How Will Specialty Pharmacy Be Affected By Cost Containment?

Cost containment and formulary management policies can have a major effect on the ways in which specialty pharmacists provide services to patients.

What is specialty pharmacy? The answer depends on whom you ask. With specialty pharmacy encompassing such a diverse set of products, it begs the question of whether specialty should be defined. While some industry insiders prefer to have innovation define its parameters, newly implemented cost containment protocols by payers may be inadvertently defining the profession. In order to determine the possible impact of cost containment, let’s see if we can first determine what specialty pharmacy entails.

Finding a specialty pharmacy definition that everyone can agree on is difficult. The disease states contained within specialty pharmacy include cancer, rheumatoid arthritis, and multiple sclerosis, just to name a few. We know that these disease states are complicated, and it is safe to assume that the complex drugs they require can be very expensive.

In response to the growing number of Medicare Part D plans that were using specialty tiers, the Centers for Medicare and Medicaid Services established a $600 minimum cost threshold that drugs must meet before plans can place them on a specialty tier. While cost is an important factor to consider, focusing on cost alone could reduce the important service aspects behind successfully caring for a specialty pharmacy patient.

This point begs the question of whether there are specific traits that are unique to specialty pharmacy. A specialty pharmacy handles pharmaceuticals that may require an intense and unique delivery process to the patient, which can account for issues such as specific storage and handling, data collection, and risk evaluation and mitigation strategy procedures. Besides managing high-touch medication therapies for patients with chronic and rare diseases, it can be argued that the strength of specialty pharmacy lies in its concentrated patient management and specialized clinical support to assist patients with adherence to their specific therapies.

It can also be argued that these specific service traits are distinct from those of retail pharmacies. Some specialty proponents may state that retail pharmacies in general may have limited storage and delivery capabilities, may not have close relationships with specific manufacturers, and may not be as flexible to handle patient emergency issues after regular business hours. Additionally, specialty pharmacy prides itself on its active refill management protocols to ensure patient adherence since these are expensive medications to manage. However, while it can be argued that specialty pharmacies have distinct service differentiations, there are lessons that can be learned from retail pharmacy when it comes to how payer cost-containment policies have essentially commoditized their industry.

Retail pharmacy is currently locked in a contentious relationship with pharmacy benefit managers (PBMs) that can be witnessed in many state legislatures and in Congress. Aggressive PBM cost containment and formulary management policies have led many to significantly increase the daily volume of prescriptions they fill to simply break even. This has caused many retail pharmacists to feel that they are no longer valued for their knowledge, but that their profession has been slowly eroded to where their services are viewed merely as a commodity.

While specialty pharmacy is not perceived in this way at this time, issues such as limited distribution networks and PBM audits that scrutinize dispensed higher-cost medications can be subtle reminders that while you view your services as specialized, this area of patient care is not immune to the harsh realities of cost containment and formulary management.

Another example of emerging cost-containment protocols by payers, seen recently in oncology, is the development of clinical pathway programs. For example, in order to prevent 2 patients visiting the same oncology practice from receiving different regimens, pathways may incentivize doctors to prescribe a specified treatment protocol for patients with a particular diagnosis based on available evidence. While the goal is to reduce costs, there are other concerns to consider. A payer can argue in favor of better patient outcomes through the use of “revenue neutral” pathways, but oncology practices may face different pathway recommendations from different insurers. Additionally, a smaller number of available regimens may discourage the use of emerging personalized treatments that may significantly help a patient due to their individual genetic makeup. While policies like these are impacting oncology practices, these programs can develop into “one-size-fits-all” policies whose effects will likely trickle down into specialty pharmacy.

In conclusion, I am a strong proponent of innovation. Like many entrepreneurs, I believe that defining an area within the marketplace has the potential to stifle innovation. While innovation has the potential to move our society forward, there is also the risk that marketplace competitors can subconsciously begin to define areas, such as specialty pharmacy, through cost protocols where patient care choices could be in danger of being reduced. I encourage industry stakeholders to keep this in mind as they continue to make valuable advances for patient care. SPT

About the Author

Ron Lanton, Esq, is the owner of True North Political Solutions LLC, a health care government affairs firm based in New Hampshire. Ron has worked in government affairs including various activities on the municipal, state, and federal levels. Most recently, he worked for H. D. Smith, where he created and oversaw the wholesaler’s government affairs department, served as its exclusive lobbyist, and also advocated for the company’s health care customers. Previously, Ron worked at a government affairs consulting firm in Arlington, Virginia, where he worked on health care, energy, commerce, and transportation issues. He also clerked for a federal magistrate, was appointed as a municipal commissioner on environmental issues, and has consulted Wall Street firms on financial issues. He has been a featured industry speaker on issues such as pharmaceutical safety and health care cost containment. Ron holds a Juris Doctor from The Ohio State University Moritz College of Law and a Bachelor of Arts degree from Miami University of Ohio. He is also a “40 Under 40” award recipient.