Thursday, May 10, 2018

Reflections from #Asembia18: The State of Specialty Pharmacy 2018

Last week, Paula and I had the pleasure of attending Asembia’s 2018 Specialty Pharmacy Summit.

The Specialty Pharmacy Summit remains the most important forum in the specialty marketplace. This year, a record 6,500 people learned, networked, and connected in Las Vegas. It was another year of record attendance. (Here’s the official press release.) Drug Channels again salutes Larry and Robert Irene for sustaining and growing an annual event that unites the entire industry.

Today marks the eighth year that I will violate Vegas code and tell you what happened there.

Below, I offer reflections on the meeting and highlight key specialty industry trends. You’ll also find a link to the conference’s Featured Session slides and a few cool photos. Feel free to add your own observations and photos in the comments section below.


Asembia’s Specialty Pharmacy Summit is the undisputed champion for conducting business in the specialty marketplace.

In 2012, Phil Hagerman of Diplomat spoke at this conference, which was then known as the Armada Specialty Pharmacy Summit. I vividly recall his prescient words: “Specialty pharmacy is the new pharmacy.”

That’s why it’s no surprise that this year’s Specialty Pharmacy Summit was bigger than ever. The largest manufacturers, wholesalers, and pharmacies sent dozens of representatives. Many companies brought more than 50 people.

The major PBMs and their specialty pharmacies were also well represented, though they had tried to avoid the meeting just a few years ago. As usual, there were also thousands of attendees from smaller pharmacies, health systems, service providers, technology companies, investors, and more. Click here to enjoy the Twittertastic social media action from #asembia18.

Another sign of the times: Booths in the exhibit hall were packed! At some other industry meetings and expos, few people visit the exhibitors. See below for my comments on the growing presence of technology and services companies.

One minor complaint is a reduction in general networking events. Like many people, I spent much of the summit running between private meetings. I would have welcomed more conference-wide social events to catch up informally with our industry friends.

Good Morning, Asembia! (with Adam, Lisa, and Doug)

I had the honor of leading the event’s Featured Session, Specialty Pharmacy Industry Outlook: What’s Happened & What’s Ahead. I was joined by Doug Long from IQVIA and Lisa Gill from J.P. Morgan Securities.

We made our slides available in real time at the conference via this @DrugChannels tweet. You can download the full deck here:

Of course, I couldn’t resist a selfie from the stage!

[Click to Enlarge]


The specialty boom continues to drive the industry’s revenue growth, even as the specialty market is showing signs of a slowdown. Total prescription dispensing revenues from specialty drugs at retail, mail, long-term care, and specialty pharmacies reached $138 billion in 2017. Though pharmacy revenues from specialty drugs grew by nearly 9%, this growth rate marked a historical low. Meanwhile, specialty drugs are driving the integration of pharmacy and medical benefits.

In my Featured Session presentation, I analyzed the industry’s current reality and outlined crucial themes for the future. I concluded with five implications and predictions, which you can review on page 10 of the slide deck file.

Here are five additional observations, based on my conversations at the summit:
  • Specialty pharmacies are entering a period of intense competition that will reduce prescription profits. The economic challenges that I outlined in last year’s write-up have become even more intense. Independent specialty pharmacies are being squeezed by the lower reimbursements they accept to participate in benefit networks. They are also squeezed by per-prescription direct and indirect remuneration (DIR) fees and by wholesalers’ repricing strategies for specialty drugs. The slowdown in industry growth is accelerating the competitive pressure. We may be on the verge of a major shakeout.
  • Everyone is uncertain about the impact of copay accumulators. I highlighted the controversial copay accumulator adjustment in my talk. Throughout the meeting, I heard diverse opinions about whether and how much this ludicrous new benefit design would affect patients. Some payers tried to downplay the impact, while others acknowledged that in 2018 up to 10% of specialty patients might get hit. Specialty pharmacies are worried about being caught in the middle and the potential impact on patients and script volume.
  • Innovative technology solutions and specialty services are thriving. The complexity of insurance coverage and the specialty patient’s needs have prompted an amazing variety of novel technology and business solutions. The rate of innovation by industry incumbents also highlights why it would be challenging for any outsider to reinvent the specialty ecosystem. The Asembia crowd remains appropriately skeptical that external companies will “disrupt” everything. That’s why I concluded my remarks by noting: Amazon may—or may not—change everything.
  • Investors remain focused on the specialty market. By my count, this year’s meeting was attended by a record number of sell-side Wall Street analysts. Most of them wrote investor notes summarizing key themes for investors. Private equity investors also were well represented.

Thanks to the many Drug Channels readers who introduced themselves at the summit. I am gratified by your compliments and words of encouragement. Nonetheless, my children remain mystified as to why anyone would ask to take a selfie with me.

Paula and I are grateful that Drug Channels remains useful and valuable to people throughout the industry. See you at #Asembia19.

My message for 2018: Hit 'em with the Hein!

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