Specialty Pharmacy: What Pharmacy Students Should Know

Pharmacy CareersPharmacy Careers November 2014

Specialty pharmacy is growing, and student pharmacists should keep abreast of the latest industry trends.

Spurred by health care reform, the rise of specialty drugs continued in 2014 in an ascendance that is projected to account for nearly half of all pharmacy spending within the next 2 years.

The growth of specialty medications means a growth in opportunities available to pharmacists. The increasing use of specialty drugs will lead to more roles that will require a hightouch approach to patient management. As the medications in the pipeline become more specialized, the skill sets of pharmacists must expand and evolve to meet the needs of their patients initiating treatment with complex biologics.

Understanding current trends in specialty pharmacy will prepare pharmacy students to take advantage of these new opportunities in the specialty space after graduation.

The following explores 10 major trends in specialty pharmacy as a new era of health care focuses the attention of all players—patients, payers, physicians, and manufacturers—squarely on the specialty marketplace.

1. The Cost of Specialty Drugs Is Skyrocketing

The cost of specialty medications has achieved what some call “unsustainable growth,” with a wide-ranging impact on patients and providers alike.

Catamaran Corporation reported that, in 2013, specialty medications accounted for 23.5% of total drug spending by only 2.1% of patients. The average cost of a specialty prescription in 2013 was nearly $2900, which represents a 17% increase from the previous year.

Additionally, spending on new specialty treatments increased 7.7%, to $7.5 billion in 2013 and accounted for 69% of total spending on new brand name drugs.

Whether that growth can be sustained in the long term by patients and providers is another question.

“Specialty drugs account for a disproportionate share of overall drug spending because of their extremely high cost,” reports America’s Health Insurance Plans (AHIP), a trade association for the country’s health insurers.

AHIP suggests that a number of measures should be taken to mitigate spending growth while improving access to specialty drugs, including encouraging alternative payments and incentive structures for new drugs and technologies and shortening the exclusivity time for biologics.

2. The Specialty Marketplace Continues to Heat Up

Large companies are buying up independent specialty pharmacies as specialty medications take up a bigger piece of the drug spending pie.

This past year saw a number of big players elbow their way into specialty pharmacy in response to the projected growth.

“It’s hard to build a specialty pharmacy from scratch, so a lot of existing players are starting to acquire some of the smaller, faster-growing companies that have already built specialty capabilities,” said Adam J. Fein, PhD, president of Pembroke Consulting and chief executive officer of Drug Channels. “What we’re seeing is that specialty pharmacy is really a set of services, not a distinct industry. So what we think of as pharmacy is going to be merging, and is merging, with what people call specialty pharmacy.”

Dr. Fein added that this move toward an expanded specialty marketplace requires companies to have their eyes firmly fixed on the future.

“Looking forward a few years, most of the drugs dispensed to patients are going to be low-cost generic drugs or high-cost specialty drugs,” he noted. “Pharmacies need to figure out how they’re going to play that balanced approach.”

3. The “Marriage” of Specialty Pharmacy and Accountable Care Organizations Continues to Strengthen

The goals of accountable care groups and specialty pharmacies are tightly aligned in supporting and caring for the needs of patients.

With the passage of the Affordable Care Act (ACA) in 2010, accountable care organizations (ACOs) emerged with the goal of reducing costs and improving patient adherence. To achieve those goals, ACOs are increasingly looking to specialty pharmacies that are already armed with an extensive history of hands-on specialized care.

“Accountable care organizations aligned incentives around managing the whole patient and really integrating the patient experience from the point of diagnosis with the doctor all the way through to successful therapy,” said chief executive officer of Avella Specialty Pharmacy Rebecca M. Shanahan, esq, in a video interview on SpecialtyPharmacyTimes.com. “What that is going to do is put a higher value and focus on the set of services that specialty does. Specialty is often times both the integrator among different kinds of providers and the last link to the patient relative to the success or failure they have in terms of understanding their disease and managing their therapy.”

Despite the aligned goals between the 2 entities, ACOs are not anticipated to have a drastic impact on the management of specialty medications or biopharmaceuticals, according to research by the Journal of Managed Care Medicine.

The study indicated that ACOs would focus on efficiency and more general quality metrics rather than on pharmaceutical access.

4. As Drug Costs Go Up, Adherence Goes Down

Reduced medication adherence is a by-product of escalating drug costs for patients feeling the economic pinch.

As specialty drugs become more prevalent and the costs continue to climb, so too does the potential for nonadherence by a patient population unable to afford these high-priced treatments.

Analysis by CVS Health found that patients who use specialty drugs carry a total health care cost that is up to 8.5 times more than the cost for patients who do not use specialty drugs. This disparity is driven by the fact that patients who use specialty drugs are more likely to have multiple diagnoses, see more specialists, fill more prescriptions, and have more lab tests, emergency department visits, and hospitalizations than the average patient.

Additionally, the shift to high-deductible health care plans by many employers has the potential to lead to reduced adherence and delayed or bypassed care due to high out-of-pocket costs.

Specialty pharmacies will need to remain aware of the impact of the ACA on coverage for specialty medications.

“An unfortunate consequence of many of the exchange plans people are purchasing under Obamacare is that the enormous costs are being shifted to patients,” Dr. Fein said. “That is really not good for the health care system or the patients.”

5. New Patients Continue to Flood the Specialty Space Through Health Care Reform

More patients are using health care services, which means more money will be spent in the specialty space.

With 32 million people projected to be newly insured by the end of the decade, the growing demand is expected to drive specialty medications to account for approximately 40% of all pharmacy spending by 2016.

In response to this demand, manufacturers have focused their efforts to align with the growing specialty market. Specialty medications currently comprise more than 50% of the pharmaceutical pipeline, with specialty products accounting for 15 of 27 novel new drugs approved by the FDA in 2013. More than 30% of new drugs approved last year were oncology drugs, which are projected to represent approximately 14% of the worldwide market share by 2018, with targeted oncology therapies accounting for more than $69 billion in sales.

“Increasing access to insurance is increasing the demand for specialty drugs,” Dr. Fein said. “Overall, I think getting insurance coverage is a good thing for these patients, but on the other hand, the way it’s been implemented could ultimately drive up health care costs. There is a lot of work to be done to fix the reform that’s been implemented.”

6. Growing Use of Technology Will Improve Patient Outcomes

Increasingly, specialty pharmacies are turning to technological breakthroughs to improve adherence and data analytics.

The phrase “There’s an app for that” has moved beyond the commercialization of convenience tools and into the realm of enhancing patient care and outcomes. Increasingly, providers are looking to technical solutions for some of the age-old problems that have plagued specialty pharmacy. For example, Avella Specialty Pharmacy began using a GlowCap, a device that fits on top of a pill bottle and wirelessly uses lights and sounds to remind patients to take their medication.

Further innovation looms on the horizon, such as Next IT’s virtual health assistant platforms. “Why can’t we use a virtual agent embedded in [smartphones] to help with reminders for medications, and answer questions about the disease process?” asked Thomas Morrow, MD, chief medical officer for Next IT in a video interview on SpecialtyPharmacyTimes.com. “An individual patient may have 2000 to 3000 potential questions about their chronic illness…this is the ultimate Google-type of device, but specific to their needs.”

7. Health Care Is Evolving into a Patient-Centered Ecosystem

With health care reform putting the emphasis on patient management, specialty pharmacy moves to the forefront.

Specialty health care is evolving to focus less on medication management and more on the total patient. As a result, providers are seeking to improve interaction between the physician, pharmacy benefit management, health care plan, care management nurse, and specialty pharmacy to create a total care ecosystem that fits each patient’s needs.

“Everything we do in specialty has a patient at the end of the activity,” said Randy Falkenrath, MBA, CVS Health senior vice president of specialty pharmacy services, during the Armada summit. “It’s really all about the services we provide in improving their care, improving their quality of life, and finding the opportunity, ideally, to improve a length of their life span.”

In this new consumer-driven market, specialty pharmacy has already found itself uniquely situated with a strong prior record of direct interaction with physicians and patients alike.

“Specialty pharmacy, just through the nature of the pharmacy business, has always been more patient-centered than some of the large institutional organizations,” Dr. Fein said. “One of the things about specialty products is that you’re treating a small patient population. That means it’s easier to devote resources to individuals who have these conditions.”

8. Biosimilars Are Coming, Possibly Sooner than Expected

On the heels of the FDA accepting the first application filed for a biosimilar, the United States may finally be on the brink of biologic price competition.

Novartis Group company Sandoz entered uncharted waters in US drug manufacturing on July 24, 2014, as it became the first US company to file an application for a biosimilar with the FDA through the pathway created by the Biologics Price Competition and Innovation Act of 2009.

Branded biologic oncology products alone currently represent more than $20 billion in global spending and are anticipated to be the top target for biosimilar development over the next 5 years.

Estimates vary on just how much relief biosimilars will offer on the cost of specialty drugs, due to the fact that manufacturers who have long since recouped their original investment could subsequently lower the price of the reference product once a biosimilar competitor hits the market. Drug companies are still putting in their due diligence to prepare for the impending flood, however. For example, Pfizer has extensive educational programs to provide information for patients and physicians on the potential of biosimilars.

“We need to find a way to communicate the importance of biosimilars and the high potential they have, especially the quality behind the molecules and how the entire concept of biosimilarity is based on the molecular structure of the candidate drug. It is a big challenge,” Dr. Coindreau said.

9. Limited Distribution Networks Are Expanding for Greater Access to Specialty Drugs

Older strategies that limit distribution channels are evolving as more players enter the market.

Manufacturers previously limited distribution networks for a variety of legitimate concerns. Among them were the ability to provide the appropriate level of patient care, special handling requirements for their products, a small patient population, and making sure the products stay in legitimate channels to protect their patents.

With more major players entering the specialty space, manufacturers have been forced to rethink these prior strategies that are no longer as applicable as they were even just a few short years ago.

“There are so many options available for specialty pharmacies, who are now often owned or controlled by other entities the manufacturer already does business with,” Dr. Fein noted. “Manufacturers are taking advantage of the diversity of offerings, while at the same time meeting the needs and demands of these large, powerful customers they interact with. Specialty drugs today are being launched with networks twice or more as large as a few years ago, so as more pharmacies and companies get into the specialty business, you’re going to see these networks get bigger.”

10. The Cost Will Be Weighed Against the Cure

With the huge price tag for treatments, stakeholders in specialty pharmacy are evaluating whether a medication’s efficacy is worth the high cost.

Controversy continues to surround Gilead’s hepatitis C treatment sofosbuvir (Sovaldi), which has achieved cure rates of up to 95% while carrying a $1000 per pill price tag.

With the cost of a typical round of treatment being $84,000, the conversation about the drug has ignited a larger debate about the escalating cost of specialty drugs and the sustainability of the system to continue paying for them.

“If you put it in the context of a cure, then the value you’re receiving is beyond a price. I think it is priceless,” said Stephen Vogt, PharmD, chief executive officer and president of BioPlus Specialty Pharmacy, in a video interview with SpecialtyPharmacyTimes.com. “Yes, it will cost $84,000 to $100,000, but you’re cured. Think about that, in my lifetime, we can say a patient is cured. They will not have liver cancer, they probably will be able to keep their liver, it will decrease medical costs…Yes, the initial cost is heavy, but if you look at the long-term benefit for that, I think in economics it pays for itself.”

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