Oncology: Are You on the Right Path Through the Brewing Storm?

Diplomat Specialty Pharmacy's president and chief executive officer shares his thoughts about the turbulent oncology arena and how specialty pharmacists can survive the storm and prosper.

To find the “right path” in oncology, one must survive a maze of challenges with no simple answer or direction. It has, nevertheless, always been our belief that every challenge creates opportunities. In fact, there is usually a direct correlation between the complexities of the challenge and the size of the opportunity. In this case, the “right path” appears to go directly through a new storm of changes and complexities that will take the oncology sector on a wild ride for the next several years.

There was no greater example of a “perfect storm” than the one in oncology 5 years ago. With the onset of Medicare Part D, new oral oncolytics emerging from the pipeline, the complexities of billing Medicare Part D or Medicare Part B, HUB distribution models, and emerging risk evaluation and mitigation strategies, a “perfect storm” was created that blew some companies off course. Conversely, this created opportunities for others who developed programs to address the conflicting elements that caused the storm.

There are currently storm clouds brewing that could create another set of challenges for your company or—depending on how you address them—could instead set the stage for business wins that can drive you past the competition. The difference will be determined by what you do now to set your course for the future.

One key opportunity is in the area of oncology pathways. Industry eyes watched the growth and recent sale of P4 Healthcare, primarily an oncology pathways company. Pathways management is one of the key strategies that managed care organizations are beginning to embrace to control the skyrocketing costs of new therapies and cancer care in general. Payers are using oncology pathways to ensure that oncologists are following national treatment guidelines for various types of cancer, capture medical and pharmacy data that are not otherwise accessible, and address the complexities of provider reimbursement. Other oncology pathways companies are now emerging. Companies are developing unique models to take risks, including capitation models that in oncology have been relatively untouched.

Another sector that will fuel the storm is the emergence of personalized medicine and diagnostic testing. According to Perry Dimas, vice president, business development, Premier Source Diagnostics, “The diagnostics and testing area is still the Wild, Wild West and is in its infancy.”

A big driver that will marry diagnostic testing and devices to the specialty pharmacy (SP) industry will be in the companion testing area, where the approval of additional new therapies will be driven by gene-specific targeting and create both opportunities and challenges around product launch, marketing, and distribution strategy.

What Will Be The Path For Specialty Pharmacy In Diagnostics And Personalized Medicine?

At a recent diagnostics conference (DXcon11east) focusing on personalized medicine, the keynote speaker opened with a slide of all industry stakeholders. It was an exceptional presentation and the discussion showcased the roles of the stakeholders and how they integrate. The usual suspects were all included starting with the 5 “P’s”—patients, physicians, payers, PBMs, and pharma. The second 5 also made sense—hospitals, diagnostic companies, regulatory agencies, gene sequencing companies, and health care IT companies.

With 10 “stakeholders,” you would expect that all had been included. But the group that I believe was glaringly absent was specialty pharmacy. It will be up to the SPs, in this space, to find their path. The personalized medicine bucket is significant and projected to grow at 11% annually, from approximately $275 billion today to nearly $400 billion by 2015, according to PriceWaterhouseCoopers. The same report projects the targeted therapies portion of the personalized medicine bucket alone to grow to more than $21 billion in that same time. It is not surprising that oncology is a significant player in this growth. What will you do to ensure your share of both distribution and services from this growing segment of the “storm”?

Where Is The True Path To Utilization Management?

This has become the “Holy Grail” in oncology and will likely emerge as the dominant theme in the near future. Long gone are the days when the SP’s function revolved around managing prior authorizations, validating the right drug to the right patient, and ensuring compliance. As cost containment pressures grow, the competitive bar is being recalibrated to a higher standard.

Specialty pharmacies are now regularly involved in partial fill strategies with oncolytics. In addition to only dispensing a limited quantity of drug, the SPs are reaching out proactively to patients to determine tolerance to therapy and recommend changes to the prescriber if necessary. In addition, the need for medical data as part of utilization management strategies is growing significantly. Specialty pharmacies must now supply diagnostic information, lab results, genetic testing results, and response to previous therapy to ensure that the patient has access to appropriate drug therapy.

Utilization management has many components, and all areas discussed above are part of the equation. One of the key areas of utilization management is waste minimization. One way to promote waste minimization is to use custom packaging, such as unit dosing and compounding services, to meet specific needs. Is the time right for specialty pharmacies to work with pharmaceutical manufacturers to better design compliance packaging and to customize therapies to better address compliance to meet the needs of the patient, provider, and payer?

Analytics And Data Reporting— Will Your Capabilities Meet The Requirements Of The New And Complex Oncology Landscape?

What are you doing in this space to differentiate yourself and your services from other SPs? Is your business protecting its turf from emerging health care IT companies? This is a storm cell of tremendous power. For years we have said that data is king. Now everyone wants a deeper dive into data, including discontinuation data, previous therapies, and additional longitudinal data sets. New pharmaeconomic models will include both medical and pharmacy data as pressure continues to move health care spend to the most cost-efficient benefit design. Are you beefing up your engine to deliver these needs?

The storm is clearly coming! To survive will require turning toward it to face it head on. So it is time to batten down the hatches and beef up our boats to be ready for what is likely to be a sometimes bumpy but always exhilarating ride! SPT

About the Author

Phil Hagerman is the president and chief executive officer of Diplomat Specialty Pharmacy, which he founded with his father, Dale Hagerman, in 1975. Mr. Hagerman has been a regular speaker at state and national pharmacy and hospice conferences on practicing creative pharmacy and developing and marketing a specialty pharmacy practice. A recipient of many awards, he was named the Ernst & Young Entrepreneur of the Year for the Michigan and Northwest Ohio Region in 2010. Mr. Hagerman has led the company’s tremendous growth period, and in 2009 and 2010, Diplomat was named as one of Inc. magazine’s fastest growing private companies in America. Most recently, in April, Mr. Hagerman received the 2011 Grant Thornton Leader and Innovator of the Year award. He has served as an expert witness for the United States Department of Justice in cases of drug diversion and is an adjunct instructor of clinical pharmacy at Ferris State University