David Filstein

Specialty pharmacy remains the largest opportunity for health systems and their patients over the next 5 years: driving improved outcomes, a better patient experience, and more than $100 billion incremental economics. The specialty market is projected to continue growing by 8% per year driven by new specialty products coming to market, continued expansion of the specialty population, and drug price increases through 2025.

With integrated specialty pharmacies enabling health systems to improve patient outcomes and lower total medical costs, every hospital will need a solution to support the growing number of patients on outpatient specialty medications. As health systems realize the benefits of integrated specialty programs, we see more health systems leveraging this model as the exclusive or preferred pharmacy choice for their employees and at-risk lives.

National pharmacy benefit managers (PBMs) and payers are now launching health system specialty pharmacy networks to realize the benefits of better care and lower costs.

We expect to see continued growth in the specialty market, driven not only by wider use of existing therapeutics, but also by new-to-market drugs. Of the estimated $118 billion total specialty market expansion through 2025, we anticipate new products to account 

Growth in neurology and endocrinology are largely driven by pipeline products. In 2022, we are seeing expansion in specialty cardiology drugs with the recent approval of 

 from Bristol Myers Squibb. We anticipate other new oncology drug launches, such as adagrasib (Mirati) and the Revlimid authorized generic lenalidomide, will have significant impact on the oncology space.

The influx of new specialty medications to the market is, in part, driven by the growth of the specialty population in the United States. A report from the 

 projected the number of Americans with chronic medical conditions will grow by 9% between 2020 and 2030, an increase of 14 million people. Some disease states are projected to experience even higher increases in patient volume.

 the total number of incident cancer cases to increase by approximately 50% between 2015 and 2050. The number of Americans with diabetes are projected to 

 between 2010 and 2050. Additionally, the US population is aging.

The release of new products—such as growth hormone treatment lonapegsomatropin-tcgd (Skytrofa), sotorasib (Lumakras) for non-small cell lung cancer, and asciminib (Scemblix) for chronic myeloid leukemia—will play a role in increasing the population serviced by specialty medications from 1% of Americans to 2%-3% over the next 5 years.

On the drug pricing front, we expect to see continued price increases for existing and pipeline products, ahead of future pricing pressures from biosimilars, competitive products, and potential drug price legislation. Although the 

 plan has recently met a new set of challenges, its drug price legislation may serve as a framework for future bills addressing the topic.

In the latest draft, the Centers for Medicare and Medicaid Services would have the ability to negotiate directly with drug manufacturers on select drugs starting in 2025. This could lower drug pricing by at least 5%-10% per year post-implementation. The bill would also cap drug price increases by mandating rebates for the amount that prices exceed the annual rate of inflation, based on 2021 prices.

Throughout 2022, we will be monitoring the progress of this or similar legislation to see what impact it will have on the specialty pharmacy market. In the absence of legislation action, we expect specialty drug prices 

 for 3 years at or above current annual rates.

We expect new products to largely be managed via a limited distribution drug (LDD) model, often with stricter administration and reporting requirements. Today, 80% of manufacturers are already using limited distribution networks for their drugs, with 150 more LDDs in 

Shields Health Solutions has responded to this tightening of the network by helping health systems navigate and address the requirements of drug manufacturers to meet the criteria for network inclusion. Shields has expansive capabilities in establishing Elements to Assure Safe Elements Risk Evaluation Mitigation Strategy protocols within health system pharmacies, helping NYU Langone to become the first integrated delivery network (IDN) in the nation to receive Risk Evaluation and Mitigation Strategies certification for vigabatrin, an anti-seizure medication.

Every health system will need a solution to support the expansion of the specialty population

Health systems have responded to these market dynamics. With approximately 90% of all large hospitals operating their own specialty pharmacy, optimizing specialty pharmacy services and controlling costs for specialty patients have never been bigger considerations than they are today.

 to significant opportunities for health systems. Not only do these pharmacy programs allow for lower cost and increased revenues, but they have also become key differentiators for health systems in the portfolio of services they can provide their patients.

We have seen this service offering result in increased patient Net Promoter Scores (NPS) in the mid-80s and improved clinical outcomes. A recent 

 quantified this impact, finding that an integrated, hospital-owned specialty pharmacy approach led to a 13% reduction in total health care costs for enrolled patients.

As health systems realize the benefits of the IDN model, they will seek to capitalize on savings for at-risk lives in their network

As health systems grow their integrated specialty pharmacies, they can realize the benefits via improved patient health outcomes, which in turn translate to lower total medical expenditure. Alongside the benefit to their own patients, health systems will look to carry these health improvements and savings to at-risk members under their care.

Many health systems have self-funded employee plans, health system-managed patient health plans, or affordable care organizations (ACOs) for which the health system can have some element of control over where these covered lives receive their care. 

” health systems who are providing both the actual care and are also at-risk for patient outcomes will seek to incentivize these lives to fill onsite either through exclusive or preferred incentive pharmacy network structures in their plans. As members of these plans fill onsite, they bring savings to the health system.

Shields has witnessed these benefits through firsthand experience with our health system partners. 

, analyzed outcomes at UMass Memorial Health’s ACO to see how patients filling onsite at UMass’s specialty pharmacy compared to those filling elsewhere.

The outcomes found a reduction of more than $1000 per member per month (PMPM) in their total medical expenditure by virtue of benefitting from the integrated care model. Building on these outcomes within their ACO, UMass Memorial Health recently announced that it has applied to the federal government to launch its own 

, and further leverage the opportunity for savings and improved health outcomes.

We expect to see additional health systems incentivizing at-risk plan members to fill with their onsite specialty pharmacies for both existing and newly launched plans.

Payers and PBMs will seek to partner with Health System networks to benefit from the improved outcomes and lower costs

We expect health systems to capture more than 25% of the specialty pharmacy market by 2025 through offering a more efficient and effective care model for patients. With networks such as Shields Health Solutions representing more than 70 health systems and more than 35% of the non-profit market, we expected more payers and PBMs to partner with health systems proactively 

IDNs create the opportunity for greater visibility for physicians, lower fulfillment costs, and higher patient adherence rates. Patients who can stay on treatment correctly have lower total medical expenditures and better health outcomes.

With more of the market represented by health systems, payers and PBMs will adapt accordingly to capitalize on the opportunities allowed by these IDNs. New specific access networks will be launched for health systems to fully maximize these outcomes.

With patients, providers and employers citing specialty pharmacy as one of their top costs, health outcomes, and overall experience pain points, we will see payers and PBMs embrace the solution that tackles all 3 of these issues.

Prime Therapeutic’s IntegratedRx-Oncology

 clinically integrated program, will allow patients whose plans are serviced by Prime to fill onsite at their hospital’s pharmacy.

As the specialty market continues to grow, health systems are uniquely positioned to bring significant value for patients in their networks. An IDN allows patients to receive superior care while generating savings for themselves and their plan.

At Shields, we are excited to see more health systems turning their focus on how to capture these benefits. Health systems nationwide are launching or looking for ways to grow their own specialty pharmacies and are structuring health plans in their control to reap the rewards of patients filling onsite.

We expect to see payers and PBMs seek to capitalize on these benefits as well, and structure health system access network plans of their own, seeking to further drive volume to these integrated health system specialty pharmacies. As we turn to 2022, we are excited to see just how much the specialty market will continue to evolve.

Stephen West is the Chief Strategy Officer and David Filstein is a Sr. Director of Corporate Strategy at 

, the nation’s leading health system specialty pharmacy integrator and accelerator.

Articles

With integrated specialty pharmacies enabling health systems to improve patient outcomes and lower total medical costs, every hospital will need a solution to support the growing number of patients on outpatient specialty medications.