Strategic Issues in Managing the Specialty Pharmacy Benefit. Tim Watson, PharmD, MBA
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1 Strategic Issues in Managing the Specialty Pharmacy Benefit Tim Watson, PharmD, MBA
2 Strategic Issues in Specialty Pharmacy Management Specialty pharmacy goals: Provide a reliable source for hard-to-find injectables Provide access to professionally trained staff on a 24-hour basis Integrate specialty medications with other medications for a robust drug utilization review and patient safety profiling system Design and deploy a comprehensive patient education strategy on how to best manage the disease, achieve desired outcomes, minimize negative consequences, etc.
3 Strategic Issues in Specialty Pharmacy Management Specialty pharmacy goals, continued: Achieve competitive pricing Create a streamlined and more accurate claims processing system Eliminate inappropriate utilization Enhance predictive modeling Improve outcomes reporting, including pharmacoeconomic impact assessments
4 Strategy / Goal Development
5 Strategic Issues in Specialty Pharmacy Management Data analysis Understand where your specialty pharmacy costs and utilization are today Pharmacy claims Run reports from your current PBM / health plan Identifies those specialty pharmacy claims being filled in retail pharmacy or mail order channel Medical utilization Mine medical claims data for J-Code billing information Crosswalk J-Code to drug level codes NDCs If actual data is unavailable or not cost effective to obtain, predictive modeling can be done based on your group size, demographics, etc.
6 Strategic Issues in Specialty Pharmacy Management Data analysis Top therapeutic areas Concentration of providers Medical and pharmacy Concentration of patients
7 Strategic Issues in Specialty Pharmacy Management Will program participation be voluntary or mandatory? This decision will impact every other implementation step Many employers implement a voluntary period, followed by a mandatory conversion Some segment disease areas as either voluntary or mandatory
8 Strategic Issues in Specialty Pharmacy Management The program will be phased in over what period of time? Most recommend at least one year for successful implementation Many have transitioned over more than one year to ensure that appropriate communication plans, operational processes, financial underwriting changes, etc. are in place Overall implementation could include a voluntary implementation window, followed by a gradual implementation to a mandatory system
9 Strategic Issues in Specialty Pharmacy Management Who s in charge of UM / DM? Will it vary by disease state? (e.g. Asthma vs. Gaucher s disease) Employer/ Payer Resources Chronic Disease Mgt Disease Mgt Vendor Specialty Pharmacy
10 Strategic Issues in Specialty Pharmacy Management Will all providers be required to use the service? Oncology is an issue for many plans Reimbursement adjustments are common, though not at 100% offset At some point, it becomes an issue of parity Rx Director, 400k+ health plan in NY: Count on losing some physicians from your network after you implement a mandatory specialty distribution contract. Physicians who rely on their own markup of specialty products may discontinue their relationships with MCOs Source: How Health Plans Should Deliver High Cost, Low Volume Biotech Drugs, May 21, 2003 Webcast, AIS Health
11 What will the communication plan entail? Provider panel Program goals Implementation timelines Operational issues Help line Members Program goals Implementation timelines Where benefits are impacted (change in copay/co-insurance) Help line Strategic Issues in Specialty Pharmacy Management
12 Anticipate Barriers / Stakeholder Analysis
13 Strategic Issues in Specialty Pharmacy Management Stakeholder Pros Cons Patient Reimbursement support Access to additional clinical resources Availability of home delivery Minimizes importance of retail pharmacy Could cost more out of pocket, depending on plan design Operational processes could confuse patient and/or delay care
14 Strategic Issues in Specialty Pharmacy Management Stakeholder Pros Cons Provider No need to hold expensive inventory Reimbursement support Convenience of one supplier Reduced ability to generate incremental revenue Operational process could be cumbersome
15 Strategic Issues in Specialty Pharmacy Management Stakeholder Pros Cons Employer Better coordination of care Better understanding of data Potential for reduced costs Potential for provider disruption Potential for member complaints Services may shift to alternative channels (e.g. hospital, home health, etc.)
16 Strategic Issues in Specialty Pharmacy Management Stakeholder Pros Cons Manufacturer Reduction in number of contracts/orders to manage Potential for increasing product use (reimbursement support) Limitations on product use via managed care strategies Potential for price erosion via price reductions demanded via contracting process
17 Strategic Issues in Specialty Pharmacy Management Stakeholder Pros Cons PBM Sell a high margin business to a captive client base Gain efficiencies in reporting/claims processing Diversify revenue/ profit sources Change in philosophy (mail order vs. localized delivery) Potential for pricing erosion over time
18 Choosing a Specialty Pharmacy Provider
19 Choosing a Specialty Pharmacy Provider Independent specialty pharmacy providers National: McKesson Large regional: IVPCare, Medmark, Apothecary Shops Local: Highly fragmented in local markets PBM-owned specialty pharmacies The big-three each have completed major acquisitions in the last 2 years Many regional firms rapidly developing strategy
20 Choosing a Specialty Pharmacy Provider Key questions: Distribution strategy Mail order vs. regional Clinical services Disease-specific expertise Reasonable access to clinicians Interventions Outcomes measurement Breadth of product line Core products Strategy to gain access to limited distribution drugs
21 Choosing a Specialty Pharmacy Provider Key questions: Implementation Success in your markets Skill in communicating with patients/physicians Ability to assist in marketing/program enrollment
22 Choosing a Specialty Pharmacy Provider Key questions: Reporting Operational Progress towards performance standards Clinical Patients meeting clinical guidelines Financial Cost and utilization summaries, predictive modeling for future budgetary decisions
23 Choosing a Specialty Pharmacy Provider Key questions: Pricing Beware blended rates product-specific discounts are the way to go Negotiate the ability to share in rebates derived from specialty pharmaceuticals Limited now, importance may grow in the future as more competition enters key therapeutic areas Establish ground rules for new product introductions
24 Choosing a Specialty Pharmacy Provider Evaluation methodology Qualitative Financial Site visits References
25 Future Issues in Specialty Pharmacy Management
26 A View Towards the Future More competition From specialty pharmacy providers From biotech firms Better data analytics to support: Outcomes research (clinical and economic) Evidence-based coverage criteria Customized care Focused on individual patients
27 A View Towards the Future Better diagnostics Predict which patients are more likely to benefit from therapy Introduction of generic biologics Requires a change in current pharmaceutical regulations by the FDA Major investments by generic biopharmaceutical firms
28 A View Towards the Future Localization or regionalization of the distribution model Many new products will require customization for individualized patients Dosage forms may require infusions at skilled facilities, rather than simple self injections
29 A View Towards the Future
30 A View Towards the Future
31 A View Towards the Future
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