Kevin Day, Pharm.D., executive resident at NCPA, gives an overview of the opportunity for independents to provide care within the growth of the specialty drug market.
How does independent pharmacy fit into the specialty marketplace?
Independent pharmacies have several options available to them to participate in the specialty marketplace. Although dominated by the two or three largest specialty pharmacies, the “pie” is plenty large for independents to have their own piece. Many independent pharmacies are already in the specialty marketplace, and independents have been the backbone of what has grown into specialty as we have known it for decades. There are nearly 150 URAC-accredited specialty pharmacies, and dozens and dozens of them are independent pharmacies. Most independents play an important role in the specialty marketplace by continuing to care for their patients who take medications on the fringe of the “specialty” definition, including medications for rheumatoid arthritis, HIV, hepatitis C, transplant patients, and others. The relationships that many independents have with their local physicians provides an advantage over large specialty pharmacies that are not located in the same area as the prescribers writing the prescriptions. Independents can move to grow in specialty by building a specialty pharmacy themselves, partnering with an organization to help provide specialty services, or by purchasing an existing specialty pharmacy practice.
How has the market grown, and why is it an area to consider?
Over the past several years the market has exploded in growth. About half of the medications approved by the FDA over the last 10 years are considered “specialty medications.” The growth of the pipeline (there are 700 or so molecules in development that would be considered specialty if they make it to market) combined with the exploding cost of these new medications has created a huge total drug spend for payers across the country. By 2020 it is projected that half of all drug spend in the country will be spent on specialty medications, still only 3% or so of total prescription volume. What technology/workflow is necessary in specialty that’s different from community pharmacy?
Specialty products, oftentimes via the manufacturer and payer of a product, require additional services that are not regularly found for traditional products. These wraparound services include patient, product, and data management. For instance, payers often require reports showing the number of days for a patient to be on-boarded onto a new medication. This metric is not commonly used for traditional products but is nearly universal for specialty products. Payers and manufacturers also commonly require data on adherence, side effects, and clinical outcomes for specialty products, which have not been the requirement for traditional products. Technology and workflow that focus on these aspects are slightly different from what has been traditional pharmacy practice.
What are the logistical barriers that make it hard for independents to get into specialty?
Although there are barriers to entry, just like for any business, I don’t believe it is hard for independents to “get into specialty.” There is a huge opportunity to provide top patient care for those using specialty products, and there are a wide variety of products that are available in open distribution, including eight of the top 10 “specialty” products by total spend. The steps that have to be taken include careful consideration of the financial impact of specialty pharmacy, including potential challenges with cash flow due to the high cost and potential slow reimbursement. Anyone looking to get into specialty must plan for how they are going to market the service, but this is only marginally different from getting into long-term care, compounding, or any variety of niches/new services. Finally, there is an education piece that is often discussed as a barrier, but pharmacists are constantly learning new information about disease states, and products and resources that are available, including continuing education through NCPA, to help pharmacists gather the clinical expertise needed to care for patients using these products. For barriers that seem like bigger challenges to overcome, there are several companies working with and for independent pharmacies to help them get into the space. These include companies like KloudScript and Aureus Health Services, which have developed specialty pharmacy solutions for independent pharmacies, as well as Diplomat and Armada, which have used their position in the marketplace to develop networks of community pharmacies that are able to provide specialty services. CT