Lessons Learned: Starting a Health-System, Oncology-focused Specialty Pharmacy

Pharmacy Practice in Focus: OncologySeptember 2019
Volume 3
Issue 1

Health-system–owned and operated specialty pharmacies have become a trend to not only capture previously unrealized profit but to also close the gap between provider, patient, and medication.

Health-system—owned and operated specialty pharmacies have become a trend to not only capture previously unrealized profit but to also close the gap between provider, patient, and medication. Just over 2 years ago, my hospital system decided on that very initiative: to delve into the world of specialty pharmacy and provide a patient- centered continuum of care. We dispense medications for several specialty providers, but oncology has been our main focus. Starting a specialty pharmacy is never easy, and even if you have an established specialty practice, here are some items to consider along your journey.

Limited-Distribution Drugs

Because many manufacturers manage drug distribution within their own pharmaceutical hub programs, simply purchasing these medications poses a challenge. Gaining access to limited-distribution drugs (LDDs) is vital to allow your specialty pharmacy to serve additional patients and disease states. Because there are so many oncology LDDs, the task may seem daunting. If your oncology providers prescribe an oral oncolytic a few times per year, consider placing that medication at the top of your wish list.

In terms of gaining access, reach out to your local drug representatives or ask to speak with market access directors. These individuals are often the key to obtaining access to oncology LDDs. The oncology LDDs that I see frequently are ibrutinib (Imbruvica), venetoclax, osimertinib (Tagrisso), palbociclib (Ibrance), abemaciclib, lenvatinib (Lenvima), and cabozantinib. Strict Risk Evaluation and Mitigation Strategy program medications, such as lenalidomide (Revlimid), may be out of reach for the new specialty pharmacy, but they are worth pursuing down the road.

Start a dialogue with your market access team and discuss the benefit to opening hospital distribution channels. Increased speed to therapy, higher satisfaction surveys, integration with provider clinics, and enhanced clinical coordination are all reasons why manufacturers should open access to your health-system—owned specialty pharmacy.

Depending on the size of your organization, leverage your clinical trial department to advocate that your specialty pharmacy dispense the medication either during a trial or following FDA approval. There is no better group to dispense a newly approved medication than the team directly involved in the clinical trial. Be careful not to endanger a provider’s participation in a clinical trial by mandating your specialty pharmacy be in network. This method to obtaining access to LDDs requires more finesse, but may be a viable option for larger health systems.


You should obtain multiple accreditations in order to be viewed as a “true” specialty pharmacy. URAC, The Joint Commission, and the Accreditation Commission for Health Care should ring a bell or strike fear in your heart. Accreditations from these organizations add value to your specialty pharmacy and distinguish you as providing exceptional, verifiable care to your patients with cancer. These orga- nizations are known as the gold standards in specialty pharmacy accreditation.

Reimbursement and Inventory Management

At the end of the day, health care and pharmacies are businesses. In order to stay in business, you must dispense a medication for more than it costs to purchase. The issue is that several payers reimburse oral oncolytics for less than they cost to dispense. Therefore, typical drug purchasing channels and reimbursements may not apply to health-system—owned specialty pharmacies, and this can adversely affect your bottom line.

Whereas a hospital may have volume-based purchase discounts and prepurchase medications for several months, small specialty pharmacies often employ a just-in-time (JIT) approach to inventory management. Volume-based discounts don’t apply to low-volume oncolytics, and stan- dard hospital group purchasing organizations may not include specialty medications and LDDs.

Inventory management is another key factor in successfully managing a health-system specialty pharmacy. For a newly christened specialty pharmacy, the health system’s accounting department will be shocked to discover the average cost of an oral oncolytic ranges from a few hundred dollars to $20,000 or more per cycle. Consider employing JIT ordering and inventory management with all medications, except for fast movers such as capecitabine and imatinib (Gleevec). You may not be able to return some oncology LDDs, and being stuck with several $10,000 bottles of oncology drugs will quickly gain management’s attention.

Maintaining a balance between inventory needs and patient expectations is also crucial to devel- oping and maintaining a high standard for the patient. Time to therapy must be balanced with your total inventory value.

White vs Brown vs Clear Bagging

Because your health system has a number of oncologists, you likely have a number of infusion centers that administer chemotherapy. Traditionally, these centers employ a buy-and-bill method in which the financial risk is carried by the hospital system and expenditures are only recouped weeks to months after the services were rendered. Patients may also cancel appointments, have their medication changed, or discontinue treatment, which can result in surplus medication sitting on the shelves. This may not be an ideal approach for small health systems with limited capital, earmarked funds, or revenue cycle issues.

Specialty pharmacies can assist in decreasing the financial liability from the health system by shipping the medication and billing the claims under their medical or pharmacy benefits. White bagging occurs when a specialty phar- macy ships medication directly to the prescriber’s office or infusion center for administration. Clear bagging occurs when the health system’s specialty pharmacy delivers medication to the clinic. Brown bagging occurs when the specialty pharmacy delivers medication to the patient, who then brings the medication to the infusion center.

For institutions that have experience in managing infusion center inventory without issue, buy-and-bill may be the preferred route. However, some insurance companies require the specialty pharmacy to ship infused oncology or specialty medications to the clinic. When payers mandate the use of a specialty pharmacy, both white and clear bagging are preferred over brown bagging. Pharmacists generally have little trust that a patient has correctly handled, stored, and transported a medication according to manufacturer specifications. Some of our infusion centers don't allow white bagging. Their thought is that if a medication must be shipped to the infusion center, it must come from their own specialty pharmacy or through buy-and-bill.

Similar to gaining access to LDDs, leverage your infusion centers and medical contacts to give your specialty pharmacy the ability to clear bag medications directly to the infusion site.

Benefits of a Health-System Oncology Specialty Pharmacy

The biggest benefit of a health-system oncology specialty pharmacy is the continuity of care. For example, a patient will have a scan or diagnostic test, receive a diagnosis, discuss treatment options with the provider, and get a prescription sent to the in-house specialty pharmacy. The patient then receives detailed counseling and their prescription from the same organization. This allows patients to be more at ease with their diagnosis and starting a new oncology drug.

If you have clinic-based pharmacists and technicians, you can integrate the specialty pharmacy’s therapeutic management system with their workflow or the oncology care model. This can ease the administrative burden of the centralized dispensing pharmacy and provide the patient with a single point of contact regarding their specialty medication. Clinic-based specialty pharmacy staff are also able to discuss oral oncology treatments, administration, and adverse effects at the point of prescribing, which helps reinforce treatment plans and patient adherence.

In addition, the specialty pharmacy should be integrated with the health system’s electronic medical records (EMRs) so all EMRs are available to review for prior authorizations (PAs), financial assistance, and provider follow-up. Having records immediately available for PAs is especially important because so many oral oncolytics can be used for off-label indications. Providers often leave detailed notes or have next-generation sequencing available in the EMR so targeted therapies can be approved more quickly through insurance. EMR integra- tion will shorten the time to therapy, increase patient satisfaction, and decrease the administrative burden on clinic staff.

Sean Altendorf, PharmD

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