Dan Steiber, RPh, Specialty Pharmacy Times Editor-in-Chief & Executive Vice President

	We would like to welcome a new set of readers to 

®, which will now reach a wider audience that will include market access professionals and key payer decision makers. The launch of this journal in 2010, spinning off from our sister publication, 

®, resulted from recognizing the growth of specialty out of retail. With spending on specialty products currently approaching nearly 50% of the total drug spend, market access is a key issue. Moving forward, we will be expanding the content of this journal to include greater insight on topics such as reimbursement, formularies, and pharmacoeconomics and the corresponding relationship with specialty therapeutics. We also welcome Doug Hillblom, PharmD, to the team as our associate editor-in-chief, Market Access Solutions.

	Mergers and acquisitions are nothing new in the health care arena. Remember when names such as Parke-Davis, Wyeth, Lederle, Upjohn, Searle, and Beecham were prevalent? Today those organizations have been absorbed into the likes of Pfizer, Merck, and GlaxoSmithKline. In the world of specialty pharmacy, we have seen much of the same. In fact, many specialty pharmacies got started with the objective of growing to the point of acquiring or being acquired. Retail-chain pharmacy has arguably experienced the same acquisition frenzy, with pharmacies such as Thriftway, Eckerd, Longs, and Safeway being absorbed by larger chains Walgreens, CVS, and Albertsons. These acquisitions have been part of the natural order, as big fish eat small fish. What is not the natural order, however, is when mergers and acquisitions bring together disparate businesses—notably, the merger of CVS and Caremark in 2006.  

	There have been similar deals since, such as Rite Aid’s acquisition of EnvisionRx, the partnership between Walgreens and Prime Therapeutics to create AllianceRx, as well as Diplomat’s role in the game with National Pharmaceutical Services.  

	Most recently, rumors had been brewing for quite some time when, in late 2017, CVS and Aetna announced their merger. In a news release, CVS Health President and CEO Larry J. Merlo said, “This combination brings together the expertise of 2 great companies to remake the consumer health care experience. With the analytics of Aetna and CVS Health’s human touch, we will create a health care platform built around individuals." 

	CVS/Caremark’s specialty pharmacy was already poised to be one of the highest revenue generators in the specialty space. Given the integration of Aetna, even more volume will potentially be driven to its platform. Still in question is what the value proposition will be beyond enhancing shareholder value.

	We have already seen the power of the payer in the specialty space, particularly when there are different treatment options for a specific condition. We need not look any further than the impact that payers had on the market following the launch of multiple oral antiviral drugs for hepatitis C virus. Initially, ledipasvir/sofosbuvir (Harvoni) owned the market by offering a curative oral therapy for this terrible disease without the debilitating adverse effects of existing therapies. But the cure came with a high price tag, at nearly $90,000 for a short course of therapy. With a lack of competition, the need for contracting was not significant. But then along came a second quality alternative therapy in the form of ombitasvir/paritaprevir/ritonavir and dasabuvir (Viekira Pak), and the large pharmacy benefit managers (PBMs) took a stand on which of these treatments would be available to the appropriate patients. For payers, size and compliance equal control and, in turn, leverage. With increased scale, will CVS/Aetna have even more dominion over specialty product selection? History tells us yes.

	Combining insurance coverage for drugs and other medical services within a single firm could be a novel benefit offered to the private insurance market of patients under 65. The merger of an insurer and its physician networks with a national pharmacy chain’s integrated care model and drugstore—retail clinic combination can deliver a new model of access to better care at a lower cost.

	Convergence and integration of resources come to mind when 2 lead players merge. Think of your smartphone today versus what we had in place just a few short years ago. We can manage our e-mails, schedule our day, pay for goods and services, watch our favorite shows, check the weather, and get directions to a location while trying to avoid traffic. We have become near totally reliant on these devices for the fundamentals of daily living. Think about what would happen if you left your smartphone at home: How far would you be willing to backtrack to get it?  Now, imagine having a one-stop shop for health care.

	The champions of this merger are quite bullish on the value proposition. It is hoped that patients will benefit from a uniquely integrated, community-based health care experience. There are nearly 10,000 pharmacies located throughout the United States via both the CVS and Target platforms and approximately 1100 MinuteClinic locations, along with 35 accredited CVS specialty pharmacies. CVS has also added resources through its acquisition of leading senior care pharmacy provider Omnicare, as well as Coram CVS Specialty Infusion Services. Furthermore, there are more than 4000 CVS Health nursing professionals providing in-clinic and home-based care across the nation. 

	The pharmacist is already known as the most accessible professional in the health care continuum. An integrated CVS/Aetna solution theoretically will enhance access to the health care system by better connecting patients’ primary caregivers or enhancing access to more immediate care through the services of an in-store clinic. These clinics can serve as a hub dedicated to connecting the pathways needed to improve health and answering patients’ questions about their conditions, prescription drugs, and health coverage.

	The lack of quality integrated data platforms in the United States has been a major impediment in providing quality health care. Combining platforms will assist in fostering a more coordinated approach to managing patient care, while the broader use of data and analytics can lead to fewer hospital readmissions. It seems that there are few limits to the number of combinations of business models. Will we see hospital networks thrown into the mix next?  

	The way many people shop for personal items and groceries has already changed through companies such as Amazon, but the question remains regarding whether it will enter the health care space through a purchase or a strategic alliance. What about the other payers and PBMs? Technology has already revolutionized so much in our daily lives. Is there an app out there that can harness an innovation yet to come to market to create a new form of convergence and integration?

	Is bigger better? It all depends on your perspective. But regardless of what the new era of health care brings, remember, all roads to success must put the patients first.

Articles

The power of the payer in the specialty space continues to grow in the era of health care consolidation.

Convergence: Is Bigger Better?

 Annual Symposium at the Philadelphia Marriott on Payer/Managed Care Strategies for Specialty Medications from December 13 to 14, 2017. The meeting gathered key specialty pharmacy and health care stakeholders to provide insight on how to build stronger partnerships with payers by better understanding key specialty pharmacy issues and dynamics for payers to consider when deriving their specialty drug management strategies and how specialty pharmacy can help payers achieve their goals.

 Annual Symposium, Acro enlisted the help of several renowned speakers to connect with those in attendance. Peter Wade, MD, provided his personal and professional experience with multiple sclerosis with a presentation entitled, “Evolution of Treatment Options, Personal and Professional Perspectives.”  As a neurologist, at the Mandell Comprehensive MS Center at Mt. Sinai Rehabilitation Hospital, as well as a being a multiple sclerosis patient himself, Dr Wade’s experiences and presentation was deeply insightful. 

During the symposium, Blair Childs, senior vice president, Public Affairs, Premier Inc., spoke to the crowd about the first year of the Trump Administration and what it means for the future of health care. Childs works closely with Congress, White House officials, and other policymakers involved in health policy and was able to provide an overview of the current market, political and health care policy realities, as well as the potential impact of changes to Obamacare as we look into 2018 regulatory and legislative updates.

Susan Marx Mashni, PharmD, chief pharmacy officer, Mercy Health in Ohio, truly impressed the audience with her real-world experiences of navigating the process of incorporating specialty pharmacy into the multiple institutions under Mercy Health’s umbrella. As a Premier Member Hospital, it was particularly interesting to hear how an integrated solution operated and how the resulting outcomes demonstrated their success. She provided insight into both the pros and cons and discussed how to avoid potential pitfalls.

To conclude the program, Philip Gerbino, PharmD, former President of Emeritus of the University of the Sciences, moderated a highly anticipated panel discussion. The multidisciplinary panel included key opinion leaders from several industries including specialty pharmacy, academia, payer, and the pharmaceutical industry. The panel opened a dialog with the audience where they were presented with questions and provided responses on hot topics such as biosimilars, high drug prices, breaking away from the traditional PBM model, and data’s role in the delivery of quality care.

For inquiries regarding Acro’s annual symposium, please email marketing@acrophramacy.com.

Many key specialty pharmacy issues discussed at the Payer/Managed Care Strategies for Specialty Medications Annual Symposium. 

Payer, Specialty Pharmacy Collaboration Helps Achieve Goals

Specialty products can alter or eradicate diseases that have long plagued humanity, increasing both quality of life and length of life span overall. However, progress and innovation come with a high price tag. Drug approvals have shifted more toward the specialty market, as has the focus for investment from many pharmaceutical companies.

	It often takes hundreds of millions of dollars to develop a new compound. Coupled with the low corresponding approval rate for novel specialty products, this creates tremendous financial risk throughout the industry. The typical size of the population for these diseases is relatively low; therefore, the development costs cannot be spread over a large enough base of treatments, resulting in a much higher cost per treatment. Other factors include whether a patient has insurance coverage for drugs, any rebates or discounts from the manufacturer, and patient deductibles and co-pays or any financial assistance patients might be eligible to receive from the government (Medicaid, Medicare), through discounting coupons, or from the manufacturer.

	Prices are set by the manufacturer, and sticker shock will continue if society chooses to seek solutions to target previously untreated diseases. The annual cost of these products can exceed $500,000 per year. Examples of some high-cost disease areas include Pompe disease, T-cell lymphoma, hyperammonemia, and myasthenia gravis. Covering the cost of these products includes a combination of payer, manufacturer, and government programs. Larger patient populations, such as those with hepatitis C, and their treatments have had a large impact on budget, with the trade-off of offering a cure for a lifelong debilitating illness.

	Although highly effective products often carry significant price tags, the marketplace has several mechanisms to assist with the challenges of balancing value and profits. For some specialty products, we are seeing more competition plus second- or third-generation products. One consequence of this evolution is that the buyers of products—payers&mdash;have a bit more leverage and more options. This leads to “contracting levers,” which include value-based contracting. 

	Payers must also see financial advantages in covering a drug or, at the very least, not suffer a financial loss. Providers or prescribers can also control drug cost and other health care expenditures based on which products they order for their patients. It is important that these providers have a feedback mechanism of sorts to enable them to make better decisions. Specialty pharmacy plays a critical role through the value it adds by that assuring patient care is optimized. There is also a potential trickle-down effect of patients receiving value that causes high-cost products to become more affordable down the line. Expect the trend of value-based contracting to continue to grow as payers increasingly hold both providers and pharmaceutical manufacturers accountable for choosing the right combination of drug regimens and treatment protocols to deliver the best possible outcomes at the lowest total cost of care. 

	Our industry grows on the back of new drug approvals. Unfortunately, our industry often gets vilified because of the increasing cost of drug therapy. Drugs are frequently viewed as a commodity because there is a defined cost. The bigger picture, however, illustrates that new products are the best hope we have to improve outcomes and extend life.

	A look at the current pipeline shows that we should expect a flurry of drug approvals in key areas this year. If you are a specialty pharmacy, it is critical to get ahead of the curve and plan your operation around a new set of tools. 

	Alzheimer disease affects over 15 million lives, yet we have few options to treat this debilitating condition. Keep an eye out for new products such as Biogen’s aducanumab, CNP520 from Amgen and Novartis, and AbbVie’s ABBV-8E12.

	Multiple sclerosis therapies continue to improve and have a long history of success, with Celgene’s ozanimod, Novartis’ siponimod, and Actelion’s ponesimod all looming on the horizon. For epilepsy, we have GW Pharmaceuticals’ Epidiolex and Zogenix’s ZX008 in the pipeline.

	Oncology continues to be the lead disease treatment provider in new drug approvals. Several products in the chimeric antigen receptor T-cell category are anticipated this year—including Novartis’ Kymriah (tisagenlecleucel) and Kite’s Yescarta (axicabtagene ciloleucel)&mdash;along with Incyte’s combination of epacadostat with anti—programmed cell death-1 products, Amgen’s Imlygic, Janssen’s apalutamide, Verastem’s duvelisib, and Loxo Oncology’s larotrectinib.

4. Impact of Average Sales Price on the Specialty Channel

	In the early 2000s, the federal government passed legislation that significantly changed the landscape of reimbursement for Medicare coverage of provider-administered injection products, which were administered primarily in the physician’s office or clinic. These drugs had been reimbursed using an average wholesale price—based system similar to that of the retail pharmacy. Often referred to as Medicare Part B products, this group of drugs switched to a system of reimbursement based on average sales price (ASP). The basis of ASP includes the wholesale acquisition price minus any discounts a manufacturer extends to the marketplace. Providers bill for a product based on the ASP, and depending on the setting, the markup can vary. Under “sequestration,” the markup to physician providers has been reduced, and as a result, the profitability of physician-administered products can be negatively affected. These physicians typically experience ASP markups between 4.3% and 10%.

	However, pharmacies focused on specialty products may be reimbursed by commercial payers based on a negotiated rate that may be more efficient than that of physicians. The result of this shift is that we are seeing strong trends of Part B products moving into the pharmacy realm, as patients obtain them from a specialty pharmacy and have them administered in the physician’s office (known as white bagging). The dispensing could also shift to a hospital’s outpatient pharmacy.

	The 340B program has been notorious for providing higher profits through contractually driven discounts for qualified pharmacy facilities. These discounts lower the cost of obtaining pharmaceutical products, but the savings are not necessarily passed through to the entities that pay for the products. This gap can result in exponentially higher profits for pharmacies. Because of 340B pricing, we have seen tremendous growth in these pharmacies; however, CMS recently finalized a handful of reimbursement policies. Effective January 1, 2018, CMS is reducing this payment rate to ASP minus 22.5% for nonpass-through separately payable drugs and biologics acquired with a 340B discount. This change will cause pharmacies to reassess the degree of participation in this program. Keep an eye out for this significant trend.

6. Will Direct and Indirect Remuneration Fees Remain Status Quo? 

		Direct and indirect remuneration (DIR) fees have been the most newsworthy topic in specialty the past few years. As our federal government continues to attempt to rein in Medicare Part D spending and drug prices, expect to see more changes this year. Because DIR adjustments can significantly affect the profits of participating pharmacies, whether retail or specialty, the pharmacies argue that discounts are not passed on to patients. 

		Furthermore, DIR fees may contribute to an acceleration into the Medicare “doughnut hole,” in addition to reducing pharmacy margins. Part D programs are administered by commercial payers, who argue that through the negotiation of lower drug costs, DIR fees significantly help patients save on both out-of-pocket costs and plan premiums. These fees will continue to come under scrutiny in 2018 as the public and government regulators become more aware of this practice. Expect changes.

7. Growth of Hospital Specialty Pharmacy and Accreditation 

		Accreditation has become the new norm in specialty pharmacy, and the largest growth in accreditation is in the hospital setting. All the major group purchasing organizations have developed solutions to assist their members in this space. Much of the shift has been a result of the trends around decreasing reimbursement for Part B products in the physician’s office setting and 340B pricing often availed in hospital-based outpatient specialty pharmacies. These pharmacies are in a strong position to provide continuity of care through integrated systems, data sharing, and coordinating care with accountable care organizations that may participate in risk-based contracting. Keeping patients in a closed ecosystem provides more control and accountability. In the traditional inpatient hospital model, patients are discharged only to receive their outpatient drug services from traditional entities, such as a retail or specialty pharmacy. The shift to hospital specialty facilitates a setting in which orders are kept in house, resulting in increased revenues and potential profitability.

8. Closed Payer Networks and Any Willing Provider Laws

			Market dynamics have resulted in payers and pharmacy benefit managers (PBMs) establishing their own specialty pharmacies or relying on a network of contracted specialty pharmacies on behalf of their members. Typically, payers establish a set of criteria to permit specialty pharmacies to participate in their network. Criteria may include the need to obtain accreditation from bodies such as the Accreditation Commission for Health Care and URAC, whose standards include improved patient adherence and clinical outcomes, reduced inappropriate utilization, and lower unit costs through effective formulary management.  

			It is the goal of specialty pharmacies to have broad access to payer networks in order to obtain patient coverage or to establish Any Willing Provider (AWP) guidelines when dispensing limited distribution products. AWP rules assume that all pharmacy services are the same, no matter who provides them or how they are organized. This is creating a debate, as specialty pharmacy is based on a coordinated care model and requires greater organization, care management, and clinical knowledge regarding rare disorders and biologic products than what is often available in retail pharmacy. With the continuing expansion of AWP rules, expect a lot of noise.

9. Limited Distribution Networks and Wholesalers

		With more products being approved for smaller patient populations, look for even greater competition to access these products. Manufacturers are continually assessing their mix of specialty pharmacies granted access to their products and raising the bar as specialty gets even better. Major distributors are experiencing margin compression that results in increased service fees to manufacturers. This trend is further accelerating the process of pharma moving to limited distribution.

10. Amazon and More Big Brother Consolidation

		In November, the wires were buzzing with speculation that Amazon will enter the pharmacy space, including specialty. The higher probability will be strategic partnerships, with companies such as Express Scripts, for example, or a series of acquisitions of retail and specialty pharmacy providers, similar to Amazon’s purchase of Whole Foods. Don’t be surprised if there is a large business-to-business play direct with manufacturers in the specialty distribution space as traditional drug distributors continue to see margin erosion and new models emerge. We are seeing PBMs being bought by specialty pharmacies in an effort to expand their access and we’ll see more consolidation between PBMs and payers, as in the case of Aetna and CVS/Caremark.

Strategies for approaching the numerous developing trends in the specialty pharmacy market are vital to a successful plan of action in 2018.

Top Trends for 2018 in Specialty

as being unique—separate from other providers in the market, including pharmacy&mdash;but the reality is that specialty pharmacy is becoming crowded. Creating a differentiated strategic plan has become essential to having a successful business practice. The definition of a differentiation strategy calls for the development of a product or service that offers unique attributes that are valued and perceived by customers to be better than, or different from, the products of the competition. Competition is everywhere in specialty.

The pharmaceutical industry has shifted its research and development portfolios from traditional chronic diseases (hypertension, diabetes, glaucoma, conditions associated with aging, etc) to rare diseases, oncology, hepatitis, etc. Innovation and differentiation have become the new mantra for success, and we MUST match services to products. Last year’s new molecular entity approvals play this out, where 100% of those approvals clearly fall within the definition of specialty. Therefore, if you are in pharmacy or want to get into the pharmacy space long term, you MUST be in specialty.

These trends are not new; however, what accelerated those trends, in my view, was the shift toward generics over the past 10 to 15 years, as patents expired or were challenged. There are few traditional chronic diseases that do not currently have a proven generic product that can be used to competently treat these ailments of aging. It is very difficult for pharma to differentiate their branded products in this hyper-competitive market and among payers—through formularies, reimbursement strategies, and the $4-per-month generic programs&mdash;to succeed. Recent data from the QuintilesIMS Institute revealed just what a bite out of profitability a branded manufacturer must endure to create market share in this environment. Why does this matter to specialty? Because these are the trends that are creating the shift.&ensp;» As the product portfolio has changed, so, too, has the focus in pharmacy shifted to an evolve-or-die approach&mdash;business Darwinism at its finest. If you are reading this, then you have made the shift. But to what degree? As we have cataloged, specialty is all about providing unique services to enhance patient outcomes. The cost of a product should not necessarily be the sole driver that defines specialty. That definition would sell services short.

Specialty pharmacies MUST differentiate from traditional pharmacies by focusing on providing many aspects of patient care and disease management. Yes, a specialty pharmacy MUST deliver medications in an efficient manner that takes into consideration the special handling, storage, and distribution requirements of these products, and more. However, a specialty pharmacy MUST also focus on how to optimize every interaction as well as the economic and clinical outcomes—particularly around complex, rare, and chronic disease states&mdash;by deploying the integrated services of a team of qualified health care professionals. These professionals MUST accept the duty to provide their patients and caregivers with education that emphasizes medication utilization and adherence to therapy and seek alternatives to reduce unnecessary costs when appropriate. This team approach MUST foster an environment of information sharing between providers. Given the high cost of these therapies, specialty pharmacies MUST be experts at seeking financial alternatives to help patients manage drug costs. If your pharmacy is not providing these “MUST” services, another pharmacy will. As such, you need to ensure that your business is differentiating itself.

There are a couple of rate limiters from the outset, namely access to a product and access to payers. Get past these hurdles and then success is driven by execution. As we have thousands of newly minted accredited specialty pharmacies, accreditation alone does not guarantee success or differentiation in the current marketplace. There are many potential points of differentiation; the key is finding a niche. A few examples include focusing on specific disease states, surrounding your business with top talent, surrounding your processes with evidence of success driven by data, compounding unique formulations, affiliating with other providers in a particular area, providing access to products that others may not have, and many more.

Separating yourself from the safety of the herd can be the key to success; but, doing so is accompanied by risk. Therefore, having a plan, doing your homework, and being prepared is essential. You MUST find that special something to differentiate your practice.

As pharmacists, we all get the same fundamental training and pass the same boards to become registered. It is what we do with this baseline training that differentiates us. Benjamin Franklin has been quoted as saying, “Without continual growth and progress, such words as improvement, achievement, and success have no meaning.”

How MUST we grow? We have been blessed as a profession in that there are limitless opportunities to grow and everything we need to learn is now online. Our industry also has several events that bring together thousands of like-minded professionals who are willing to help their colleagues take it to the next level. All the professional associations have recognized the emergence of specialty and have created initiatives to fine-tune skills for those who seek them.

The best place to begin investing in the future is in yourself. As the common saying goes, this is a marathon, not a sprint. The top athlete gets better through training, repetition, and competition. As you read this, hopefully we will have had an opportunity to visit at the fifth annual National Association of Specialty Pharmacy (NASP) Annual Meeting and Educational Conference, September 18-20, 2017, at the Marriott Wardman Park in Washington, DC. The offerings of this program came because of your specialty pharmacy peers, dedicated individuals who took time away from running their own businesses to lend a hand to others, all with a focus on better patient care and advancing the profession. Programs included comprehensive information regarding all aspects of specialty pharmacy; since it’s held in DC, national legislative and regulatory policy; and the Certified Specialty Pharmacist exam (

® partnered with NASP for this meeting, including filling out the roster of participants at the expo. Representatives from leading pharmaceutical manufacturing organizations, service providers, and other specialty pharmacies were in attendance. Knowledge is essential, but relationships put that knowledge to work.

In closing, a quote from tennis superstar Venus Williams to 

: “You have to do things right to stay in business, and that’s not easy, and that’s a choice on a daily basis, the choices you make in how to run your business and how to have a point of differentiation and how to be true to your brand, how to offer something that people want and to offer something that you love.” Follow your passion. Fine tune your craft. Put your patients first and you will succeed.&ensp;â—†

Pharmacies that do not differentiate themselves and fail to provide must-have services will lose out to their competitors.