Value-Based Care Creates Opportunities for Specialty Pharmacy

Specialty pharmaceuticals are no longer a blip on the horizon of the health care industry, as they have been driving pharmacy trend since 2007.¹

Currently, patients, providers, payers, employers and other key stakeholders in the health care industry are well aware of the impact these products have on their own, and the global pocketbook. According to the IMS report on Medicines Use and Spending in the US, net spending on all medicines reached $309.5 billion in 2015, and, of this spend, 36% was attributable to specialty medicines.

In the last 5 years, specialty spending has doubled, and this trajectory of growth is expected to continue, as 37% of the late phase R&D pipeline is comprised of products destined for the specialty market.² There is no universally accepted set of criteria that destine a drug for the specialty marketplace.

In fact, health plans and manufacturers, often disagree on which factors determine whether a medication should be categorized as specialty. Factors considered include high cost, special handling requirements, use for a rare disease, need for continued assessment of response, need of training for self-administration, association with FDA-mandated risk evaluation mitigation strategies (REMS), and complex side effect monitoring.³

The predominant factor cited by the majority of health plans is cost; however, the monthly dollar-amount threshold varies from plan to plan. In a survey conducted in 2012, health plans cited monthly cost thresholds ranging from $500 to $2500.³ The complexity and low prevalence of the disease state being treated were also high ranking factors.³

Spurred by expedited review designations available through the FDA, the number of disease states treated by specialty drugs has grown drastically. In an attempt to encourage innovation and off-set the barriers to product entry, the FDA created 4 designations to allow for expedited approval of new medications.

Drugs with the “potential to address unmet medical needs,” drugs that “may result in a substantial improvement in at least 1 clinically significant endpoint… over other available therapies,” drugs that “may potentially provide a significant advance in medical care” and medications for “life-threatening illnesses” that “offer a benefit over current therapies” are all eligible for expedited review.⁴

Oncology, HIV, rheumatoid arthritis, hepatitis C, and multiple sclerosis patients are just a couple of the traditional specialty populations continuing to benefit from the innovation that is following in the wake of the accelerated review incentives. But, specialty drug development is also benefiting orphan disease states.

Disease states with rare prevalence in the population were formerly thought of as not being lucrative enough for pharmaceutical manufacturers to recoup their sunken R&D investments. But, federally funded incentives, such as the expedited review process, enabled manufacturers to bring therapies to market for orphan disease states that affect only 500 out of 1 million, and even ultra-orphan disease states that affect only 20 out of 1 million people.

Although the expedited review processes have brought clinically groundbreaking and therapeutically vital medications to market, they have also created an explosion in the number of high-cost specialty medications for complex disease states in an era that is crying for cost-containment.

The heavy downward price pressures and post-Affordable Care Act demands for accountability, access, and affordability left many stakeholders struggling to develop management strategies. Manufacturers and payers are finding strategic partners in specialty pharmacies.

The first specialty pharmacies developed in the late 1980s and early 1990s out of a need to assist patients in securing reimbursement. Patients were often required to pay out-of-pocket for the cost of the medication, wait days for the medication to come in, and then fill out difficult to navigate paperwork to obtain reimbursement.

Small pharmacies saw this opportunity and began offering services to this niche population. As the market grew and companies became more equipped, specialty pharmacies began adding services to their menu to provide disease-specific pharmacy care.

Today, the value-added services range broadly from one specialty pharmacy to another, but typically include supportive clinical and educational services, drug utilization and adherence monitoring, outcomes documentation from a clinical and economic perspective, and reimbursement assistance. The development of accreditation standards through third party organizations, such as the Utilization Review Accreditation Commission, the Accreditation Commission for Health Care, and the Center for Pharmacy Practice Accreditation are standardizing the services provided by specialty pharmacies.

The specialty pharmacy landscape is populated today by 4 larger players (CVS/Caremark, Walgreens, Accredo, and Diplomat), multiple mid-range pharmacies, the small retail players, and the hospital systems.

Manufacturers can implement 1 of 4 distribution models to bring their products to market. Going from the broadest to the narrowest, these include: open network, specialty network, limited network, and exclusive network distribution.

The level of exclusivity depends largely on the degree of management the medication necessitates. Manufacturers seeking to closely match supply with marketplace demand may seek a more closed distribution model.

Manufacturers rely on specialty pharmacies to provide outcomes data, in many cases, on medications brought to market so rapidly that long-term safety or outcomes data was lacking. As value based medicine becomes of greater importance in reimbursement modeling, this partnership with specialty pharmacies to provide informatics throughout the continuum of care will be pivotal.

Specialty pharmacies also serve as strategic partners to payers seeking to control drug expenditure trends. A survey of payers conducted in 2016 outlined the services payers demand from their specialty pharmacy partners.

Distribution of limited-distribution medications and patient services, such as coordination of eligibility and reimbursement, assistance in acquiring financial assistance and patient education to promote adherence, were the most valued services. But, data collection surrounding patient interventions, outcomes and expenditures, utilization management assistance through adherence to prior authorization requirements, and prevention of inappropriate dosing or diversion were also highly valued, and listed as organization goals for the next 12 to 24 months.⁵

As value-based reimbursement increasingly becomes the suggested strategy for cost-containment, the opportunities for specialty pharmacies will continue to grow. Entrepreneurship to expand value-added services, partnership with other key-stakeholders, and delivery of improved outcomes can position a specialty pharmacy to capitalize on the projected specialty drug trend.

Pharmacists facing a job market that is becoming increasingly saturated also have the opportunity to benefit from the growing specialty pharmacy trend, as opportunities expand within these pharmacies, pharmaceutical manufacturing, and managed care. But, certification or practice-based experience will be required to differentiate themselves from their counterparts and ensure their ability to integrate into a high complex work environment.

Heather Brand earned her B.A. in Chemistry and PharmD from the University at Buffalo, SUNY. She worked for an oncology based pharmacy for six years prior to transitioning to a consultant role for a benefits management firm. She 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.

References

1. Kober S. The Evolution of Specialty Pharmacy. Biotechnology Healthcare. 2008 July/August:50-51.

2. IMS Institute for Healthcare Informatics. Medicines Use and Spending in the U.S. A Review of 2015 and Outlook to 2020. http://www.imshealth.com/en/thought-leadership/ims-institute/reports/medicines-use-and-spending-in-the-us-a-review-of-2015-and-outlook-to-2020#form (accessed 2016 May 3).

3. Fein A. Defining Specialty Pharmacy. http://www.drugchannels.net/2013/02/defining-specialty-pharmacy.html (accessed 2016 May 14).

4. Vora JB. Evaluation of medical specialty medication: utilization and management opportunities. Milliman. April 2014.

5. EMD Serono Specialty Digest 12^th edition: Managed care strategies for specialty pharmaceuticals. http://specialtydigest.emdserono.com/Digest.aspx (accessed 2016 May 14).