Executive Summary:
Proposal: This project was aimed at studying the feasibility of centralized sterile product preparation for Anywhere
Health Care’s (AHC) 15 hospitals.
Rationale: We can reduce AHC use of products purchased from compounding pharmacies while providing the same benefits of those compounded products by using Outside Testing Labs to validate extended beyond use dating. By centralizing this process we reduce variation in products by having one validated method for preparation. The ability to reduce the impact on future drug shortages is an advantage as well.
Operations:
Summary of regulations surrounding manufacturing (repackaging) and distribution within a health system:


Allowed under State regulations as intra-system transfer of products, exempt from distribution license
Preparing controlled substances requires DEA manufacturing and distributing licenses
Location for preparation: Main Hospital

Available USP <797> compliant clean room

Available space for storage and distribution activities

Ruled out other locations due to construction and capital costs
Products: 10 products were identified to prepare; decreasing our drug costs by $500,000 annually:
 hydromorphone PCA
 morphine PCA
 midazolam infusion
 fenantyl infusion
 succinylcholine syringe
 ropivacaine 0.2%
 magnesium 1 gm
 magnesium 2 gm
 phenylephrine syringe
 norepinephrine infusion
Developed and/or shared by the American Society of Health-System Pharmacists
More information is available at www.cspinsourcing.org

Financial assessment:
Salaries
Year 1 Year 2
$170,500 $152,250
Year 3
$156,818
Year 4
$161,522
Year 5
$166,368
Total
$807,457
Operational Costs
Capital costs
$464,583 $597,794
$ 168,006 $ 0
$624,123
$ 0
$653,598
$ 0
$684,968
$ 0
$3,025,066
$ 168,006
Savings $ 631,057 $ 1,119,746 $ 1,175,733 $ 1,234,520 $ 1,296,246 $ 5,457,302
Net operational savings $15,695
% net spend -2%
$282,794
-27%
$303,540
-28%
$323,584
-28%
$344,304
-29%
$1,269,916
-25%
Implementation timeline:

After DEA licenses are obtained, security installed, equipment purchased processes developed and training completed, we will begin to incorporate 1-2 products per month, until fully operational. o Year one operational costs include this ramp up in production.
Workflow diagram:
Purchase
•Main
Hospital purchases
•Delivered to
7th floor
•Inventory kept on 6th floor
Prepare
•Items prepared for batch- all supplies gathered, labels printed
•Product moved from
6th floor to
7th floor for preparation
Test/Store
•Moved back to 6th floor
•Products sent to
Outside
Testing Labs for testing, quaranteed for 14 days until validated
Distribute
•Products sent to various sitesmonthly
'allocation'
•Cost transfer occurs monthly
Limitations:

Discussions with the local DEA to determine level of manufacturing may result in increased security measures for storage and distribution of controlled substances

Inefficient process to move products back and forth between basement storage space and 7 th floor at Main
Hospital
Conclusions:

Operationally feasible at Main Hospital with least capital startup costs

Financially beneficial for the organization with a five year net operational savings of $1.2 million, 25% reduction in net spend.
Developed and/or shared by the American Society of Health-System Pharmacists
More information is available at www.cspinsourcing.org

Legal Background:
Evaluation of the current rules and regulations surrounding manufacturing and distribution within a hospital system revealed that hospitals are exempt from FDA manufacturing licenses (21 CFR 203.3) and [the state] does not currently have regulations surrounding a manufacturer license. Federal regulations for distribution refer back to compliance with state regulations. [The state] allows intra-company transfers of non-controlled substances in a hospital system to be exempt from distribution licensing [insert state regulation citation here]. However, for preparation and distribution of controlled substances, additional DEA manufacturer and distributer licenses are required. The DEA defines repackaging and relabeling as a form of manufacturing and does not provide any exemptions for hospitals.
DEA licensure:
Applications: designate which products and how much would be prepared and distributed annually.
Cost: $3407 for DEA manufacturer license.
Reporting:

ARCOS- inventory, acquisitions and distributions transactions in specific format. Reports monthly or quarterly

Year-End-Report- online information for inventory & quota information.
(http://www.deadiversion.usdoj.gov/quotas/quota_apps.htm)

Cost: Free software provided; will take time to record and submit information.
Security:
Need definition of small vs. large quantity from DEA- different requirements from local DEA

DEA determined as small quantity. Received approval for plans of our safe and security measures. o If we were deemed a “Large quantity manufacturer” there would have been increased requirements regarding wall & floor thickness, vaults, storage facilities, alarm systems, etc..

Limited access, authorized employees only to storage areas. All activities dealing with controlled substances must be supervised and under surveillance, all products must be secured at end of business day.

Contract carriers need to be secure and connected with a CB to notify law enforcement.

Policies & Procedures on theft/loss reporting.
Developed and/or shared by the American Society of Health-System Pharmacists
More information is available at www.cspinsourcing.org

SWOT Analysis:
Centralized Sterile Product Preparation
Strengths

Avoid non-24 hour sites from ‘RN-to-mix’ preparations or waste from preparing ahead of time with no patient need

Ability to store in unit based cabinets (UBCs) and facilitate quicker turnaround time on nursing units- supporting cartless model that many sites are striving towards

Reduces site-by-site batching of certain products

Reduce dependence on externally compounded products

Reduce variation by having batching occur at one site using one validated technique

Main Hospital has available storage and distribution functions and available IV hood space for preparation reducing capital startup costs
Opportunities


Expanding products to increase cost savings

Consider code cart syringes or Qpumps
Prevent critical drug shortages internally by producing necessary supplies and reducing our dependence on third party compounding pharmacies
Weaknesses

Labor resource needed for added workload

Need for quality control processes and reporting measures that do not already exist

Storage of large batches of product both at preparation site and receiving site

Upfront testing costs of each medication for extended beyond use dating

Sterility testing: o Destructive test requires waste of products o If performed internally requires additional competency o If external, additional cost

Monthly cost transfers could get complicated

340B drugs NDC replaced at original site NDC for NDC, extra step for shipping bulk vial back to preparation site

PCA preparation will require additional storage considerations at each site within UBCs as current pre-made PCAs do not have the plunger attached, this additional length to the product will require sites to find additional space or avenues for stocking on patient care areas.

Moving large volumes of fluids will require heavy lifting

Inefficient process to move product back and forth from storage space to 7 th floor

Time spent on reporting to ARCOS/DEA
Threats

Change in drug costs, reducing margin

Change in regulations surrounding centralized preparation and distribution

Shortages- bulk drug, supplies

Recall of drug product
Developed and/or shared by the American Society of Health-System Pharmacists
More information is available at www.cspinsourcing.org

Financial Model:
There is significant drug cost savings by preparing sterile products internally rather than outsourcing the selected compounded products.
 Operational costs including drug cost, labor and equipment to implement and prepare these products internally is ~$590,000.
Net Operating Savings
Year 1
$22,091
Year 2 Year 3 Year 4 Year 5 TOTAL
$377,217 $394,232 $416,424 $443,852 $1,653,816
Net Spend % -3% -34% -34% -34% -34%
* Expected savings are susceptible to change with impending drug shortages and variety in drug pricing
-30%
Investment: Equipment necessary to prepare these products:

Repeater pumps

CII Brain

Safes

Outside Testing Labs testing

Additional security measures (camera, locks, badge reader etc…)

Storage totes

Shelving units

Printer
Expected ongoing expenses include IV supplies, sterility testing materials, labels, drugs and labor.
Location for preparation:
A number of locations were considered, but the best option was determined to be at Main Hospital. Other options included Anywhere Hospital B and Anywhere Hospital C, but were ruled out due to limitations with available space, labor resources and additional capital costs. Nearly 50% of the products produced would be used at Main Hospital, allowing for less required distribution if Main Hospital was the preparation site. The high risk IV room is currently an underutilized space at Main Hospital that is USP <797> compliant. This IV room is the most cost effective space to begin sterile product preparation without too much interruption of the workflow. The Main Hospital pharmacist in the ante room would be available to check the initial setup and final products prepared by the centralized IV prep technician. A separate office space is available for storage and distribution activities. With the additional security measures, controlled substances should be able to be stored in the side room once secured and monitored. The estimated cost of construction of a clean room at the existing packaging center is $310 per square foot, in addition to purchasing all equipment and reconditioning the back storage space for proper medication storage it was determined not to pursue operations at the Offsite Packaging Center location at this time.
Robotic Technology:
There are three robots for non-hazardous preparation currently in the market that were evaluated.
There are several advantages to using robotic technology for the use of sterile product preparation. Automating the preparation of sterile products allows for increased accuracy and standardization between products. There are several
Developed and/or shared by the American Society of Health-System Pharmacists
More information is available at www.cspinsourcing.org

check points to validate proper loading of the robot and selection from the robotic arm prior to preparation. Validation of the barcode, vial size, vial weight, and photographed image are common safety measures for all robots in the market.
Electronic documentation for each individual product is recorded and validated upon checking by the pharmacist for proper product selection, pre and post preparation weights and final image for visual product inspection. Products are then labeled for use. A daily UV sterilization is also common for these machines to utilize to ensure proper environment for preparation. Finally, because a robot is doing the manipulation, there is a decreased exposure to needle sticks for employees. While the list of advantages for robotic technology is certainly appealing and valid to warrant the evaluation, there are some major disadvantages which are outlined below.
Robot A: This product only produces products in syringes at this time. Due to this limitation and the desire to expand our preparation to include more products than just syringes, this technology was ruled out.
Robot B: This robot was excluded for two main reasons. The first and primary reason was the capital expense. The robot cost $ 1.2 million, not including the annual maintenance agreement. Secondly, this robot was not fast enough to produce the number of products we would need to produce for an adequate supply for AHS. After contacting actual end users of this robot, the true capacity was realized only a couple hundred doses per day, with much supervision from a technician. The company representatives recommended two to three robots to service our entire system. Despite the cost savings in drugs, it was not enough to support the capital expense.
Robot C: This robot provided some promise in that its design was much smaller, allowing it to fit into an existing IV room. It also boasted that it was faster than the competition, but after a site visit, the capacity for the IV Station was just not enough at this time. Other institutions have made this robot work, but it has taken years to tweak and perfect the process before they were able to gain the efficiencies claimed. Robot C was less expensive than Robot B at $350,000 with a $50,000 annual maintenance fee. Robot C also had the technology for RFID chips that could be placed into the labels to track products in the hospital and distribution routes. The primary reason for excluding this robot was its lack of efficiency at this time. Averaging only 23 products per hour, we would need at least three robots to meet the needs of our organization with no intention of expanding our products.
The final method of preparation that was considered was technician manipulation with the help of a repeater pump.
Repeater pumps cost approximately $4,000 and have the throughput to produce between 60-100 doses per hour.
Despite not being a fully automated process, this method was determined to be the most cost effective for our needs at this time.
Products:
The initial analysis of medications to produce was driven from the top outsourced compounded sterile products purchases. In addition to that list, products that are currently being batched and other ‘pre-made’ products were considered. Actual usage data from across the system was annualized to determine the number of doses necessary to produce. Current costs of the bulk medication, diluents, syringes and needles necessary were all considered in the total cost of the preparation when determining the savings. The final product list was determined by the top ten products that provided the most cost savings and could feasibly be produced in one month’s time. As noted above, the following are the final products that provided the most cost savings.
Developed and/or shared by the American Society of Health-System Pharmacists
More information is available at www.cspinsourcing.org

Medication
Hydromorphone HCL
Midazolam
Ropivacaine HCL (PF)
Morphine Sulfate
Succinylcholine
Fentanyl Citrate (PF)
Magnesium
Magnesium
Phenylephrine
Norepinephrine
Concentration/Strength Diluent/Diluent
0.4mg/mL 0.9% Normal Saline 30 ml (PCA)
1 mg/mL
0.2%
2 mg/mL
20 mg/mL
0.9% Sodium Chloride 100ml
0.9% Sodium Chloride 250 mL
0.9% Sodium Chloride 30 mL
(Straight pull) 5 mL syringe
10 mcg/mL
2 gm
1 gm
100 mcg/ml
4 mg
0.9% Sodium Chloride 100 mL
NS 50 ml (or SW)
D5W 100 ml
5ml syringe (normal saline)
0.9% Sodium Chloride 250ml
Labor:
It is estimated that this preparation can be coordinated with 3 technician FTEs and a partial pharmacist (0.2 FTE). Main
Hospital’s anteroom pharmacist will provide the product checking, partial pharmacist FTE will provide program oversight, validation and coordination of scheduling. For the initial startup, a coordinating pharmacist or qualified lead technician will be necessary to develop the policies and procedures, training documenting, initial validation and application for DEA licensure.
A lead technician would be required to perform all documenting and reporting for DEA requirements with pharmacist oversight. Daily audits would be necessary for controlled substances. The lead technician would help with the daily preparation, testing and distribution activities, with a second technician whose primary role would be preparing the products.
Testing:
Contracting with Outside Testing Labs for outsourced sterility testing to achieve extended beyond use dating for the products produced is vital to the success of this operation. After preparation, all products will be sequestered for two weeks to ensure sterility. After meeting minimum sterility testing, products will be distributed to Anywhere Hospitals for patient use. To meet USP <71> requirements, a prescribed portion of each batch is tested for sterility. By using
Outside Testing Labs for our external testing, we will have an auditable record of sterility and validation of testing.
Currently, Main Hospital has determined that sending the prescribed portion of products out for external testing is the most feasible. Contracting with our internal lab for future testing is an area for exploration.
Developed and/or shared by the American Society of Health-System Pharmacists
More information is available at www.cspinsourcing.org

Purchasing:
Drugs and supplies will be purchased using the new DEA license to create a new account. Separate POs will identify the order. Monthly cost transfers will be coordinated by the preparation site.
Distribution:
A medical courier company will distribute these products with a daily (Monday-Friday) pickup from the packaging center at Main Hospital. Each product will be prepared and distributed to the hospitals on a monthly basis.
Workflow:
The preparation activities will be conducted in the High Risk IV room at Main Hospital. The storage and distribution portion of this project will take place in the basement storage space. A daily breakdown of the activities is outlined in the Centralized Sterile Product Preparation Workflow Power Point .
Limitations:

Actual production time is unknown until batch recipes have been made and tested

Unknown amount of time for reporting to ARCOS

Drug shortages may prevent preparation of certain products
Implementation timeline:

Meet with DEA to determine security needs

Security install: Update packaging center space to accommodate new totes, secure glass window, secure door to
“controlled substance space” install badge reader and security cameras.

Submit DEA license applications for approval

Develop policies & procedures

Develop training materials

Hire technicians

Purchase of capital equipment and storage

SOP for each individual product will be prepared

Validate workflow process with technicians

Technicians trained/validated

Validation for Outside Testing Labs sterility testing will be conducted

Communication plan between sites needs to be identified and developed
Once products have been validated and are ready for preparation, will begin with two products, in addition to midazolam and norepinephrine that SLMC will be producing for a total of four products.
Developed and/or shared by the American Society of Health-System Pharmacists
More information is available at www.cspinsourcing.org

Once process is developed, begin to incorporate 1-2 products per month, until fully operational.
Month Labor (FTE) # of products Products Year 1 % Savings realized for added product
100% savings Month 0-3 1 tech
1 pharmacist
Months 4-5 2 techs
0.5 pharmacist
Month 6
Month 7
Month 8
Month 9
2 techs
0.5 pharmacist
2 techs
0.5 pharmacist
2 techs
0.5 pharmacist
2 techs
0.2 pharmacist
2 products Midazolam, norepinephrine
+2 products (4 total) Midazolam, norepinephrine magnesium 2gm, fentanyl
+ 2 products (6 total) magnesium 1gm hydromorphone PCA,
+ 2 product (8 total) phenylephrine syringe
Morphine PCA
+1 products (9 total) Succinylcholine syringes
+ 1 product (10 total) Ropivacaine 0.2% 250 ml
75% savings
50% savings
42% savings
33% savings
25% savings
Developed and/or shared by the American Society of Health-System Pharmacists
More information is available at www.cspinsourcing.org