David M. Suchanek, RPh

A retailer’s decision to get involved in the specialty pharmacy marketplace should be an informed one that encompasses careful research and a full understanding of all of the stakeholder requirements. 

How does the industry define the provision of specialty products in “retail”? It is a definition that varies widely and depends on who is answering the question. Unfortunately, some antiquated industry practices and inconsistencies also contribute to the uncertainty. We will explore what it takes to participate in the growing specialty marketplace, but also review some industry inadequacies and challenges.

It seems that every week I get a few more calls from organizations wanting to participate in the growing frontier known as “specialty.” I ask them, “So you want to get into specialty…why do you want to participate? Why now? What is your current footprint or business model? And most importantly, are you willing to FULLY finance your potential market entrance?” After reviewing things at a high level, there is less than a 25% interest level in taking the next step to actually participate. But why? Doesn’t the drug pipeline primarily consist of biotech products? The answer is a very strong YES.

Unfortunately for some, it is becoming harder and harder to survive doing traditional pharm-acy. I define traditional pharmacy as focusing on a few branded products and the ever-increasing list of $4 generics, and maybe some greeting card, OTC product, candy, or cigarette sales (a BIG kudos to CVS Health and others for pulling tobacco sales out of their business, something I personally hope is a trend that we as an industry embrace and follow). And getting into specialty is tough, too. Mistakes can be very costly and can negatively impact even existing business lines.

So, why is it so tough to get into specialty? One word: expectations. There are very high expectations from the stakeholders who make the decisions and/or allow participation. Thus, the stakeholders also set the actual “barriers to entry.”

Payers typically want their membership to have:

A safe supply chain and distribution solution

 purchasing directly from manufacturers or a tier 1 wholesaler that meets the pedigree requirements of the Healthcare Distribution Management Association, Verified-Accredited Wholesale Distributors, and others.

 and accreditation from URAC, the Accreditation Commission for Health Care (ACHC), and others; continuous quality improvement programs; performance metric—monitoring capabilities; customer satisfaction surveys; redundancy; error-tracking; and issue-resolution tracking.

 to cover remote membership/employees in all 50 states plus Washington, DC.

Consistent services and network of providers:

 Payers typically want a network that will meet the access and service needs of their individual organization. Not all products are available from any 1 specialty pharmacy, so most payers have preferred pharmacies by disease category, location, or product. They want a similar experience for their membership at all of their contracted specialty pharmacies.

 Performance data, clinical data/outcomes, MD information, and pricing trends are entry-level requirements for most specialty networks.

 This would include toll-free telephone and fax numbers, clinical programs, and full-time employees.

 Pharmaceutical manufacturers want safe, high-quality, consistent services at fair market value rates.

Physicians/offices have their individual wants and needs, too. They typically include:

 Less office work to get a patient on the prescription.

Is the patient covered? What is their cost?

 A patient who can’t afford the medication won’t start or stay on it long.

 Options for the patient that allow consistency, safety, and clinical services.

 Some offices provide educational support, while others let the specialty pharmacies provide services.

 Offices want to know if the patient is able to get the drug, if the patient is getting the drug, that their patients have been helped, when patients are having side effects/dropping off therapy, or if the patient has reimbursement issues. All of the stakeholders want positive outcomes, appropriate utilization, and an easy process.

 Increasingly, offices are asking specialty pharmacies for “report cards” specific to their patients being serviced.

Specialty pharmacies evolved over the last 20 years because of the inadequacies in the marketplace and the need to properly service the patient and coordinate with all the stakeholders. It has grown from a cottage industry to a best-in-class solution that meets the majority of the stakeholder needs.

Successful specialty pharmacies have invested and continue to invest in the ever-evolving specialty industry. These investment areas include but are not limited to:

 National Association of Boards of Pharmacy number, or retail class of trade from the traditional pharmacy, usually depending on state requirements

 (most traditional pharmacy platforms are inadequate for most specialty services and programs)

(URAC, ACHC, Verified Internet Pharmacy Practice Sites, others)

 (by the National Association of Specialty Pharmacy, pharma, consultants, or self-training)

 sales reps, registered nurses, registered pharmacists

 to third-party participants (501c3s, data aggregators, manufacturers, third-party logistics providers, hubs, others)

 (up to the latest USP 797/FDA standards)

 A business plan and pro forma that captures all the dynamics

 A full backup plan, generator, information technology backup, hot site, insurance

		And the most important investment, your 

For years, it seemed that most retailers and chains, minus the big-box players, were not very interested in or motivated to participate in the specialty marketplace. However, due to the number of specialty products in the pipeline and the declining number of branded products, many are now attempting to participate. More than a dozen chains and many other independent retailers are now actively participating in specialty, with a wide variety of specialty solutions. But specialty is “special” and it requires a well thought out strategy to be successful. Some of these retailers have been very successful, while others that jumped in without a well thought out business plan have yet to see a positive return on investment. There are many specialty products that are very well suited for the local retail market; having the right growth strategy can make all the difference.

Even if you take all the proper steps to build your specialty pharmacy, you still may not be able to participate fully. Some specialty products are only available through limited distribution networks. This trend will continue. Manufacturers limit access to products for several reasons. Payers also limit access to certain products for the reasons mentioned earlier. Often, smaller pharmacies do not fully understand what is actually required to successfully launch a specialty product in the US marketplace and are disgruntled when they do not have access to a product and have to turn a patient away. Some reasons for the limited networks include, but are not limited to:

 Biotech products are often very expensive to produce, with long manufacturing schedules/times. Forecasting volume can be challenging. Getting more product into the channel can be a costly venture. Every entity that touches product ultimately adds cost to the channel.

 These usually increase in open channel models.

 If the FDA fast-tracks a product, there may not be enough to go around.

FDA/Risk Evaluation and Mitigation Strategies (REMS): 

Some products have FDA-mandated REMS requirements, such as the use of a hub, a limit on the number of pharmacies that can offer the product, data reporting requirements, or clinical/enhanced safety programs.

 Larger companies have greater infrastructure and resources for managing the supply chain, and smaller companies have limited resources. It can cost $90,000 to add a specialty pharmacy to a network.

Manufacturers want to make sure their product has payer coverage. Most specialty pharmacies and pharmacy benefit managers directly contract with payers versus participating in a retail network.

 Specialty pharmacies provide a consistency of service not traditionally found at most pharmacies. Enhanced adverse event reporting may require unique documentation and reporting of both solicited and unsolicited events.

 Enhanced data is often required on sales, inventory, physician, payer coverage, performance metrics, and connectivity to third parties (hub, data aggregators, 501c3s, e-consent)

 Most specialty pharmacies assist patients in finding co-pay assistance or alternative funding. This is usually a core competency utilized for most patients. Support may also include indigent enrollment into government assistance/Medicaid programs or coordination with other advocacy organizations.

 Manufacturers in some disease categories sell directly to the pharmacy. Some require electronic funds transfer or immediate payment along with inventory data reports and own-use restrictions.

 Some specialty products require home health care coordination, injection training, infusion at home, or a suite/site of care.

Dedicated toll-free phone and fax lines: 

Due to the high level of coordination between the stakeholders, it is often best practice to have dedicated telephone lines and fax lines. This may also be a contractual requirement by the manufacturer.

 Some products require cold chain storage in validated and monitored refrigerators as well delivery of product in fully validated coolers.

As payers increase their safety and quality requirements for participation in their networks (usually via URAC or ACHC), manufacturers also want their network to have these accreditations to add value to their network and increase the likelihood of coverage by the payers.

At the end of the day, all of the stakeholders want positive outcomes, appropriate utilization, and an easy process. Retailers are actively providing new and innovative solutions to the stakeholders. What was once a market of narrow preferred networks has evolved into a multichannel approach with many carve-outs. Each product is unique. Each disease category is unique. Each stakeholder has their own opinion on how to manage specialty patients.

As our population grows and new medications emerge from the pipeline, the opportunities for specialty will continue to grow dramatically. Participation requires investment, a strategy, and time. If you think you might want to participate in specialty, do the research, gain a full understanding of the financials, and build your business plan. 

is senior vice president of biotech and specialty services at D2 Pharma Consulting, LLC. He has served as vice president of biotechnology and pharmaceutical services at VCG & Associates and as vice president of operations, segment management, pharmaceutical account management, and trade relations at Curascript/Express Scripts.

Articles

A retailer's decision to get involved in the specialty pharmacy marketplace should be an informed one that encompasses careful research and a full understanding of all of the stakeholder requirements. 

Specialty in Retail: What Does It Take to Participate?

The procedures and services involved in specialty pharmacy are different from the community model.

	Often I hear pharmacists say, “I fill specialty prescriptions all the time through my store(s). What is the big deal?” I then reflect back 15 years when I had the same perception. What about the “reality” of the specialty care model? What are the components? Why is specialty different? What must do as a pharmacy to succeed? What are the expectations from the stakeholders in the process?

	Most full focused service specialty pharmacies (SPs) provide much more than the traditional pharmacy test claim. A full review is completed for almost every patient. This includes 

1) A pharmacy claim review (a test claim); 2) A phone call to the insurance carrier to verify the pharmacy benefit 

(Is it retail or mailorder? Is there a preferred pharmacy for the patient? What are the copay/deductible amounts for each option? Is there a Prior Authorization/Statement of Medical Necessity? Requirements?); 

 (Out of Pocket? Deductible? Prior Authorization? Requirements? Buy and Bill by MD?); 

nursing benefit/injection training/home health care

 (What is coverage policy? Preferred local and national vendors? Patient responsibility? What is covered? Billing process and coding requirements? Rates?); 

compounding/per diem rates if applicable; 

 3) understanding and reviewing Compassionate Care Program options

 (Is there a copay assistance program for the product? Who is administering program? What are the requirements? Is there a copay card, credit card, or other? How to process? How to get paid?); 

is the patient eligible for a Patient Assistance Program?

 (Who is administering program? What are the requirements? What does the patient need to do to apply? What does the MD office need to do as part of the process?); 

are there any alternative coverage organizations?

 (eg, American Cancer Society, local advocacy organization); 

do you provide payment plan options for your customers?

	Most full-service SPs provide intense training programs and educational services by disease category and product. This includes educational training sessions for pharmacists, technicians, and billing staff at least 2 times a year for each focused disease category; customized enrollment forms (a 1-pager that captures patient information; insurance information; service needs, eg, nursing, injection training; clinical information, eg,

; traditional Rx prescribing requirements; and customized or manufacturer educational materials (storage of materials, inventory tracking of materials).

	Most full-service SPs are contracted with the payers/insurance companies to provide administration supplies as part of the contracted rate. These materials include syringes, needles, sharps containers, and alcohol swabs.

High—Touch MD Office/ Clinical Services

	Offices/MDs prescribing and processing specialty Rxs typically do not handwrite an Rx for the patient. Approximately 90% of specialty Rxs/referral forms are sent via fax. E-prescribing, although becoming more prevalent, has not been widely accepted by “specialty prescribers” due to the complexity of the products and the required adjuvant regimens. These services include 1) fax or call back to the MD/office letting them know the fax was received. This can be done within 15 minutes or batched to a certain time of day or MD/office preference; 2) MD office notification of referral status: Did the patient’s insurance approve the prescription? Is there additional paperwork that the MD office must provide?; 3) patient stratification by disease and severity: MD/offices expect SPs to provide different levels of service and support depending on if the patient is naïve (patient has never taken Rx) or experienced (patient has been on therapy before); 4) compliance/persistency services: is the patient getting their refills? On time? Any side effects? Has the patient stopped therapy? Any interventions? (MD/office expects fax or phone notification if the patient is experiencing any issues. Some SPs have secure Web portals that allow MD to see all patients under their care and clinical information); and 5) proactive refill requests.

	Pharmaceutical manufacturers may have requirements for participation in a limited distribution network product, open distribution product service agreements, and the FDA may have Risk Evaluation Mitigation Strategies requirements. These requirements may include inventory tracking and reporting (852 standardized EDI inventory reports); sales tracking and reporting (867 standardized sales reports); packing, shipping, tracking via a national courier in validated containers; performance tracking and reporting (turnaround times, call metrics); continuous quality improvement tracking, documentation, resolution; clinical data capture and reporting: disease- or product-specific capture, talk tracks, by patient severity stratification; and coordination with manufacturer 800 Call Center/Service Center/ HUB.

	In summary, specialty pharmacy is taking what you likely do every day and enhancing the process with very tangible controls (it must be real and segregated to meet the needs of the stakeholders). Often pharmacies will set up a separate facility or separate area for specialty Rx processing. On top of all of this is the need for a very flexible scalable IT platform that includes an Rx Dispensing system, a workflow manager, and a data warehouse with robust internal and external reporting ability. To participate, these are just some of the basic requirements to compete, and hopefully if done right, to succeed.

David Suchanek, RPh, is senior vice president of biotech and specialty services at D2 Pharma Consulting, LLC. He is a member of the 

 editorial board. For more information visit www.SpecialtyPharmacy.com.

The Specialty Pharmacy Care Model 

The growth of this field is dependent upon connecting stakeholders in a productive way. 

	Over the past 30 years, specialty pharmacy has grown from a notion to a niche industry to being on the brink of becoming the major force in health care delivery.

	With the pipeline overflowing with specialty products and the days of big blockbuster brand products long gone, our focus leads to the future of pharmacy—spec ial ty pharmaceuticals. Overall, these products have had one thing in common since they were first introduced&mdash;they tend to present “challenges” to all the stakeholders: physicians, patients, payers, pharmacies, and manufacturers.

	It is because of those challenges that I and others in the profession were drawn to provide “special” solutions for the marketplace. We chose to do what was truly “new,” what took us out of our comfort zone, what our patients needed. As our current health care system continues to change, it is important for pharmacists to do what some peers will not venture to do…evolve.

	Many years ago, a patient walked into my pharmacy crying. She just got back from the oncologist and he told her something that she never wanted to hear—that she had an aggressive type of cancer and they needed to start treatment right away.

	The physician handed her an Rx for a new medication. She had never heard of it and had no idea what she was going to go through that afternoon. She was simply told that she was going to have an RN visit her to show her how to inject the medication after her chemotherapy in a few days.

	Frantically, she searched for the medication. She went to the 3 pharmacies in the “big town nearby the MD office” without any luck and finally landed in our store. We figured it out but it was not an easy endeavor. To add to the mix, she did not have a benefit for the medication and we had to resort to the new manufacturer assistance program.

	In the end, we became good friends as she fought for the next decade before succumbing to the illness. This experience had a long-term impact on me. That day when we solved the problem of how to get the cancer medication for our dear customer, we decided to go down the path of specialty.

	Specialty has been and continues to be about bringing “solutions” to the stakeholders and linking them cohesively together (Figure). It started simply with providing services to MD offices, manufacturers, payers, and patients.

	It now has evolved to include REMS programs, 501c3 foundations, hospitals, home health/nursing services, infusion suites, wholesale, and HUB services. In the near future we expect to see integrated lab and genomic testing, media tool— driven adherence support services, and Web portals that empower patients to co-manage their disease with their health care team in a real-time environment. We all need to continue to evolve. PT 

David M. Suchanek, RPh, is senior vice president of biotech and specialty services at D2 Pharma Consulting, LLC, a  consulting firm which focuses exclusively on pharma services in the life sciences industry. Mr. Suchanek is a member of the Specialty Pharmacy Times editorial board. For more information, visit www.SpecialtyPharmacyTimes.com.

The Evolution of Specialty Pharmacy 

Pharmacists who want to enter specialty pharmacy can mitigate the risks by educating themselves on the market.

	With every conference we go to and every journal we read, we are increasingly bombarded with information about the specialty pharmacy industry. What does it truly mean? How can one participate? What does participation really mean? What are the true risks to my business if I do nothing? To whom do I turn for advice? Where do I start? All are good questions, but the first step is to learn about specialty.

	Over the next year, we will explore through a “specialty series” what it takes to become a specialty pharmacy. This will include topics such as:

	• The evolution of specialty pharmacy 101

	• The specialty pharmacy patient care model: the necessary steps

	• Doing your homework: local market research

	• Stakeholder engagement: payers, pharma, advocacy organizations

	Education and fully investing in the endeavor is crucial. Too often pharmacists attempt to enter the space without thoroughly thinking through all the dynamics. Not knowing some of those dynamics can quickly put someone out of business. Specialty products are expensive and not without risk. Learning the space, putting together a sound business plan, understanding the investment, and executing the strategy are the keys to participation.

	As the blockbuster brand products fade away and become fewer, we are left with a few choices:

	• Diversify the business: provide home health/nursing services, compounding services, respiratory/durable medical equipment, etc

	• Embrace specialty A diversified strategy is a wise one, but specialty products are here to stay. Once we look at the facts,1 they are hard to ignore and crystal clear.

	• More than 50% of late-stage pipeline drugs and more than 70% of applications for new indications are for specialty drugs

	• Specialty drug spend in the medical benefit is expected to grow 60%, reaching $105 billion in 2015

	• More than 50% of total pharmaceutical spend will be specialty by 2013

	• As many as 50 new specialty drugs could be approved in 2011 and 2012, almost half in oncology

	• 18 of the products pending/approved in 2010/11 target orphan diseases, which currently have few or no treatments

	• More than 40% of new products are expected to have Risk Evaluation Mitigation Strategy requirements

	So let us start with the basics and define specialty. Years ago when “biotech” products were introduced to the marketplace, no one knew what to do with them and how to categorize them. So a few payers/health care plans carved out these novel products into a new “special” class. There were a few other choice words that were also utilized, but “specialty” was the winner.

	At that time, “specialty products” were defined as “biotech-like” products that were expensive (more than $500 a month per patient), had unique reimbursements (could be a pharmacy or medical benefit), had unique storage and shipping requirements (eg, refrigeration, frozen, hazardous), or required ancillary supplies (eg, administration kits, needles, syringes, alcohol swabs, sharps containers) or educational materials (administration information, support programs, etc). Today that definition has expanded and changed with the times.

	Most products are considered “expensive” if they cost more than $1000 a month per patient. The category now also includes oral products (eg, oncology, transplant, HIV/AIDS products), autologous vaccines, inhalation products, intrathecal products, and supportive/adjuvant therapies in a particular drug/disease category. It also includes products that may require home health or nursing services, emergency 24/7/365 support, or orphan products (products with a small patient population).

	Common disease categories include but are not limited to those listed in the Table. If you are currently dispensing products in these categories, you may be ahead of the curve in gaining access and participating in the specialty pharmacy space. However, dispensing a few products today does not guarantee you will be able to continue to do so in the future.

Stakeholders have very high expectations of pharmacies providing services to specialty patients. Physicians, pharma, payers/health care plans, and patients all have expectations based upon best-in-class offerings and services by existing specialty pharmacy providers. The longer one waits to enter the space, the greater the barriers for participation will be. It is time to decide if you want to engage. If you do, through this series I will help walk you through the process to avoid common mistakes, maximize your investments, and participate in the future of pharmacy—specialty pharmacy. PT

David M. Suchanek, RPh, is senior vice president of biotech and specialty services at D2 Pharma Consulting, LLC, a consulting firm which focuses exclusively on pharma services in the life sciences industry. Mr. Suchanek is a member of the Specialty Pharmacy Times editorial board. 

	1. Adaptation from CVS/Caremark 2011 Trend Report, D2 analysis.

How to Become a Specialty Pharmacy 

Is a low-molecular-weight heparin program right for your pharmacy?

	The industry has come a long way in the treatment and prophylaxis of thrombosis. As the population ages and waistlines increase, so do the comorbidities that are often associated with acute and maintenance anticoagulation therapy. For years, pharmacies have worked hand-inhand with physicians in the management of the complex treatments and stabilization of patient-specific regimens.

	As usual, with complexity there is opportunity for pharmacists to play a more active role in the improvement of patient outcomes. There is also an increasing business opportunity for those who invest the time required to develop a “LMWH program.” So why is this a business opportunity for your pharmacy?

	First, some product needs are best serviced “locally.” Low-molecular-weight heparins (LMWHs) clearly fit into this category. If a patient is getting released from the hospital on a Friday night, can a traditional mail order pharmacy provide STAT delivery of product? Not easily. Can a specialty mail order pharmacy provide STAT delivery of product? Yes, but not easily and not without high internal costs.

	Which leads us to the second reason why it is a business opportunity: this category is typically not a focus of mail order pharmacies (or the PBMs that often own the specialty or mail order pharmacies). It is fairly easy to adjudicate the pharmacy claim and get an override if needed, due to the STAT nature of the product(s).

	So where are patients to go when they are released from the hospital? Sometimes the hospital may have an outpatient pharmacy where the patient can obtain product, but not always, and they often have very limited hours of operation. This leaves many patients without a convenient solution. They might need to call multiple pharmacies to find the product in stock.

	Be the solution for patients in your area. Talk to the local hospitals—what are their protocols for discharging patients who require anticoagulation therapy? Do patients receive a “dose” before leaving? Do they walk out with a prescription in hand? Does the hospital provide a listing of local pharmacies that carry inventory regularly? What products are on formulary in the hospital? Does the hospital have an anticoagulation clinic?

	How can you work together with the clinic to provide continuity of care and enhance patient outcomes? Who are the top prescribing physicians in the area? Who is affiliated with the hospital/IDN? Would the hospital be willing to partner if you can assure them after-hours care and access to on-hand inventory of all the products?

	Consider investing in the development of a hospital-specific/physician-specific Rx referral form with the relevant therapies listed. Develop a visual process flow. Develop a brochure characterizing your services. And dedicate an 800 number to your program, with access to a pharmacist or nurse after hours 24/7/365. A little investment of time and effort will yield increased revenue and, importantly, will differentiate your pharmacy from the rest of the pack. PT 

David M. Suchanek, RPh, is senior vice president of biotech and specialty services at D2 Pharma Consulting, LLC, a consulting firm which focuses exclusively on pharma services in the life sciences industry. Mr. Suchanek is a member of the Specialty Pharmacy Times editorial board. For more information, visit www. SpecialtyPharmacyTimes.com.

Low-Molecular-Weight Heparins Can Be "Heavy" Hitters

The interpretation of Fair Market Value is not so black and white.  Here's how a pharmacy or pharmaceutical manufacturer can put policies on place to bring clarity. 

Navigating the Perils of Fair Market Value

, October 2010), we reviewed and defined Fair Market Value (FMV), bona fide services, and how organizations can establish a process and create a benchmark of their service offerings. The overall intent of the FMV contracting methodology is to bring clarity and transparency to the financial relationship between 2 contracted organizations.

	This sounds easy in principle, but the reality is that due to the wide variety and complexities of products and their required services, it is not so black and white. So how can a pharmacy or pharmaceutical manufacturer put policies in place to adhere to the interpretation of the law?

 is to embrace the contracting practice and methodology of Fee For Services (FFS) at FMV. This can be difficult for pharmacies to fully execute, as some pharmaceutical manufacturers have not yet transitioned or are partially transitioned to FFS contracts, but the trend is certainly shifting toward a more transparent and benchmarked process. Many manufacturers over the past 18 to 24 months have been steadily researching ways to properly transition contracting methodologies, and are also evaluating services and their associated fee structures. This is partially due to general awareness of these trends, but more recently there has been a dramatic shift and urgency to the process.

	Why? There is a perception that this is partially due to the awareness of “new” government practices. Numerous articles have discussed how the government is now enforcing the practice of holding pharmaceutical manufacturer executives accountable for “misbehavior” on their watch. This bold step has direct repercussions for the manufacturer and all of its vendors down the entire supply chain.

	If a manufacturer is held accountable for violations of health care laws, the organization or executives could be excluded from participation in any federal health-related programs— meaning Medicaid, Medicare, and an extensive list of other federally sponsored programs. As such, anything that touches a government program is being re-reviewed internally at most manufacturers. With state, federal, and employer budget shortfalls continuing, pharmaceuticals prices/contracts and related services are targets of focus. When audits occur, any participant in the supply chain can be impacted.

The second step for a pharmacy includes: 

		Identify current services offered to the marketplace

		Stratify/break down services into basic (offered to everyone), enhanced, and custom

		Investigate the internal cost of each service; this will serve as your internal benchmark for the low end of your organization’s FMV range

		Make sure no fees are for referrals or the marketing/promotion of the product

		Make sure services are bona fide and have a commercial need

		Gain independent external input as to the valuation of services; this will serve as a potential benchmark for the high end of your organization’s FMV range

		Finalize the “list of services” and the associated “FMV range”/grid

		Develop a “standardized process” to benchmark each contract/ opportunity to the grid

		Document, document, document all communication and evaluation transparently

		If a deviation from the grid is needed, assure a fully documented escalation process

		Routinely evaluate if the services that are contracted are being completed and discrepancies are being documented

	The goal for a pharmacy is to have a solidified process, benchmark/grid of what it is consistently charging for services, audit accordingly, and document everything. If it is not documented, you did not do it.

 will need to take is to have the legal/regulatory team embrace the contracting methodology of FFS at FMV. Most trade relations teams ultimately manage the process with legal team oversight. The process is easier to establish for new emerging companies than existing companies. With established manufacturers, existing contacts are in place that could be many years old before the advent of FFS at FMV practices.

are unique to each individual manufacturer but can be stratified into the following categories:

		Break down services and fees by product

		Develop a grid of all services offered for all product lines

		Identify any inconsistencies between products/contracts (does one contract have a different fee than another contract for a similar/ same service?)

		Identify contract expiration/termination dates and evergreen (renewal) clauses

		Identify contract renegotiation or change clauses

		Externally/independently benchmark industry fee ranges for all services provided by product and all products

		Stratify client base by importance: this can be by payer coverage, data collection and reporting abilities, location, size of patient population serviced, general services, unique differentiated services, and other. This process can be done from historical experience but is often supported and documented via a transparent RFP process.

		Development of implementation/ outreach strategy

		Development of a solidified contracting process if not already established

		Development of a solid audit process based on the frequency of services performed by the vendors. (If weekly activities, there should be monitoring weekly to insure services are completed and timely according to the parameters of the contract. If not documented, risks for the manufacturer increase and could be perceived as paying for a service that is not actually performed.)

	The goal for a manufacturer is virtually the same as a pharmacy—with a few nuances. It is best to have a solidified process, benchmark/grid of what you are consistently charging for services, audit accordingly, and document everything. Additionally, many manufacturers now use the information of capabilities reviewed through a request for proposal process for documentation and justification for limiting distribution networks.

	Similarly, if a pharmacy does not have such best-in-class processes with an understanding of FMV methodology, it is increasingly perceived as a potential risk for the manufacturer, and thus another reason for exclusion in a distribution network.

	In summary, embrace the practice, develop a solidified process, establish a benchmark/reference grid with both internal and external information, audit consistently, and always document, document, document. 

David Suchanek, RPh, is senior vice president of Biotech and Specialty Services at D2 Pharma Consulting LLC (D2), a consulting firm focusing exclusively on pharma services in the life sciences industry. D2 assists emerging and established pharmaceutical and biopharmaceutical companies to develop and execute strategic business initiatives, including the development of contracts that meet Fair Market Value requirements. Mr. Suchanek is a member of the 