Tuesday, February 11, 2014

Employers Pick Specialty Pharmacies Over Retail Drugstores—For Now

The Pharmacy Benefit Management Institute (PBMI) has just released its 2014 PBMI Specialty Drug Report. (Free download.) The report is stuffed with fascinating insights about how employers view specialty drugs covered under medical and pharmacy benefits.

I was struck by the results on employer perceptions of pharmacy outlets for specialty drugs. Employers think specialty pharmacies provide better pharmacist access and lower costs. However, they also think retail pharmacies are comparable for clinical services—and that surprised me.

The specialty/retail pharmacy distinction is blurring, because many drugstores are chasing the specialty market opportunity. (See Chapter 8 of the new 2013-14 Economic Report on Retail, Mail, and Specialty Pharmacies and The Explosion in Accredited Specialty Pharmacies.) Perception may not match reality, but expect these comparisons to become more common.


PBMI collects survey data from employers, not pharmacy benefit managers (PBMs). Its 2013-14 specialty report includes responses from 337 employers, with 14.3 million covered lives.

PBMI presents the results by employer size. It defines smaller employers (36.5% of respondents) as having up to 5,000 lives (employees plus dependents). It defines larger employers (63.5%) as having more than 5,000 lives. The Respondent Profiles section (pages 7-11) highlights some important differences in how these different groups manage drug benefits.

For report collectors, this new edition complements PBMI’s 2013-2014 Prescription Drug Benefit Cost and Plan Design Report, which I discussed on Drug Channels in Benchmarking Manufacturers' PBM Rebates.


Respondents were asked whether specialty pharmacies are “better,” “worse”, or “equal” to retail pharmacies on four metrics:
  • Ability to Interact with a pharmacist
  • Unit price
  • Clinical programs
  • Access to copayment assistance programs
A minority of respondents answered “not sure,” so I dropped them to create the summary chart below.

[Click to Enlarge]

  • Specialty pharmacies are perceived as giving patients more pharmacist interaction. This makes sense, since specialty pharmacies focus intensely on patient communication, typically with a care team available 24/7 via telephone or email.
  • Specialty pharmacies are also perceived as having lower prices. This is consistent with external data showing larger Average Wholesale Price (AWP) discounts for specialty pharmacies. Commercial health plans pay 82.9% of AWP, i.e., “AWP minus 17.1%,” as the ingredient cost reimbursement for a specialty drug prescription that a specialty pharmacy dispenses. Retail pharmacies receive slightly more, at 84.0% of AWP. See The Latest Data on Specialty Pharmacy Reimbursement
  • Surprisingly, about one-third of employers perceive that clinical programs are comparable at specialty and retail pharmacies. Specialty pharmacies pride themselves—and base their accreditation—on these programs and services. New programs, such as CVS Caremark’s Specialty Connect, will further blur the lines between specialty and retail. This topic had a very high proportion of “not sure” responses (30.1%), so perhaps employers don’t feel qualified to truly judge this metric.
  • Retail drugstores are seen as better at providing access to copayment programs. This finding probably reflects central-fill mail pharmacies usually blocking copay offset programs. Some PBMs, however, are starting to embrace them. As I suggest in How the Fourth Tier Coinsurance Boom Drives Copay Offset Programs, copayment offset programs for specialty drugs are becoming a roundabout way for payers to extract discounts from pharmaceutical manufacturers.
Which format will eventually win the hearts of employers and other payers?

P.S. Speaking of Valentine's Day, this Friday is the last day of discounted pricing on the new 2013-14 Economic Report on Retail, Mail, and Specialty Pharmacies. What could be more romantic? ;)

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