NCPA Executive Update

NCPA Executive Update delivers insights on legislative, regulatory, policy, and industry developments from NCPA CEO B. Douglas Hoey, Pharmacist, MBA, to NCPA members and pharmacy leaders every Friday.

Without Specialty, You May Be Out of Business… | NCPA Executive Update | June 30, 2017

by NCPA | Jun 30, 2017

Dear Colleague,

Doug Hoey

While there are plenty of headlines to the contrary, in some ways most prescription drugs – despite actions by PBMs that raise prescription drug costs – are more affordable than ever. Only about 10% of health care costs come from prescription drugs. Generic drugs make up only 2.7% of the costs (though they make up 90% of outpatient prescriptions) and brand drugs make up only 7.3% of all of health care costs. Most drugs are cheap, and could be even less expensive without the additional fees added by middlemen — but a few exceptions are skewing the entire market.

Those exceptions are mostly considered “specialty” drugs, although there is no standard definition of what is and what is not a specialty drug – which is a whole different topic and don’t get me started on that one. I’ve covered that topic in previous EUs and will again a different time. All of the top five drugs by invoice spending in the U.S are considered specialty or biologic drugs. Fortunately, retail pharmacies still usually have access to those medications, but just those five drugs account for about $1 of every $10 spent. Or to put it another way: If your pharmacy is missing out on just those five drugs, on average your top-line revenue is 10% lower than it could be!

Here’s another relevant fact from QuintilesIMS: "Overall, 2015 saw a 21.5% spending increase for specialty medicines to $150.8 billion on an invoice price basis." That means that specialty prescriptions, while only a fraction of the number of prescriptions dispensed, represent nearly 40% of the dollars spent on prescriptions.

Your pharmacy has to be able to play in the specialty pharmacy marketplace. Because of numerous obstacles, that’s easier said than done. Those include:

  • Reimbursement on specialty drugs is especially low and slow.

  • Cash flow is an issue.

  • Audits are a concern.

  • Patients often need special assistance to bill for their prescriptions.

  • Most state Medicaid NADAC plus reimbursement formulas put pharmacies upside down when it comes to specialty medications.

  • Health plans encourage steering patients into their own mail order pharmacy or into the mail order pharmacy of the PBM with which they've partnered.

  • And PBMs, in the unique and anti-free market position of price-setter and price-taker, are erecting hurdle after hurdle in the name of "quality," but what is more likely a thinly veiled effort to discourage competitors from entering the market or hanging around.

While there are plenty of challenges, community pharmacists are uniquely qualified to take care of specialty patients who are often dealing with life-or-death conditions. Community pharmacists make sure they have the care they need for their personal circumstance. The local networks forming through CPESN (Community Pharmacy Enhanced Services Network) are one opportunity for independent pharmacies to assert themselves in specialty care.

This marketplace is just too big for community pharmacy to be shut out. So what to do?

NCPA’s Annual Convention in October will include a focus on specialty – a 3-hour session that will examine the business of specialty medications and how you can position your pharmacy for success:

  • Specialty Pharmacy: A Data-Driven Success Story
    Part I: Candid talk with peers on where they are, and a focus on what you need to succeed.
    Part II: The focus of this session is on the why and how of collecting data to tell your pharmacy’s story and build your value package as a partner in specialty. Hear insights from peers who have achieved success with this complicated, worthwhile niche.

  • Specialty Pharmacy: Talk the Marketing Talk
    Prescriptions for specialty medications aren’t just going to walk through your front door. To grow a specialty pharmacy niche, you’ll need to market your ability to fulfill orders and provide top-level care for patients. This session is about how to use your data to tell a compelling story to prescribers and patients. Get best practices, insider tips, and practical differences of specialty pharmacies.

Specialty prescriptions are complicated, but worth it. Make sure you are in the business … because without them? Well … you may be out of business.

Doug Hoey

P.S. Have a happy "Independents" Day! The next Executive Update will appear July 14.