Specialty Pharmacy: Professional Services or Getting Too Cozy?

THERE ARE, PRINCIPALLY, 2 REVENUE STREAMS that a specialty pharmacy derives income from: the dispensing margin from a payer and services from the contracted manufacturer. These services typically go beyond state board requirements for dispensing and counseling.

Successful specialty pharmacies invest a good deal of resources in business development. They also work with manufacturers to gain access to products and provide services to both pharma and patients. This editorial will explore a few points regarding the ethics of these services, how they may be compensated for, and whether that compensation is appropriate.

In our specialty space, there has been a good deal of confusion in the marketplace regarding specialty pharmacy services versus marketing services. It is very important for every specialty pharmacy entering into a business relationship to be governed by an appropriate contractual relationship. Specialty pharmacy is structured around improving patient lives and has an incredible impact on improving patient outcomes.

The services provided by a specialty pharmacy, which are frequently coveted by pharma, can be unique and tailored specifically to a product and patient. Pharma often sees the value in these services and is willing to financially reward a specialty pharmacy for them.

There are, however, lines that must be drawn between professional services and what might be interpreted as exceeding regulatory parameters. Recently, there have been a number of cases in the media where a specialty pharmacy and manufacturer were found to have crossed these lines, with one or both parties found to be liable.

I have often written about the impact of limited distribution products and how most pharmacies seek access to products. Often, once a manufacturer enters into an agreement, there are services tied beyond dispensing and distribution. However, guidelines must be drawn. Specialty pharmacies focus on treating patients with serious health conditions.

These disorders are frequently treated with high-cost and complex medication regimens that require a core set of services at a level not generally available via the corner drug store or mail order pharmacy.

These services may include providing assistance with reimbursement for expensive treatments that have limited availability, assignment of benefits, and other increased financial risks. Intensive patient management is often needed to assure the effective use of these medications.

It has been common practice for pharmacies to offer co-pay coupons, co-pay waivers, and automatic refills, among other things, on a customized basis. This allows the manufacturer to offset the cost of these value-added services in order to differentiate their products on the market.

Any programs that are put into place must be critically reviewed to confirm that they meet legal and regulatory standards. Co-pay waivers that are used routinely by a pharmacy can be viewed as an incentive for patients to utilize that pharmacy’s services, which is in violation of the Anti-Kickback Statute (AKS).

Automatic Refills

The media recently reported on specialty pharmacies that instituted automated refills without the consent of a patient. This practice is generally in violation of commercial payor plans and that of the Centers for Medicare & Medicaid Services. Policies require that a pharmacy contact the patient with each refill to ensure they need the product and are not merely stockpiling the medication.

This is both bad pharmacy and a financial drain to the payor system.

Co-pay Assistance

If a commitment is made to a patient that their co-pay will be waived in exchange for using a specific product, this activity can be considered illegal.

Co-pay waivers are only acceptable as part of a sound financial assistance policy or if there has been an honest attempt to collect the co-pay unsuccessfully—with rare exceptions—as noted in a recent online post by our friends at Bass, Berry & Sims PLC (http://bit.ly/1L1fLvO).

If your pharmacy is going to provide financial assistance, a sound policy must be developed with objective eligibility requirements that only allow qualifying patients to have their co-pay waived. Your policy must state that writing off these amounts can only come after bona fide collection efforts.

The policy must also require that services to the patient be discontinued if their obligations continually go unpaid. Although most co-pay voucher/coupon programs state up-front that federal program beneficiaries are prohibited from using these out-of-pocket relief options, a policy still must be in place to ensure co-pay coupons are not used.

This policy should include verifying a patient’s age, checking for potential federal program beneficiaries, and confirming that the bank identification number for a patient’s insurance is not associated with a federal program.

Switching Programs

It has been common for payors to drive market share to particular products in a therapeutic class through various tools such as prior authorization, step therapy, co-pay differentials, and formulary exclusions.

A pharmacy should not engage in the practice of switching prescriptions from one branded product to another for the purposes of shifting market share and compensation by a manufacturer.

Certainly any changes to therapy without documented consent from the prescriber is a slippery slope; however, doing so for money is a cliff.

Compliance and Persistency Programs

These services are the bread and butter of specialty and certainly have their place in professional practice when governed by an adherence to the appropriate therapy ordered by the physician. Providing patient education and monitoring is key.

Likewise, monitoring should assess if continuous therapy is appropriate and whether or not just filling a script is in the best interest of that therapy. A pharmacy must be careful if there is compensation for such therapy via government-sponsored programs if the program is designed to support utilization that may be deemed excessive.

Referral Programs

Collaboration in professional practice is a significant part of the future in medication therapy management. Cooperation between physicians, nurses, and pharmacists focused on improving outcomes is part of our new accountable care paradigm.

However, if there is compensation flowing for those services, we suggest that you carefully review this collaboration for any potential inappropriate behavior. Even well-intentioned activities can be a violation of state and federal regulations.

Audits and Compliance

Accreditation generally includes ridged compliance and standard operating procedures. Review your operations to make sure your documentation matches your activity, and audit those practices frequently. Pharmacies found to be in noncompliance have previously been cited and fined.

The federal AKS should be an area of particular focus for the specialty pharmacy and manufacturer entering into any potential agreements. It is this statute that authorities will often cite when assessing appropriate standards.

Typically, the AKS prohibits payment for any purchase of product or services, including referrals, which may be covered under government-sponsored programs. Further liability can come from any federal false or potentially fraudulent claims, which could result in severe fines if adjudicated by the legal system.

It is important to understand which, if any, “safe harbors” may exist in providing these services while assuring your team stays out of any potential risk activities. Make sure your teams are well trained and working off of carefully scripted protocols.

It is well accepted that specialty products generally require a great deal of professional intervention and are very service-oriented. The rules of engagement are often quite different compared with traditional pharmacy. When a specialty pharmacy enters into a distribution and services agreement with a manufacturer, the devil is in the details.

Therefore, all activities must be well documented and reviewed to assure that the risks for all parties have been well covered. If it does not feel right, it is generally not right. After the parties agree to the portfolio of services, those services must be well articulated in the agreement and checks and balances must be put into place.

There are a handful of experts in the market that can assist in the process and, together with your legal team, can facilitate the contracting process. Specialty Pharmacy Times will continue to invite our authors to provide updates and work toward keeping you in compliance. SPT

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Dan Steiber, RPH, is founder of D2 Pharma Consulting LLC (d2rx.com) and is responsible for commercial operations; trade-supply chain strategy development, including 3PL selection; regulatory oversight, and “operationalizing” organizations. Mr. Steiber has served in several senior positions in pharmacy, distribution, and industry over the course of his 35-year career.

Mr. Steiber is a licensed pharmacist in Texas, Washington, California, and Pennsylvania. He is affiliated with several professional associations and publications and is a frequent speaker on behalf of many professional organizations. Mr. Steiber graduated from Washington State University College of Pharmacy. He has participated in a variety of postgraduate programs in law and business development/marketing at Harvard University and Northwestern University. Mr. Steiber currently resides in Highland Village, Texas.