Friday, September 01, 2017

The State of Specialty Pharmacy 2017: Reflections from #Asembia17 (rerun)

This week, I’m rerunning some popular posts while I work on the forthcoming 2017-18 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors. Click here to see the original post and comments from May 2017.

FYI, Asembia's 2018 Specialty Pharmacy Summit will be held on April 29 to May 2, 2018.



Last week, Paula and I had the pleasure of attending Asembia’s 2017 Specialty Pharmacy Summit in Las Vegas, itself the summit of spectacle. We even met a new friend, as you can see from the photo on the right.

The Specialty Pharmacy Summit remains the most important forum for conducting business in the specialty marketplace. More than 5,000 people learned, networked, and connected at the wonderful Wynn Las Vegas. Thanks to Larry and Robert Irene for creating an annual event that brings the entire industry together. Click here to enjoy the social media action from #Asembia17.

Today marks the seventh year that I will violate Vegas code and tell you what happened there. Below, I offer reflections on key specialty industry trends, DIR fees, patient satisfaction controversies, and a link to the Featured Session slides. You’ll also find a few incriminating photos! Please add your own observations and photos to the comments section below.

ADAM’S REFLECTIONS ON SPECIALTY PHARMACY IN 2017

1. Asembia’s Specialty Pharmacy Summit is a must for everyone in the specialty industry.

The 2017 Summit was bigger than ever, with more than 5,000 attendees. The largest manufacturers, wholesalers, pharmacies, and PBMs all sent dozens of representatives. Some companies brought more than 50 people. As usual, there were also thousands of attendees from smaller pharmacies, health systems, service providers, technology companies, investors, and more.
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Last year, I noted that some large PBMs tried to avoid the event. But this year, as I predicted, they had no choice but to capitulate and attend the meeting.

Another reason for the event’s scope: No one knows how to throw a party better than Robert and Larry Irene! This year’s Summit benefitted from three major social events. Each evening provided an ideal opportunity to catch up with old friends and make new ones.

The Encore Beach Club party was a phenomenal networking gala—and surely the best party that I will attend in 2017. Asembia pumped up the Vegas glamour with such inspired whimsy as a talking wall. (Yes, really. See Paula feeding the wall in the photo at right.) I have no idea how they will top themselves next year.

2. LIVE with Adam, Doug, and Eric!

I had the honor of kicking off the Summit on Monday with the Featured Session Specialty Pharmaceuticals and Pharmacy: Today, Tomorrow and Beyond. I was joined by Doug “The Numerator” Long from QuintilesIMS and Eric “Commando” Percher from Barclays.

Here we are having fun on stage!

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Click here to download the full slide deckWe made our slides available in real time at the conference via @DrugChannels.

3. Specialty pharmacy is growing up.

In my talk, I outlined the crucial themes driving the specialty pharmacy industry. I concluded with the following implications and predictions:
  • PBMs, pharmacies, wholesalers, health plans, and providers will battle for control of the specialty market and the patient journey.
  • Manufacturers’ specialty networks will become larger and more inclusive.
  • Channel control will continue migrating from manufacturers to PBMs and payers.
  • Coevolving economics will consolidate specialty pharmacies.
  • Organized channels—new ownership and partnering relationships—will emerge.
Some of these trends are already playing out. Throughout the Summit, pharmacies of all types pitched manufacturers to gain access to limited dispensing networks.

4. Specialty pharmacies will need to resolve their economic challenges.

Throughout the meeting, specialty pharmacies requested additional financial support from manufacturers. Complaints ranged from wholesalers’ new pricing terms to the actions of pharmacy benefit managers (PBMs).

The touchy subject of Direct and Indirect Remuneration (DIR) fees was a hot topic among independent specialty pharmacies. Many specialty pharmacies asked manufacturers for financial support to offset the impact of these fees.

Specialty pharmacies expressed two primary concerns with these fees:
  • Some DIR fees are computed as a percentage of a drug’s ingredient cost. When computed in this way, a DIR fee can absorb a significant portion of a prescription’s gross profit.
  • DIR fees may be computed using quantitative performance criteria that are irrelevant to specialty pharmacies. For example, a specialty pharmacy’s DIR fee could be based on generic dispensing rates or adherence to non-specialty hypertension medications.
I’m sympathetic to the specialty pharmacies’ financial pain. However, manufacturers were rightly skeptical about requests for financial relief. After all, what’s to stop a pharmacy from simply passing on (or being forced to pass on) a manufacturer’s extra payments back to a plan? This is precisely the buy-side dilemma that wholesalers have created for themselves.

DIR fees are embedded in contracts between a PBM and a pharmacy or the pharmacy’s PSAO. From what I heard, many manufacturers expressed a belief that the solution should therefore be negotiated by the relevant parties in the transaction: pharmacies and PBMs.

I suspect that we will also see specialty pharmacies develop a newfound fondness for operating efficiency.

5. Everyone wants to be a specialty pharmacy—especially health systems.

As I describe in Section 3.3.5. of our 2017 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers, many hospitals and health systems are pursuing specialty pharmacy dispensing revenues.

Their presence was even more prominent this year. Pharmacy locations owned by healthcare providers—such as hospitals, health systems, physician practices, and providers’ group purchasing organizations—were the fastest-growing category of accredited specialty pharmacies. See The State of Specialty Pharmacy Accreditation in 2017.

Factors pushing this expansion include hospitals’ and health systems’ desires to:
  • Provide more integrated, comprehensive care for patients with complex, chronic conditions that are typically treated with specialty medications.
  • Integrate specialty pharmacy services with Accountable Care Organizations (ACOs) and/or engage in risk-based contracting with third-party payers.
  • Generate substantial profits by acquiring discounted specialty drugs under the 340B Drug Pricing Program. (Sound familiar?)
At Asembia, there was also a growing ecosystem of consultants and other service providers that aim to help hospitals and health systems set up specialty pharmacies.

Alas, payers don’t consider hospitals to be cost-effective sites of care and continue to favor PBM-owned specialty pharmacies. According to the latest EMD Serono Specialty Digest (which was released at Asembia), 50% of health plans use a single specialty pharmacy provider. Health systems are therefore struggling to penetrate manufacturer-defined limited specialty pharmacy dispensing networks.

6. Patient satisfaction winners named amid controversy

A hearty congratulations to the winners of the Specialty Pharmacy Patient Choice Award from Zitter Health Insights and Specialty Pharmacy Times! As I noted in our March news roundup, I served on the awards committee. I also attended the awards luncheon, which thankfully featured no La La Land goofups.

US Specialty Care won the PBM/Payer Specialty Pharmacy category. PANTHERx Specialty Pharmacy won the Non-PBM/Payer Specialty Pharmacy category.

The concept of a specialty pharmacy patient satisfaction survey was unexpectedly controversial. The National Association of Specialty Pharmacy (NASP) is mounting a competing patient satisfaction survey. However, I wonder if an association-sponsored survey can be neutral when it comes to PBM/Payer and other types of specialty pharmacies. NASP seems to be focusing on the interests of independent specialty pharmacies. I also doubt that NASP would publish any results that showed its founding members were underperforming. More to come on this intra-industry kerfuffle.

A CLOSING THOUGHT

At this year’s meeting, I found that many of my observations and predictions from last year’s meetings are still relevant. Refresh your memory with The State of Specialty Pharmacy in 2016: Reflections from #Asembia2016.

Thanks to the many Drug Channels readers who introduced themselves at the summit. I appreciate your words of encouragement and support. Even more flattering: A surprising number of people asked for selfies with me during the Summit. Perhaps a few brave souls will post the photos below?

Paula and I are grateful that Drug Channels remains useful and valuable to people throughout the industry. See you at #Asembia18.

Viva Las Vegas!

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