Who Is the Customer in Specialty?

Specialty Pharmacy TimesSeptember/October 2014
Volume 5
Issue 5

Specialty pharmacies face the complexities of managing relationships with patients, physicians, manufacturers, and payers.

Specialty pharmacies face the complexities of managing relationships with patients, physicians, manufacturers, and payers.

The economics of pharmacy have always been tied to providing a product to a patient at some price, and any professional services were “baked into” the price. Over the last several years, pharmacy education has evolved. Pharmacists have received a predominance of clinical education, so that we now play a key role on the health care team focused on product selection, optimization, and patient outcomes. Unfortunately, however, this evolution has not been followed by the economics. In hospital, retail, long-term care, and specialty pharmacy, operations and sales are primarily driven by product and rarely by service.

Professional Evolution and Reality

We’ve been working hard at pharmacy as an overall profession, and many of us have carved out key clinical positions in oncology, hospital, long-term care, industry and, of course, specialty pharmacy, to name a few. Some pharmacists have built businesses around service, but these are not common, although they are most desired. Even with specialty pharmacy, the bulk of the bottom line is driven by reimbursement focused on the average wholesale price or wholesale acquisition cost.

There are exceptions and they are primarily driven by those specialty pharmacies that might have agreements with certain payers or that are owned by payers and or with the manufacturer. In exchange for providing focused professional services, supply chain management, and data, “some” specialty pharmacies are able to supplement their revenues. I focus on the word “some” as most pharmacies that may dispense a specialty product do not have service or direct distribution agreements in place with manufacturers.

Limited Networks

If a manufacturer chooses to create a restricted or limited network for specialty pharmacies, depending on their criteria a pharmacy may or may not be selected to be in their network. This may drive a manufacturer’s willingness to pay for non-mandated services or data. So much depends on the characteristics of the product in determining the distribution plan. The size of the patient population is often a key driver in selecting the number of pharmacies in a specialty pharmacy network. Prior to launch, a prudent pharmaceutical organization is going to look at costs and efficiencies. The reality is that the broader the specialty pharmacy network, the greater the likelihood that the fixed costs may increase, as do the complexities of managing more relationships.

Collaborative Practice Agreements: Can Pharmacy Get There?

Regarding payment for services, our profession is working hard to shift this paradigm with new collaborative practice laws. Collaborative practice agreements are used to create formal practicing relationships between pharmacists and physicians, often allowing the para-professional to offer a range of services including initiation, modification, and monitoring of a patient’s drug therapy. Nearly every state has some form of a provision for collaborative practice, which can include pharmacy services; however, these provisions vary from state to state regarding the extent of the services provided and the level of authority required to perform those services.

Regarding modification of therapy by a pharmacist under a treatment protocol, nearly every state allows for this practice. We have state pharmacist associations to thank for moving many of these initiatives. Check with your board of pharmacy or state association on what is permitted in your state. If your business dispenses to patients in more than 1 state, you likely need to enter into an agreement in the state in which the patient resides and have an active role in the patient’s care.

What Is the Value Proposition for Specialty Pharmacy?

I recently presented specialty pharmacy with a panel of payers and medical directors. I found it quite interesting that their focus was not on patient care and services but on cost. How can specialty pharmacy curb the rising and uncontrolled cost of specialty products? Their perception of value wasn’t in the quality of services other than dispensing accuracy and timing; it was not on compliance and adherence rates, but rather on cost and cost control. As a matter of fact, they quoted recent data with little variability in these areas between retail and specialty. They were particularly concerned about recently launched and soon-to-be launched therapies in hepatitis C. They acknowledged that these are great advances, but that uncontrolled prescribing and dispensing would put their budgets upside down. The fact that there was the potential for hundreds of thousands of affected patients to flood the market—and soon—had these medical directors talking “crisis” mode.

Who Is the Customer in Specialty Pharmacy?

Retail pharmacists have been put in the position of being the “gatekeeper” since the early days of adjudicating claims in real time. Often, a branded drug is not covered or on a formulary. Specialty pharmacies are often judged by manufacturers on their ability to obtain coverage on new and expensive products, often going to the extent of writing letters for prescribers and submitting them to payers for coverage. While some pharmacies do this as matter of course in business, others may pass fees under a distribution services agreement to a manufacturer for patient pharmacy services not required by the state board of pharmacy.

Pharmacies also have agreements with payers requiring that they adhere to their polices in order to get paid for the product at a contracted rate. Physicians generally want the product that they feel in their judgment will provide the patient the best outcome. Patients just want to get better. So who is the customer—the patient, the physician, the manufacturer, or the payer? Who wins, who loses?

With the high cost of specialty products, bets are on the payer winning. As more products come to market and compete, the payers have the leverage. This includes government and commercial programs; there are only so many dollars to go around with new approvals, and with the continued influx of new patients previously not covered, and with our aging population swelling in numbers. Choices have to be made and access to new therapies will have to be limited. Who does pharmacy put first?

Unfortunately, the economics of pharmacy are focused on the product and if the pharmacy does not get paid, they do not stay in business. The question is, does the patient end up being the loser, do they get a therapy or not, and is the therapy they receive the one that provides the best outcome? We have some serious ethical issues here as the FDA and industry bring new products to market. The question of who is the customer will linger until we figure this out. Who will be the judge?

Please enjoy the 2014 Specialty Pharmacy Industry Guide, where we have outlined the top 10 trends—and managing cost is first on the list. SPT

Specialty Pharmacy Times

is THE journal fully committed to setting the publication standard through peer-written and reviewed articles focused on the “real world” of specialty pharmacy practice. We invite you to enjoy this issue and pass it on! We welcome your feedback on this topic and on any topics you would like us to cover in future editions of

Specialty Pharmacy Times.

Please reach out to me at dsteiber@pharmacytimes.com. And we also encourage you and your colleagues to subscribe to this unique journal, receive the e-Newsletter, and sign up for the free App by logging on to www.specialtypharmacytimes.com.

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. He has served in several senior positions in pharmacy, distribution, and industry over the course of his 40-year career. Dan is a licensed pharmacist in Texas, Washington, California, and Pennsylvania. He is affiliated with several professional associations and publications and a frequent speaker on behalf of many professional organizations. He 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.

Related Videos
Practice Pearl #1 Active Surveillance vs Treatment in Patients with NETs
© 2024 MJH Life Sciences

All rights reserved.