In a 2-part Q&A with Specialty Pharmacy Times, NASP President Rebecca Shanahan discussed how direct and indirect remuneration (DIR) fees affect specialty pharmacy, how to improve patient outcomes, the impact of Any Willing Provider legislation on payer access and patient services, and many other hot topics in the specialty landscape.

SPT: Compare the impact of DIR fees on specialty pharmacy and the differences in the specialty pharmacy model compared with traditional retail?

Shanahan: It’s no surprise that specialty and retail are really challenged by these fees. I think for retail the challenge is that 1, it’s a significant fee, but 2, it’s probably pretty difficult to track and forecast because of the way that the (pharmacy benefit managers) PBMs have set up the operation and implementation of the algorithms around the fees. So they end up being applied, not at the point of sale, but sometime thereafter, retrospectively. For a retail pharmacy, that becomes pretty challenging, particularly through an independent retail pharmacy, and your ability to have lots of analytics and forecasting coming out of your pharmacy system is limited. I think it’s been a real challenge for everybody, but particularly for the retail pharmacies.

The National Community Pharmacist Association (NCPA) just came out as identifying DIR fees as their number 1 issue, and seeking a sort of a policy goal for them and the retroactive nature of the direct and indirect remuneration fees. We at NASP also believe this is a critical issue for us. It’s an issue, in part, because of how dramatically it’s grown in such a short period of time. I think that the CMS report that just came out said that DIR revenues grew approximately 22% a year, and about 14% per year, per-member per-month. That’s a dramatic increase in revenue for the PBMs, but also a dramatic increase in the charges for us.

For specialty pharmacy––particularly in a differentiated manner––the way that these programs are being applied is they are measuring performance of specialty pharmacy against what we would consider to be traditionally retail oriented metrics of performance. Metrics related to the adherence and persistence on diabetic therapies and/or on statins are not things that are high incidence in specialty pharmacy populations. We predominately treat patients with life-threatening and/or unique chronic diseases that are usually of a smaller population with a higher cost. So for us to be measured in a way that applies not to the patients that we are serving, or that really does not allow us as specialty pharmacies to influence performance, you can’t really say that as these metrics are applied to specialty pharmacies, they are applied to drive performance of clinical outcomes because we are not in a position to influence those clinical outcomes with respect to those kinds and categories of patients.

So what happens in several of these programs is that if you do not have a bolus of patients or a representative number of patients, then you get assigned a network score based on the network that you’ve contracted through. For us as a specialty pharmacy, we would get assigned a network performance score for, you know, 20,000 retail pharmacies who do not have the high touch specialty specialty drugs that a specialty pharmacy does.

The third piece of that is that the way that programs are being applied is a percentage, in some cases that are the most onerous, is there’s a charge against a percentage of total the cost of therapy. So if you’re taking a 3% charge against a $125 prescription, that’s one thing. But when you’re taking a 3% charge against a hepatitis C drug, it’s over $1000, and there’s no correlation between that kind of money and either administrative costs on the part of the PBM, or on rational savings. And so what happens, is drugs like that go underwater, they go underwater because we are not buying those drugs through a distribution channel. We are usually buying those particular, high-cost drugs through––not hepatitis C, but some of the other high-cost orphan drugs or limited distribution drugs that specialty pharmacies dispense––we are buying through direct from the manufacturer, so we’re not getting the kind of fees or discounts on drug costs that would allow us to have a positive margin before we start providing all of the services that we provide.

If you are in a negative margin situation in a specialty drug where you have to provide the kinds of services that drive the value of specialty, for example: patient access, assuring compliance with the clinical policy bulletin of a health plan, collection of lab information, and pursuing access to co-payment assistance for that patient, then getting the patient on therapy, having a pharmacist to explain to the patient what their disease is and what their drug regimen has to be, and then following up to manage that drug regimen and reporting clinical outcomes back to health plans and manufacturers with respect to these drugs, you’re in a negative margin perspective. So you start in a negative margin with some of these drugs because your costs of goods does not envision some sort of distribution discount, you then are even further underwater if you provide the kinds of services that really influence the outcomes clinically for these patients for these drugs. That ends up with the health plan and/or the PBM on behalf of the health plan, or on behalf of a government payer actually paying you less than fair market value for your services plus your drug. The Medicare program envisions that providers will be paid a fair market value for their services. We think that’s a real challenge for us, but from a financial perspective, it’s a real challenge for us with our patients from a clinical outcomes perspective if we are not able to devote the kind of services that we know drive outcomes for specialty pharmacy patients. It’s a problem for the patients, because then they have higher out-of-pocket costs, and they go into the donut hole much faster when they have specialty drugs anyway. So you’re burdening the entire system by virtue of how these DIR fees are sometimes applied to specialty pharmacy, and that’s why I think there is not only a significant issue with respect to how the program is envisioned globally for both retail and specialty, but particularly at specialty, for how it sets us up to be reimbursed at less than fair market value.

When a number of specialty pharmacies determine that they are not paid a fair market value for the services they provide, they then are forced to make a decision about whether or not they can provide their services to those categories of patients that are covered by programs that include this kind of a DIR fee. If enough of those folks that are highly specialized in specialty pharmacy services cannot provide those services, it also limits the number of people who are any willing providers under the program. So patients don’t have access to a pharmacy that’s tightly aligned with their treating physician to deliver the kind of care that we know delivers best outcomes.

Now, some of what the PBMs say is well, “what best outcomes are you delivering specialty pharmacy that regular pharmacies can deliver or that specialty pharmacies affiliated with PBMs can’t deliver?” And I would say that there is some published data, with respect to savings models, that specialty pharmacy deliver. I know that Diplomat has been able to demonstrate with some of their clinical data that by managing tightly, and in the usual manner of specialty pharmacy, there is a significant portion of the hepatitis C population that rather than being on therapy for 12 weeks, can be on therapy for 10 weeks or lesser, and thereby saving both the payer and the patient significant costs.

We know at Avella that in a 800,000 life small health plan population––which we are the exclusive provider of oral oncolytics––not only are we able to provide a very aggressive price offer for oral oncolytics, but in addition, we undertook to manage the therapy in terms of managing dosing, managing split-fills to be sure that patients are responding to the therapy before we give them an entire month’s supply of highly expensive drugs, and managing patient adherence and compliance through mobile applications and other kinds of interactions with our patients that we were able to save, in addition to the unit pricing costs, more than $100,000 on an annual basis for a very small population of patients.

We know that specialty pharmacies, by virtue of their interventions, only facilitate getting patients on therapy faster and keeping them on therapy longer, which is clearly a real value proposition for folks who are paying for these therapies. But by virtue of our interventions, we can save money for both patients and for health plans and their plan sponsors. We know the model that we have works really well, but when your gross margin decreases substantially, and you are underwater on several of the drugs that you have to provide services for, you really have to determine whether or not you can continue to provide the kind of services that really benefit everybody in the health care channel. We think that’s really important, and we think the reimbursement model has to change both in terms of the type of discount that gets taken in these programs––because a percentage of drug costs is not a fair market value or a sustainable program––and in terms of not recognizing and applying the right kinds of performance standards and metrics to specialty pharmacies. We also believe that a program that only takes away money from the specialty pharmacy or performance, and doesn’t reward specialty pharmacy for the clear clinical outcomes and interventions and standards that we adhere to––both through our common practices, but also through our accreditation bodies––are things that are not sustainable programs, because everywhere you look, the government and commercial, as well as government payers are seeking out value-based contracts. It appears for specialty pharmacies, specifically, the only value that these PBMs are seeking to implement in these kinds of programs have been negative value and not positive value, and we don’t think that’s an appropriate recognition for the services that specialty services provides, and we don’t think that was envisioned by the Medicare program.

SPT:  How can specialty pharmacy best demonstrate defensible and holistic metrics for improving patient outcomes?

Shanahan: We’ve been able to demonstrate, with respect to transplant patients, HIV patients, and oral oncology patients, how Avella’s intervention with those patients, either through the use of a mobile app in combination with pharmacy counseling or through pharmacy management services relative to unit dosing and relative to spilt-fill programs, will result in best clinical outcomes, as well as cost savings. We also know, for example, a recent American health and drug benefits study demonstrated that specialty pharmacy care is associated with a significantly lower risk of disease relapse in MS patients and fewer relapses with MS patients when they are treated by specialty pharmacies, as opposed to when they get their therapies from a community pharmacy. Those are some pretty great examples of interventional instances that have resulted in better outcomes clinically for patients and better value economically for planned sponsors. We also know that there are a number of studies that demonstrate high medication adherence having better outcomes, those include studies in HIV, solid organ transplant, CML [chronic myeloid leukemia], and hepatitis C. From a perspective of adherence and compliance, which we know is a huge cost driver for health plans––people who get therapy and then don’t stay on therapy or people who don’t get on their therapy at all––that kind of nonadherence experiences result in additional hospital administrations, exacerbation of health care conditions, and a variety of other things that negatively impact patient health and also cost.

There was a study in an AIDS Research and Therapy review article that says waiting for clinical or immunological signals before getting a patient on HIV therapy is a detriment to their overall health and management of their disease. Specialty pharmacy has very high realization rates in terms of getting a patient on therapy quickly because of all the services we provide.

SPT: Discuss the beneficial financial implications of specialty services in the overall health care system?

Shanahan: Anytime you can get a patient on a drug like hepatitis C that cures you in most cases, you are avoiding dialysis, you are avoiding organ transplant, and you are avoiding cancer. The overall cost of some portion of the hepatitis C population is that they have lifestyles that has contributed to their disease. Old therapies used to create nausea and vomiting and really bad side effects, which made the patients sicker than they already were with hep C. With these new therapies, there are fewer side effects, and as a result, you see a more rapid resolution of the disease. With that you get a patient who should be more encouraged with respect to lifestyle changes, so as to not end up in the situation they end up in if they don’t have a kind of cure of their disease. It would cost well over a $100,000 or more if a patient ends up with dialysis, ends up with a transplant, or ends up with cancer. We know there is clear cost savings associated with hepatitis C specifically.

Additionally, the MS study is a good study, because we know that in the event that the patient is adherent, compliant, and persistent on their therapy are less likely in the event of an exacerbation to have relapse. So we know that it causes fewer relapses and causes fewer admissions to the hospital, and even in those situations where patients are admitted to the hospital, they have a shorter length of stay. You are less sick if you are adherent, persistent, and compliant on your specialty medications, and that avoids a host of other problems.

SPT: How will Any Willing Provider (AWP) legislation impact payer access to specialty pharmacy?

Shanahan: Medication nonadherence adds an estimated $290 to $300 billion of unnecessary costs to the health care system––that’s 13% of all of the health care system’s cost. Specialty pharmacy is a hub, or air traffic control, that coordinates clinical efforts across the doctor’s office and while the patient is at home. This results in reduced costs, increased patient safety, and quality of care; and a better management of medical and pharmaceutical costs for patients prescribed these specialty medications. In at least 2 peer reviewed studies, specialty pharmacies contributed somewhere around 13% lower costs in medical costs, so for renal transplant and oncology patients, that’s a significant savings.

I think the AWP laws are good for specialty pharmacy, because it requires that managed care sponsors and PBMs allow any provider in the network who’s able to meet the terms of membership, and those membership terms for specialty pharmacy are higher. We believe that in order to provide the kind of service that patients getting specialty medications deserves to get, that they’re going to have to include us as providers. We have to provide data as part of our accreditation process as to how we are doing with respect to time-to-fill, from the time we get information about the patient, with respect to how we manage that patient throughout their therapy, with respect to how we report outcomes. We feel very confident that if we are measured by these standards, that we know are successful in managing the outcomes of specialty pharmacy patients, that we will be successful in getting included in provider networks.

SPT: What is the long-term impact of AWP on patient services when having to change pharmacies?

Shanahan: There are a lot of things that happen when you have to change pharmacies––you have to go to a new pharmacy, you have to go through all of the review of the coordination of benefits, clinical policy bulletin, and health plan provisions to set yourself up. Then, if you are a patient that has developed a strong clinical relationship with a specialty pharmacist, you have to educate and inform the new provider of services, not only about your disease, your drug therapies, and your comorbid conditions, but a lot of things about your lifestyle and what happens to you day-to-day. We become very intimately involved with our patients, we have pictures that patients send in, we have information about when they’re going on vacation and where they go on vacation––it becomes a tightly integrated service model.

We also have great familiarity with the doctor’s office and the office staff in that physician’s office, how we share information back and forth, how we coordinate what happens if we find that the patient’s falling off therapy or that they have a side effect or bad reaction. You’re setting up kind of an ecosystem of care for that patient that then you have to reestablish. Not only is it redundant effort for everybody who is a health care provider, but it’s also redundant effort for the patient, and it risks the patient falling off therapy, or the patients having a different kind of therapy or a different kind of relationship with that pharmacy. And to the extent that the pharmacy is a high-volume mail order pharmacy, having that one on one relationship with a pharmacist who becomes part of your clinical care team becomes less easy to achieve. Not unachievable but less easy to achieve.

Check back tomorrow for part 2 of this 2-part interview with NASP President Rebecca Shanahan.