Pathways to specialty pharmacy

Specialty pharmacy may mean more targeted and individualized patient care, but its appeal in the pharmacy industry is anything but narrow.

Adam Fein“The specialty market's growth is drawing more and more pharmacies into this business,” said Adam Fein, PhD, president of Pembroke Consulting and chief executive officer of the Drug Channels Institute.  “Any pharmacy that is not trying to position for the specialty pharmacy business is setting itself up for failure.”

Nearly every sector of the healthcare industry includes specialty pharmacies. They range from independent enterprises to those owned by pharmacy benefit managers (PBMs) and health plans, to those based in hospitals or chains. As for their future prospects: Industry observers say that specialty pharmacy will only continue to grow.

According to the 2013-2014 Economic Report on Retail, Mail, and Specialty Pharmacies developed by Fein, specialty pharmaceuticals worth an estimated $63 billion were dispensed in 2013 by retail, mail-order, and specialty pharmacies.  

In addition, the report stated, specialty drugs now account for approximately 22% of total pharmacy industry revenues.

"We are in the middle of a specialty pharmacy gold rush," Fein said. "Traditional retail pharmacies face brand-new competition from health plans, wholesalers, physician practices, and hospital systems, in addition to competition from the existing specialty pharmacies. Everyone wants to be in this business, so it's really a matter of getting in, in some way, as quickly as possible."

Defining the market

Defining specialty pharmacy isn't easy; there is no special licensure or accepted industry-wide definition to designate a specialty pharmacy.

Fein described specialty pharmacy as a business strategy that can be adopted by any pharmacy with access to a drug through a legitimate distribution channel.

Jennifer HagermanThe National Association of Chain Drug Stores goes into somewhat greater detail, defining specialty pharmacy as “the service created to manage the handling and service requirements of specialty pharmaceuticals, including dispensing, distribution, reimbursement, case-management, and other services specific to patients with rare and/or chronic diseases.”

Experts agree that regardless of the specific definition, one thing remains clear - specialty pharmacy means going beyond the mere dispensing of a drug.

“Simply dispensing a specialty pharmaceutical is not enough to truly take care of these patients,” said Jennifer Hagerman, PharmD, senior director of education and quality for Diplomat, during a specialty pharmacy session at the annual meeting of the American Pharmacists Association held recently in Orlando, Fla.

Who's in the game

While specialty pharmacy owners comprise a range of different types, including PBMs, independents, chains, and hospitals, data shows that in terms of revenue, the national market share remains fairly concentrated.

According to the Drug Channels Institute, 63% of the revenues derived from pharmacy-dispensed specialty drugs in 2013 were earned by Express Scripts, CVS Caremark, and Walgreens.

Pharmaceutical trends

The popularity of specialty drugs continues to be on the rise. According to Hagerman, FDA approved 27 new molecular entities in 2013. Of that number, 14 were specialty medications.

“We are starting to see much more personalized and targeted medications coming to the marketplace, with some of these medications even being accompanied by a diagnostic test, so you are making sure that you are actually treating the right group of patients,” Hagerman said at the meeting.

Pharmaceuticals considered specialty medications typically have several common characteristics, such as high cost, special requirements for administration, special needs for storage and handling, exclusive or restricted distribution, and the need for ongoing monitoring to ensure safety and efficacy.

“Specialty medications can be hugely varied in cost. They can be anywhere from about $10,000 a year all the way up to the most expensive drug, which is about $400,000 a year," Hagerman said during the session.

When looking at the drug trend, which measures the rate of change in total drug spend after both cost and utilization are evaluated, Hagerman said, the industry saw double-digit growth of 18.4% for specialty pharmaceuticals in 2012, while traditional drugs saw a record low of -1.5%.

What’s hot

Examined on a per-member/per-year cost to commercial plans, data on specialty spending show that the highest commercial specialty-therapy class is inflammatory conditions, which accounted for a per-member/per-year cost of $50.62, followed by multiple sclerosis, cancer, HIV, and hepatitis C virus (HCV).

Other common disease states addressed by specialty pharmacy include respiratory conditions, anticoagulants, growth deficiency, and transplants.

Experts in the industry say that in order to achieve success in the industry, it is essential to watch the drug pipeline, because it allows pharmacists to prepare for new drug launches, create strategies to work with payers and pharmaceutical companies, and review key trials to determine how best to work with patients to replicate study results.

“It's important that we watch what's coming down the market,” Hagerman told the crowd. “If you don't know before it gets here, it's going to be too late.”

The challenges

While more and more pharmacies may be trying to enter the specialty pharmacy market, the market is not without its challenges.

Accessibility. Access to specialty pharmaceuticals can often be a problem, due either to a payer lockout or to limitations imposed by the manufacturer.

According to Hagerman, payers typically require pharmacies to be accredited by one of several accrediting organizations. The largest and most prestigious of these accreditation organizations, she said during the conference session, is URAC, an independent nonprofit that offers accreditation, education, and measurement programs.

Several benefits result from securing such accreditation. Many networks require it; it helps pharmacies identify areas for improvement; it helps to ensure compliance with internal policies; and it could give a pharmacy the competitive advantage.  However, the accreditation process is time-consuming and costly - particularly in light of the number of man-hours necessary to complete the process.

Clinical expertise. Another challenge to the establishment of a specialty pharmacy is the level of clinical expertise necessary for successful treatment of patients, resulting in large part from the extensive variety of specialty pharmaceuticals and the distribution regulations and recommendations associated with many of those products.

There are ways to improve levels of staff expertise, Hagerman told conference attendees. Education and training can be made part of the job responsibilities of the clinical staff; annual competencies can be added; and incentives such as promotions or rewards can be offered to those pharmacists who achieve relevant certifications, such as board-certification in oncology pharmacy or specialty pharmacy.

Drug adherence. As in traditional pharmacy, patient adherence is also a challenge in specialty pharmacy. According to Gary Rice, BS Pharm, MS, MBA, CSP, vice president of clinical services at Diplomat, who also spoke at the American Pharmacists Association annual meeting, patient adherence is a particularly important area of focus for specialty pharmacy providers, because often patients dealing with complex disease states are prescribed complex medications.

"If patients have a positive experience with that drug therapy, we see that they have much better adherence," Rice said.

Data show that 70% of health plans rely on specialty pharmacies to improve adherence, he said during the session.

“This is an important emphasis for the payer, so payers are expecting the specialty pharmacy to manage these patients - in a way, with these very high-cost drugs, that these patients are compliant," he said.

Techniques to improve adherence

Some of the means by which patient adherence can be improved include the use of compliance packaging, adherence calls, and patient training and education. Diplomat also uses prophylactic starter kits that include over-the-counter items to treat possible side effects of the medication.

Technology can also help pharmacies track patient adherence, whether through the use of glow caps that remind patients to take their next dose or smartphone applications designed to improve adherence.

According to Rice, Diplomat’s approach to the use of technology to enhance patient care includes employment of multiple systems, as well as different types of technology that move beyond just the traditional patient-dispensing system.

“Often you need an additional technology, from a patient-care-management perspective,” he said, adding that a data warehouse is also necessary for combination and assessment of multiple forms of data.

Technology systems should use strategic data collection to drive adherence and refill calls, identify missed doses and their causes, provide side-effect details, and identify any educational needs of the patient.

Getting into the game

There isn't just one path to involvement in the specialty pharmacy business, Fein said, and pharmacies have to decide which option works best for them.

For instance, while some pharmacies choose to acquire specialty pharmacies or to build their own internal specialty pharmacy capabilities, another option is to partner with an established specialty pharmacy. These partnerships allow retail pharmacies to outsource some back-end clinical services - such as prior authorization, adherence calls, and copay assistance - that often accompany the use of specialty pharmaceuticals, while enabling the retail pharmacy to continue to maintain the patient relationship.

"These partnerships are really a lower-risk way to enter the specialty pharmacy business," Fein said.

Investment decision

How a pharmacy chooses to get into the specialty pharmacy market is an investment decision, Fein said. While a partnership between a retail pharmacy and specialty pharmacy offers a lower risk and lower investment for a retail pharmacy, it also carries a lower return and may not be a sufficient arrangement over time, he said.

“Ultimately, however, I think that these pharmacies will have to make the investment, or they won’t be competitive over time,” he said.

Not every specialty pharmacy will also be interested in an arrangement like this, since many will be focusing on growing their own business. There are specialty pharmacies, however, such as Diplomat that do offer partnership arrangements.

Fein said the key for retail pharmacies is finding specialty pharmacy partners who can show manufacturers their capability to receive specialty products.

“Pharmacies need to ask, will this partnership be sufficient to get access to products or not?” he said.

A changing industry

Regardless of how pharmacies choose to move forward, Fein said, the industry is changing.

In coming years, two primary types of drugs will be dispensed to patients: the relatively low-cost generic drugs and the more expensive, highly specialized products that cater to fairly small patient populations.

“That traditional middle-of-the-market primary care is dropping away. Pharmacies need to make a choice as to how they are going to survive in this new world that’s going to be here within three to five years,” he said. “Fundamentally, pharmacies need to change or die.”

Jill Sederstrom is a freelance writer in Kansas City.