The American Society for Automation in Pharmacy

ASAP Cost-Benefit Analysis on the Value of Technology February 2014

Introduction

The American Society for Automation in Pharmacy (ASAP) undertook a cost-benefit analysis in 2009 to show the cost that pharmacies incur in the use of technology and how it serves to improve patient safety, patient adherence, and serves to reduce fraud and abuse. We believe that the investment in technology used to deliver needed medications to millions of Americans each and every day is simply overlooked or taken for granted by state and federal governments, third-party payers, and others. This document is an update of the analysis published in 2009. As part of the update we decided to also include an analysis of the technology used in closed-door pharmacies servicing long-term care facilities.


Methodology

In order to develop the cost factors as fully as possible, we solicited input from technology vendors and the users of the technology. Breakpoints were selected based upon the levels at which additional technology components are typically purchased. While purchase decisions are generally individualized to address the specific needs of each pharmacy, we found considerable agreement regarding the breakpoints at which technology is added and the components that are most often added. Depreciation was calculated on a four-year, straight-line basis. While some variability exists in the way that vendor service agreements are handled, we found that certain services and third-party database components are bundled into regular maintenance fees by most vendors. Consequently, we did not attempt to break out the cost of each component. Finally, total costs are presented as an average of the per prescription cost to dispense.


Pharmacy technology clearly requires a significant capital outlay, plus ongoing support and upgrade costs. However, specific benefits are difficult to connect with specific cost factors. We decided to categorize the benefits of key technology components into three areas: patient safety, adherence, and fraud and abuse prevention. Included in this report is a table showing a breakdown of the various technologies and how they apply to each category.


We did not attempt to allocate the percentage of the cost per prescription that would benefit safety and adherence or reduce fraud and abuse. We are leaving it up to the user of the data to make this determination. It should also be noted that we did not attempt to determine the return on investment. This was not the purpose. Once again, the focus of this study was to determine the cost that is added to a prescription based on the technology used in the pharmacy and the benefits derived by the consumer. The costs do not represent the total cost to fill a prescription, only the technology costs associated with the prescription.


The ASAP membership was invited to offer comments to our findings in 2009. We had broad participation and the suggestions offered were incorporated into that final document.


There were no comments challenging the breakpoints or the costs used for the various technologies included. Because of this we feel confident that our updated costs are valid representations. As for the costs and benefits associated with closed-door pharmacies servicing nursing homes, the input we received from pharmacists with experience in this area made us feel comfortable with the cost shown.
We did not attempt to separate hardware and software costs, since it is common industry practice to bundle hardware and software, making it difficult to segregate the two. Likewise we did not attempt to identify the specific costs associated with hardware maintenance. Rather, we decided to apply a percentage of the total investment cost to cover support costs in general.


Intended Use

We encourage the use of these findings, if it is felt the data will serve to improve reimbursement and open up new opportunities for pharmacy in providing technology-based services. We ask that reference be given to ASAP as the source.