Manufacturer Channel Strategy for Specialty Drugs
Exclusive, limited, and open networks each have pros and cons that must be weighed heavily.
Drug manufacturers’ channel strategy is critical for successful drug launches, and each strategy can be drastically different from one medication to another. Manufacturers can select exclusive, limited, or open networks. Each channel offers a wide variety of benefits, and the pros and cons of each must be weighed heavily.
Ibrutinib is an oral oncolytic with several indications that decided to go with a very narrow network. This small network is a different strategy than most multi-billion dollar medications. What made this channel strategy the best for this therapy? How should a manufacturer build out a channel strategy for the next blockbuster, and should the medication be given to the masses or restricted to ensure proper utilization?
The answers depend on a host of different criteria ranging from REMS requirements to data agreements. The manufacturer of ibrutinib could have easily given access to 20 to 30 well-respected specialty pharmacies, but decided to restrict access to just a few. More than likely this will not become the norm regarding channel strategy, because narrow networks for too many medications would complicate an already fragmented health care system, and medications might be subject to a failed launch if the wrong specialty pharmacies are selected. However, for some medications, narrow networks are preferred and needed for accurate dispensing.
How does a manufacturer choose their specialty pharmacies from the herd?
Each pharmacy has qualities that make it unique for different medications and disease states. Specialty pharmacies can focus on specific disease states, cover different geographic regions, and participate in various insurance networks; all must be taken into consideration when choosing a channel strategy. Manufacturers must weigh what is most important to them, then start the RFP process.
It is hard to gauge how complex clinical therapies will be in future; some will be simplified, and some will be more complex. The simplified therapies, such as once-daily oral therapies with a low side effect profile, can more than likely be given to any qualifying specialty pharmacy. The complex, high-touch therapies with significant side effects, can be funneled down to the boutique specialty pharmacies. The boutique specialty pharmacies allow for detailed data collection, which can include provider information, dosing, diagnosis, and close side effect monitoring. A significant amount of information can be gathered in post-launch surveillance.
A specialty pharmacy cannot be everything to everyone; it simply would require too many resources. Specialty pharmacies must keep in mind manufacturer channel strategy when selecting which segment of the specialty industry they would like to compete in. Start-up specialty pharmacies have a lot of significant barriers to compete will the large scale, PBM-owned or large established specialty pharmacies. It often makes for a better business plan to enter the boutique segment of the market.
Each specialty pharmacy offers its unique place within the market that allows drug manufacturers to choose customized channel strategies for almost any therapy. This customization creates an opportunity to many smaller boutique style specialty pharmacies to gain market share, that under normal conditions could not compete with the "big-box" specialty pharmacies. Regardless of which specialty pharmacy channel is chosen, it is critical to get the right medications into the right specialty pharmacy.
About the Author
Anthony Mazzarese is a graduate of The University of Pittsburgh School of Pharmacy. He received his MSPBA, a 12-month, executive-style graduate education program designed for working professionals striving to be tomorrow’s leaders in the business of medicines, from the University of Pittsburgh in 2016. He is the Pharmacist-in-Charge at Giant Eagle Specialty Pharmacy. His practice is focused on improving medication compliance and overall well-being in the areas of HIV, auto-immune disorders, oncology and organ transplantation.