NASP Responds to Controversy Surrounding Specialty Pharmacy Use

Mischaracterization of specialty pharmacy rampant amid growing controversy regarding specialty drug pricing.

As a rising tide of media scrutiny and criticism has begun to surround the relationship between pharmaceutical manufacturers and specialty pharmacies, the National Association of Specialty Pharmacy (NASP) released a statement Monday in response to what it called a “mischaracterization of specialty pharmacy.”

The New York Times and Wall Street Journal both recently published articles questioning the relationship between specialty pharmacy and drug manufacturers following Valeant Pharmaceuticals International Inc’s announcement it would purchase a specialty pharmacy called Philidor Rx Services, based in Hatboro, Pennsylvania.

Valeant, which is has lately been under fire for sharp drug price increases, was alleged in the report by the Times to have used Philidor to keep prices high for dermatology products.

“The fact that a company calls itself a specialty pharmacy does not make it so. Simply stated, charging high prices for medications does not define a specialty pharmacy,” NASP wrote in the statement.

“A specialty pharmacy is a state-licensed pharmacy that solely or largely provides only medications for people with serious health conditions such as cancer, hepatitis, rheumatoid arthritis, HIV/AIDs, multiple sclerosis, organ transplantation, or bleeding disorders. In addition to being state-licensed and regulated, specialty pharmacies are often accredited by independent third parties such as URAC or the Accreditation Commission for Health Care,” the statement continued.

Valeant said Monday that accounting associated with the relationship with Philidor was legal, but said it would form a special committee to investigate the relationship, according to the Times.

A report issued by Citron Research stated that Valeant could be the pharmaceutical equivalent of Enron, by using Philidor and affiliated pharmacies that may allow Valeant to record “phantom sales” to pharmacies that bolster financial results.

Valeant Chief Executive Officer J. Michael Pearson said on a company quarterly earnings call that Valeant purchased an option to acquire Philidor in late 2014 and Valeant consolidated Philidor’s results in its own financial reports, according to the Times.

“An option? To acquire a company to which you are the only customer? Why would Valeant, a major big cap pharma, a darling of the hedge fund crowd, a suitor of Allergan and an aggressive acquirer of pharmas like Salix, Bausch & Lomb, etc, etc, be secretly maneuvering to buy a little known pharmacy with a concealed ownership structure? And then consolidate its financials? Why was this entity NEVER disclosed in any prior company disclosure?” Citrix questioned in the report.

Allergen released a statement last week stating it has no ownership or affiliation with any specialty pharmacy.

“Regarding the commercial distribution of Allergan's products, the Company does not rely on specialty pharmacies for the distribution of its products,” the statement read. “The Company stated that approximately 3% of Allergan US Branded sales are distributed through unaffiliated specialty pharmacies, the majority of which are unique specialty products, namely Botox Therapeutic and Zenpep. The Anda Distribution segment is a traditional pharmaceutical wholesaler with no specialty pharmacy capabilities or licensing.”

As this controversy continues to grow, NASP stated that there is a general misunderstanding regarding what defines a specialty pharmacy, which provides a number of services, including assistance in arranging for payment by private insurance, Medicare, or Medicaid.

Specialty pharmacies also help patients find financial assistance through patient support organizations or assistance programs run by pharmaceutical manufacturers.

“Specialty pharmacies often work closely with pharmaceutical manufacturers. However, specialty pharmacies are not manufacturers and do not establish prices for medications,” NASP said in the statement. “Rather, specialty pharmacies connect severely ill patients with the medications that are prescribed for their conditions, provide the special handling and patient care services that are required for these medications, and support patients who are facing reimbursement challenges for these highly needed but also frequently costly medications.”