Community “Specialty” Pharmacy vs the Competition

The health care landscape is in the midst of a dynamic evolution, and pharmaceutical products remain at the center of legislative and consumer focus. As a profession, we understand the true value of pharmaceutical care and the benefits that innovative therapies provide to patients. However, innovation can come at a high cost, and unlike professional services or hospital care, there is often sticker shock. Given the state of political affairs currently engulfing health care, our industry regularly gets vilified and is frequently a victim of misperception.

Pharmacy is a relatively low-margin industry, and although the wholesale acquisition prices for specialty products are typically higher, recent data demonstrate that the price that is ultimately paid is not the same cost that is often published or reimbursed to the pharmacy or reflected in a patient’s co-pay. Brand drug margins, particularly in the specialty space, are in the single digits. The specialty drug market, where the innovation is occurring, represents the future of pharmacy and health care. Although the pharmacy side works hard to educate the market on its value, it frequently gets tied back to the price of the product. Therefore, it is not a surprise that some uninformed stakeholders are seeking alternatives to traditional pharmacy.

E-commerce and Pharmacy

In general, online shopping solutions are the present and future. Since 2010, retail ecommerce has more than doubled to nearly 10% of all sales, according to data published by Statista. Recently, Amazon made a big move by purchasing PillPack, a mail order pharmacy, and the market reacted by punishing both traditional retailers and their distributors. This does not come as a surprise given the tremendous financial pressures affecting all segments of the health care industry. The market is looking for the big solution, be it perceived or real.

In response to the demands of more informed and sophisticated purchasers of health care services, industry competition calls for value to be delivered at the lowest possible price. E-commerce is often viewed as a potential solution to cost; however, this does not transfer into the complex world of pharmaceuticals. Online pharmacy must compete in a whole new game, with preset rules and embedded stakeholders.

People Need People

The reality is, health care is a relationship business. Face-to-face interactions will always be the baseline; it is how we humans are wired. Although technology continues to evolve and grow the market, people will still want human interaction. To date, services provided by the community pharmacy and pharmacist play a very active role as a key component of the health care delivery system. The community pharmacy is being affected dramatically by the changes occurring within the managed health care industry and has survived. I believe community pharmacy will continue to evolve and will get stronger as a result of this perceived online threat. Pharmacists, as providers of health care services, should understand the demands and meet them in a cost-effective manner. They must adapt their methods of providing health care services, and specialty is the key.

Currently, community pharmacy has a strategic advantage as a result of the broadest network of pharmacy outlets in the US market today and consumers generally knowing and trusting their com- munity pharmacist. It stands to reason that patients would choose to maintain a professional relationship with their local pharmacist to obtain specialty products via their community pharmacy instead of through other providers.

The brand recognition of community pharmacy cannot easily be replicated by other providers. Community pharmacy already has the advantage of:

• Being patient management-based, with a focus on professional services.
• Local relationships with patients and physicians.
• Key relationships with manufacturers for purchasing power.
• Reporting capability by capturing data currently lost within the medical benefit.
• Potential tie-in of financial management services.

Specialty Services

The primary goal for specialty pharmacies is to focus their practice on therapy for patients with serious health conditions that include cancer, hepatitis, rheumatoid arthritis, HIV, AIDS, multiple sclerosis, organ transplantation, and bleeding disorders. However, innovative products defined as “specialty” are progressing into more common disease states, such as cholesterol management, asthma, allergies, diabetes, and hypertension. While many high-cost complex medications are currently limited to accredited specialty pharmacies, community and hospital pharmacies have been hard at work to prepare for the future.

Specialty medications frequently require unique handling and administration assis- tance. Furthermore, intensive patient man- agement is often needed, including teaching patients how to inject themselves and general awareness so to optimize use of these medications. Online and mail order entities are ill equipped to handle this and YouTube videos are a poor substitute for training. Specialty pharmacies provide a variety of services, including in-person proper utilization of medications, comprehensive treatment assessment, patient monitoring, and communication with caregivers and the patient’s physician or other health care providers.

With the growth of specialty products, private health insurance organizations often put cost and therapeutic controls in place that specialty pharmacies help navigate. When a product cannot get paid for in a traditional manner, specialty pharmacy services often facilitate financial assistance from patient support organizations.

Alternative Customized Non-Specialty Services and Generics

Unlike specialty pharmacy, online and mail order pharmacies have been around for decades. Newer to the scene are direct-to-patient dispensing pharmacies that share more characteristics with mail order pharmacies than the specialty space. These direct-to-patient pharmacies can be coupled with customized manufacturer programs designed to offer patients services focused on these products. These are generally not specialty drugs. Instead, they are products that may have a higher cost, a less favorable profile with insurance companies with higher co-pays, be coming off patent, or offer a lower cost to the manufacturer than selling to wholesale distributors.

Lower-cost generics have their place in online pharmacies given the fact that many of these products are often paid for in cash. This factor makes generics are a nice fit, and with complimentary sales opportunities, generics become more attractive to e-commerce organizations. With the availability of so many generics for chronic conditions, it’s a low-margin, high-volume business.

Know the Difference

There is a distinct difference between specialty and online mail order pharmacies. One is very service oriented, while the other is generally high volume. The rules of engagement are quite different, however, and are often confused because of overlapping semantics and definitions.

The Academy of Managed Care Pharmacy (AMCP) defines specialty pharmaceuticals and pharmacy as: “Requiring a difficult or unusual process of delivery to the patient (preparation, handling, storage, inventory, distribution, Risk Evaluation and Mitigation Strategy [REMS] programs, data collection, or administration) or patient management prior to or following administration (monitoring, disease, or therapeutic support systems).”

The definition further notes that high cost alone is not sufficient to label a product as specialty because this definition also encapsulates expensive branded drugs that do not carry unique delivery requirements and high-touch patient management guidelines.

The AMCP goes on to state that, “Specialty pharmacies are distinct from traditional pharmacies in coordinating many aspects of patient care and disease management. They are designed to efficiently deliver medications with special handling, storage, and distribution requirements with standardized processes that permit economies of scale. Specialty pharmacies are also designed to improve clinical and economic outcomes for patients with complex, often chronic, and rare conditions, with close contact and management by clinicians.”

Specialty pharmacy is also unique because of the staff members employed to provide education that ensures patients use their medications appropriately and remain adherent to avoid unnecessary medical costs, as well as to help patients obtain financial assistance to lower out-of-pocket costs. Furthermore, specialty pharmacy support systems facilitate the sharing of information among physicians treating patients.

It is well accepted that specialty products generally require a greater level of professional intervention than “lick, stick, and pour” and mail out the door—be it in a customized compliance pouch or in a standard amber vial. The specialty pharmacy business is built around improving patient lives and has an incredible impact on their health. Although specialty pharmacy is a business, this unfailing commitment to the well-being of patients should top the list of priorities. That is where the definition of specialty begins and ends.