Specialty Pharmacy and Distribution

This case study from Avella Wholesale demonstrates the necessary strategies and steps for successful catering to a niche market.

Avella, then The Apothecary Shops, opened a specialty pharmacy wholesale division in 2005. The company’s goal was to build on its core competency to support a distinct population of manufacturers, physicians, and their patients. There were and still are no illusions of competing with the major pharmaceutical wholesale facilities. Indeed, Avella’s goal is to distribute low to mid-size volume specialty medications and offer a suite of personalized services in support of those drugs. Avella Wholesale looks to distribute specialty drugs and products that most large distributors cannot or choose not to offer.

Specialty drugs have given hope to patients with ophthalmic conditions that in the past likely resulted in blindness or loss of visual acuity. Ophthalmic specialty drugs and injectables can not only be expensive, but may also require frozen storage at -4°F (-20°C). Clearly, it is impractical and costly to have inventories in dozens of wholesale facilities. Ophthalmology practices that perform surgeries and procedures that use these specialty injectables are reluctant to purchase products directly from manufacturers, if possible, because the financial implications are immense. They must not only pay for the drugs, but then must submit claims to be reimbursed.

When considering all of the variables associated with many ophthalmic specialty drugs, the logical strategy for manufacturers is to limit distribution. Manufacturers must identify pharmacy wholesalers that are licensed to distribute in all 50 states, that have expertise in specialty pharmaceuticals, have the physical capacity to store and ship temperaturesensitive products, have the capacity to bill payers, and have the ability to customize 865/867 data reports. Avella Wholesale currently distributes specialty drugs to treat an array of medical conditions. The following are a few that illustrate the demand and the unique considerations for specialty wholesale.

Jetrea, a limited distribution drug manufactured by ThromboGenics, is the epitome of an ophthalmic specialty drug whose characteristics require tight monitoring by the manufacturer and wholesaler. Its per unit cost and storage requirements make it unrealistic for physician practices to keep it on hand. An intravitreal injection indicated for the treatment of symptomatic vitreomacular adhesion, the Jetrea wholesale cost is $3950 per dose. The 0.2 ml single dose vial must be frozen at all times and thawed at room temperature just prior to injection.

The specialty distributor’s cold chain expertise protects the product’s integrity and potency. Often specialty pharmacy/distributors co-locate in a blended hybrid facility. This practice often allows the operation to have the option of billing patients’ insurance companies. Best practices permit a firewall between various operations, thereby permitting the distribution division to maintain the responsibility for product data records. In the case of Jetrea, physician practices receive product as needed, free from product billing responsibilities. Practices need to only bill for the administration fee, a routine process for them.

Select distributors such as Avella Wholesale also distribute Eylea from Regeneron Pharmaceuticals. An injection to treat Macular Edema following Central Retinal Vein Occlusion and neovascular (Wet) Age-related Macular Degeneration, Eylea is $1850 per dose and requires refrigeration.

In addition to the ophthalmic specialty drugs noted, other products with limited specialty distribution include Kadmon Pharmaceutical’s Ribasphere RibaPak, the only 2-pills-per-day ribavirin for hepatitis C. Other examples of specialty distribution include BD PhaSeal Closed System Transfer Device (CSTD), the first and only CSTD cleared under the FDA’snewly created product code, ONB: Closed Antineoplastic and Hazardous Drug Reconstitution and Transfer System.

Another high touch program with adherence an integral key to patient outcomes is the specialty distribution of GlowCaps, an innovative, interactive electronic drug reminder that is manufactured by Vitality.

The GlowCap is placed on the prescription bottle and a wireless reminder light plugs into a kitchen or bathroom outlet. The cap pulses and glows orange at a predetermined time. It is a subtle reminder for a patient to take their drug. If the bottle is not opened within 2 hours of a scheduled dose, the reminder is escalated to a telephone call to the patient with the message, “It’s time to take the pill in your green GlowCap.” Vitality provides reports to the patient, a family member, or caregiver that summarize a patient’s progress. Refill coordination and reports to physicians are also provided.

ADDITIONAL BEST PRACTICES

Does a specialty distributor need to be accredited?

The current standard is having received Verified-Accredited Wholesale Distributor (VAWD) accreditation.

The National Association of Boards of Pharmacy (NABP) oversees pharmacy wholesale facilities’ accreditation. VAWD-accredited facilities are in compliance with state and federal laws that prevent counterfeit drugs from entering the nation’s drug supply. Pharmacies and physicians who receive their drugs from VAWD-accredited pharmaceutical wholesale distribution facilities can be reassured that the drugs they dispense have not been contaminated, diverted, or counterfeited.

The accreditation process is thorough and multi-leveled. A pharmacy wholesaler must submit a completed application to the NABP. NABP then verifies the pharmacy wholesaler’s licenses, checks the NABP clearinghouse to determine if the applicant has faced disciplinary actions, and performs financial and criminal background checks. The applicant’s policies and procedures must be in compliance with VAWD criteria. Lastly, the NABP conducts an onsite inspection of the pharmacy wholesaler to verify that the policies and procedures are implemented and adhered to by the pharmacy wholesaler’s personnel.

Does a specialty distributor need to be licensed in all states?

A specialty distributor does not need to be licensed in all 50 states; however, that is the standard.

How big should a specialty distributor be and what are ideal location characteristics?

Size of specialty distributors varies from 500-square-foot to 5000-square-foot to 500,000-square-foot facilities. Research indicates that locating in a stable climate is preferable, which may include avoiding hurricanes, tornadoes, earthquakes, snow storms, and other similar weather events that cause airport disruption. Physicians and patients can then rest assured that their specialty medications will arrive without delays due to poor weather conditions.

What types of quality and compliance programs should a specialty distributor have?

Specialty distributors should implement and adhere to the following industry best practices, and quality and compliance programs:

• Wholesale
• DEA
• FDA/cGMP
• Pedigree
• Independent Internal Quality Department with full authority
• Standard Operating Procedures (Document and Change Control)
• Internal Audit Program
• Formal Customer Complaint System
• Corrective and Preventative Actions (CAPA) Program
• Adverse Drug Event Reporting System
• Drug Recall System (Quarantine and Non-conforming product systems)

What type of security should a specialty distributor have to protect its facility?

Restricting access to the facility protects the integrity of the drugs received from manufacturers. A state-of-the-art security system monitors the facility 24 hours a day. The security system should be compliant with Code of Federal Regulations §205 and Code of Federal Regulations, Part 1300. The system includes badge entry pads, and only employees are given access to the specialty distribution facility.

There are intercoms and mirrors at all doors into and out of the wholesale facility. These allow staff members to see and hear everyone who requests admission into the facility. Surveillance cameras record all activity within the facility and at every entrance. Motion sensors and infrared motion beams detect and record entry into the wholesale facility throughout the day and after hours.

What are best practices for reporting capabilities?

The specialty distributor’s warehouse management system should provide flexibility to customize 856/867 daily and quarterly data reports. The system should allow for tailored reports for manufacturers, data, and frequency. In addition, the specialty distributor’s system should have the technological infrastructure to manage group purchasing organizations.

What type of sales and marketing support should a specialty distributor offer its clients?

The best operators cover all 50 states and expedite communications between patient and provider, patient, and pharmacy, as well as between provider and pharmaceutical manufacturer. They should also offer frequent in-office support and coordinate educational programs to the medical professional community. In the case of Avella, a customized marketing solution during product launch and other key times can be an invaluable tool for manufacturers in need of marketing/sales support.

Should a specialty distributor be affiliated with the major industry wholesalers?

Many pharmacies have contracts with McKesson, AmerisourceBergen, or Cardinal Health as well as a secondary pharmacy wholesaler. The top specialty distributors have wholesale contracts with the major industry wholesalers that allow them to drop-ship medications that are counted toward the purchaser’s volume and discount provisions in its primary wholesaler’s contract.

Avella Wholesale, located in Phoenix, Arizona, is licensed in all 50 states. For more information, email wholesale@ avella.com or call (877)480-1754.

About the Authors

Keith L. Cook, RPh, serves as president of Avella and has more than 30 years of pharmacy experience. Prior to joining Avella, Cook spent 20 years in top leadership roles in the pharmacy department of Wal- Mart, working in various senior level positions. Cook is a graduate of the University of Kansas and also attended the Wharton School of Business for Pharmacy Leaders.Leslie A. Yendro, RN, is the vice president of business development of Avella. Ms. Yendro’s background includes more than 25 years of experience in both the pharmaceutical and specialty pharmacy industries. She is a graduate of Illinois Wesleyan University and Saint Louis University and is a licensed registered nurse.