core-formulary)

III\. The Formulary Development Process . . . . . . . . . . . . . . .
[6](#iii.-the-formulary-development-process)

######### IV. The IHS National Core Formulary . . . . . . . . . . . . . . . . . [8](#the-ihs-national-core-drug-formulary-ncf)

V.  An Explanation of Closed Classes . . . . . . . . . . . . . . . . .
    [11](#v.-an-explanation-of-closed-classes)

VI\. Formulary Implementation Requirements . . . . . . . . . . . . .
[12](#vi.-formulary-implementation-requirements)

VII\. The National P&T Committee and the Future of the NCF . . . . . .
[13](#vii.-the-national-pt-committee)

VIII\. The Vocabulary of Pharmaceutical Purchasing . . . . . . . . . .
[14](#viii.-the-vocabulary-of-pharmaceutical-purchasing)

VIII\. References & Acknowledgements . . . . . . . . . . . . . . . . .
[16](#ix.-references-acknowledgements)

X. Members of the National Formulary Work Group . . . . . . . . . .
[17](#members-of-the-national-formulary-work-group)

# I. [Introduction -- Why a National Formulary?]{.underline}

In February 2000 and May of 2001, the Indian Health Service (IHS)
National Pharmacy Council presented the national core formulary concept
to the IHS Executive Leadership Group (ELG), recommending the
consideration of a national core drug formulary for the Indian health
care system. While this was not the first call for action on this issue
(the concept has been discussed in IHS since 1996), these presentations
raised several key and timely points that gave the issue new
momentum: 1) the inexorable rise in pharmaceutical costs experienced
across the country; 2) the use of formulary restrictions by some
facilities as a cost management tool; and 3) the leadership and positive
experience of the Department of Veterans Affairs (DVA) and Department of
Defense (DoD) in developing and implementing their own national
formulary systems.

The ELG authorized the formation of a work group comprised of physicians
and pharmacists representing the spectrum of federal and tribally
operated hospitals and clinics. The ELG charged the group with exploring
the possibility of a national formulary for the IHS/Tribal/Urban health
care system, and with making recommendations for the content of that
formulary. The group was also asked to recommend a process for
implementing and maintaining the formulary throughout the system. After
consultation with formulary experts from the DVA and DoD, as well as
presentations to and feedback from IHS leaders and clinical
practitioners across the country, this document represents the final
product of the work group.

As noted, there have been previous efforts toward evidence-based
standardization of pharmaceutical use across the Indian health care
system. In 1997, in response to some of the same issues, a national work
group was formed to determine methods to address the pharmaceutical cost
problem. While this group considered the implementation of a national
formulary, it was felt that achieving acceptance by practicing
clinicians would be too great a barrier. The group opted instead for
production of disease-specific practice guidelines, with the idea that
voluntary adherence to national guidelines would result in more
cost-effective prescribing. These documents were based upon existing
guidelines produced by national expert panels and organizations, and
were tailored for use in the Indian health care system. Guidelines for
hypertension and diabetes were produced and distributed to I/T/U
facilities across the nation.

While their products were very well researched and written, the
guidelines work group process failed for several reasons. First, the
resources committed to educating providers on the initiative were
inadequate. The guidelines ultimately were not integrated into the daily
practice of I/T/U providers, and therefore were not used. The guidelines
were offered in paper format as well as on the IHS Intranet, but did not
become generally adopted by facilities. Because use of the guidelines
was not mandatory, they became easy to ignore. Finally, there was no
provision to continually revise and update the guidelines, so they
rapidly outdated as medical practice changed. Those few facilities that
have asked for updates have been disappointed to learn that none are
available.

Taking a lesson from the past, the IHS National Core Drug Formulary Work
Group (hereafter referred to as the National Formulary Group, or NFG)
has made a number of observations and adopted a number of philosophies
that guided the work of the NFG:

-   Drug costs are increasing at a rate several times that of the core
    rate of inflation.

-   IHS appropriations are not increasing, and cannot be expected to
    increase, at a rate that matches inflation for health care costs in
    general, much less that of pharmaceuticals.

-   The I/T/U system has a mission to provide high quality medical care
    to American Indian and Alaska Native (AI/AN) patients, in a context
    of rising user numbers, increasing complexity of medical conditions
    in an aging population, exploding health care costs, and flat
    appropriations.

-   Elimination of standard of care drugs from local formularies is not
    a rational or appropriate strategy for managing costs.

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-   No attempt to manage drug costs can or should be made without
    establishing the core level of service that must be maintained in
    order to remain true to our mission. A core drug formulary is part
    of the foundation of any attempt to manage rising pharmaceutical
    costs.

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-   Most patient care activities, client morbidity and mortality, and
    drug costs in I/T/U facilities occur as a result of a limited number
    of chronic medical conditions. Systematic efforts to improve and
    standardize clinical practice should begin by targeting these
    conditions.

-   Numerous evidence-based guidelines for medical practice and drug
    utilization exist. Neither the resources nor the expertise are
    present in I/T/U facilities to duplicate this work. The Indian
    health care system has a responsibility to ensure that this
    information is made available to providers in a manner that
    facilitates application at the point of care.

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-   Providing quality care and managing costs are not optional
    endeavors. Both are essential to the success of the I/T/U mission.
    Providers must be given appropriate tools, but should also be
    presented with clear expectations about the use of those tools.
    Implementation of and compliance with the provisions of a core drug
    formulary should be compulsory for all facilities.

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-   Medical knowledge changes rapidly, and with it standards for
    clinical practice. If I/T/U leaders and patients expect care
    consistent with evolving standards, commitment must be made to a
    process for perpetual review and dissemination of new information.

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-   If health professionals are expected to comply with a core
    formulary, they deserve an active voice in a formulary development
    process that is transparent and responsive. A National Pharmacy and
    Therapeutics Committee (NPTC), consisting of practicing physicians
    and pharmacists, should have the responsibility of updating and
    publishing the national core formulary, and of interacting with the
    field on its content.

With this background, the National Formulary Group proceeded to develop
a National Core Drug Formulary, along with a plan for implementation and
maintenance. The Executive Leadership Group has recommended approval by
the IHS Director, pending a period of comment and response from
leadership and users in the field. The remainder of this document
describes the anticipated benefits of implementing a Core Drug
Formulary, presents the first edition of the Formulary, and provides a
variety of supplemental information.

# II. [Benefits of a National Core Formulary]{.underline}

The advantages of a national core formulary can be appreciated in the
context of a number of factors that are important to I/T/U staff and
patients: parity, portability, quality, safety, convenience, and cost.

## [Parity]{.underline}

One of the characteristics of the Indian health care system is its
diversity. As each tribe is geographically and culturally unique, so are
the health care facilities that serve them. These range from small rural
clinics with one or two contract providers to multiple specialty
hospitals, and everything in between. About half of the system is under
the direct administration of the Federal government, and tribes or
tribal consortia operate the remainder.

No defined package of benefits, pharmaceutical or otherwise, has been
established for AI/AN patients using I/T/U facilities. As a consequence,
patients across the country have access to very different sets of
services depending on where they live and choose to receive care.
Surgery, obstetrics, podiatry, physical therapy, and mental health are
among the obvious examples of services that are readily available to
patients at some locations but are either limited or inaccessible at
others.

There is a similar disparity in access to pharmacy services. Some
facilities, particularly urban clinics, have no pharmacy service at all;
patients must depend on sample medications or purchase their drugs on
the open market. For facilities with pharmacies, local formularies range
from highly restrictive to broadly inclusive, depending on budgets,
third party reimbursements, precedent, and a variety of other factors.
Decentralization and the reduction of area and national consultative
support have increased local autonomy, but at the expense of consistency
in pharmacy services.

Variability in pharmacy services has consequences at both ends of the
spectrum. Some facilities have restricted formularies so much that
patients do not have access to important standard of care medications.
Other formularies are so broad that the facility expends considerable
financial and staff resources in purchasing, stocking, and supplying
medications that would be a luxury at most locations, or for which
cheaper and equally effective alternatives are available. In some
places, patients who cannot get a medication they want or need at one
facility will travel to another to get it there. This is neither
desirable nor appropriate from a patient care standpoint.

A national core formulary, while not restricting a facility's ability to
supply a broad variety of medications (except in certain closed
classes), ensures that basic core drugs are available to all patients
using I/T/U pharmacies. It levels the playing field to some extent, by
establishing a floor that is common to all participants. This floor then
becomes a starting point for parity among facilities for all patients.

## [Portability]{.underline}

While most patients receive most or all of their care at one location,
I/T/U facilities serve a mobile population. Whether it is a "snowbird"
who lives in the north but winters in the south, a person traveling the
powwow circuit, or simply someone whose access to transportation is
inconsistent and cannot always get to the same facility, all pharmacies
routinely see patients who need to be continued on medications
prescribed at another location. While it is impossible to ensure that
every drug a patient may be taking is available wherever he or she goes,
a national core formulary will maximize the probability that patients on
a typical medical regimen will be able to have their needs met at any
facility in the system, without the inconvenience and risk of switching
drugs.

## [Quality]{.underline}

One of the consequences of decentralized administration of health care
facilities is that each facility creates its own formulary. In what
other system does a group of six or seven busy doctors and pharmacists
with limited resources have the responsibility for researching and
creating an entire drug formulary? The DVA and DoD each employ national
committees with substantial research and travel budgets, solicit input
from expert panels, and continuously revise and update their formularies
according to evolving knowledge and indications. Large health plans and
state Medicaid systems have comparable, if less robust, mechanisms.
Private offices and hospitals have little need for formulary management,
because although they generate the demand for drugs, they do not have to
pay for them. The I/T/U system is unique in expecting average doctors
and pharmacists to have the time and expertise to create evidence based
formularies, and to keep them up to date.

The scene is familiar for IHS pharmacy staff. One doctor leaves, and the
next one comes with a list of drugs that he or she likes and must have
on the formulary. A pharmaceutical representative makes a presentation,
complete with lunch and pens, and suddenly new demand is created. A
nearby consultant sends several patients back on a new medication, and
now the P&T committee has to consider adding it. Do all IHS and tribal
facilities have the time and expertise to research and make informed
decisions on these issues? No.

The IHS National Core Drug Formulary is, and will continue to be, based
upon the most current medical practice and evidence. It relies heavily
on work done by the DVA, both to critically evaluate drugs and drug
classes, and to establish guidelines for drug use and non-formulary
prescribing. Other sources of information include guidelines published
by the National Institutes of Health as well as other national and
international resources. The national core formulary process also
requires consultation and review by subject matter experts from within
the Indian health care system. While most of this information is readily
available to local facilities through electronic and print media, the
national core formulary process will ensure that new information is
evaluated in a timely manner and distributed consistently to all
participants. Local formularies will be up to date, at least in those
areas covered by the core formulary, and P&T committees will be able to
focus on issues more important than adding or deleting drugs.

## [Safety]{.underline}

Patient safety has always been of paramount importance, but nationally
publicized reports of the prevalence of serious medical errors have
brought this issue to the forefront. Accrediting agencies require
organizations to continually monitor for errors, and to have mechanisms
in place for correcting them and for improving performance. A national
core formulary can play an important role in the effort to improve
safety.

As indicated above, if all facilities have the same core of medications
for common conditions, chances are that a patient transferring care from
another location will not have to switch medications. This will obviate
the need for the additional monitoring and follow-up often necessitated
by such changes.

If use of a core formulary encourages providers to use a relatively
small set of drugs for most prescriptions, then increased familiarity
with these medications on the part of both prescribers and pharmacists
should improve safety. In addition, the consistent utilization of
disease state management guidelines will promote appropriate drug use
and reduce the likelihood of errors.

## [Convenience]{.underline}

Pharmacy and Therapeutics committees have multiple responsibilities over
and above the routine addition and deletion of drugs from the formulary
list. Ideally, these committees will spend the majority of their time in
activities relating to quality of care such as drug utilization
evaluations and training on practice guidelines and standards of care.
One intent of the national formulary process is to relieve P&T
committees of some of the routine formulary management. Their energies
can then be productively directed toward more important quality
improvement responsibilities.

The proposed National Pharmacy and Therapeutics Committee (NPTC, see
section [VII](#vii.-the-national-pt-committee)) will act as a resource
to local P&T committees by researching and providing recommendations and
documents for standard drug utilization reviews (DUR). The Committee
will collaborate with IHS subject matter experts, including the Council
of Chief Clinical Consultants and the National Diabetes Program, to
supply and update relevant disease state management guidelines as they
become available. Members of the Committee will assist Areas in
educating staff on core formulary use and compliance. These efforts,
undertaken by one group at a national level, will obviate the need for
duplicative efforts by multiple groups across the country.

## [Cost]{.underline}

A core formulary will not, by itself, produce substantial cost savings.
Indian health care facilities, after all, already have access to the
best possible drug prices through Federal Supply Schedule and DVA
National Standardization Contracts (see section
[VIII](#viii.-the-vocabulary-of-pharmaceutical-purchasing)). The intent
of the core formulary is to ensure availability of standard of care
medications for key medical conditions. Facilities with overly
restrictive formularies may actually see increased drug costs because of
the need to comply with the requirements of the core formulary. On the
other hand, since drugs recommended by the formulary tend to be well
established and less expensive, preferential use of formulary drugs is
likely to support cost management efforts.

In certain cases, cost differences between formulary drugs and others in
the same class are substantial, and the NFG has determined that these
classes should be closed (see section
[V](#v.-an-explanation-of-closed-classes)). Conscientious efforts to use
the formulary drug in these and certain other classes have the potential
to create savings both locally and nationally. For example, the NFG has
estimated that Prime Vendor users could save \$1.2 million system-wide
by using simvastatin in preference to atorvastatin for cholesterol
management, and treating hypertension with nifedipine instead of
amlodipine could save well over \$800,000.

Although cost management is not the principal purpose of the National
Core Formulary, the NFG believes that the two are inseparable. A core
formulary ensures that other efforts toward cost reduction are not taken
at the expense of quality of care for priority health conditions. As
such, this effort is the first step toward implementation of any
comprehensive cost management strategy.

# III. [The Formulary Development Process]{.underline}

The National Core Formulary presented in this document was developed
through a collaborative process involving members of the work group and
IHS subject matter experts (specifically in diabetes, cardiology, and
psychiatry). Other resources include the DVA National Formulary, the
Department of Defense Basic Core Formulary, other documents published by
the DVA and DOD (including drug class reviews and prescribing
guidelines), guidelines published by other national bodies, and the
Institute of Medicine's 2001 report on quality in health care.

Determining the content of a core that has relevance throughout the
I/T/U system requires consideration of the similarities that allow us to
think of ourselves as a system of health care. The vast majority of
drugs prescribed in the I/T/U are provided to outpatients, and most of
these patients are being treated for limited number of diagnoses. It
thus makes sense to define a set of conditions treated in the ambulatory
setting that constitute the source of the core formulary. The Institute
of Medicine report on health care quality recommended that efforts to
address quality deficiencies should focus on those health conditions
that have the greatest impact in terms of morbidity, mortality, and
cost. The work group agreed that the National Core Formulary should
address a top priority set of conditions, specifically diabetes,
hypertension and cardiovascular disease, asthma and chronic lung
disease, stomach ulcers and related disorders, arthritis, and depression
and anxiety disorders. Thirty-two of the top fifty drugs purchased
through the Prime Vendor system are in these diagnostic categories, so a
formulary that addresses them will cover a great preponderance of
prescriptions and pharmacy costs at Indian health care facilities. As
experience and confidence with the national formulary grow, future
iterations should include additional classes of drugs addressing other
priority conditions.

In selecting drugs for the first edition of the IHS National Core
Formulary, work group members posed three questions (see box).
Affirmative answers to all three led to inclusion of the drug in the
core formulary.

Certainly, Agency-wide agreement on the appropriate content for a core
formulary will be difficult to achieve. For this reason, the NFG agreed
to start with a fairly straightforward list that the overwhelming
majority of I/T/U providers should readily accept as core to the
treatment of the six specified disease categories. Certain drugs or drug
classes may be notable by their absence from the first edition of the
NCF. These will no doubt be addressed in future iterations as the
formulary is adopted into general use.

For example, Angiotensin-II receptor blockers (ARB) are widely used as
second-line agents for management of hypertension and protection from
renal damage in diabetic patients. As the role of these agents becomes
more clearly defined, it is highly likely that the ARB drug class will
be recognized as part of the core drug armamentarium by the National P&T
Committee, and that one of these agents will be added to a future
edition of the NCF. In the meantime it expected that most I/T/U
facilities will have an ARB on their local formularies for treatment of
patients who do not tolerate ACE inhibitors.

Another drug class that some may consider underrepresented on the NCF is
selective serotonin reuptake inhibitors (SSRI). This class of
antidepressants has become the mainstay for treatment of depression, and
the NFG has recognized this by inclusion of one SSRI (fluoxetine) on the
National Core Formulary. I/T/U providers know, however, that treatment
of depression often requires the use of several antidepressant
medications in sequence until the right balance between therapeutic and
adverse effects is achieved. It is unlikely that any provider is likely
to feel that he or she is able to adequately treat depression in a
majority of patients with access to only one SSRI. Fluoxetine is
considered a core drug because it has a clear cost advantage over other
SSRI's and is therefore recommended for first-line use in most cases.
However, facilities are strongly encouraged to have other SSRI drugs
available for those patients who do not tolerate or achieve desired
effects from fluoxetine.

Considering the wide variety of drugs that are available for treatment
of the selected priority health conditions, the National Formulary Group
believes it has selected a reasonable and effective set of medications
for the National Core Formulary. Providers or facilities that have
recommendations for changes or additions to the NCF should make their
requests known to the National Pharmacy and Therapeutics Committee (see
Section [VII](#vii.-the-national-pt-committee)). The NFG intends for the
process of revising and updating the NCF to be as careful, scientific,
and responsive as the process for developing the first edition has been.

# The IHS National Core Drug Formulary (NCF)

## The IHS National Core Drug Formulary Work Group, November 2002 (version 1.1)

+-------------+------------+--------------+-------------+-------------+
| **Disease   | **T        | **P          | **Drug      | **Comment** |
| Category**  | herapeutic | harmacologic | Name**      |             |
|             | Class**    | Class**      |             |             |
+-------------+------------+--------------+-------------+-------------+
| ###### Car  | #### An    |              | **Aspirin** |             |
| diovascular | tiplatelet |              |             |             |
+-------------+------------+--------------+-------------+-------------+
|             |            |              | **          |             |
|             |            |              | Clopidogrel |             |
|             |            |              | 75mg**      |             |
+-------------+------------+--------------+-------------+-------------+
|             | **Antico   | Coumarins    | *           |             |
|             | agulants** |              | *Warfarin** |             |
+-------------+------------+--------------+-------------+-------------+
|             | **D        | Loop         | **F         |             |
|             | iuretics** | diuretics    | urosemide** |             |
+-------------+------------+--------------+-------------+-------------+
|             |            | Thiazides    | *           |             |
|             |            |              | *Hydrochlor |             |
|             |            |              | othiazide** |             |
+-------------+------------+--------------+-------------+-------------+
|             |            | Potas        | **Spiro     |             |
|             |            | sium-sparing | nolactone** |             |
|             |            | diuretics    |             |             |
+-------------+------------+--------------+-------------+-------------+
|             | **In       | Digitalis    | **Digoxin** |             |
|             | otropics** | glycosides   |             |             |
+-------------+------------+--------------+-------------+-------------+
|             | **Anti     | Nitrates     | **Nit       |             |
|             | anginals** |              | roglycerine |             |
|             |            |              | 0.4 mg      |             |
|             |            |              | tab**       |             |
+-------------+------------+--------------+-------------+-------------+
|             |            |              | *           | M           |
|             |            |              | *Isosorbide | ononitrates |
|             |            |              | dinitrate** | are not     |
|             |            |              |             | excluded    |
+-------------+------------+--------------+-------------+-------------+
|             | ##         | Alpha        | **          | ####        |
|             | ## Antihyp | blockers     | Terazocin** |             |
|             | ertensives |              |             |             |
+-------------+------------+--------------+-------------+-------------+
|             |            | Beta         | *           |             |
|             |            | blockers,    | *Atenolol** |             |
|             |            | selective    |             |             |
+-------------+------------+--------------+-------------+-------------+
|             |            |              | **M         | Extended    |
|             |            |              | etoprolol** | release     |
|             |            |              |             | metoprolol  |
|             |            |              |             | p           |
|             |            |              |             | reparations |
|             |            |              |             | are not     |
|             |            |              |             | required as |
|             |            |              |             | part of the |
|             |            |              |             | core        |
|             |            |              |             | formulary.  |
+-------------+------------+--------------+-------------+-------------+
|             |            | Calcium      |             |             |
|             |            | Channel      |             |             |
|             |            | Blockers     |             |             |
+-------------+------------+--------------+-------------+-------------+
|             |            | All calcium  |             |             |
|             |            | channel      |             |             |
|             |            | blockers     |             |             |
|             |            | (CCB)        |             |             |
|             |            | specified by |             |             |
|             |            | the National |             |             |
|             |            | Core         |             |             |
|             |            | Formulary    |             |             |
|             |            | are extended |             |             |
|             |            | release      |             |             |
|             |            | p            |             |             |
|             |            | reparations. |             |             |
|             |            | Immed        |             |             |
|             |            | iate-release |             |             |
|             |            | CCBs are     |             |             |
|             |            | associated   |             |             |
|             |            | with higher  |             |             |
|             |            | rates of     |             |             |
|             |            | side effects |             |             |
|             |            | and          |             |             |
|             |            | co           |             |             |
|             |            | mplications. |             |             |
+-------------+------------+--------------+-------------+-------------+
|             |            | Phen         | **          |             |
|             |            | ylalkylamine | Verapamil** |             |
+-------------+------------+--------------+-------------+-------------+
|             |            | Benen        | **          |             |
|             |            | zothiazepine | Diltiazem** |             |
+-------------+------------+--------------+-------------+-------------+
|             |            | Dih          | **N         |             |
|             |            | ydropyridine | ifedipine** |             |
+-------------+------------+--------------+-------------+-------------+
|             |            | An           |             |             |
|             |            | additional   |             |             |
|             |            | dih          |             |             |
|             |            | ydropyridine |             |             |
|             |            | CCB,         |             |             |
|             |            | amlodipine,  |             |             |
|             |            | has come     |             |             |
|             |            | into common  |             |             |
|             |            | use in the   |             |             |
|             |            | treatment of |             |             |
|             |            | h            |             |             |
|             |            | ypertension. |             |             |
|             |            | It is        |             |             |
|             |            | considerably |             |             |
|             |            | more         |             |             |
|             |            | expensive    |             |             |
|             |            | than others  |             |             |
|             |            | in this      |             |             |
|             |            | class,       |             |             |
|             |            | however, and |             |             |
|             |            | its true     |             |             |
|             |            | utility is   |             |             |
|             |            | for a        |             |             |
|             |            | relatively   |             |             |
|             |            | limited      |             |             |
|             |            | subset of    |             |             |
|             |            | patients     |             |             |
|             |            | with heart   |             |             |
|             |            | failure.     |             |             |
|             |            | Amlodipine   |             |             |
|             |            | is not on    |             |             |
|             |            | the DoD      |             |             |
|             |            | Basic Core   |             |             |
|             |            | Formulary or |             |             |
|             |            | the IHS NCF. |             |             |
+-------------+------------+--------------+-------------+-------------+
|             |            | ACE          | **          |             |
|             |            | Inhibitors   | Captopril** |             |
+-------------+------------+--------------+-------------+-------------+
|             |            |              | **L         |             |
|             |            |              | isinopril** |             |
+-------------+------------+--------------+-------------+-------------+
|             |            | Angiotensin  | **Any       |             |
|             |            | Receptor     | drug** in   |             |
|             |            | Blockers     | the ARB     |             |
|             |            | (ARB)        | class is    |             |
|             |            |              | acceptable, |             |
|             |            |              | but         |             |
|             |            |              | facilities  |             |
|             |            |              | must make   |             |
|             |            |              | at least 1  |             |
|             |            |              | ARB         |             |
|             |            |              | available   |             |
|             |            |              | to          |             |
|             |            |              | patients.   |             |
+-------------+------------+--------------+-------------+-------------+
|             | **Lipid    | Statins      | **Si        | #### C      |
|             | Ma         |              | mvastatin** | losed Class |
|             | nagement** |              |             |             |
+-------------+------------+--------------+-------------+-------------+
|             |            |              | **L         |             |
|             |            |              | ovastatin** |             |
+-------------+------------+--------------+-------------+-------------+
|             |            | Fibrates     | **Ge        |             |
|             |            |              | mfibrozil** |             |
+-------------+------------+--------------+-------------+-------------+
|             |            | Bile acid    | **C         |             |
|             |            | sequestrants | olestipol** |             |
+-------------+------------+--------------+-------------+-------------+
|             |            | W            | **Niacin**  |             |
|             |            | ater-soluble |             |             |
|             |            | vitamins     |             |             |
+-------------+------------+--------------+-------------+-------------+

##  IHS National Core Drug Formulary (v. 1.1) Page 2

+-------------+------------+--------------+-------------+-------------+
| **Disease   | **T        | **P          | **Drug      | **Comment** |
| Category**  | herapeutic | harmacologic | Name**      |             |
|             | Class**    | Class**      |             |             |
+-------------+------------+--------------+-------------+-------------+
| ###         | #### Hy    | S            | ###         | Both of     |
| #### Diabet | poglycemic | ulfonylureas | # Glipizide | these       |
| es Mellitus |            |              |             | common      |
|             |            |              |             | drugs       |
|             |            |              |             | should be   |
|             |            |              |             | available   |
|             |            |              |             | to promote  |
|             |            |              |             | portability |
|             |            |              |             | of the drug |
|             |            |              |             | benefit.    |
+-------------+------------+--------------+-------------+-------------+
|             |            |              | **          |             |
|             |            |              | Glyburide** |             |
+-------------+------------+--------------+-------------+-------------+
|             |            | Biguanides   | **          |             |
|             |            |              | Metformin** |             |
+-------------+------------+--------------+-------------+-------------+
|             |            | Thiazo       | **Pio       |             |
|             |            | lidinediones | glitazone** |             |
+-------------+------------+--------------+-------------+-------------+
|             |            | Thiazo       |             |             |
|             |            | lidinediones |             |             |
|             |            | are less     |             |             |
|             |            | effective at |             |             |
|             |            | improving    |             |             |
|             |            | glycemic     |             |             |
|             |            | control than |             |             |
|             |            | are other    |             |             |
|             |            | oral agents  |             |             |
|             |            | in the       |             |             |
|             |            | sulfonylurea |             |             |
|             |            | and          |             |             |
|             |            | biguanide    |             |             |
|             |            | classes, and |             |             |
|             |            | they are     |             |             |
|             |            | considerably |             |             |
|             |            | more         |             |             |
|             |            | expensive.   |             |             |
|             |            | The DoD      |             |             |
|             |            | recently     |             |             |
|             |            | added a      |             |             |
|             |            | thiaz        |             |             |
|             |            | olidinedione |             |             |
|             |            | agent to     |             |             |
|             |            | their Basic  |             |             |
|             |            | Core         |             |             |
|             |            | Formulary,   |             |             |
|             |            | but did not  |             |             |
|             |            | consider     |             |             |
|             |            | this a core  |             |             |
|             |            | drug class.  |             |             |
|             |            | The NFG,     |             |             |
|             |            | however,     |             |             |
|             |            | considering  |             |             |
|             |            | the          |             |             |
|             |            | extremely    |             |             |
|             |            | high         |             |             |
|             |            | prevalence   |             |             |
|             |            | of diabetes  |             |             |
|             |            | in AI/AN     |             |             |
|             |            | populations, |             |             |
|             |            | and the need |             |             |
|             |            | to have a    |             |             |
|             |            | full range   |             |             |
|             |            | of           |             |             |
|             |            | medications  |             |             |
|             |            | available    |             |             |
|             |            | for          |             |             |
|             |            | treatment,   |             |             |
|             |            | has included |             |             |
|             |            | this class   |             |             |
|             |            | among the    |             |             |
|             |            | required     |             |             |
|             |            | core         |             |             |
|             |            | formulary.   |             |             |
+-------------+------------+--------------+-------------+-------------+
|             |            | Insulins     | **S         |             |
|             |            | (human       | hort-acting |             |
|             |            | recombinant) | (Regular)** |             |
+-------------+------------+--------------+-------------+-------------+
|             |            |              | **Intermed  |             |
|             |            |              | iate-acting |             |
|             |            |              | (NPH)**     |             |
+-------------+------------+--------------+-------------+-------------+
|             |            |              | **          |             |
|             |            |              | Combination |             |
|             |            |              | (70/30)**   |             |
+-------------+------------+--------------+-------------+-------------+
|             |            | Although     |             |             |
|             |            | multiple     |             |             |
|             |            | insulin      |             |             |
|             |            | formulations |             |             |
|             |            | and regimens |             |             |
|             |            | are          |             |             |
|             |            | available,   |             |             |
|             |            | the majority |             |             |
|             |            | of patients  |             |             |
|             |            | requiring    |             |             |
|             |            | insulin can  |             |             |
|             |            | be           |             |             |
|             |            | a            |             |             |
|             |            | ppropriately |             |             |
|             |            | treated with |             |             |
|             |            | those        |             |             |
|             |            | listed.      |             |             |
+-------------+------------+--------------+-------------+-------------+
|             | **Renal    | ACE          | **          | See comment |
|             | pr         | Inhibitors   | Captopril** | concerning  |
|             | otective** |              |             | ARB agents  |
|             |            |              |             | above.      |
+-------------+------------+--------------+-------------+-------------+
|             |            |              | **L         |             |
|             |            |              | isinopril** |             |
+-------------+------------+--------------+-------------+-------------+
|             |            |              |             |             |
+-------------+------------+--------------+-------------+-------------+
| Depression  | **Antidep  | Tricyclic    | **Amit      |             |
| & Anxiety   | ressants** |              | riptyline** |             |
+-------------+------------+--------------+-------------+-------------+
|             |            |              | **I         |             |
|             |            |              | mipramine** |             |
+-------------+------------+--------------+-------------+-------------+
|             |            |              | **Nort      |             |
|             |            |              | ryptiline** |             |
+-------------+------------+--------------+-------------+-------------+
|             |            | Tetracyclic  | **          |             |
|             |            |              | Trazodone** |             |
+-------------+------------+--------------+-------------+-------------+
|             |            | SSRI         | **F         |             |
|             |            |              | luoxetine** |             |
+-------------+------------+--------------+-------------+-------------+
|             |            | Selective    |             |             |
|             |            | serotonin    |             |             |
|             |            | reuptake     |             |             |
|             |            | inhibitors   |             |             |
|             |            | have become  |             |             |
|             |            | the mainstay |             |             |
|             |            | of treatment |             |             |
|             |            | for          |             |             |
|             |            | depression.  |             |             |
|             |            | Fluoxetine,  |             |             |
|             |            | because it   |             |             |
|             |            | is now       |             |             |
|             |            | available in |             |             |
|             |            | generic      |             |             |
|             |            | form, has a  |             |             |
|             |            | clear cost   |             |             |
|             |            | advantage    |             |             |
|             |            | over other   |             |             |
|             |            | SSRI's, and  |             |             |
|             |            | should be    |             |             |
|             |            | suitable for |             |             |
|             |            | most         |             |             |
|             |            | patients. It |             |             |
|             |            | is the only  |             |             |
|             |            | SSRI         |             |             |
|             |            | required by  |             |             |
|             |            | the NCF.     |             |             |
|             |            | However,     |             |             |
|             |            | this is not  |             |             |
|             |            | a closed     |             |             |
|             |            | drug class   |             |             |
|             |            | and most     |             |             |
|             |            | facilities   |             |             |
|             |            | will want to |             |             |
|             |            | have other   |             |             |
|             |            | SSRI's on    |             |             |
|             |            | formulary to |             |             |
|             |            | meet the     |             |             |
|             |            | needs of     |             |             |
|             |            | patients     |             |             |
|             |            | experiencing |             |             |
|             |            | side effects |             |             |
|             |            | or treatment |             |             |
|             |            | failures.    |             |             |
+-------------+------------+--------------+-------------+-------------+
|             | **Anx      | Be           | **C         |             |
|             | iolytics** | nzodiazepine | lonazepam** |             |
+-------------+------------+--------------+-------------+-------------+
|             |            |              | **          |             |
|             |            |              | Lorazepam** |             |
+-------------+------------+--------------+-------------+-------------+
|             |            |              |             |             |
+-------------+------------+--------------+-------------+-------------+
| Asthma      | **Broncho  | Beta         | **Albuterol |             |
| &Chronic    | dilators** | Agonists     | MDI**       |             |
| Lung        |            |              |             |             |
| Disease     |            |              |             |             |
+-------------+------------+--------------+-------------+-------------+
|             |            |              | *           |             |
|             |            |              | *Salmeterol |             |
|             |            |              | MDI**       |             |
+-------------+------------+--------------+-------------+-------------+
|             |            | Anti         | **          |             |
|             |            | cholinergics | Ipratropium |             |
|             |            |              | MDI**       |             |
+-------------+------------+--------------+-------------+-------------+
|             | **Anti-in  | Steroids     | **          |             |
|             | flammatory |              | Fluticasone |             |
|             | agents**   |              | MDI**       |             |
+-------------+------------+--------------+-------------+-------------+
|             |            |              | *           |             |
|             |            |              | *Prednisone |             |
|             |            |              | (oral)**    |             |
+-------------+------------+--------------+-------------+-------------+
| Reco        |            |              |             |             |
| mmendations |            |              |             |             |
| for asthma  |            |              |             |             |
| treatment   |            |              |             |             |
| are drawn   |            |              |             |             |
| from the    |            |              |             |             |
| 2002        |            |              |             |             |
| updated     |            |              |             |             |
| NAEPP       |            |              |             |             |
| Expert      |            |              |             |             |
| Panel       |            |              |             |             |
| Report. Of  |            |              |             |             |
| particular  |            |              |             |             |
| note is the |            |              |             |             |
| fact that   |            |              |             |             |
| although    |            |              |             |             |
| oral        |            |              |             |             |
| medications |            |              |             |             |
| such as     |            |              |             |             |
| meth        |            |              |             |             |
| ylxanthines |            |              |             |             |
| and         |            |              |             |             |
| leukotriene |            |              |             |             |
| inhibitors  |            |              |             |             |
| are         |            |              |             |             |
| commonly    |            |              |             |             |
| used for    |            |              |             |             |
| asthma,     |            |              |             |             |
| they do not |            |              |             |             |
| appear as   |            |              |             |             |
| first or    |            |              |             |             |
| second line |            |              |             |             |
| agents in   |            |              |             |             |
| the         |            |              |             |             |
| national    |            |              |             |             |
| guidelines. |            |              |             |             |
+-------------+------------+--------------+-------------+-------------+

##  IHS National Core Drug Formulary (v. 1.1) Page 3

+-------------+------------+--------------+-------------+-------------+
| **Disease   | **T        | **P          | **Drug      | **Comment** |
| Category**  | herapeutic | harmacologic | Name**      |             |
|             | Class**    | Class**      |             |             |
+-------------+------------+--------------+-------------+-------------+
| GE Reflux & | *          | Histamine-2  | *           |             |
| Peptic      | *Anti-acid | Blockers     | *Ranitidine |             |
| Ulcer       | agents**   |              | 150 mg      |             |
| Disease     |            |              | tablets**   |             |
+-------------+------------+--------------+-------------+-------------+
|             |            | Proton Pump  | **          | #### C      |
|             |            | Inhibitors   | Rabeprazole | losed class |
|             |            |              | 20 mg       |             |
|             |            |              | tablet**    |             |
+-------------+------------+--------------+-------------+-------------+
|             |            |              |             |             |
+-------------+------------+--------------+-------------+-------------+
| #####       | **Pain     |              | **Acet      | Ac          |
| # Arthritis | r          |              | aminophen** | etaminophen |
|             | elievers** |              |             | is          |
|             |            |              |             | considered  |
|             |            |              |             | a           |
|             |            |              |             | first-line  |
|             |            |              |             | agent for   |
|             |            |              |             | treatment   |
|             |            |              |             | of          |
|             |            |              |             | oste        |
|             |            |              |             | oarthritis. |
+-------------+------------+--------------+-------------+-------------+
|             | **Anti-in  | NSAIDS       | #####       | Already     |
|             | flammatory |              | ### Aspirin | part of the |
|             | agents**   |              |             | formulary   |
|             |            |              |             | for         |
|             |            |              |             | car         |
|             |            |              |             | diovascular |
|             |            |              |             | disease,    |
|             |            |              |             | aspirin     |
|             |            |              |             | remains a   |
|             |            |              |             | valuable    |
|             |            |              |             | and         |
|             |            |              |             | inexpensive |
|             |            |              |             | solution    |
|             |            |              |             | for         |
|             |            |              |             | management  |
|             |            |              |             | of          |
|             |            |              |             | arthritic   |
|             |            |              |             | conditions. |
+-------------+------------+--------------+-------------+-------------+
|             |            |              | **          |             |
|             |            |              | Ibuprofen** |             |
+-------------+------------+--------------+-------------+-------------+
|             |            |              | *           |             |
|             |            |              | *Naproxen** |             |
+-------------+------------+--------------+-------------+-------------+
|             |            |              | ##          |             |
|             |            |              | ## Sulindac |             |
+-------------+------------+--------------+-------------+-------------+
|             |            | Multiple     |             |             |
|             |            | NSAID agents |             |             |
|             |            | are          |             |             |
|             |            | available,   |             |             |
|             |            | and          |             |             |
|             |            | facilities   |             |             |
|             |            | may choose   |             |             |
|             |            | to include   |             |             |
|             |            | several on   |             |             |
|             |            | their        |             |             |
|             |            | formularies. |             |             |
|             |            | However, the |             |             |
|             |            | above agents |             |             |
|             |            | represent    |             |             |
|             |            | well         |             |             |
|             |            | -established |             |             |
|             |            | and commonly |             |             |
|             |            | used drugs   |             |             |
|             |            | from a       |             |             |
|             |            | variety of   |             |             |
|             |            | chemical     |             |             |
|             |            | classes. In  |             |             |
|             |            | the interest |             |             |
|             |            | of           |             |             |
|             |            | consistency  |             |             |
|             |            | among        |             |             |
|             |            | facilities,  |             |             |
|             |            | these core   |             |             |
|             |            | drugs should |             |             |
|             |            | be available |             |             |
|             |            | to patients  |             |             |
|             |            | at all       |             |             |
|             |            | facilities.  |             |             |
+-------------+------------+--------------+-------------+-------------+
|             |            | **Comment on |             |             |
|             |            | Cox-2        |             |             |
|             |            | i            |             |             |
|             |            | nhibitors:** |             |             |
|             |            | The IHS      |             |             |
|             |            | National     |             |             |
|             |            | Core Drug    |             |             |
|             |            | Formulary    |             |             |
|             |            | does not     |             |             |
|             |            | include any  |             |             |
|             |            | Cox-2        |             |             |
|             |            | inhibitors.  |             |             |
|             |            | Although     |             |             |
|             |            | individual   |             |             |
|             |            | facilities   |             |             |
|             |            | may wish to  |             |             |
|             |            | include      |             |             |
|             |            | these drugs, |             |             |
|             |            | the NFG      |             |             |
|             |            | believes     |             |             |
|             |            | that Cox-2   |             |             |
|             |            | inhibitors   |             |             |
|             |            | have yet to  |             |             |
|             |            | establish    |             |             |
|             |            | themselves   |             |             |
|             |            | as part of   |             |             |
|             |            | the core     |             |             |
|             |            | standard of  |             |             |
|             |            | care for     |             |             |
|             |            | arthritic    |             |             |
|             |            | conditions.  |             |             |
|             |            | The DoD P&T  |             |             |
|             |            | Executive    |             |             |
|             |            | Committee    |             |             |
|             |            | recently     |             |             |
|             |            | considered   |             |             |
|             |            | these drugs  |             |             |
|             |            | and declined |             |             |
|             |            | to add them  |             |             |
|             |            | to their     |             |             |
|             |            | Basic Core   |             |             |
|             |            | Formulary.   |             |             |
+-------------+------------+--------------+-------------+-------------+
|             | **Disease  | Steroids     | **P         |             |
|             | -modifying |              | rednisone** |             |
|             | anti       |              |             |             |
|             | -rheumatic |              |             |             |
|             | drugs      |              |             |             |
|             | (DMARD)**  |              |             |             |
+-------------+------------+--------------+-------------+-------------+
|             |            | Ant          | **Met       |             |
|             |            | imetabolites | hotrexate** |             |
+-------------+------------+--------------+-------------+-------------+
|             |            |              | **Sulf      |             |
|             |            |              | asalazine** |             |
+-------------+------------+--------------+-------------+-------------+
|             |            | Certain      |             |             |
|             |            | other        |             |             |
|             |            | commonly     |             |             |
|             |            | used         |             |             |
|             |            | disea        |             |             |
|             |            | se-modifying |             |             |
|             |            | a            |             |             |
|             |            | ntirheumatic |             |             |
|             |            | drugs,       |             |             |
|             |            | specifically |             |             |
|             |            | hydrox       |             |             |
|             |            | ychloroquine |             |             |
|             |            | and          |             |             |
|             |            | a            |             |             |
|             |            | zathioprine, |             |             |
|             |            | are not on   |             |             |
|             |            | the IHS core |             |             |
|             |            | formulary.   |             |             |
|             |            | These drugs  |             |             |
|             |            | are also     |             |             |
|             |            | absent from  |             |             |
|             |            | the DoD      |             |             |
|             |            | Basic Core   |             |             |
|             |            | Formulary.   |             |             |
+-------------+------------+--------------+-------------+-------------+

# V. [An Explanation of Closed Classes]{.underline}

The principal purpose of a core formulary is to ensure the availability
of those drugs that are needed in order to provide basic standards of
care for health conditions that cause the greatest morbidity and
mortality in the service population. Another purpose, however, is to
promote practices that produce the greatest efficiencies in pharmacy
cost management without sacrificing quality of care. For certain medical
conditions, the best (standard of care) treatment includes use of fairly
costly innovator drugs for which no generic substitutes are available.
However, often there are several different drugs available, which are
essentially equivalent in their efficacy and side effect profiles. If
one of these drugs offers a significant cost advantage, all other
factors being equal, it makes sense to preferentially prescribe this
drug.

The DVA Pharmacy Benefits Management program periodically performs
systematic evaluations of particular drug classes to identify those
drugs that offer the greatest therapeutic benefit to patients and should
therefore be used preferentially in patient care. From time to time the
DVA will identify a class of drugs with comparable efficacy profiles and
will decide to solicit a National Standardization Contract for a
particular drug or drugs (see section
[VIII](#viii.-the-vocabulary-of-pharmaceutical-purchasing)). The
manufacturer is guaranteed virtually exclusive access to all DVA
facilities for distribution of their product, in exchange for a
substantial discount on cost, for a period of up to five years. The drug
class in question becomes "closed", meaning that all DVA prescribers
must use the contract drug(s) as their first-line choice for the
relevant condition. If intolerance, ineffectiveness, or adverse effects
are demonstrated, there is a facilitated process to obtain an
alternative non-formulary drug for the patient.

Presently, there are five closed drug classes in the DVA National
Formulary (see box). Studies of the DVA National Formulary system have
demonstrated that enforcing a system of closed drug classes has
contributed to many millions of dollars in savings for DVA hospitals,
without compromising the quality of care. In the IHS, it has been
estimated that enforcement of a closed class for statins alone could
save \$1.2 million annually.

The IHS National Core Drug Formulary, in its first edition, contains two
closed drug classes: statins and proton pump inhibitors. ***Facilities
are required to keep only two statin drugs (simvastatin and lovastatin)
and one PPI (rabeprazole) on their formularies, and to utilize these
drugs preferentially for treatment of the relevant conditions.***
Patients already on other drugs should be switched to the closed class
drugs in a timely manner, if there are no medical contraindications.
***Each facility must have policies facilitating requests for
non-formulary alternatives for patients who cannot tolerate or who do
not achieve desired therapeutic results with the formulary drugs.***

Purchases of drugs in closed classes through the Prime Vendor are
monitored, and those facilities purchasing a high proportion of
non-formulary drugs in these classes will be offered assistance in
educating their providers on the availability, efficacy, and cost
benefits of the closed class drugs. Because compliance with the National
Core Formulary is expected to be a performance element for Area
Directors, it is likely that IHS Area Offices will develop incentives
for facilities to assist them in observing National Formulary
guidelines.

# VI. [Formulary Implementation Requirements]{.underline}

-   Implementation of the National Core Drug Formulary is mandatory for
    all Federally-operated IHS hospitals and clinics. Implementation is
    urged for Tribally operated facilities.

-   Implementation consists of two components: 1) commitment to making
    all core drugs available to patients; 2) commitment to observing
    closed class restrictions.

-   Although preferable from a cost standpoint, addition of all core
    drugs to local formularies is not required. National Core Formulary
    participation only mandates that facilities make all core drugs
    available to patients, through whatever means the facility selects.

-   Normal P&T processes should continue to be used to complete the
    local formulary for disease categories not covered by the core
    formulary and, if desired, to add non-core drugs for treatment of
    priority conditions (except in closed classes).

-   Cost advantages and portability of the drug benefit will be
    maximized if core drugs are used preferentially for all patients,
    with non-core drugs prescribed only when there is a clear clinical
    indication to do so.

-   For closed classes, only those drugs specified on the National Core
    Formulary may be listed on facility formularies. Closed class drugs
    are to be prescribed as first line agents when a drug in the class
    is indicated.

-   Every facility must have expedited processes for providing access to
    non-formulary drugs in closed classes when the formulary drug is
    contraindicated by reason of ineffectiveness or adverse effect.

-   For patients already on non-formulary drugs in closed classes,
    facilities must develop procedures for transitioning them to the
    formulary drug in a timely fashion.

# VII. [The National P&T Committee]{.underline}

# and the Future of the National Core Formulary

The charge to the National Formulary Work Group was to evaluate the need
for and feasibility of a national formulary, and to develop a formulary
and recommendations for its implementation. By completing this work, the
NFG has fulfilled its charge and is not scheduled to meet again.

One of the earliest NFG recommendations was that no attempt should be
made to initiate a national formulary system without a process in place
for keeping it up to date. The NFG recommended that a permanent
committee be chartered, with the responsibility of maintaining the
National Core Formulary and providing ongoing therapeutics and cost
management support to I/T/U facilities. This committee will essentially
function as a National Pharmacy and Therapeutics Committee.

The recommended composition of the National Pharmacy and Therapeutics
Committee (NPTC) is for a field membership of twelve practicing
physicians and pharmacists representing the full spectrum of geographic
and practice settings in Indian country. Physicians should be in the
majority on this committee, with a recommended ratio of eight physicians
and four pharmacists; NFG members felt that credibility and acceptance
of NPTC recommendations by I/T/U providers would be at risk if
practicing physicians were not the majority participants.

Leadership of the NPTC will reside in a physician chairperson and a
pharmacist vice-chair; it is recommended that the latter have training
and experience in pharmacoeconomics. These individuals will be
permanently assigned to the NPTC and supported at 50% FTE each. The
majority of the research work and travel associated with NPTC membership
will fall to these individuals by virtue of their salary support.

Field members of the NPTC will attend semi-annual meetings of the
committee. These meetings are anticipated to be 1-2 days in length. The
purpose of NPTC meetings will be to discuss evolving research and
practice guidelines for conditions addressed by the NCF, to review the
status of national contracts and other pharmacoeconomic data, to consult
with subject matter experts on formulary and guidelines issues, and to
modify the National Core Formulary as needed. Interim business between
meetings will be conducted via e-mail and conference call, the latter at
least quarterly.

NPTC members are expected to be a resource to medical staffs and
facilities in their areas on pharmacy and therapeutics issues, and to
represent and interpret actions of the Committee to the field. Regional
travel may be required in order to accomplish these responsibilities.

The NPTC will develop processes for field input to the Committee, both
requests for information and research, and requests for modifications to
the National Core Formulary. These processes will include requirements
for a threshold level of consensus from several facilities or Areas
before NCF changes are considered.

Success of the National Pharmacy and Therapeutics Committee, and indeed
of the entire National Core Formulary process, depends upon adequate
funding support and the committed and active involvement of all NPTC
members. A proposal for funding the two half-FTE leadership positions,
as well as all travel and other support costs for NPTC members, is
pending final approval. Selection of field members is expected to be at
the discretion of Area Chief Medical Officers. CMO's and all other
interested individuals should begin considering candidates for Committee
leadership and membership in anticipation of a call for nominations.

# VIII. [The Vocabulary of Pharmaceutical Purchasing]{.underline}

## Pharmaceutical Prime Vendor, Federal Supply Schedule, and National Acquisition Contracts

The language of pharmaceutical procurement in the IHS can be confusing.
The purpose of this section is to acquaint the reader with the various
terms that are used when discussing these issues.

Presently in the Indian Health Service, most drug purchases are made
through the Pharmaceutical Prime Vendor (PPV). The IHS and Tribally
operated facilities are permitted to purchase drugs through the PPV by
virtue of a 1996 interagency agreement between IHS and the Department of
Veterans Affairs (DVA). This agreement enables Indian health care
facilities to utilize the contracts and/or contracting expertise of the
DVA for Prime Vendor distribution of pharmaceuticals, medical-surgical
supplies, and other health care items.

The national PPV program is managed by the DVA, and is a pharmaceutical
distribution contract with one or more drug wholesalers. The current
contract is with AmerisourceBergen and expires in early 2004. The PPV
contractor is required to maintain a supply of and distribute
pharmaceuticals and a variety of other items with therapeutic uses that
are dispensed through pharmacy services. These items are sold under
various Federal Supply Schedules (FSS), National Standardization
Contracts, and miscellaneous other government contracts. The PPV program
utilizes state of the art software and payment capabilities to achieve
just-in-time acquisition services for participating facilities.

Federal Supply Schedule contracts are solicited, awarded, and
administered by the DVA's Federal Supply Schedule Program. Vendors
contract with the DVA (and through the DVA with all other Federal
agencies) for discounted prices on drugs or other items, without a
specific agreement on volumes or amounts that will be purchased. FSS
prices for drugs are at least 26%, and often as much as 60%, lower than
Average Wholesale Price (AWP), and total FSS purchases by all Federal
agencies exceed \$2 billion annually. The vast majority of drugs
purchased through the PPV program are bought at FSS prices.

National Standardization Contracts are managed by the Special Contracts
Team of the DVA Pharmaceutical Products Division. These are a mandatory
source for DVA healthcare facilities, and the DVA is committed to
procuring all its requirements of the contracted items from the
identified contractors. IHS facilities may also utilize these contracts,
but must provide projected purchase quantities and sign a commitment
agreement. The PPV makes the specified item(s) available, and locks out
the ordering facility's ability to purchase equivalent items from other
manufacturers. National contract prices are very competitive because of
the volume commitment and the DVA's ability to enforce compliance with
the contracts at its facilities. The product prices under these
contracts are generally considerably lower than FSS prices for the same
or similar product. The contract period is typically for one base year
plus 1 to 4 one-year renewal option periods. All national contract items
are distributed exclusively through the DVA PPV program.

National contracts serve two major roles. Most commonly, a national
contract is solicited when several brand or generic options exist for a
particular high-volume drug. The DVA contracts with a single
manufacturer to purchase that manufacturer's version of the drug,
guaranteeing a certain volume of business for a specified time frame (up
to five years). Participating facilities must select this manufacturer's
product when purchasing from the PPV, for the duration of the contract.
IHS facilities are routinely invited to participate in these contracts.

Less commonly, the DVA may elect to solicit a national standardization
contract from a manufacturer of a particular innovator drug (still under
patent) in a drug class with several competitors, each of comparable
therapeutic efficacy. This will usually be a high-volume and high-cost
drug category, and by executing an agreement to preferentially utilize a
particular drug product, the DVA can obtain sharply discounted pricing
and substantially reduce its costs for the drug class in question. On
the DVA formulary, this type of national contract results in a "closed
class," that is a drug class with only one product (sometimes two) on
the formulary. See section V on closed classes.

It is appropriate to remind readers that the DVA holds its customers,
including IHS and Tribal health facilities, to certain rules and
restrictions as conditions of participation in the DVA Prime Vendor
programs.  All products must be used for direct services to Federal
government beneficiaries, including those individuals deemed eligible
under 25 U.S.C. 1680c(a).  These drugs may not be provided, re-sold or
diverted to non-eligible beneficiaries.  Access to the PPV is a
privilege, and DVA is under no obligation to permit IHS and tribal
facilities to participate in its contracts.  If the DVA receives
validated complaints from drug companies that their products are being
sold or otherwise provided to non-eligible beneficiaries, it can elect
to exclude IHS and tribal facilities from current and future contracts.

The ability to utilize the Pharmaceutical Prime Vendor and to take
advantage of Federal Supply Schedule and National Standardization
Contracts works to the great advantage of IHS and Tribal health care
facilities. The problem of rising pharmaceutical costs would be even
more critical if we were not afforded this privilege. Facilities that
are not maximizing their use of FSS and national contract pricing are
missing an opportunity for substantial cost avoidance. Moreover,
maintaining a close partnership with the DVA on national contracts puts
IHS in a position to have a voice in their future contracting decisions.

# IX. [References & Acknowledgements]{.underline}

[References:]{.underline}

> Committee on Quality of Health Care in America, Institute of Medicine.
> [Crossing the Quality Chasm: A New Health System for the 21^st^
> Century]{.underline}, National Academy Press, 2001.
>
> Pharmacy Benefits Management Strategic Healthcare Group, Department of
> Veterans Affairs (web site): <http://www.vapbm.org/PBM/menu.asp>
>
> Pharmacoeconomic Center, Department of Defense (web site):
> <http://www.pec.ha.osd.mil/>
>
> National Asthma Education and Prevention Program, [NAEPP Expert Panel
> Report: Guidelines for the Diagnosis and Management of Asthma --
> Update on Selected Topics 2002]{.underline} (web-based document):
> <http://www.nhlbi.nih.gov/guidelines/asthma/execsumm.pdf>

[Acknowledgements:]{.underline}

> The National Formulary Group wishes to acknowledge the invaluable
> assistance provided by the following people:
>
> Joe Canzolino, RPh, Assistant Chief Consultant, Pharmacy Benefits
> Management, Strategic Healthcare Group, Department of Veterans
> Affairs, Hines, IL
>
> COL Daniel D. Remund, RPh, MS, Co-Chair, DoD P&T Committee, and the
> staff of the Department of Defense Pharmacoeconomic Center, Fort Sam
> Houston, San Antonio, TX
>
> IHS subject matter experts:
>
> James Galloway, MD, FACP, FACC, Director, Native American Cardiology
> Program (cardiovascular disease)
>
> Frank Armao, MD, Clinical Director, Winslow Health Center (psychiatry)
>
> Kelly Acton, MD, MPH, FACP, Director, IHS National Diabetes Program
> (diabetes)

# [Members of the National Formulary Work Group]{.underline}

Howard Hays, MD, MSPH, Co-Chair

Federal, Clinic (White Earth Indian Health Center)

Samuel M. (Mike) Hope, RPh, MS, Co-Chair

Federal, Area Office (Oklahoma)

Ray Loretto, DVM

Tribal, Consumer (Jemez Pueblo)

Tom Berry, RPh

Federal, Area Office (Aberdeen)

(presently FDA)

Stephen Heath, MD

Federal, Hospital (Gallup Indian Medical Center)

Becky Finch, RPh, PharmD

Tribal, Clinic (Toyiabe Indian Health Program)

Todd Warren, RPh, BPS

Federal, Clinic (Fort Washakie Indian Health Center)

David Yost, MD

Federal, Hospital (Whiteriver PHS Hospital)

Alan Shelton, MD

Tribal, Clinic (Puyallup Tribal Health Authority)

Travis Watts, RPh, PharmD

Federal, Hospital (Claremore Indian Hospital)

Richard Olson, MD

Federal, Area Office (Phoenix)

(presently IHS HQ)

Wyman Ford, RPh, MBA

Federal, National Supply Center (Ada OK)

Chris Watson, RPh, MPH

Federal, Area Office (Phoenix)

Robert E. Pittman, RPh, MPH

Federal, Headquarters

Michael Contos, RPh

Federal, Pharmacoeconomics Consultant