Larry and Robert Irene outdid themselves with this 10th annual event, which had an astounding 3,000+ attendees. All facets of the industry were represented, making for top-quality networking and meetings. (Loved the lounge, BTW.) And the Wynn, my favorite Vegas hotel, never disappoints.
As usual, the meeting shed light on where the specialty market is heading. In violation of Vegas code, I'll tell you what happened there … or at least the part related to specialty pharmacy. Read on for my seven trends for specialty pharmacy's future, plus a bonus photo of me with two notable conference attendees.
SEVEN TRENDS YOU CAN BET ON
1) The specialty pharmacy gold rush is on. “Specialty pharmacy” is a business decision—not a regulatory or statutory definition. Thus, Armada’s attendance has exploded, along with the competition for dispensing specialty drugs. The players include pharmacy benefit managers, retail drugstore chains, health plans, pharmaceutical wholesalers, physician practices, hospital systems, and independent specialty pharmacies. At the summit, I met people from all of these organizations. For more on the factors driving the growth, see Chapter 8 of the 2013-14 Economic Report on Retail, Mail, and Specialty Pharmacies.
2) Manufacturers are all in. At the summit, pharmaceutical manufacturers had a bigger presence than ever before. Manufacturers’ specialty pipelines drew people from many functional areas—trade, managed markets, payer marketing, brand marketing, and others. (As I discuss below, manufacturers’ uncertainty about organizational structure also boosted attendance, by drawing people from so many diverse areas.) This year, Armada cemented its reputation as the key destination for manufacturers’ specialty account management activities. I wonder if the traditional pharmacy trade associations regret having ceded to Armada the specialty market access and trade meetings.
3) Specialty pharmacies are specializing. Smaller specialty pharmacies have traditionally focused on open distribution drugs in such therapeutic categories as hepatitis C, multiple sclerosis, HIV, and transplant. Given growing competition, these smaller players are focusing on differentiating themselves so that they can access limited distribution products. Some are emphasizing a geographic niche, by partnering with regional insurers, hospitals, and health systems. Others are using disease-state expertise.
Smaller specialty pharmacies are also strongly emphasizing their self-professed service advantages over the largest players (especially Accredo, Caremark, and Walgreens). My hallway conversations, however, reinforced some specialty pharmacies’ service quality challenges, as I have shared on Drug Channels in Health Plans Get No Satisfaction From Specialty Pharmacies and Employers Pick Specialty Pharmacies Over Retail Drugstores—For Now.
4) The battle to control the patient journey is intensifying. Every specialty market player wants to lead patient care services. At this year’s Armada conference, newer market entrants—health systems, physicians, technology companies, retailers, and others—all argued for a more prominent strategic patient role. Meanwhile, the long-running services tug-of-war between hub providers and specialty pharmacies is escalating. Some specialty pharmacies are launching their own hubs. These developments will challenge the conventional wisdom about channel design and force manufacturers’ commercial strategies to evolve.
5) Manufacturers are being forced to rethink network strategies. Most pharma manufacturers limit the number of specialty pharmacies authorized to dispense their specialty products. This helps to ensure appropriate, high-quality care to patients taking specialty drugs. The expanding specialty dispensing alternatives, however, are challenging this typical approach. Market participants with formulary or prescribing influence—PBM-owned specialty pharmacies, large health systems, and community oncology practices—are demanding access to limited networks. Newer specialty drugs are launching with networks of 15 to 20 pharmacies, vs. 5 to 8 pharmacies a few years ago. Expect networks to become even larger and more inclusive.
6) Manufacturers aren’t sure how to organize for the specialty market. As many readers know, I consult exclusively with biopharmaceutical manufacturers. Many of these companies are struggling with organizational structure. For example: Who should lead interactions with specialty pharmacies? Some manufacturers have a unified approach. Others share account management responsibility, often depending upon each pharmacy’s corporate ownership—PBM, payer, retailer, health system, etc. Still others are experimenting with various team account models. (For the record, I’m in favor of a more consistent, unified structure, but that’s not a subject for Drug Channels.) The need for a sound structure will become even more critical, given larger networks, specialty pharmacies’ diverse corporate ownership, and the growth of organized customers.
7) Many retail pharmacy owners still don’t get it. Despite the summit’s record attendance, I encountered surprisingly few retail pharmacy owners. The well-known retail chains with specialty investments were there, along with many smaller specialty pharmacies that trace their roots to traditional independent pharmacy. Why weren’t there more attendees from the 20,000+ independent pharmacies? Just my $0.02, but they could have helped themselves better position for the pharmaceutical industry’s specialty future. Many seem to prefer complaining about PBMs, MACs, and wholesaler pricing.
These seven trends are just the beginning. Other hot topics at this year’s Armada summit included specialty drug pricing, the hepatitis C market and Sovaldi, payers’ benefit management strategies, distribution channels, co-pay offset programs, the 340B drug discount program, site of care management, biosmilars, and more.
A PEEK BEHIND THE CURTAIN
“You wouldn’t like Armada, honey. It’s just a bunch of boring meetings.” – me, before my wife Paula joined me at this year’s summit
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P.S. Special thanks to the many enthusiastic Drug Channels readers who introduced themselves. I particularly enjoyed the group at the craps table who, after recognizing me late one night, chanted my name as I rolled. Alas, my blogging is better than my dice work.