Can Value-Based Cancer Care Address the Challenges Faced by Specialty Pharmacies in Oncology?

VBCC - March 2012, Volume 3, No 2 - VBCC Perspectives
Atheer A. Kaddis, PharmD
Senior Vice President
Sales and Business Development
Diplomat Specialty Pharmacy
Fint, MI

Specialty pharmacies are facing specific challenges in the ways they interact with payers, providers, and even with the pharmaceutical industry in relation to access and delivery of cancer drugs.

Limited-Distribution Drugs
Although not limited to oncolytics, a major challenge specialty pharmacies face in relation to cancer drugs is with limited-distribution drugs. This especially relates to oral oncolytics, which are the primary type of cancer drugs that specialty pharmacies manage. The main challenge a specialty pharmacy faces in trying to provide quality care to patients, and in having a partnership with oncologists, is the issue of limited-distribution processes. If a specialty pharmacy has access to 80% of the oral oncolytics in the market, and another oral oncolytic is introduced to the market where the specialty pharmacy is not included in that limited-distribution network, this directly interferes with the pharmacy's ability to provide a continuum of care for patients it serves. It also is a challenge for the relationship with the oncologist's practice, where the specialty pharmacy is trying to support the practice for all of its oral oncolytic needs. Therefore, the oncology practice now has to send the prescription to a different specialty pharmacy to fulfill that prescription.

This also causes a challenge for payers. If a new drug is approved and the preferred specialty pharmacy for a payer does not have access to that drug, the payer then has to send that prescription to a competitor specialty pharmacy with contracted discounts that may vary significantly from the discounts that could have been offered by the preferred specialty pharmacy as a result of contractual agreements. This challenge is not only specific to cancer drugs, but because oncology is such a "high-touch" category, it highlights the challenges this puts on the ability of the specialty pharmacy to provide all the patients', payers', and providers' needs.

Buy and Bill
Another challenge involves infused chemotherapy drugs, which fall under the "buy-and-bill" process today. Oncologists buy these drugs from wholesalers or directly from the drug manufacturers. They administer infusions in the oncology practice, bill the payer, and are reimbursed from the payer. Therefore, the specialty pharmacy today has a very limited role in the care of a patient who is receiving an infused chemotherapy drug. That presents an issue when a patient receives both an infused chemotherapy drug and an oral oncolytic, because for that patient, the specialty pharmacy is dispensing the oral drug and the oncology practice is administering the infused drug. This situation creates a break in the continuity of care for that patient, because the specialty pharmacy has little or no information on the infused drug and cannot provide complete services to that patient, as in the case of the oral oncolytics. However, it is very likely that in the near future, as reimbursement is gradually being reduced for infused chemotherapies, and as the drug shortages that we are experiencing today become even more of a problem, oncologists will likely try to reach out to the specialty pharmacy to order their infused chemotherapies.

Class of Trade
This, in turn, will become a challenge of the class-of-trade issue. Some manufacturers sell an infused chemotherapy drug to an oncologist, or to a wholesaler to sell to an oncologist, at a much deeper discount than the price available to a specialty pharmacy for these medications. This is the result of what is known as "class of trade." There is a physician class of trade, a hospital class of trade, and even retail pharmacy and mail order classes of trade, but there is no specialty pharmacy class of trade today. The specialty pharmacy is usually buying the drugs at the same discount level as retail pharmacies, so specialty pharmacies are not getting much of a discount on these agents. This becomes a problem when an oncologist decides to order the drug from a specialty pharmacy and let it bill the health plan for that drug. The amount that the pharmacy will be reimbursed from the health plan is likely much lower than the cost of the drug for the pharmacy. That puts any potential profit on the drug at risk for the specialty pharmacy. Therefore, as reimbursement is reduced for oncologists, it will create a new problem, because oncologists may not be able to turn to specialty pharmacies to order these drugs. This challenge was highlighted by the Centers for Medicare & Medicaid Services Competitive Acquisition Program that aimed to reimburse specialty pharmacies at average sales price plus 6%. Most specialty pharmacies could not afford to participate in this program, and the program has not been continued.

Value-Based Reimbursement
There is considerable advantage to specialty pharmacy being more involved on the whole with oncolytics, and not just with oral oncolytics. I would argue that the advantage is for all stakeholders, including oncologists, if the specialty pharmacy is dispensing all of the drugs, which allows the pharmacy to provide other services to patients. Specialty pharmacies can manage the prescription through the prior authorization process; they can make sure that genomic testing is done for appropriate patients, and that the results are back before a patient receives the medication, to ensure that the drug is being administered according to nationally accepted guidelines or the payer's established criteria. Specialty pharmacies can also provide educational materials, so a patient receiving a chemotherapy drug will know what to do if side effects occur. This type of support is now provided by the specialty pharmacy. In addition, especially for oral oncolytics, before a drug is dispensed to patients who have a high out-of-pocket cost, the specialty pharmacy can work with various organizations to help with financial assistance for the patient and ensure appropriate adherence. This can dramatically improve adherence to therapy, especially for self-administered oncolytics.

Specialty pharmacies can also help patients and manufacturers with Risk Evaluation and Mitigation Strategies (REMS) to ensure that patients are receiving medications in accordance with prescribing requirements and to provide data to manufacturers to ensure that their medications are being used according to US Food and Drug Administration requirements. The big challenge for oncologists is that the reimbursement structure for cancer care is often skewed toward drug reimbursement rather than accurate reimbursement for all of the services being provided by oncologists. However, if oncologists are reimbursed for the value of cancer care that they are providing, using measurable metrics, that takes the burden of reimbursement away from the drug itself to focus on the value of care delivery.

From the payers' standpoint, if they are able to reduce the reimbursement on the drug and pay doctors for the value of care that is being provided, the payers can focus on paying for better-quality care, improved metrics, and more appropriate use of drug therapy, rather than for the use of higher-cost drugs. From the manufacturers' standpoint, this can also be a benefit, because now their products will be used appropriately. Medications will be used based on national guidelines and diagnostic testing, thereby improving overall outcomes for patients, providers, payers, and drug manufacturers. We have started down the road of paying for services and pay for performance for cancer care; however, the road is long, and there is much more work to be done to achieve the goals of value-based cancer care. Much hope is being placed in the development of accountable care organizations and in the patient-centered medical home, but it remains to be determined if these programs will be the solution long-term.

Biosimilars
Specialty pharmacies are going to play a major role in the introduction of biosimilars. They will be collaborating with payers to ensure that policies are followed regarding biosimilars. Some difficult decisions will have to be made by payers as to whether they consider biosimilars alternatives to existing branded drugs. We can expect to see a 15% or 20% discount on the branded agent with biosimilars, and some manufacturers may then offer more rebates on their branded drugs to compete with the biosimilar agents. Some payers will prefer biosimilars in certain situations and brand-name drugs in others, but this will be largely driven by financial issues and contracts, as long as there is comfort in the ability to interchange the drugs clinically. Specialty pharmacies are going to have an increased role in the dispensing of biosimilars, such as monoclonal antibodies, in cancer care. Today, these are primarily buy-and-bill agents. In the future, specialty pharmacy will likely have more of a role in dispensing and supporting these medications. Drug shortages, which are related mainly to generic drugs today, may also drive the uptake of biosimilars.

Evolving Role of specialty Pharmacy: From Dispensing of Drugs to Patient services and Cost Management
Specialty pharmacy is evolving and is no longer focused only on the dispensing of drugs, as was the case 5 or 10 years ago. Some pharmacies are now working with payers on medical management services, providing all the back-end clinical, financial, and educational support around the dispensing of a specific drug, especially in relation to cancer drugs. Specialty pharmacies have specific strategies in terms of cost management of extremely expensive cancer drugs, and this does not necessarily mean discounts on drugs. The pricing and distribution of drugs are commodities today. Cost management, and significant savings, for a payer can come from utilization management, patient adherence, and clinical programs and pathways in oncology, making sure that the appropriate drugs are being used for the appropriate patients. Specialty pharmacies are therefore heading toward support of these services, including managing adherence, partial-fill programs, and clinical programs that relate to cancer drugs. These services are going to drive the role of specialty pharmacies going forward rather than dispensing drugs and trying to get a deeper discount from manufacturers. Instead, specialty pharmacies are going to differentiate themselves around the services and value they provide, by helping payers manage costs related to appropriateness of therapy, comparative effectiveness, and patient adherence. That is expected to be the future for specialty pharmacy, and it is an exciting prospect.

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