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- Retail pharmacies dispensing more complex therapies aligned with specialty pharmacy programs; consumer / patient cost sharing of the pharmacy benefit continues to increase
- Retail store-based medical clinics increasing and providing access to care but competing against physician practices
- Significant drastic changes in marketing strategy likely with threat posed by Amazon and its PillPack unit as they ramp up healthcare marketing initiatives to compete in the pharmacy care and PBM market sectors
... See how retail pharmacy-based healthcare clinics are changing healthcare delivery in the United States, read the article below for insights ...
Specialty Pharmacy Overview
Specialty pharmacy is typically involved with advanced therapies and complex patient types. Therapies dispensed are often referred to as “biologics”or “large molecules”; they can also be conventional oral or injectable products for patients with highly specialized care needs. Oncology is a cornerstone of the specialty pharmacy sector. The high level of patient care involved coupled with the high cost, more complex therapies required are ideally suited to the abilities of these providers. As more biologicals reach the marketplace for other advanced patient care conditions, oncology / specialty pharmacy protocols are readily transferrable to them.
Specialty drugs and their patients can be broadly categorized as having a combination of these attributes:
- Complex to manufacture and distribute; they require special handling and administration
- Usually injectable but may be oral; injectables can be self-administered or administered by a clinician
- Due to being advanced/specialized, they are costly and taken by a smaller portion of the population
- Specialty pharmacy patients require more care and are more challenging cases for clinicians to treat
A large portion of specialty pharmacy patients are covered via Medicare. While the number of specialty pharmacy patients is relatively small in terms of the overall population, the cost of the medications they require make up a very large portion of total drug spend in both commercial and government healthcare or pharmacy benefit plans. Specialty pharmacy therapies can run from $10,000 to $100,000 in annual cost. Depending upon the therapy and the benefit program it is featured in, the product may be covered through the medical or the pharmacy benefit. Besides storing, shipping specialty products and counseling patients, specialty pharmacies usually spend considerable time and resources verifying coverage of patients and identifying the most appropriate benefit to adjudicate the claim through.
When patients self-inject specialty drugs or take them orally, the pharmacy benefit associated with their health plan often provides coverage through the use of a PBM. When a clinician administers specialty drug therapies (through an IV or injection), the product is usually covered by the medical benefit.
Buy And Bill
Clinicians administering intravenous specialty pharmaceuticals under the medical benefit purchase the products and then are reimbursed by payers in an arrangement called “buy and bill". Buy and bill has been a controversial business arrangement. Although it has been utilized for years, there have been issues as to how much the product cost when the clinician procured the product and what the clinician actually charged the payer.
Clinicians would substantially markup products in buy and bill arrangements, especially in oncology. Payers (commercial and government) have put limits on the percentage of markup they will allow physicians to charge them but fixed price arrangements are increasingly becoming the standard. Hospital outpatient facilities also acquire specialty therapies through negotiating their own terms with manufacturers and bill the payers for the drugs.
Specialty Pharmacy Operating Models
Specialty pharmacies and their services operate through different models. Some are organized as "closed door" pharmacy facilities which do not have storefronts or "walk-in" business, some are operating units of PBMs in conjunction with mail order facilities, others are administered through retail pharmacies equipped and staffed to provide specialty pharmacy services. Other variations include hybrid specialty pharmacy business models which are combinations of specialty pharmacy and infusion services or specialty pharmacies supporting home infusion providers and / or long term care facilities. Depending on the size of the organization and therapies offered, they can operate as a hub pharmacy for a manufacturer or have multiple locations servicing regional or metropolitan areas throughout the nation.
The leading therapeutic categories dispensed via specialty pharmacy venues are:
Specialty Pharmacy Reimbursement And Market Access
Reimbursement in the specialty pharmacy sector can be complex. Depending on the patient, medication, provider and the plan(s) involved; a claims adjudication pathway could closely resemble a retail pharmacy claim or it could involve separate charges for therapies, per diem payments for supplies, equipment, pharmacy services, non-nursing care services and then separate payments for nursing care. Home infusion is typically paid for under the medical benefit but overall specialty pharmacy reimbursement can be through the pharmacy or the medical benefit depending on the patient, therapy, point-of-care and how the patient's insurance plan (or PBM) chooses to align the payments based on the benefit design.
Pharmaceutical manufacturers and other product producers have to account for the nuances of the specialty pharmacy service sector in their market access strategy and tactics. Failure to account for the unique payer and service attributes within it can greatly reduce or even lock out a product from being used as contracting is not in place and / or a promotional pull-through framework and messaging is not aligned with the channel.
Retail and Mail Order Pharmacy Overview...
The pharmacy sector has completely remade itself since 2000. The chain drugstore market is dominated by two players Walgreens and CVS; Rite Aid is in a much lesser scale position and regional pharmacy chain Fred’s has entered final bankruptcy proceedings. There is much speculation about Walgreens either going private with help from private equity ally KKR or perhaps being acquired by Amazon, Kroger or Walmart:
As for the mass merchandiser sector of retail pharmacy, Walmart, Sam’s Club ( part of Walmart ) and Target ( TGT ) own this market but it is important to remember CVS owns and operates the pharmacy departments in all Target stores. Costco is coming on strong in this segment through their hearing, optical and other healthcare services, including pharmacy benefit management and mail order pharmacy.
Leading grocery chains like Kroger and Albertsons ( private equity owned ) are the dominant grocery-based pharmacies; large regional players in grocery pharmacy include HEB (privately held ) and Publix ( privately held).
In September, 2019, courts approved CVS Health's acquisition of Aetna. CVS is acquiring Aetna to widen its business model and fortify its position against Amazon who is laying groundwork to enter the pharmacy sector. The CVS Health / Aetna tandem will have wide impact across multiple healthcare sectors such as employee benefit consultants, PBMs, MCOs, physician practice groups, health systems and retail, mail order and specialty pharmacy. Checkout these links for more details about how one of the largest chain drugstore retailers and pharmacy benefit managers in the United States transformed their business model through acquiring one of the largest and oldest health insurance / managed care organizations in the country:
Compounding Pharmacy Overview
Compounding pharmacies are distinctly different service providers. They support healthcare systems, home infusion companies, hospitals, long term care facilities and physician/clinic-based care providers. Their business is based on more specialized products which they produce on a contract basis for various providers; those with high volume, specialized capabilities are registered as "503Bs".
In October, '15 AmerisourceBergen acquired PharMEDium for $2.58 billion; this fortified their position in large scale, institutional pharmacy services. Margins within the compounding pharmacy unit are substantially higher than the drug wholesaling business. PharMEDium is expected to ramp up quickly during to fulfill opportunities via AmerisourceBergen channels and grow the legacy PharMEDium book of business. With the exit of Cantrell from the marketplace, PharMedium has the leading presence in compounding pharmacy but an FDA permanenr injunction against them in 2019 has brought more scrutiny to bear from Federal and State regulators across the nation to compounding pharmacies and best practice.
Mail Order Pharmacy Overview
While mail order and specialty pharmacy sectors are more fragmented, the leaders are CVS / Aetna, Cigna / ExpressRx, United Healthcare / OptumRx, Anthem BCBS / Ingenio Rx and AllianceRx Walgreens Prime.
Mail order pharmacies offer home delivery of prescription medications which are maintenance therapies (blood pressure, cholesterol, diabetes, oral contraceptives, etc.). In addition, they often provide specialty pharmacy services for advanced injectable and biological therapies. A number of managed care organizations, PBMs and the larger retail pharmacy chains operate their own mail order pharmacies. Key managed care attributes include:
- Advanced clinical/financial reporting for payers/plans/providers
- Economical prescription drug access for consumers/patients
- Close formulary management
- Rapid, large scale brand to generic conversion upon brand expiration
- Specialty pharmacy service attributes for advanced therapies
One of the largest deals was Cigna acquiring Express Scripts (now known as ExpressRx) for $54 billion in 2018....
... A list of Mass Merchandiser Pharmacies ...
... A list of Mail Order Pharmacies ...
... As Amazon expands its business into the healthcare sector, pharmacy retailers may find themselves under siege ...
... This is a list of Retail Pharmacies; scroll down for Mass Merchandiser Pharmacies, Compounding Pharmacies, Mail Order Pharmacies, Specialty Pharmacies plus healthcare marketing presentations, pharmacy market trends ...
... A list of Compounding Pharmacies...
... Find out more about Compounding Pharmacies, visit the learning resource below ...
... A list of Specialty Pharmacies ...
... Multiple factors trigger change and innovation in pharmacy; new products and other developments frequently occur and a growing biosimilar pharmaceutical sector are catalysts for more advancements ...
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