Tuesday, April 23, 2019

The Specialty Pharmacy Boom: Our Exclusive Update on the U.S. Market

It’s time for Drug Channels Institute’s annual update of the number of U.S. specialty pharmacies.

As always, I had outstanding research assistance. (See photo at right.) But even we can’t count the total number of pharmacies dispensing specialty drugs, since any pharmacy can designate itself a specialty pharmacy.

We therefore counted every pharmacy location that had achieved accreditation by an independent organization.

Our exclusive findings:
  • As of the end of 2018, more than 900 unique pharmacy locations had achieved specialty pharmacy accreditation from one or more of three major independent accreditation organizations. The 2018 figure marks a 25% increase over the 729 locations in 2017 and is more than double the 2015 figure.
  • Pharmacy locations owned by healthcare providers—hospitals, health systems, physician practices, and providers’ group purchasing organizations—now account for more than one-quarter of all accredited specialty pharmacy locations.
Enjoy more of our arithmomania below. It will help explain why you’ll count more people than ever at next week’s Specialty Pharmacy Summit 2019. Drug Channels Institute will be there, so please say hello, e.g. “Greetings, it is I, a Drug Channels reader.”

LET’S COUNT, COUNT!

This post is adapted from Chapter 3 of our new 2019 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers.

Three primary organizations offer accreditation for specialty pharmacies:
You can find information on our methodology at the bottom of this article.

ONE PHARMACY, TWO PHARMACIES…AH AH AH AH AH!

As of the end of 2018, we had identified 911 unique pharmacy locations that had achieved specialty pharmacy accreditation from ACHC, CPPA, and/or URAC. (See the chart below.) The 2018 figure marks a 25% increase over the 729 locations in 2017 and is more than double the 2015 figure.

[Click to Enlarge]

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 606 locations that were accredited by only one of the three organizations, an increase of 56 locations (+10%) from the previous year’s figure.
  • There were 305 pharmacy locations accredited by two or more of the three organizations, an increase of 126 locations (+70%) from the previous year’s figure.

HOSPITALS ARE BATTY FOR SPECIALTY PHARMACY

Pharmacies that compete to dispense specialty therapies are owned by a diverse set of organizations. These pharmacies are operated by pharmacy benefit managers, retail chains, health plans, pharmaceutical wholesalers, physician practices, hospital systems, and other organizations. There are also many independent specialty pharmacies.

The chart below quantifies this diverse specialty market participation by categorizing, per corporate ownership, the share of unique locations with specialty pharmacy accreditation based on ownership.

[Click to Enlarge]

Observations:
  • Less than half of all accredited specialty pharmacy locations are independently owned businesses. This category includes 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.
  • The second-largest category was specialty pharmacies owned by hospitals, health systems, physician practices, and providers’ group purchasing organizations. Since 2015, this category has more than doubled as a share of accredited specialty pharmacy locations.

    For a deeper dive into providers’ specialty pharmacies, see sections 3.3.5. and 3.3.6. of our 2019 pharmacy/PBM report. Exhibit 50 shows Drug Channels Institute’s revenue estimates for 10 of the largest specialty pharmacies owned by health systems and hospitals.
  • Location data do not correspond with the market share of specialty prescriptions or specialty dispensing revenues. As we show in The Top 15 Specialty Pharmacies of 2018: PBMs Keep Winning, PBMs and insurers dominate specialty drug dispensing channels. The top four companies—all of which are fully or partly owned by a PBM—accounted for more than 70% of prescription revenues from pharmacy-dispensed specialty drugs.
COMMENTS FOR COUNTS

A few notes 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. We have identified these locations based on the pharmacy’s address.
  • 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., 3.2.2., and 3.3.1. of our 2019 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers.
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