Specialty Pharmacy's New Frontier: Opportunities and Challenges for Retail
Choosing the right distribution strategies for a new product is a critical process for the pharmaceutical manufacturer. A number of variables need to be weighed that the team should be evaluating, often led by the supply chain team.
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 and the manufacturer’s team should be evaluating these often, led by the supply chain team. If a manufacturer does not have a team in place, there are a handful of experienced consultants that can drive the process of strategy, selection, and implementation.
IS IT SPECIALTY?
Specialty pharmaceuticals are generally defined as products used to treat chronic, high-cost, or rare diseases and 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 include:
Frequent dosage adjustments
Dosage administration of injectable and infusible
More severe side effects than traditional drugs
Special storage, handling, and/or administration
Narrow therapeutic range
Periodic laboratory or diagnostic testing
Higher costs than “traditional” products ($10,000 to $100,000 annually)
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. They are commonly defined and/or classified by the method of administration and these often drive a plan around the use of specialty pharmacy.
Office-administered injectable products
Self-administered injectable products
Clinic/office–administered infusible products
Select oral agents
Newer criteria around the need for specialty pharmacy have also emerged, including:
IS SPECIALTY PHARMACY THE RIGHT CHANNEL FOR YOUR PRODUCT?
Coordination of care
Reimbursement handing and patient assistance
White and brown bagging needs
Specialty pharmacy is defined as the service created to manage the handling and service requirements of specialty pharmaceuticals including dispensing, distribution, reimbursement, case management, and other services specific to patients involved with rare and/or chronic diseases. Specialty pharmacy, therefore, is a service that endeavors to provide 2 key deliverables: 1) A mechanism to manage the cost of specialty pharmaceuticals for the patient; and 2) An opportunity to save money for the benefit sponsor compared with traditional models in which products are delivered through less efficient means, primarily the hospital or physician offices.
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, therefore determining which services best fit your product’s needs is crucial.
Since specialty pharmacies usually fill a prescription on the day it is received products are generally distributed by third-party carriers such as FedEx or UPS. Typically, products are delivered the next day to the patient, or in the case of “White Bagging,” to the caregiver.
Specialized handling is often required for controlled products and cold chain products, for example, biotech injectables and other similar products. One key shipping requirement is that products must be maintained at the proper temperature levels. Products remain refrigerated while in the pharmacy’s inventory and are shipped to patients in special packaging, typically containing refrigerated gel packs.
“Kitting” or providing the patient/ caregiver all of the essentials is done to assure that the patient/caregiver has all the necessary equipment to reconstitute and administer the product and also dispose of any waste, including mixing vials, needles, syringes, infusion pumps, puncture- resistant containers, etc. Pharmacies work with patients to set up inventory management programs, utilizing just-in-time delivery processes that eliminate the need to maintain a large inventory, ensuring the stability of the product on hand.
Reimbursement for specialty drugs can be extremely challenging, mainly due to product costs and the duration of therapy. Often specialty pharmacies take on the assignment of benefits or take on the burden of obtaining reimbursement by billing the insurance companies directly. Patients benefit by eliminating the claims process and the associated risk of nonreimbursement, as so many of these product have complex reimbursement and high product costs. Additionally, specialty pharmacies will verify insurance coverage prior to shipping products, eliminating potential challenges.
Specialty pharmacy provides a hightouch environment for better patient care and adherence. For example, patient hot-lines are available for reimbursement-related questions and are staffed by product area experts to ensure better customer support. These experts help patients navigate complicated insurance policies and procedures and focus on any plan-specific limitations and requirements, including copays, deductibles, coinsurance, lifetime spending caps, prior approval requirements, and preexisting conditions clauses. Often coverage is denied, and the specialty pharmacy may file an appeal on behalf of the patient. If the appeal is unsuccessful, the pharmacy will assist the patient in finding other means to obtain access to the product through patient assistance programs or other methods of payment.
Most specialty pharmacies provide around-the-clock clinical support hotlines, which may include pharmacists and nurses who are highly trained on the products and disease states and are able to answer patients’ questions regarding a wide range of clinical issues. As we’ve defined specialty products, the nature of the diseases and their treatments is complex. It is critical that patients have access to accurate information about administration, dosing, side effects, and adverse reactions.
Cost-effective pharmacotherapy and disease state management offer targeted interventions and patient education and health outcomes can be improved, thus reducing the total cost of care on an outbound basis. Typically, the patients are educated on the proper preparation and use of products through various communication channels including video and print, often complemented by a nurse who may visit the home to assure that the complex medical conditions and therapy are properly addressed. Studies have shown that often poor compliance is the result of difficult administration procedures and challenging side effects with some products.
One cornerstone of specialty pharmacy is compliance, or following a treatment regimen as prescribed. This may include such factors as the timing and dosing of the drug. Persistence is defined as the patient remaining on the prescribed therapy over time. There are a host of reasons with specialty products that lead to poor compliance/persistence rates among patients, including cost, side effects, and/or comorbidities that result in poor efficacy and outcomes and often lead to higher-cost treatments on an inpatient basis. By far the number 1 reason specialty pharmacy is chosen is the proven fact that its practices lead to the patient properly and consistently taking prescribed therapies.
THE RIGHT PARTNERS
Now that you’ve decided your product can be best served through specialty pharmacy and what services best fit your product, there are several choices that need to be made around the ultimate flow and mix of specialty pharmacies. There are several specialty pharmacy models that are in place today that could be viable options to best manage the supply chain and clinical needs for your product (Figure 3).
These choices run from the use of an exclusive specialty pharmacy to an open or select network of specialty pharmacies. Consideration also needs to be given regarding the need for a HUB and specialty distributor. Typically, a manufacturer may choose to use the services of a HUB when managing more complex products across a network of specialty pharmacies. Additionally, we are seeing an increased demand for institutional and medical practice dispensing, therefore the use of a distributor may be appropriate for your product to sell products into the practice setting.
VENDOR SELECTION TRENDS
When selecting specialty pharmacies it is critical that the RFP process includes rigorous documentation and be fully regimented. This will ensure Fair Market Value, vendor validation, and credentialing. 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 Risk Evaluation Mitigation Strategy (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 also that the FDA may require manufacturers to disclose which pharmacies will be in the network along with validation and documentation of their capabilities.
The pharma company should always use the RFP process for documentation of company “viability,” education and documentation of capabilities (internally), departmental inquiries/focus areas, documentation for FDA/REMS submissions, verification of pricing methodology, and pricing for services.
Establishing a solid timeline will assure completion of a project within the scope of the deliverables; this can vary depending on several factors, such as FDA review, REMS, manufacturing, etc.
THE FINAL SELECTION PROCESS
After a thorough analysis and review with the selection team, the field gets narrowed down. The bidders may be invited to present to the team, or a combination of site visits is another typical next step. We use a RFP metrics–driven assessment tools to make this element as objective as possible and drive the decision. It’s important that your organization ask all of the right questions through every stage of the process.
As the field gets narrowed down, the team should be reviewing contracts and other service agreements. The pharma 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. The development of standard operating procedures and implementation is the next and final step.
Specialty pharmacies that win agreements offer comprehensive clinical services, therapeutic expertise, and access to patients and strong data reporting capabilities. The specialty pharmacies that have access to preferred payer relationships have broader lines of products and manufacturer relationships and also have cost and access advantages. Many manufacturers choose to have a network of specialty pharmacies to have broader access to patients and lower the resistance from payers who may own the specialty pharmacies.
Health professionals often have a degree of influence over patients’ choice of a specialty pharmacy and are aware of what providers offer comprehensive support services, therapeutic expertise, and access to products. More recently, we have also seen smaller/regional specialty pharmacies having greater success in part as a result of strong relationships with local physicians and payers. Most specialty pharmacies do not market directly to individual patients.
Choosing your specialty pharmacy strategy is a complex, highly analytical process tied to substantial strategy setting. Look for the right help to get it done and seek those with profound expertise, high standards, deep relationships, and the ability to work well within your organization’s culture. SPT
This article series is being presented as a continuing education activity at the National Association of Chain Drug Stores Pharmacy & Technology conference in Denver, Colorado.
About the Author
Dan Steiber, RPh, is editor-inchief of Specialty Pharmacy Times and has been involved in the specialty pharmacy industry for more than 35 years. He is a principal of D2 Pharma Consulting LLC and is responsible for commercial operations, trade-supply chain strategy development, regulatory oversight, and operationalizing organizations. Mr. Steiber has served in several senior positions in pharmacy, distribution, and industry over the course of his career.