Specialty Pharmacy: What It Means to Stakeholders

Tuesday, July 5, 2016

Marsha K. Millonig, MBA, BPharm

The term “specialty pharmacy” has a variety of meanings. To some, it means expensive medications; to others, it means a pharmacy that focuses on medications to treat certain disease states. The industry has not yet agreed upon definitions for “specialty medication” or “specialty pharmacy,” although the definitions that do exist have some consistent themes.

What we can agree on is that there are challenges facing all healthcare stakeholders when it comes to “specialty.”

Defining the Terms

A specialty medication can be:

  • High-cost prescription medication used to treat complex, chronic conditions
  • Complex to manufacture
  • Difficult to administer
  • Biologic, biological, biopharmaceutical, biotech
  • High-cost injectable, infused product, oral agent, or inhaled medication
  • Requiring close supervision, monitoring, and handling
  • Administered at home, MD office, infusion center, or outpatient hospital
  • Available through exclusive, restricted, or limited distribution

According to the National Association of Specialty Pharmacy (NASP):

  • A specialty pharmacy is a state-licensed pharmacy that solely or largely provides only medications for people with serious health conditions requiring complex therapies.
  • In addition to being state-licensed and state-regulated, specialty pharmacies should be accredited by independent third parties such as URAC®, the Accreditation Commission for Health Care (ACHC), the Center for Pharmacy Practice Accreditation (CPPA), or The Joint Commission, to ensure consistent quality of care.
  • Specialty pharmacies connect patients who are severely ill with the medications that are prescribed for their conditions, provide the patient care services required for these medications, and support patients who are facing reimbursement challenges for these highly needed but also frequently costly medications.

Regardless of the definition, the issues surrounding specialty are impacting many stakeholders and causing a flurry of industry activity. There are conferences, webinars, and white papers devoted to the topic.

Health Plan Concerns: Cost and Utilization

According to Express Scripts 2014 Drug Trend Report, eight of the top 10 highest revenue drugs in 2016 will be specialty. Specialty pharmacy has grown upwards of 20% per year. By 2018, specialty drugs are estimated to contribute up to 44% of the overall drug spend.

The pipeline is replete with specialty and biosimilar products. Plans are looking for ways to manage the increasing trends and are implementing tools such as prior authorization, preferred provider networks, and member cost-sharing programs. They are also looking at models that tie financial terms to clinical performance.

Pharmacy Concerns: Network Access and Administrative Challenges

New arrangements are being formed with community pharmacies and specialty pharmacies, allowing the community pharmacy to dispense the specialty product and maintain their patient relationships. This can be confusing to prescribers, who may not know that the community pharmacy has an agreement with the specialty pharmacy, and thus route the prescription to the specialty pharmacy.

Pharmacies are often trying to obtain prior authorization, yet with new ePA requirements in place in some states, they may not be able to submit the request or be electronically notified of the outcome.

Many products have a Risk Evaluation and Mitigation Strategy (REMS) associated with them, which are FDA-required parameters that must be met prior to dispensing. Identifying and complying with the requirements takes additional resources.

Manufacturer Concerns: Formulary Status and Patient Access

Manufacturers remain focused on ensuring their products receive preferred formulary status, as well as reducing or eliminating barriers to patient access. They have invested heavily in resources to assist in getting the claim paid, primarily through the use of hubs that facilitate obtaining prior authorization and identifying financial assistance resources for patients. They are also working with plans to develop agreements that incorporate clinical outcomes.

Patient Concerns: Cost and Access

Many specialty products have costs ranging from several hundred to potentially several hundred thousands of dollars. With the increase in high deductibles and/or co-insurance plans, the patient financial responsibility can be overwhelming or insurmountable. Patients may not understand network limitations or that there may be financial assistance available to them via manufacturer programs or charitable foundations.

Adding to these concerns are the operational inefficiencies that exist in the specialty arena. Prescriptions are rarely transmitted electronically, as is common for ambulatory and inpatient medications, but primarily via a faxed intake form. Pharmacies are verifying benefits through Web searches and telephone calls. REMS requirements can vary by product, and determining the requirements can be challenging. Pharmacies may find themselves no longer able to manually submit a prior authorization request, depending upon plan constraints or regulatory requirements. All of these manual processes negatively impact speed to therapy, operating costs, and stakeholder satisfaction.

More information about industry activities to address these operational inefficiencies can be found in this Specialty Pharmacy Times article.

Marsha K. Millonig, MBA, BPharm, is president and CEO of Catalyst Enterprises, LLC, and an Associate Fellow at the University of Minnesota College of Pharmacy’s Center for Leading Healthcare Change.

Want to learn more about related topics? Check out these RxPerts Academy features on specialty pharmacy:

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