retail, mail, and specialty pharmacies dispensed about $98 billion in specialty pharmaceuticals. Though market share was concentrated among the top companies, even I can’t count the total number of pharmacies dispensing specialty drugs, since any pharmacy can designate itself a “specialty pharmacy.”
A useful proxy for the number of active specialty pharmacies comes from our exclusive analysis of the two primary pharmacy accreditation organizations. We found nearly 400 pharmacy locations than had specialty pharmacy accreditation. As the second chart below shows, the number of accredited specialty pharmacies is still booming.
Specialty pharmacy accreditation is becoming the promised land for pharmacies that want to participate in the networks developed by manufacturers and third-party payers. As more pharmacies can prove that they are special, will that mean that no one is?
I'VE BEEN WORKING REAL HARD
Chapter 3 of our new 2016 Economic Report on Retail, Mail, and Specialty Pharmacies analyzes specialty drugs and specialty market participants. Pharmacies dispensing specialty drugs are operated by such organizations as pharmacy benefit managers, retail chains, health plans, pharmaceutical wholesalers, physician practices, and hospital systems. There are also many independent specialty pharmacies.
This diversity reflects that fact that any pharmacy can focus its business on self-administered specialty pharmaceuticals covered under a patient’s pharmacy insurance benefit. Furthermore, some specialty products are in open distribution and can be dispensed by any licensed pharmacy. As the Valeant-Philidor Rx darkness on the edge of town revealed, even pharmacies that don’t dispense specialty drugs can pretend to be specialty pharmacies.
TRYING TO GET MY HANDS CLEAN
Accreditation measures a pharmacy’s capabilities and performance on such metrics as business management, pharmacy operations, patient care, and other items. Accreditation helps define specialty pharmacy services and creates a pathway by which any pharmacy can build specialty pharmacy capabilities. Independent accreditation organizations help pharmacies develop and verify their capabilities to manufacturers and third-party payers.
The two major specialty pharmacy accreditation organizations are the Utilization Review Accreditation Commission (URAC) and the Accreditation Commission for Health Care (ACHC). Both URAC and ACHC also have other accreditations beyond specialty pharmacy.
In 2012, three pharmacy organizations—the American Pharmacists Association, the National Association of Boards of Pharmacy, and the American Society of Health-System Pharmacists—established The Center for Pharmacy Practice Accreditation (CPPA). In 2015, this new nonprofit organization published specialty pharmacy practice standards. CPPA has accredited very few pharmacies to date.
The major accreditation organizations have standards that are similar but not identical. Broadly, accreditation assesses a pharmacy’s structure, processes, and performance in four areas: (1) organization and administration, (2) pharmacy operations, (3) clinical management, and (4) quality reporting and improvement.
PROVE IT ALL NIGHT
Our proxy for the number of active specialty pharmacies comes from the two primary accreditation organizations. We downloaded each group’s full list of accredited locations and then painstakingly identified locations that appear in both lists. We excluded CPPA because all of its accredited locations already appear on the other lists.
As of January 2016, our exclusive analysis identified 378 unique pharmacy locations that have achieved specialty pharmacy accreditation from URAC and ACHC. (See chart below.) About one-quarter of these pharmacy locations are accredited by both organizations. The companies accredited by ACHC (but not URAC) are more likely to be independent specialty pharmacies that also have an infusion business.
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Almost 60% of all accredited specialty pharmacy locations are independently owned businesses. The remaining locations are owned by PBMs, healthcare providers, retail chains, and pharmaceutical wholesalers. See Exhibit 37 in our new report for a detailed breakdown (or just look at the pictures on the wall of Candy's room).
A proxy for growth in self-designated specialty pharmacies comes from the number of locations with URAC’s Specialty Pharmacy Accreditation, which began in 2008. The exhibit below shows the locations accredited in each year along with cumulative accreditations. By the end of 2015, 250 specialty pharmacy locations had achieved “Full Accreditation” from URAC. We project that this growth will continue, with total URAC accreditations reaching about 400 locations by the end of 2016.
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EVERYBODY'S GOT A HUNGER
The business of accreditation is now a fast-growing industry. This means accreditors are behaving as if they are profit-maximizing companies, even if they are notionally “non-profit.”
URAC appears to be growing its accreditation business faster than ACHC. But URAC also claims to have “created” pharmacy accreditation. In reality, ACHC accredited its first specialty pharmacy (Priority Healthcare) in 2000—eight years before URAC made its first accreditation. If dreams came true, oh, wouldn't that be nice.
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DCI’s research analyst moonlights in a band. (He tells me that I raised a Cain, whatever that means.) Click here if you can’t see the video.