Selection of the right distribution model is of key importance in the launch of a specialty product, where each of the stakeholders has specific needs and requirements that must be met.
Selection of the right distribution model is of key importance in the launch of a specialty product, where each of the stakeholders has specific needs and requirements that must be met.
Welcome to our annual oncology edition, which coincides with the ASCO meeting held annually in Chicago. Oncology products are the area of most significant growth in specialty pharmacy and almost without exception meet the definition of specialty.
One of the early goals of a specialty product manufacturer launching an oncology product is selecting the optimal distribution model. We recognize that not all products that are deemed “specialty” are tied to pharmacy- or patient-specific orders. As the growth of specialty continues to trend at more than 20% each year, the supply chain of a product can take many paths. While there is a tremendous trend to develop oral solid treatments in oncology, the mainstay continues to be oncology office—infused specialty products.
At a recent conference workshop, leaders from D2 Pharma Consulting, AmerisourceBergen Specialty Group, Omnicare, and Cardinal Health all converged to review distribution alternatives for specialty products, including oncology. Finding the optimal critical path for an oncology product 1, 2, or 3 years from approval is often necessary, as many New Drug Application (NDA/BLA) filings require information on the supply chain as an element of the FDA review. Supply chain criteria that often need to be explored include the following:
While many products share properties with others, external factors go beyond the fiscal and physical needs of an optimal supply chain.
The “traditional” supply chain route for a product is manufacturer>drug wholesaler>retailer. That is changing greatly as products come off patent and specialty manufacturers produce differentiated products that create longevity for their organizations. Specialty provides this “safer haven” as those products are defined as having frequent dosage adjustments; typically more severe side effects than traditional drugs; a narrow therapeutic range; higher costs than “traditional” products ($10,000 to $100,000 annually); patient registration requirements; special storage, handling and/or administration; smaller numbers of patients (50 to 100,000); a patient training and clinical call center; and deeper clinical data reporting and analysis to augment broader compliance and adherence management.
The relationship and business dynamics of the marketplace come into play, especially when considering the many intermediaries that “touch” a supply chain decision.
The definition of an organization is thought to be a unit of people that is structured and managed to meet a need or to pursue collective goals. All organizations have a management structure that determines relationships between the different activities and the members, and subdivides and assigns roles, responsibilities, and authority to carry out different tasks. Organizations are open systems—they both affect and are affected by their environment.
When developing a successful specialty distribution model, the attainment of consensus is mission critical. I’ve found the specialty distribution process outlined in Figure 1 gains consensus.
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Manufacturers must consider which organizations best fit their model based on the criteria and the critical path in selecting their commercialization plan to account for these elements, which may include:
The process described yields what is either an open, limited, exclusive, or hybrid distribution model. Based on these options, the business relationships are thereby assembled—typically through a rigorous process that provides both objective and subjective parameters based on capabilities, quality, and price.
Ultimately, the manufacturer has to consider the “4 Ps” we have often spoken about in Specialty Pharmacy Times—the physician, payer, pharmacy, and patient (Figure 2). Each has a unique and interwoven set of needs that must be met in order to have a successful distribution model.
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Once the manufacturer considers the various stakeholders, combining with their business objectives, they are ready to begin mapping out the flow of the distribution model and consider the 4 options. So what comes next? Mapping out the actual flow of the product? In this special oncology edition, we have authors that have offered their thoughts on what may work best.
Stay tuned for our next edition of Specialty Pharmacy Times, where we’ll walk through the next set of parameters, including several models that have been accepted as best practices in the distribution of specialty products—some of which include specialty pharmacy and others that are best served through other channels. Hope to see you in Chicago! SPT
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About the Author
Dan Steiber, RPh, is a principal of D2 Pharma Consulting LLC (d2rx.com) and is responsible for commercial operations, trade-supply chain strategy development including 3PL selection, regulatory oversight, and “operationalizing” organizations. Dan has served in several senior positions in pharmacy, distribution, and industry over the course of his 35-year career. He is a licensed pharmacist in Texas, Washington, California, and Pennsylvania and is affiliated with several professional associations and publications and a frequent speaker on behalf of many professional organizations. Dan graduated from Washington State University College of Pharmacy and has participated in a variety of postgraduate programs in law and business development/marketing at Harvard University and Northwestern University. Dan currently resides in Highland Village, Texas.