The Shifting Landscape of Specialty Pharmacy

It could be argued that the history of specialty pharmacy began at Stadtlanders Pharmacy in Monroeville, PA.

The emergence of new and more complex therapies led an initiative at Stadtlanders to offer more robust patient care services for the patients they served. Stadtlanders began offering many of these services to patients who had chronic conditions, and who also were taking medications with high costs associated with their therapies.

As the company continued to grow, they were able to achieve higher than normal revenues due to increasing medication prices. Over the next several years, the company was able to expand service offerings into multiple disease state areas. The company was ultimately purchased by CVS Health in 2000, and continues to operate successfully today.

With all of the changes seen in the specialty pharmacy landscape, there are a few entities that have remained unchanged since the segment’s inception. These include overall increases in utilization, rapid price inflation of available therapies, and an increasing number of medications classified under the specialty designation.

As a result of increased coverage across the United States through programs such as Medicare part D and most recently, the Affordable Care Act, more patients have access to these expensive therapies. Rapid price increases have always been prevalent, and many insurers and pharmacy benefit managers, are extremely concerned that the rate at which medication prices are increasing is simply not sustainable.

Lastly, pharmaceutical manufacturers have begun to develop treatments for disease states that have never had treatment options available. Many of these are for orphan products, and as a result, have a high price point.

Over recent years, there has been a growing emphasis on how to define and classify specialty pharmacies and specialty medications. A primary driving force for defining this has been the negative press the industry has received most recently, with scandals surrounding Valeant and Philidor, as well as the ill-advised Daraprim price gouging.

Both of these missteps received widespread media attention and shed a negative light on the industry. In response, the National Association of Specialty Pharmacy (NASP) attempted to define a specialty pharmacy.

NASP said that a specialty pharmacy provides medications to patients with serious health conditions who require complex therapies. NASP added that they provide services for patients, which include the proper use, comprehensive assessment, monitoring, and frequent interaction.

This frequent interaction has come to be known as “high touch clinical services” in the industry today. Lastly, NASP said that specialty pharmacies improve adherence and appropriate medication use. In the future, specialty pharmacies will not only be evaluated on their ability to improve adherence, but in the ability to deliver positive outcomes for the patient populations they serve.

The definition of a “specialty medication” is more nebulous than critics of the industry would prefer. There is no universally accepted definition, but many specialty medications have similar characteristics.

A large portion of the products are biotech, injectable, or treat a chronic condition. The products may also require special program requirements (REMS) for dispensing.

Moreover, the products often require special storage and handling, and can only be accessed from a select group of pharmacies. The recent surge and success of specialty products has fueled an interest by manufacturers to position their new products in the specialty space.

Manufacturers know that by designating their products as specialty, they can often set a higher price point. They also know that offering a product through specialty pharmacies comes with other benefits, such as reimbursement support, expert patient counseling, and data reporting, feeds from dispensing specialty pharmacies.

The special needs of the patient populations that specialty products serve gave rise to unique networks where specialty products can now be accessed. As a general rule, the more complex and specific a product is for a given patient population, the more restricted the network becomes for access for that drug.

There are 4 primary network designs in specialty pharmacy. These include open, specialty, limited, and exclusive networks. Each network design offers specific advantages and disadvantages for manufacturers, pharmacies, prescribers, and payers.

The goal in selecting a network design is to ensure patient access and create value for all stakeholders in the network. Network designs and channel strategies are rapidly evolving in specialty pharmacy today. The specialty pharmacies that will be successful in the future will need to identify areas of opportunity and develop novel strategies to create synergistic relationships with their network partners.

The specialty pharmacy landscape is currently comprised of 4 “big players,” which include CVS Health, Walgreens, Accredo, and Diplomat. There are a number of other mid-range, retail, and hospital systems that have started to develop specialty pharmacy models of their own as well.

With such rapid growth in the industry, there are expected to be a great deal of mergers and acquisitions taking place in the coming years. Market leaders will distinguish themselves through their ability to serve the providers, patients, and other partners they interact with.

Finally, pharmacists should take advantage of opportunities and challenges that are presented by specialty pharmacies. Through the effective coordination of care, pharmacists can offer value to manufacturers, providers, patients, and payers in the specialty pharmacy landscape.

About the Author

Justin Smerker earned his PharmD degree from the University of Pittsburgh in 2009. He is currently a clinical pharmacist for PANTHERx Specialty Pharmacy. He has experience in the implementation and delivery of high-touch patient care services as well as in clinical management, persistency, and adherence programs. Justin also has participated in assisting with the successful launch of newly FDA approved medications. He has served as an adjunct clinical instructor for experiential education at Duquesne University. Prior to working in the specialty pharmacy sector, Justin successfully managed high volume retail pharmacies. He is currently enrolled in the Masters of Science in Pharmacy Business Administration (MSPBA) program at the University of Pittsburgh, a 12-month, executive-style graduate education program designed for working professionals striving to be tomorrow’s leaders in the business of medicines.