The Future of Specialty Pharmacy: Where Do We Need to Go?

The specialty pharmacy industry is unique in many ways, but the price growth for these drugs is no longer sustainable, Steve Miller, MD, senior vice president and chief medical officer of Express Scripts, said during a pre-meeting session of AMCP Managed Care & Specialty Pharmacy Annual Meeting 2016.

Dr Miller sat on a panel to discuss the future of specialty pharmacy during Specialty Pharmacy Connect, which convened on April 19, just ahead of the full annual meeting.

Phil Hagerman, RPh, CEO and chairman of Diplomat Pharmacy, echoed Dr Miller’s comment and kicked off the panel by explained that the landscape specialty pharmacy is interesting and competitive in a way that isn’t seen in other industries.

Importantly, specialty pharmacy is being led by the drug pipeline, he said, and oncology drugs are the leader in the space, accounting for close to 50% of the drugs currently in development. While other disease states may have once been a bigger concern regarding cost, because they had larger populations, oncology has a large number of drugs and orphan drugs coming to the market, he explained. And with breakthrough status, orphan drug status, and priority drug review vouchers, more of these drugs will be brought to the market faster.

Hagerman described drug launch years as a wine vintage: the cost is not necessarily in that first year. For example, at Diplomat in 2013, only 5% of sales came from drugs launched in 2013. In 2014, more than 20% of sales came from drugs launched in 2013. The challenge is that not only new drugs are driving spending. In addition, drugs that were launched earlier than 2013 grew by 50% over a 2-year period of time for Diplomat.

“So you’ve got a lot of old, established drugs in specialty still taking market share as new indications come out for those drugs, and you’ve got the new drugs driving tremendous profit,” he said. “It’s kind of a double whammy in healthcare here."

He finished his talk by discussing limited distribution, which he said is here to stay because it gives manufacturers the opportunity to control the patient experience in a way it hasn’t been able to since the clinical trial.

Jeff Henderson, BA, vice president of managed markets at Intarcia Therapeutics, also discussed limited distribution as a positive force. These limited distribution networks are leading to manufacturers working with specialty partners and payers on risk-based contracts.

“Working through specialty pharmacy as a manufacturer probably brings us closer to the patient than we as a manufacturer have been since we conducted our clinical trials to get our drug approved,” he said.

As he looked to the future, Henderson highlighted integrated delivery networks (IDNs), which have been around for a while, but they are evolving in their level of sophistication, use of technology, and as a result of factors like accountable care and quality measures.

“We as manufacturers, as the healthcare marketplace evolves, are being asked to demonstrate value, demonstrate cost effectiveness, demonstrate outcomes, and demonstrate whether we can help with some of these dynamics that are taking place in the marketplace,” he said. “For example, alternative payment models.”

Dr Miller rounded out the session by discussing cost and the need for innovation.

While the rising cost of specialty pharmacy drugs has been held at bay through the ability to shift other patients onto generic drugs, the industry is reaching the end of that generic drug wave. To combat this, there needs to be a more holistic approach to specialty pharmacy patients.

In addition to taking the time to talk about how Express Scripts pitted pharmaceutical manufacturers against one another to negotiate lower prices for hepatitis C drugs and save $1 billion in just 1 year, Dr Miller outlined a new way to reimburse drugs.

He used the example of Tarceva, which can extend life for a patient with lung cancer by 4.2 months, but can only extend life by 12 days for someone with pancreatic cancer.

“Would you have paid the same price for a product that worked one-tenth as well?” he asked.

With help from Steven D. Pearson, MD, MSc, president of the Institute for Clinical and Economic Review, and Peter Bach, MD, MAPP, from Memorial Sloan Kettering Cancer Center, a new reimbursement model is being developed that looks at innovative ways to reimburse not just at the drug level but at the indication level.

“The future for specialty pharmacy is not just ‘are we going to use data better’? Not just taking better care of patients…” he said. “But rather we all have to innovate together to bring the field where it needs to go and create a sustainable situation for our patients.”