Importance of Hospital Specialty Pharmacies Grows Amid Shifting Oncology Landscape

Powerful economic forces continue to drive change in, which is clearly evident when examining the trends affecting hospital and institutional practices. We are seeing rising drug costs across all segments, for inpatient hospital in particular, but those same trends create opportunity on the outpatient side, specifically around oncology. Most hospitals are focusing on specialty pharmacy to improve continuity of care and generate significant new revenue. As mentioned in previous editorials, the number of specialty drugs entering the market is growing, with hundreds more in the pipeline. Although our politicians continue to debate ways to control escalating drug costs, each new product introduction seems to set a new pricing standard for these innovative therapies.

Changing Dynamics in Oncology

Oncology medical practices continue to evolve, and as a result of the changing dynamics of buy-and-bill drug reimbursement, many oncologists have left traditional community practice and integrated into hospitals or academic centers. Because of this remarkable trend, the importance of hospital specialty pharmacy has grown exponentially. This shift changes the practice of hospital pharmacy as well as the product and patient mix that flows through it. A greater number of patients with cancer are receiving infusions in outpatient facilities associated with the hospital instead of a community oncology practice.

Opening Limited Distribution Doors

Manufacturers of both oral and infused oncology products should see an increased demand for their products in the outpatient and inpatient hospital settings. The parameters for these companies are changing, as previously limited or closed distribution networks are being forced to be more open, expanding the opportunities for hospital specialty pharmacy. Hospitals that open a specialty pharmacy are challenged by access to these limited-distribution networks. In my experience, limited-distribution products and the ability to participate in these networks have restricted a majority of the fill opportunity.

Given that the distribution channel for most products entering the hospital space is via specialty drug distributors that may limit access to a drug under a contractual agreement with the manufacturer, a hospital pharmacy subsequently needs to approach both the distributor and the manufacturer to obtain access. Certain criteria may have been established by the manufacturer to gain access based on different clinical and reporting requirements; however, infrastructure and reporting capabilities do not always translate to drug access. Clearing all these hurdles takes time, effort, and investment.

Access to infused oncology specialty products tends to be less limited than access to orals. Therefore, a health-system specialty pharmacy should have access to approximately 75% of the necessary infused oncology products available on the market. Expanding a product mix will change financials because specialty drugs currently account for approximately 35% of the total drug spending from less than just 3% of prescription volume dispensed. Over the next several years, about 40% to 50% of the total US drug spend is expected to comprise specialty medications.¹

Upgrading to Health-System Specialty Pharmacy

Hospital pharmacy has long been on the leading edge of the profession, and the bar continues to rise for graduates who may want to practice in the hospital setting. To get a clinical position in a hospital, most graduates enter 2-year residency programs after 6 to 8 years of both prepharmacy and pharmacy education. This expanding pool of talent bodes well for the future of hospital specialty pharmacy.

Several factors should come into play as hospitals continue to expand into oncology. The benefits of specialty pharmacy integration stretch beyond finances, with numerous opportunities to take patient care even further. Hospital specialty pharmacy is ideally positioned to expand clinical services with an integrated approach that includes oncology physician practices that interface as a component of an overall accountable care organization. Because a hospital-based specialty pharmacy can collect clinical data from a number of sources to demonstrate outcomes and quality of care, it can more accurately report adverse events, participate in clinical trials, and advance medication adherence, to name just a few benefits.

This unique portfolio of services, data sharing, and care coordination in the oncology space in particular is difficult to duplicate compared with standalone specialty pharmacies. This creates yet another set of circumstances that oncology manufacturers should pay attention to. Pharma needs to establish better channels of communication with hospital specialty pharmacies, especially to educate pharmacists on the attributes of their products and services they may provide. (Specialty Pharmacy Times® has expanded our reader base to include this important audience.)

Reimbursement and Access to Payer Networks

By and large, specialty pharmacies have grown as a result of the expertise developed through gaining access to payers and navigating the reimbursement landscape. As hospitals expand their product mix to include specialty products, they must also expand their skill sets to address these complicated areas. The buy-and-bill world of reimbursement and drug benefit programs for outpatient specialty products presents a newer set of needs that require hospital pharmacies to engage new resources for their personnel and internal systems. Manufacturers recognize the importance of providing resources that assist in the reimbursement process, often engaging the services of a hub or offering guidance from field-based reimbursement specialists. Additionally, nearly all specialty products have some form of patient assistance programs available to offset their cost.

Hospital specialty pharmacies are working hard to educate payers on their expanding access to products and services in this shift from community to institutional oncology. This transition requires that pharmacies participate in payer networks and expand their contractual access to be defined as a health-system center of excellence. Although a hospital specialty pharmacy can dispense products to patients with Medicare and Medicaid, the same cannot be said for commercial plans in most cases. This process is rapidly evolving as contracts increasingly shift their focus from the medical benefit to the pharmacy benefit, which is managed by a pharmacy benefit manager.

Additionally, most specialty product revenue from the pharmacy benefit flows through in-house, payer-owned specialty pharmacies. Although this is old news for traditional specialty pharmacies, it is likely a new experience for hospitals. This explains the large growth in specialty accreditations by hospitals, as they recognize that payer access is often gated by having obtained accreditation from 1 or more entities.

Approximately 10% of all specialty prescriptions are dispensed by 340B contract pharmacies, and nearly 50% of hospitals with more than 600 beds operate a specialty pharmacy, which highlights the importance of purchasing specialty drugs through the 340B program.² This makes complete sense, as hospitals participating in 340B can access discounts on the cost of drug acquisition. These discounts provide significant economic benefits to the health system in reducing the drug spend and improving margins while supporting outreach and care for uninsured and underinsured patients.

Only Going to Grow

The portfolio of specialty products will continue to expand as these products become increasingly complex, as seen with gene therapies, chimeric antigen receptor T-cell products, and customized treatments. Patients can access this level of unprecedented care only through the services of a complex integrated health care setting, most often the hospital—hence the broadening of hospital specialty pharmacy services. What an exciting time for the industry. We recognize this evolution, and as such, Specialty Pharmacy Times® is evolving our content to expand our readers’ access to information and education around oncology. We invite you to join us on this journey as the number of innovative oncology products grows.

A specialty pharmacy’s specific expertise and experience in supporting patients with cancer is among its most essential attributes. The very best of these entities combine professionals who have years of experience in oncology with supportive clinical capabilities and great data-driven decision making. The well-trained, compassionate professionals—and not just the products they dispense—are what truly makes a pharmacy special.

References

• Top 10 issues facing hospital pharmacy in 2019. Visante website. visanteinc.com/top-10-issues-facing-hospital-pharmacy-in-2019/. Published December 11, 2018. Accessed June 3, 2019.
• Nezneski L, Shain C, Wilson, A. Understanding and navigating specialty and orphan drug challenges in the 340B program. Specialty Pharm Times. 2019;10(2):28-32.