Thursday, May 14, 2015

Employers See Differences Between Specialty and Retail Pharmacy...For Now

The Pharmacy Benefit Management Institute (PBMI) recently released its 2015 PBMI Specialty Drug Report. (Free download with registration.) The report provides insights about how employers view specialty drugs covered under medical and pharmacy benefits.

The results illustrate why payers limit and manage the pharmacies eligible to dispense specialty medications. Most employers believe that specialty pharmacies have better clinical services than retail pharmacies. Some employers, however, consider retail pharmacies’ capabilities to be comparable to those of specialty pharmacies. See my summary chart below.

The PBMI survey questions imply that there is a clear distinction between dispensing formats. I expect, however, that retail/specialty comparisons will become trickier and more nuanced. Channel strategy will be all about these blurred lines.


PBMI collected survey data from employers, not pharmacy benefit managers (PBMs). Its 2015 specialty report includes responses from 366 employers, accounting for 23.5 million covered lives. See the Respondent Profiles section (pages 7-14) for details.

The data below come from the report’s table 36, on page 41. The answers to some questions changed significantly from last year’s survey. Unfortunately, this discrepancy appears to be at least partially an artifact of the sample design.

Here's why: PBMI supplemented its internal database with a purchased respondent panel of human resources (HR) decision makers. I presume that people on PBMI’s own lists are more generally interested in benefit management. Therefore, the new HR panel adds more generalist perspectives. Below, I highlight the differences from last year’s results.


The PBMI survey asked employers 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]


Employers are divided on which pharmacy format provides pharmacist interaction.

As you can see, there was no consensus on whether retail or specialty pharmacies provide patients with more pharmacist interaction. Given specialty pharmacies’ additional communication capabilities, I would have expected a stronger showing from that format.

This result, however, likely reflects the inclusion of HR generalists in the 2015 survey. In the 2014 survey, nearly 8 out of 10 employers perceived that specialty pharmacies provided more pharmacist interaction. I’m therefore skeptical that opinions have changed so dramatically. I conclude that the typical HR manager has a more favorable view of retail pharmacies as a channel for specialty products.

Specialty pharmacies are perceived to have lower prices.

This finding is consistent with external data from the PBMI’s companion 2014-2015 Prescription Drug Benefit Cost and Plan Design Report. As I show in The Newest Benchmarking Numbers on Retail and Specialty Pharmacy Reimbursement, employers paid 83% of Average Wholesale Price (AWP), i.e., “AWP minus 17%,” as the ingredient cost reimbursement for a specialty drug prescription dispensed by a specialty pharmacy. By contrast, employers report paying 84% of AWP, i.e., “AWP minus 16%,” as the ingredient cost reimbursement for a 30-day retail brand-name prescription.

Most employers perceive that specialty pharmacies have better clinical programs.

In this year’s survey, 57% of employers favored specialty pharmacies. Specialty pharmacies pride themselves—and base their accreditation—on such programs and services.

As I discuss in New Details on CVS Health’s Specialty Connect Program, many specialty-at-retail programs are designed to address the perceived deficiencies in a retail pharmacy’s clinical capabilities. CVS Health’s Specialty Connect program provides back-end clinical services and care management, regardless of dispensing channel. Diplomat Pharmacy offers a similar strategy to non-affiliated pharmacies via its Retail Specialty Network (RSN) program.

Note that this question also produced a significant discrepancy compared with last year’s results, which showed greater perceived comparability between retail and specialty pharmacies. The proportion of “not sure” responses dropped sharply, from 30.1% in 2014 to 5.0% in 2015.

Retail drugstores are believed to provide better access to copayment programs.

This finding, which is consistent with last year’s survey, probably results from the actions of central-fill pharmacies, which usually block copay offset programs. However, opinions on these programs are changing, because some consumers are being asked to pay a greater share of prescription costs for more-expensive specialty drugs.

In 2014, about 37% of specialty pharmacy prescriptions used a copay offset program, although usage varied dramatically among therapeutic classes. See Co-Pay Offset Programs Are Blooming in Specialty Pharmacy.


As I noted Tuesday in Specialty Pharmacy’s Bright but Complex Future, the specialty gold rush is on. Retail pharmacies are using multiple approaches to compete for the business of dispensing specialty drugs. These approaches include:
  • Building internal specialty pharmacy services
  • Utilizing retail locations
  • Outsourcing specialty pharmacy services
  • Acquiring a specialty pharmacy
  • Joining a specialty network services alliance
For full details, see Section 3.3 in our 2014-15 Economic Report on Retail, Mail, and Specialty Pharmacies.

Going forward, will employers be able to get up, get up, get up and recognize a clear distinction between retail and specialty pharmacy?

P.S. For obvious reasons, I have omitted a video of Robin Thicke singing about the pharmacy industry. If you dare, click here for the PG-rated (but still pretty much NSFW) “Blurred Lines” video. Yes, it's #tbt! (Ask your kids what that means.)

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