Thursday, January 30, 2014

The Explosion in Accredited Specialty Pharmacies

How many specialty pharmacies are there?

Surprisingly, even we can’t definitively answer this question. Any pharmacy can designate itself a “specialty pharmacy” if its business focus is self-administered specialty pharmaceuticals covered under a patient’s pharmacy insurance benefit.

Manufacturers and third-party payers therefore limit specialty pharmacy networks. That’s why accreditation is now a key tool for pharmacies that want to dispense specialty medications.

To measure specialty pharmacy growth, we crunched data from URAC, a leading independent accreditation company. As the chart below shows, the number of accredited specialty pharmacies is doubling every year. As of December 2013, there were 59 URAC-accredited companies operating 114 specialty pharmacy locations. We project that next year, those numbers will grow to 110 companies.

More specialty pharmacies and more competition mean channel strategy will be even more important than the Prime Directive. Fascinating.


A majority of the specialty drugs that pharmacies dispense to patients are sold via self-defined specialty pharmacies. However, any licensed pharmacy can dispense a specialty drug if the product can be purchased from a manufacturer or through an authorized wholesale distribution channel.

Most pharmaceutical 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. These networks typically contain 5 to 20 specialty pharmacies. Third-party payers may further limit the number of specialty pharmacies available to a beneficiary.


Enter independent accreditation organizations, which help a pharmacy develop and verify its capabilities to manufacturers and third-party payers. Accreditation thereby creates a pathway by which any pharmacy can build specialty pharmacy capabilities. In Chapter 8 of the new 2013-14 Economic Report on Retail, Mail, and Specialty Pharmacies, I describe how third-party accreditation is one of the six market factors increasing competition for specialty dispensing.

URAC is one of the most prominent accreditation organizations. According to the EMD Serono Specialty Digest (7th edition), more than two-thirds of health plans identify URAC as the most important third-party accreditation for a specialty pharmacy.

To quantify specialty pharmacy growth, we analyzed companies with “Specialty Pharmacy Accreditation” in the URAC Directory of Accredited Companies. Some companies have multiple locations. We use the “Accredited Since” field to determine the year of accreditation.


Our chart below shows the astounding growth in URAC-accredited specialty pharmacies.

[Click to Enlarge]

In 2008, only two companies—CuraScript (4 locations) and Optum Rx (2 locations)—had achieved “Full Accrediation.”

As of December 2013, 59 companies with 114 specialty pharmacy locations had achieved “Full Accreditation” from URAC. An additional 51 companies are “In Process” and will likely be accredited shortly.

Despite the accreditation boom, market share for dispensing specialty drugs remains highly concentrated—for now. (See New Drug Channels Institute Study Finds Three Companies Dominate Specialty Pharmacy, Identifies Key Trends Affecting Profitability.) The specialty industry is becoming much more competitive, which will compress margins for undifferentiated pharmacies.

Specialty pharmacy’s future? To boldly grow where no pharmacy has grown before! (Sorry, couldn’t resist.)

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