The Facts, Figures and Trends in U.S. Pharmaceutical Distribution Gayle C. Johnston, President, CuraScript SD Miguel Rodriguez, Senior Product

Transcription

1 The Facts, Figures and Trends in U.S. Pharmaceutical Distribution Gayle C. Johnston, President, CuraScript SD Miguel Rodriguez, Senior Product Manager, CuraScript SD

2 2015 Distribution Management Conference and Expo March 8-11, 2015 JW Marriott Orlando, Grande Lakes Orlando, Florida

3 85 th Edition HDMA Factbook ( ): The Facts, Figures, and Trends in Healthcare

4 Thank You!

5 Methodology Annual surveys sent to HDMA Distributor Members Data is reported solely at the Corporate-Level Secondary data collected from sources such as IMS Health

6 About the Report Distributor Demographics & Characteristics Finance Section -Administration subsection Information Systems Section Operations Section -Special Handling subsection

7 About the Report (Continued) Healthcare Products Section Customers Section Market Characteristics Section -Healthcare Overview subsection -Prescription Overview subsection -Pharmaceutical Companies subsection International Section

8 Using the HDMA Factbook An introduction to the supply chain A benchmarking tool for companies and distribution centers Uses and best practices As an education/teaching tool Support for advocacy efforts

9

10 Did You Know 55,750 different types of healthcare products An average of 1,377 different manufacturers Each day 15 million prescription medicines and healthcare products are delivered to nearly 200,000 licensed healthcare providers

11 Did You Know The average number of units picked per day per distribution center: 98,149 On an average day, a distribution center handles 4,764 orders Each order has an average of 9 lines

12

13 Did You Know Nexium and Abilify switched rankings in 2013 Abilify ranked #1 in 2013 with sales of $6.5 billion, making up 2.0% of the market Nexium was the top-ranked prescription in 2012, but this year dropped to 2 nd with sales of $6.1 billion Humira ranked 6 th in 2012 and jumped to 3 rd in 2013 with sales of $5.5 billion

14

15

16 Did You Know Novartis remained 1 st with sales of $18.8 billion Pfizer, who ranked 3 rd in 2012, jumped to 2 nd with sales of $17 billion And, Merck & Co. moved from 2 nd to 3 rd with sales of $16.5 billion

17

18 How to Order the 85 th Edition HDMA Factbook

19 Karen J. Ribler Executive Vice President & COO Julie G. Ghareeb Manager, Research

20 The 2014 Specialty Distribution Facts, Figures, and Trends Report This document is confidential and is intended solely for the use and information of the client to whom it is addressed.

21 Specialty Pharmaceutical Market and Characteristics Specialty Distributor Role and Customers Distributor Capabilities and Services Payer and Regulatory influence on the Supply Chain 21

22 What is a specialty pharmaceutical? Specialty Pharmaceuticals generally have four or more of the following characteristics Are typically high in cost ($600 or more per month) Have complex treatment regimens that require ongoing clinical monitoring and patient education Require special handling, storage or delivery Are generally derived biologically Are available in infusible, injectable or oral forms Are dispensed to treat individuals with chronic and / or rare diseases Frequently have limited or exclusive product availability and distribution Are used in therapeutic areas such as: Oncology Autoimmune / Immune Inflammatory Conditions Rare / Orphan Diseases 22

23 Manufacturers partner with both specialty distributors and traditional wholesalers to get their products to market Comparison of Traditional and Specialty Distributors Role in Supply Chain Predominan t Customers Other Customers Ownership Model Traditional Wholesalers Carry broad line of pharmaceuticals, including specialty drugs Pick, pack, and ship a majority of specialty drugs Hospitals Retail Pharmacies Specialty Pharmacies Home healthcare providers Mail Order Some traditional wholesalers own specialty distributors and specialty GPOs, and specialty pharmacies Specialty Distributors Distribute primarily specialty pharmaceuticals Offer services to providers Independent physician offices Physician-Owned Clinics Standalone Hospital Clinics Specialty Pharmacies Hospitals Specialty Pharmacies Home Healthcare providers Some specialty distributors own specialty GPOs and specialty pharmacies 23

25 Sales of branded and generic specialty pharmaceuticals have grown steadily in recent years US Specialty Pharmaceutical Sales Growth, Source: IMS Institute for Healthcare Informatics, June

26 In 2013, the top therapeutic drug class was Oncology, followed by Autoimmune disease, HIV antivirals and MS 2013 US Sales of Specialty Drugs US Dollars - $93B TOTAL Share of Specialty Growth 30% 9% 19% 18% 13% 10% 11% 11% 5% 3% 5% -1% 3% 3% 2% -34% 2% -3% 2% 6% 8% 2% 100% 8% Source: IMS Institute for Healthcare Informatics, June

27 Survey Respondents report oncology products as the highest in sales volume, contributing nearly one-third of average sales 2013 Specialty Distributor Reported Sales Share Volume by Therapeutic Area Therapeutic Area 2013 Average Oncology 32.7% Other 16.7% Hemophilia, bleeding disorders 15.7% Inflammatory 13.6% Autoimmune / Immune 7.4% Supportive care (e.g., anemia, blood modifiers) 6.3% CNS 3.4% Ophthalmology 2.5% Hepatitis 0.7% Metabolic diseases 0.3% HIV/AIDS 0.3% Cardiovascular 0.2% Growth Hormone 0.0% Transplant 0.0% Source: Center for Healthcare Supply Chain Research, 2014 Survey, based on 2013 specialty distributor data 27

29 The top 10 manufacturers generate 74% of sales value, and the average distributor has agreements with 164 manufacturers 2013 US Specialty Pharmaceutical Sales by Manufacturer Product US Sales $B Cumulative Sales % Growth Amgen % 8% 2 Genentech % 7% 3 Johnson & Johnson % 16% 4 Gilead Sciences % 18% 5 Abbott % 17% 6 Novartis % 4% 7 Teva % 8% 8 Bristol-Myers Squibb % 12% 9 Biogen Idec % 33% 10 Lilly % 5% 164 Average Number of Manufacturers that a Specialty Distributor served in 2013 Other % 4% Total US Specialty % Source: IMS Institute for Healthcare Informatics, June 2014 Source: Center for Healthcare Supply Chain Research, 2014 Survey, based on 2013 specialty distributor data 29

30 Distributors are offering manufacturers additional services to support the use of specialty pharmaceutical products Provider & Patient Support Marketing Support Adherence management programs 3 rd party support services (contract review) Utilization Management Patient Counselling Refill reminders Disease management / Disease state advocacy Provider advocacy Treatment initiation and education Hub Services Promotional material distribution Customer access and knowledge Other Specialty Distributor Services Expanded Data Services Reimbursement Clinical data services (e.g. data from EMRs) Clinical data to payers EMR Technology Reimbursement Services/Consulting Medication preauthorization Patient assistance program management Claims / co-payment collection Source: Center for Healthcare Supply Chain Research 30

31 Providers also benefit from additional services provided by distributors on behalf of manufacturers Other Specialty Distributor Services Provider & Patient Support Adherence management programs 3 rd party support services (contract review) Utilization Management Patient Counselling Refill reminders Disease management Disease state advocacy Reimbursement Reimbursement Services/Consulting Medication preauthorization Patient assistance program management Claims / co-payment collection Provider advocacy Treatment initiation and education Hub Services Source: Center for Healthcare Supply Chain Research 31

32 Specialty pharmaceutical distributors serve a range of different types of healthcare provider customers % of Distributor Sales Value by Provider Segment: Provider Segment Share Chang e Independent physician-owned/clinics 59% 63% + 4% Hospitals 24% 20% - 4% Hospital owned & operated clinics 11% 10% - 1% Specialty pharmacies 2% 2% <-> Retail pharmacies 1% 1% <-> Government organizations 1% 0% - 1% Other healthcare distributors 1% 2% + 1% Other 0% 2% + 2% Observations from Interviews Expansion in private clinics served winning their business Sales value of products shipped to independent clinics (non-oncology) has increased, as compared to hospitals Some distributors may serve hospitals from their traditional line of business, causing proportional mix to change Limited or exclusive distribution agreements have increased distributor-to-distributor sales Source: Center for Healthcare Supply Chain Research, 2014 Survey, based on 2013 specialty distributor data Note: *Home Health and Long-term care categories were added to the survey in 2014, but no distributors reported sales; Specialty pharmacies regardless of parent company affiliation, and can include mail order 32

33 Each specialty distributor serves a large number of provider ship-to locations, over 60% of which are physician clinics Average number of Unique Ship-To Points per Specialty Distributor by customer type Source: Center for Healthcare Supply Chain Research, 2014 Survey, based on 2013 specialty distributor data 33

35 Specialty distributors continue to provide exceptional service levels for a substantial volume of orders Specialty Distributor Service Levels 99.3% Average Order Fill Rate Average Order Statistics Per Specialty Distributor 3,399 orders per day 3.5 days Average Order Lead-Time 11,900 lines picked per day $15,903 per order 23.5 hours Average Turnaround from order pickup to provider delivery Source: Center for Healthcare Supply Chain Research, 2014 Survey, based on 2013 specialty distributor data 35

36 The average days of inventory on-hand at specialty distributors decreased between 2012 and 13 Days of Inventory On-Hand at Specialty Distributors Days of On-hand Inventory Days of On-hand Inventory Source: Center for Healthcare Supply Chain Research, 2014 Survey, based on 2013 specialty distributor data Why? Changes in contract terms with manufacturers Implementation of operations efficiency programs 36

37 Specialty Distributors use or offer a variety of services, as a normal part of doing business IT Technologies Used By Distributors or offered to Customers for Use % Operational Technologies Using Customer Relationship Management 100% Warehouse Management 100% EDI Data exchange to take orders, process invoices 100% Track and Trace Technologies 25% Technologies offered to Providers % Using REMS infrastructure systems and support 100% Inventory management technologies (e.g., drug storage cabinets) 100% Reimbursement support systems 50% Electronic Medical Records 25% Reasons for Adoption Automation Operations Management Productivity Customer Service Regulatory Compliance Manufacturer Communication Increase Value Proposition Source: Center for Healthcare Supply Chain Research, 2014 Survey, based on 2013 specialty distributor data 37

38 Specialty Pharmaceutical Market and Characteristics Specialty Distributor Role and Customers Distributor Capabilities and Services Payer and Regulatory Influence on the Supply Chain 38

39 Payers play a pivotal role, particularly for specialty drugs and the coverage mix is changing significantly due to health reform US Health Insurance Coverage By Payer Type 2013 (Actual); Projected Source: National Health Expenditures 2013, Centers of Medicare and Medicaid Services, Office of the Actuary 39

40 Payer clinical and utilization management strategies constantly evolve, with implications for site of care and supply chain 2013 Clinical & Utilization Management Strategies Commercial Plans Source: 2014 EMD Serono Specialty Digest 40

41 Observations on Buy and Bill versus External Delivery distribution models Both Buy and Bill and External Delivery have a place within the current system Both models are likely to continue to thrive as the specialty market grows Buy and bill is viewed by providers as: Offering the most efficiency and patient-centered flexibility Being particularly well-suited for specialty medications where dosage may need to be adjusted for the patient on the day of treatment External delivery can offer benefits to providers as well, particularly small providers who prefer not to bear the cost of carrying high-cost specialty medications in inventory 41

42 The 340B program has expanded significantly, and is affecting competitive dynamics among provider groups Growth of 340B Covered Entity Sites (thousands) Observations and Implications Program expansions as well as provisions in the Affordable Care Act have greatly increased the number of eligible providers Number of Covered Entities Approximately one-third of US hospitals now qualify Non-340B providers buy at market prices putting them at competitive disadvantage The trend of hospitals obtaining favorable 340B pricing has shifted some cancer care into hospitals, and away from provider offices Explosive expansion of contract pharmacy networks Years (as of April 1) The program is under increased scrutiny by the federal government via ongoing audits to ensure that 340B providers are truly eligible Source: Health Resources and Services Administration (HRSA) Office of Pharmacy Affairs, Quarterly Data 340B Drug Pricing Program Activity; RAND Corporation 42

43 REMS programs vary in complexity, and REMS Integration Initiative is underway to improve effectiveness and standardize Approved REMS Programs by Level of Complexity July drugs MG = Medication Guide CP = Communication Plan ETASU = Elements to Assure Safe Use IS = Implementation System Simple Simple Moderate Complex Complex Medication guides Specific package insert language Communication plan to disseminate safety information Dear healthcare providers letters (DHCP) Educational material packages Level 1 plus the following: Prescriber training / certification Pharmacist verification of lab test results prior to dispensing Patient monitoring Registration of prescribers Patient enrollment into Registries Patient acknowledgement forms (e.g., Acknowledgement of Risks) Level 2 plus the following: Certification and training of pharmacists and physicians Recertification and product release approval at each dispense Regular audits of prescribers and dispense locations Implementation systems Authorization codes Limited access to registered customers Note: This captures the ONLY the elements of approved REMS programs as listed by FDA.gov products may also have medication guides, which are not associated with the REMS; Includes Individual REMS and Shared System REMS 43

44 Closing Thoughts Growth in the Specialty pharmaceutical sector is expected to continue as new drugs are introduced, providing growth opportunities for specialty distributors Specialty distributors continue to provide an agile, secure supply chain which ensures that lifesaving specialty medications are properly handled and delivered to providers in a timely manner Payer pressures continue to create challenges which have implications for site of care and the supply chain Reimbursement rates have placed pressure on all providers, but particularly independent provider offices Mandating pharmacy versus medical benefit coverage for specialty drugs changes practice economics for some providers 340B entities have a competitive advantage in the oncology space, and this has contributed to a shift in site of care from provider office to hospital but Government scrutiny and Manufacturer practices could change the playing field Distributors, manufacturers and providers will monitor, plan and prepare for changes in the regulatory environment as the ACA runs through its first full year, public payer practices change, and tracablility requirements become more clear 44

45 About the Center The Center for Healthcare Supply Chain Research The Center for Healthcare Supply Chain Research is a 501(c)(3) non-profit charitable organization that serves as the knowledge partner of the Healthcare Distribution Management Association (HDMA). The Center for Healthcare Supply Chain Research Mission To conduct research and disseminate information that will enhance the knowledge base, efficiency and effectiveness of the total healthcare supply chain. To provide thought leadership to further enhance the safety and security of the healthcare supply chain through future focused study and programming. Center Staff Contact Information Karen J. Ribler, Executive Vice President & Chief Operating Officer (703) kribler@hdmanet.org 45