Tuesday, April 10, 2018

EXCLUSIVE: A Record Number of Specialty Pharmacies Now Have Accreditation

It’s time for Drug Channels Institute’s annual update on the accreditation of specialty pharmacies.

Our spooky research team (pictured at right) is back! We have counted every pharmacy location that has achieved accreditation by an independent organization. Our exclusive findings:
  • The number of specialty pharmacies with accreditation expanded again in 2017. We identified 729 unique pharmacy locations that by the end of 2017 had achieved accreditation from the three major independent accreditation organizations. The 2017 figure is almost double the 2015 figure.
  • For the second consecutive 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 below for the complete details of our exclusive analysis. Notes for fellow arithmomaniacs are in the final section.

Pharmacies that compete to dispense specialty therapies are owned by a diverse set of organizations: pharmacy benefit managers (PBMs), retail chains, health plans, pharmaceutical wholesalers, physician practices, and hospital systems. There are also many independent specialty pharmacies. The battle for control of the specialty market is accelerating, though PBMs continue to dominate the market as channels narrow.


This post is adapted from Chapter 3 of our new 2018 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers.

It is impossible to count the number of pharmacies that dispense specialty drugs, since any pharmacy can designate itself a specialty pharmacy. Furthermore, some specialty products are in open distribution and can be dispensed by any licensed pharmacy.

A useful proxy for the number of active specialty pharmacies comes from our analysis of pharmacy locations that have achieved accreditation by an independent organization. These accreditation organizations help pharmacies develop and verify their capabilities to manufacturers and third-party payers.

Three primary organizations offer accreditation for specialty pharmacies:
Note that the major accreditation organizations have similar but not identical standards. Many PBMs require that pharmacies dispensing specialty drugs have accreditation from one or more organizations.


We identified 729 unique pharmacy locations that had achieved specialty pharmacy accreditation from ACHC, CPPA, and/or URAC. (See the chart below.) The 2017 figure represents a 46% increase over the 499 locations in 2016 and is almost double the 2015 figure.

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Our methodology accounts for the fact some pharmacy locations have accreditation from more than one organization. We have identified these locations based on the pharmacy’s address. There were 550 locations that were accredited by only one of the three organizations (URAC, ACHC, and CPPA). There were 179 pharmacy locations accredited by two or more of the three organizations. For further details on our approach, see the Comments for Counts below


The chart below quantifies specialty market participation by categorizing the 729 unique locations from the chart above with specialty pharmacy accreditation based on ownership.

[Click to Enlarge]

Our observations:
  • About half of all accredited specialty pharmacy locations are independently owned businesses, including private independent pharmacies, pharmacies owned by private equity firms, and independently owned franchise locations. The remaining locations are owned by healthcare providers, retail and long-term care chains, PBMs and health plans, and wholesalers.
  • For 2017, the second-largest category was specialty pharmacies owned by hospitals, health systems, physician practices, and providers’ group purchasing organizations. For the second consecutive year, pharmacy locations owned by healthcare providers were the fastest-growing category, adding 98 total accredited locations. About half of this increase came from 44 newly accredited AHF Pharmacy locations of the AIDS Healthcare Foundation, the largest provider of HIV/AIDS medical care in the United States.

Despite the diversity of industry participants, the top four specialty pharmacies are all owned or co-owned by a PBM. They accounted for about two-thirds of prescription revenues from pharmacy-dispensed specialty drugs. See The Top 15 Specialty Pharmacies of 2017: PBMs and Payers Still Dominate.

Meanwhile, smaller specialty pharmacies, physician offices, and health systems often struggle to access specialty medications within payer and PBM networks. They are accepting lower reimbursements to participate in payers' networks and paying per-prescription direct and indirect remuneration (DIR) fees. Slowing industry growth is accelerating the competitive pressure.

The specialty boom continues to reshape pharmacy market competition. Unfortunately, not everyone will get to the street where the air is sweet.


A few comments on our approach:
  • Our analyses are based on data that we independently gathered from the three accreditation organizations.
  • We analyzed pharmacy locations, not the number of companies. Many specialty pharmacy businesses have multiple locations, each of which is counted separately.
  • Some pharmacies seek accreditation from more than one organization. We accounted for potential double-counting when computing the total number of unique pharmacy locations with specialty pharmacy accreditation.
  • The data exclude locations with provisional, conditional, and expected accreditation.
  • Both ACHC and CPPA also accredit certain individual pharmacy locations within chains. These locations are accredited if they are “spokes” associated with a specialty pharmacy services hub within the chain. We excluded the individual spoke locations from our analysis to maintain comparability when counting the number of accredited specialty pharmacies.
For further details on our methodology, see sections 3.1.3. and 3.2.2. of our pharmacy and PBM report .

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