Specialty Pharmacy
How is Traditional Pharmacy Practice Positioned
Nick Calla
Vice President, Industry Relations
Cardinal Health Specialty Solutions
August 19, 2016
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Today’s Learning Objectives
• Understand the context and trends of the specialty
pharmacy industry and the various stakeholders interests
• Recognize and identify characteristics of specialty
pharmacies and products and applicable situations for
retail class of trade
• Evaluate specialty pharmacy growth opportunities and
challenges for your business
• Describe and discuss the unique attributes of specialty
pharmacy services
• Explain the processes involved with specialty prescription
dispensing practices
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The Evolving Market of Specialty Drugs
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What is Specialty Drug?
Specialty products
(drugs) are generally
defined as high-cost
prescription drugs that
treat complex
conditions and require
special handling and
administration, a
patient adherence
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Top Specialty Drug Therapies
Express Scripts. (2015). The Express Scripts 2014 Drug Trend Report.
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Growth in Specialty Drugs
Medical and pharmacy benefit specialty drug expenditures as a
percent of total drug spend: forecast to be above 50% in 2018*
2013 Prime Therapeutics LLC. Internal Data. URAC Specialty Pharmacy White Paper: The Patient-Centered Outgrowth of Specialty Pharmacy. https://www.urac.org/Whitepaper/PQM-Specialty_Pharmacy.pdf.
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Growth in Specialty vs. Traditional Drugs
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trademarks or registered trademarks of Cardinal Health. All other marks are the property of their respective owners.
What is a Specialty Pharmacy?
Specialty pharmacies must offer a full range of clinical and operational
services to enhance the safety, quality, and affordability of care for patients
Clinical Services
Operational Services
Health care provider access: Specially trained pharmacists, nurses, and
clinicians are accessible to patients around the clock to provide guidance
and insight on disease states, as well as the use and management of
specialty drugs
Supply chain management: Adheres to rigorous storage, shipping, and
handling standards to meet product label shipping requirements, such
as temperature control and the timely delivery of products in optimal
conditions
Physician consultations: Consults directly with physicians to address patient
side effects, adverse drug reactions, non-compliance, and other patient
concerns
Care coordination: Offers coordinating services with other health care
providers, including those providing skilled nursing services, custodial
care, infusion administration, and direct-to-physician distribution
Care management: Performs disease and drug-specific patient care
management services that meet the unique needs of each patient and
incorporate multiple safeguards when dispensing and delivering the drug to
ensure patient safety
Insurance navigation: Expedites access to therapy by working directly
with insurers and navigating their benefits, utilization management,
and prior authorization processes
Clinical outcome measures: Collects data and tracks outcomes for specific
patients
Patient adherence programs: Manages patient adherence and persistency of
drug regimens
Patient assistance: Facilitates eligible patients’ enrollment in patient
assistance programs and access to charitable resources
Plan optimization: Aligns economic incentives across medical and
pharmacy benefits while helping patients navigate the complexity of
sometimes-siloed benefit structures
REMS programs: Manages care for manufacturer Risk Evaluation and
Mitigation Strategies (REMS) program requirements, including REMS
reporting, Phase IV trials, the dispensing of FDA trial drugs under strict
protocols, and related clinical and cognitive counseling
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trademarks or registered trademarks of Cardinal Health. All other marks are the property of their respective owners.
Specialty Process
•
•
•
•
•
•
•
•
Prescription Origination
Benefits Investigation/Appeals
Prior Authorization
REMS
Co-pay assistance
Dispensing
Patient Monitoring
Reporting
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An Historical Comparison of Key Specialty
Pharmacy Functions Provides Market Context
Specialty Pharmacy pre 2000
Specialty Pharmacy since 2000
Fragmented providers
Select provider networks
Mostly medical benefits
Pharmacy benefit > medical benefit
High degree of assignment of
benefits
Benefits Investigations & Prior
Authorizations
Home infusion
Specialty infusion
Pack & Ship
Contract driven
de Novo Startups
Consolidation and investment
Little to none brand identification
Limited distribution networks
Relatively few products
Hundreds of products
Low touch – pre adherence
management
High Touch
Source: Bill Sullivan, Specialty Pharmacy Solutions, 2014 Armada Specialty Pharmacy Summit
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The Maturity of the Specialty Market is
Creating a More Competitive Landscape
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Specialty Pharmacy Market Share
$98.3B - 2015 Specialty Pharmacy Revenues (in billions)
BioPlus, $0.8 , 1%
All other retail, mail and
SPs, $24.9 , 25%
CVS Health, $29.6 , 30%
Cigna, $0.9 , 1%
Avella, $1.1 , 1%
Humana SP, $1.7 , 2%
Express Scripts, $17.2 ,
17%
Prime Therapeutics,
$2.5 , 3%
Diplomat, $3.4 , 3%
Briova/OptumRx,
$6.5 , 7%
Walgreens
, $9.8 ,
10%
SOURCE: Fein AJ. 2015-2016 Economic report on retail, mail and specialty pharmacies. Pembroke Consulting, Inc., and Drug Channels Institute. January 2016.
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trademarks or registered trademarks of Cardinal Health. All other marks are the property of their respective owners.
Three Keys to Specialty Pharmacy Success
Prescription Access
Access to the specialty
prescription referral from the
prescribing physician.
Patient Access
Must be in the payor’s specialty
pharmacy network to be reimbursed.
Many MCO’s have closed specialty
pharmacy networks.
Active engagement is required with
each plan to gain access
Patient
Product Access
Manufacturers may require pharmacy
specific approval for a distributor to
sell specific products to the pharmacy
Complexity and requirements vary
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Product
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trademarks or registered trademarks of Cardinal Health. All other marks are the property of their respective owners.
Rx
Environmental Challenges and the Specialty
Pharmacy Value Proposition
The high cost, high management of specialty pharmacy demands the close
coordination of activity and patient management among the key stakeholders
PATIENT
PHYSICIAN
PAYER
PHARMACEUTICAL
MANUFACTURER
Service Expectation
Service Expectation
Service Expectation
Service Expectation
•Toll-free, 24-hour clinical
support
•Benefits verification
•Direct home delivery
•Internet community
•Clinical extension of the
office
•Compliance management
•Customized dose delivery
•Reimbursement
coordination
•Patient education services
•Coding and billing
assistance
•Competitive pricing
•Customized programs (e.g.
disease treatment
management and clinical
support)
•Reduction in wasted drug
•Dedicated payer/sales
support
•Shipping and delivery
–Nationwide distribution
–Special handling
–Overnight delivery
•Patient and office assistance
–Direct patient interaction
–Patient/physician
reimbursement coordination
–Clinical trial drug delivery
–Indigent care / patient
assistance programs (PAPs)
•REMS execution
Measurement
Measurement
Measurement
Measurement
•Improved outcomes
•Increased satisfaction
•Time savings
•Patient satisfaction
•More patients
•Cost savings
•Member satisfaction
•Patient satisfaction
•Prescriber satisfaction
•Improved patient access
•Regulatory compliance
•Increase sales
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Examples of Manufacturer Limited
Distribution Pharmacy Networks
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trademarks or registered trademarks of Cardinal Health. All other marks are the property of their respective owners.
Manufacturer’s Shifting Channel Management
Strategies Toward the Limited End of the Continuum
Fewer Patients
“Orphan”
Larger Patient
Populations
Exclusive/limited distribution
partners enhance patient
services, limit manufacturing
costs, and ensure robust
surveillance data.
Sprycel
Revlimid Zytiga
Cometriq
Caprelsa
Gilotrif
Tarceva
Gleevec
Ibrutunib
Nexavar
Exclusive
Distributor or specialty
pharmacy
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Limited
2-20 specialty pharmacies
(e.g., oral Oncology)
Sutent
Managed
Orders routed to/from single
point of contact
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Open Channel
Traditional distribution
channels (e.g., retail
availability
The Challenge
• Educate in house pharmacies
• Provide availability
– Products
– Pricing
– Services
• Accreditation
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In 2015, 250 Specialty Pharmacy Locations
Have Achieved Full URAC Accreditation
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trademarks or registered trademarks of Cardinal Health. All other marks are the property of their respective owners.
Where is the Playing Field?
Specialty at retail pharmacy focuses on the convergence of highly utilized
specialty therapies that intersect with the Retail Pharmacy channel
Traditional
Drugs
Specialty
Drugs
The overlap of
common specialty
therapies is key to
winning at retail
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• Driven by chronic diseases with
maintenance patterns in large patient
populations and for specific disease
states associated with market specific
concentrations (e.g. HIV, HCV, RA,
etc.)
• Recurring business from loyal patients
who want a convenient, discreet and
face-to-face pharmacy transaction for
their specialty oral solids and popular
self-injected drugs
• Open network claims, government and
“any willing provider” payers
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trademarks or registered trademarks of Cardinal Health. All other marks are the property of their respective owners.
Options to Enter the Specialty Market
Pros
Partner
Acquire
Build
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Cons
Fastest Market Entry
Low start-up costs
Have expertise
Access to limited distributions
Bridge to long-term solution / prove concept
Profit sharing/ Fee for Service = Lower potential ROI
Partnerships can be challenging
Cost of management (more than expected)
Difficulties of partner dissolution (if necessary)
Instant Market entry/ competitive footprint
Likely to purchase favorably
Access to limited distributions
Predictable ROI
Expensive/ High Premium
Capital Restrictions/ more useful elsewhere
Cultural differences
Systems integration issues
Loss of acquired clients
Few remaining with ability to complete on large scale
Wall Street opinion (if public)
Customizable business framework
Systems well integrated
Increased availability of data
Automation/State of the art
Long timeline
Large CAPEX
Uncertain ROI
Difficult obtaining expertise
Scale insufficient to drive purchasing
No Access to limited distributions
Unwilling to do business with others
Infrastructure Intensive
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trademarks or registered trademarks of Cardinal Health. All other marks are the property of their respective owners.
Thank you!
© 2016 Cardinal Health. All Rights Reserved. CARDINAL HEALTH, the Cardinal Health LOGO and ESSENTIAL TO CARE are
trademarks or registered trademarks of Cardinal Health. All other marks are the property of their respective owners.