Synergies in Specialty: The 3 P's of Specialty Pharmacy--Pharmacy, Payer, and Product

In the development of a specialty pharmacy strategy, there are many key stakeholders, but none more important than the pharmacy, payer, and product. Each has its own mission and goals; however, at some point they must all come together.

In the development of a specialty pharmacy strategy there are many key stakeholders, but none more important than the pharmacy, payer, and product, represented by the manufacturer. Each has its own mission and goals, however, at some point they must all come together. Several key points come into play as the stakeholders assess their specific criteria. At the 2013 NACDS Total Store Expo, Specialty Pharmacy Times has brought together key representatives of each stakeholder to participate in a special panel to openly discuss the various criteria and perspectives regarding the synergies and common interests. Here is an overview of the takeaways of that panel discussion.

The decision regarding how to best approach the optimal flow of a product from production through consumption is more often based on several criteria. There is not a single choice and through a rigorous process the decision process distills over time. The market basket of factors is complex, but it starts with specialty pharmaceuticals generally being defined as products used to treat chronic, high-cost, or rare diseases, and they can be injectable, infusible, oral, or inhaled medications. Specialty pharmaceuticals tend to be more complex to maintain, administer, and monitor than traditional drugs; therefore they require closer supervision and monitoring of a patient’s overall therapy. Key characteristics are as follows:

• Frequent dosage adjustments
• More severe side effects than traditional drugs
• Narrow therapeutic range
• Higher costs than “traditional” products ($10,000 to $100,000 annually)
• Patient registration
• Compliance management
• Dosage administration of injectable and infusible
• Special storage, handling, and/or administration
• Periodic laboratory or diagnostic testing
• Target small numbers of patients (5000 to 100,000)
• Patient training and clinical call center
• Clinical data reporting and analysis

Often, specialty pharmaceuticals can be broken down into 4 distinct categories and are commonly defined and/or classified by the method of administration. These often drive a plan around the use of a specialty pharmacy:

• Office-administered injectable products
• Clinic/office-administered infusible products
• Self-administered injectable products
• Select oral agents

Newer criteria around the need for a specialty pharmacy have also emerged, including:

• Enhanced data
• Inventory management
• Testing management
• White and brown bagging needs
• Risk evaluation mitigation strategies management
• Coordination of care
• Reimbursement handing and patient assistance
• The role in accountable care organizations

THE TRADITIONAL SPECIALTY PHARMACY PERSPECTIVE

A pharmaceutical manufacturer should consider 3 key areas when selecting a specialty pharmacy, according to Cheryl Allen, vice president, business development and industry relations at Diplomat Specialty Pharmacy.

First, a patient-centric corporate philosophy: You want a pharmacy that is truly focused on the patients. In the specialty space, it is imperative to offer patient-facing employees both disease state—specific training and continuing education. You also want to choose a partner with proven success in taking care of patients. A pharmacy’s methodology and its ratings from patients and prescribers can provide direction on service concerns and overall satisfaction.

At Diplomat, the training center, called Diplomat University, provides structured new hire and ongoing training sessions to frontline staff—sessions with topics that range from new products to patient empathy. Diplomat also maintains a department dedicated to supporting patients who require funding services; in 2012, more than $19 million was found from external sources to help patients cover their copayments. As for performance, surveys completed by an external vendor in 2012 reported patient and prescriber satisfaction at 98%.

Second, a collaborative partner: You want a pharmacy that is nimble and strategic, one that works across teams to include hubs, data aggregators, and panel specialty pharmacies. This type of cross-functional collaboration allows for identification of trends to support the patient’s journey. Diplomat partners across company lines to ensure key clinical factors of compliance and also monitors programs to ensure they meet goals for clinical trial efficacy.

Third, program flexibility: You want a partner pharmacy that can adapt to address the specific needs of the product. Unique factors could include targeted patient populations; unique patient challenges requiring customized care (such as dosing challenges, self-administration, and side effects); prescriber relationships and communications; and payer controls and strategies specific to the product and program. Diplomat is known in the industry for its ability to custom build programs that support new drug launches and ensure patient compliance.

THE RETAIL SPECIALTY PHARMACY

Navarro Health Services (NHS), a Miami-based regional chain, could no longer sit on the sidelines. Understanding the unique complexities of the specialty arena, along with the cultural differences within the diverse communities a local retailer serves, allows the establishment of a “value proposition” that provides a competitive edge in the marketplace, says Albert Garcia, executive vice president. Most patients are unaware that their local friendly pharmacy may not be able to fill every prescription. Therefore the failure to clinically manage these patients properly to achieve the best possible clinical and financial outcomes may decay one’s credibility and decrease revenue opportunities.

After evaluating the opportunity, NHS decided it was time to take an offensive and defensive approach to provide specialty pharmacy services to better cater to their current base of patients as well as attract a new patient base. Starting a specialty business—which is growing by double digits—will also allow NHS to expand outside of their “brick and mortar” geographical areas to realize top-line revenue growth.

NHS has built a dedicated multidisciplinary specialty team consisting of a clinical pharmacist, case manager, care coordinator, contract manager, and a sales team. The care coordination focuses on the initial patient assessment, insurance verification, and prior authorization, copay assistance program, delivery of product, adherence, side effect management, and patient outcomes.

The team’s goal is to make sure each patient is:

• Contacted, and coordination of benefits is documented and processed
• Having coordinated shipment/delivery of product
• Offered drug therapy management counseling
• Provided patient education about adverse reactions
• Given overall clinical monitoring
• Educated about ways to increase adherence
• Provided a drug utilization review

The NHS specialty pharmacy business is built around “improving the patients’ lives” at a local level and understanding the local and diverse culture of their community and their fellow local health care providers. The staff works to ensure that every new patient receives his or her medication, even if restricted because of insurance or manufacturer programs, providing the medication from a combination of either a central fill or hub facility or the local pharmacy. The patient generally enters the system at the local pharmacy level where the specialty product is identified and the order is sent to the hub. After performing the functions as described above, the order is sent to the mandated pharmacy, and communicated with the patient, provider, and pharmaceutical representative when appropriate.

PAYER TAKING CONTROL OF COSTS: THE SPECIALTY WHEEL

Employers have the ability to manage costs through a set of tools, or a “specialty wheel,” that can be deployed using data, active clinical programs, and business solutions across the pharmacy benefit manager (PBM) and medical benefits to optimize spending on specialty drugs and alert members to the most affordable drugs and delivery channels (Figure 1).

Figure 1: The Specialty Wheel

A key to payer success is the formulary and benefit design, which sets the stage for all other components of specialty management. The 4 key factors employers and their PBMs should focus on include:

• Drug dispensing supports patients while managing costs. Most payers require members to receive specialty products from their in-house specialty pharmacy for maximum control of quality and price and to ensure accurate and timely delivery. By integrating a health plan’s care management and nurses, the payer’s clinical reviews ease prior authorization procedures and simplify members’ experience. The integrated data enable the right medicine to get to the right patient at the right time, and flags the patient’s provider when the patient is not taking the medicine or not responding well to it.
• Utilization management aligns drug reviews between pharmacy and medical benefits, allowing the PBM to identify when a drug is not appropriate for the patient or initiate a conversation with the provider about formulary management, step therapy, quantity limits, and alternative choices. The goal is not so much to restrict access as it is to encourage responsible, cost-conscious choices.
• Care management is a “high-touch” service that features seamless contact between the PBM and the medical care team concerning new prescriptions, helping to contact new patients, monitor adherence, manage side effects, and answer questions.
• Contracting activities enable members to save money through efficient benefit design, guiding patients to the optimal site of care, using preferred products, optimizing rebate and price protection strategies, and using preferred pharmacies. Payers can also identify when patients may be unnecessarily going to the hospital for drug administration rather than to their doctor’s office or their home.

Prime Therapeutics is a leading national payer which uses the “wheel” to optimize specialty spending. Consider autoimmune diseases, the third-most common category of disease in the United States after cancer and heart disease and the top cause of death among women. Among the 20 million lives Prime covers, there are some 81,000 people being treated with debilitating autoimmune disorders. The prevalence of autoimmune disease averages about 1200 per 100,000, but that masks a striking range. In Alabama, for example, it’s half as prevalent as in Oklahoma. Prime’s spend on autoimmune diseases is $5.76 PMPM with $1.62 PMPM on the medical side spent on high-tech drugs such as Remicade, and $4.14 PMPM on the pharmacy side on biotech drugs such as Humira and Enbrel.

Autoimmune diseases such as rheumatoid arthritis, psoriasis, lupus, or Crohn’s disease are painful and often debilitating and can cause extended absenteeism. For instance, rheumatoid arthritis can cause permanent joint damage and destruction, even in the first year or 2 of the disease, which is why early diagnosis and treatment are crucial. Since early treatment can delay onset and progression, Prime supports evidence-based treatment not only to reduce pain and inflammation, but also to prevent or retard the underlying cause of bone damage. Ultimately, this approach can enable the patient to remain at work instead of on disability.

Prime’s specialty management approach has trimmed up to 35% off average wholesale prices for these drugs. Here are the key tactics used to accomplish these savings:

• Drive preferred product use to create savings (Utilization Management).Formulary and benefit design are the foundation for specialty management. For instance, a contractual change in the third quarter of 2011 designating Humira as preferred choice (rather than clinical equivalent Enbrel), with a steep price penalty for the latter, drove Humira’s share of new prescriptions up 30% and allowed Prime to secure a volume price discount from the manufacturer.
• Reduce costs through contracting activities (Contracting). PBM tools such as contracting for lower prices or negotiating rebates help hold down the rate of increase in drug costs. For example, while the average wholesale prices of autoimmune drugs are rising at 8.9% per prescription, Prime’s net ingredient costs of the drugs are rising at just 6.5%, or 25% slower than the average wholesale price rate of increase.
• Optimize reimbursement rates with site of care costs (Contracting). Another significant cost of specialty drugs is the site of care in which they are administered. Working with a health plan to break out site-of-care reimbursements, such as the facility fee and the professional fee, Prime found that facility fees varied widely among various plans for the administration of 1 autoimmune drug. For instance, on the medical side, the facility fee ranged from $77 per service to $145 per service. This identifies an opportunity to optimize reimbursement rates for site-of-care.
• Drive specialty through a dedicated channel to add value and cuts costs (Drug Dispensing). Bringing specialty services—from shipping to discounts to clinical programs and care management—together provides greater value for plan sponsors. In Prime’s case, given the rising importance of specialty and integrating health plan and the PBM pharmacy directions, Prime last year opened a 55,000-square-foot specialty pharmacy in Orlando to serve all of the company’s needs. Prime now ships 36,000 specialty prescriptions per month out of this facility. By bringing the whole specialty operation in-house, Prime was able to capture the quality and price control potential of shipping from a single source, including enhancing adherence among patients and driving discounts among manufacturers.
• Coordinate care management for greater value (Care Management). Coordinated care management provides better patient care, collaboration with the health plan, improved adherence to therapy, early intervention when issues arise, proactive prevention of complications, and reduced waste. This is particularly important in cancer care management, which can be very complex and involves a wide array of caregivers.

PRODUCT: THE MANUFACTURER-DRIVEN DISTRIBUTION STRATEGY

One of several decisions a manufacturer must make when launching a new product is its distribution strategy. Specialty pharmacy offers a greater level of complexity and a longer time frame. Typically, a manufacturer contemplating a distribution strategy for the launch of a new product should be in the planning phase no sooner than 24 months from its launch date. A number of critical variables need to be weighed when selecting a strategy that the team should be evaluating, often led by the supply chain team. If a manufacturer does not have a team in place, there are a handful of experienced consultants who can drive the process of strategy, selection, and implementation (Figure 2).

Figure 2: Distribution Strategy

A critical step in the selection process is the development of a request for proposal (RFP). As we’ve seen, specialty pharmacy offers a menu of services. Determining which services best fit your product’s needs is crucial. When selecting specialty pharmacies it is critical that the RFP process include rigorous documentation and be fully regimented. This will ensure Fair Market Value (FMV), vendor validation, and credentialing. Note that in the absence of solid documentation many states and other government payers under the Sunshine Act, Any Willing Provider Statues, and other legislation may challenge your selection.

Should your product require a REMS, the RFP process will validate that your selection process has been fully vetted and often can be used for submission purposes on new product approvals that require such assessment. Note that the FDA may require manufacturers to disclose which pharmacies will be in the network along with validation and documentation of their capabilities.

Establishing a solid timeline will assure completion of a project within the scope of the deliverables. This can vary depending on several factors, which may limit the timing, such as FDA review, REMS, and manufacturing, among other factors (Table 1). The key areas that should be covered are reflected in Table 2.

After a thorough analysis and review with the selection team, the field gets narrowed down and bidders may be invited to present to the team or a combination of site visits are typical next steps. An RFP metrics-driven assessment tools makes this element as objective as possible and drives the decision. Here, again, the use of highly qualified consultants with deep experience in the specialty space is crucial to making the right selection. It’s important that your organization ask all of the right questions at every stage of the process.

As the field gets narrowed down, the team should be reviewing contracts and other service agreements. The pharmaceutical industry is in a highly regulated environment; typically there is a good amount of back and forth until the legal teams can align on appropriate contractual language. For manufacturers, choosing their specialty pharmacy strategy is a complex and highly analytical process tied to substantial strategy setting.

While there are many decision points in setting the optimal strategy for specialty products, the 3 P’s—pharmacy, payer, and product—continue to be key drivers.

About the Authors

Dan Steiber, RPh, is editor-in-chief of Specialty Pharmacy Times and is a principal of D2 Pharma Consulting LLC (d2rx.com). He has served in several senior positions in pharmacy, distribution, and industry over the course of his 40-year career. He is a licensed pharmacist in Texas, Washington, California, and Pennsylvania and is affiliated with several professional associations and publications and is a frequent speaker on behalf of many professional organizations. Mr. Steiber graduated from Washington State University College of Pharmacy. He has participated in a variety of postgraduate programs in law and business development/marketing at Harvard University and Northwestern University.Duane Barnes, MS, MBA, is senior vice president of consumer delivery for Prime Therapeutics, where he has overall responsibility for Prime’s contact centers, PrimeMail, and the Prime specialty pharmacy program. Prior to joining Prime Therapeutics, he served as senior vice president of Aetna Rx Home Delivery and Aetna Specialty Pharmacy. He received his bachelor’s degree from West Virginia University and his master’s degrees from Indiana University, Kelley School of Business.