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The Path to "Economic Value" in Specialty-Patient Care

Specialty pharmacies and managed care organizations will need to work together to truly balance the scale between cost and improved patient outcomes.
Published Online: Sep 21,2017
Dan Steiber, RPh
Specialty Products: New World Order

Drug approvals over the past decade have shifted from the treatment of common health issues—such as diabetes, hypertension, and lipid management—toward more rare disease states with smaller patient populations. A key driver of this shift has been the successful challenge, or expiration, of patents, which has facilitated the availability of quality generics to treat most common health issues.

Markets and managed care organizations have played a very strong role in shifting utilization from branded products to generics, where those alternatives are available to community pharmacies that are dispensing more than 90% of their prescriptions using multisource products. A manufacturer can spend hundreds of millions of dollars to launch a new product, only to find that the market may not support it—for example, the recent approvals of PCSK9 inhibitors.

Purposeful hurdles have been established by payers to ensure appropriate utilization after more traditional therapies and measures have failed to reach the desired end points. Because of this shift, the research and development efforts of manufacturers have, by and large, focused on what the market refers to as specialty products.

In 2016, the FDA approved 22 new molecular entities, all of which clearly fit the definition of specialty products: they are distributed through limited access; require special handling, distribution, and/or administration; are included in the FDA-mandated Risk Evaluation Mitigation Strategy program; are high in cost; and have complicated regimens with critical and proactive adverse effect management.

As we move closer to the end of 2017, these trends continue to play out. President Donald Trump has made it very clear to the FDA that the previous administration overregulated the approval process, and the need for new specialized therapies is essential. As such, we anticipate a significant expansion of specialty products that will require the oversight and a partnership between specialty pharmacy and managed care to truly balance the scale between cost and improved patient outcomes.

Pharmacy Economics 101

The economics of pharmacy have always been tied to providing a commodity to a patient at a price dictated by the cost of the product established by the manufacturer. Because most products are dispensed in the retail setting, any professional services provided by the community pharmacy were integrated into the price paid, either by the payer or the patient with co-pays, or both. Community pharmacy has been working hard as of late to establish provider status for pharmacists to help separate the distribution and dispensing elements from the service elements. That is the hope.

Clearly, over the past several decades, pharmacy education has evolved and pharmacists have received a predominance of clinical education to the point where they currently play a key role on the healthcare team, with a focus on product selection, optimization, and patient outcomes. This certainly has become true in the specialty pharmacy space. However, this evolution has not been followed by the economics.

The convergence of higher-cost products, changes in our healthcare system under the Affordable Care Act, and better coordination of care have not necessarily resulted in specialty pharmacy services getting compensated for their value. There are only so many dollars to go around, including the patient shouldering more of a cost burden. Specialty is making progress, however, but it will still take hard evidence to demonstrate the incremental value that is being provided by enhanced services in the business and profession.

Even with specialty pharmacy, the bulk of the bottom line is driven by reimbursement focused on the average wholesale price or wholesale acquisition price. There are exceptions, driven primarily by specialty pharmacies that have agreements with payers or pharmacies owned by payers and/or manufacturers. In exchange for providing focused professional services, supply chain management, and data, some specialty pharmacies can supplement their revenues. Most pharmacies that may dispense a specialty product do not have service or direct distribution agreements in place with manufacturers. Arm yourself with the information our authors have diligently provided you.

“Show Me the Money”

There are a good number of tactics being implemented in the market place, including value-based contracting (VBC). VBC involves payment, or reimbursement, based on indicators of value, such as patient health outcomes, efficiency, and quality. This is distinct from volume- or fee-for-service–based contracting, which involves payment for every unit of service delivered, often without terms related to outcomes, quality, or cost performance. Specialty must, therefore, objectively demonstrate what incremental value it brings toward optimizing patient outcomes.

Each therapeutic class or disease state presents itself with potential measures. Those measures can be based on multiple factors, including quality, cure, outcomes, adherence, cost, and potentially so many more. Often, the measures can be subjective based on how the patient feels. Objective measures, however, are best when designing a VBC initiative. Specialty pharmacy can be the focal point of data convergence and in the case of specialty products, interpretation and action taken in the care and management of pharmaceutical care with multiple payers.