Transcript Retail and Specialty Pharmacy Opportunities for Health Systems

Retail and Specialty Pharmacy
Opportunities for Health Systems
Dana Darger, RPh
Retail Pharmacy & Specialty Pharmacy Defined
• Retail Pharmacy - a pharmacy in which
drugs are sold to patients, as opposed to a
hospital pharmacy. Also known as a
community pharmacy.
• Specialty Pharmacy
– “Just like retail pharmacy, but everything is
just more difficult”
– Barriers include obtaining the drug, cost of
drug, prior authorizations, payer lockout
Why?
• Take care of your patients
• Complete care helps to affect important
health system metrics (length of stay and
readmissions)
• In risk-based or accountable care payer
models, control stays with health system
• Financial opportunities
Prescription Process
• Health systems generate prescriptions
Software
Athena
Mosaiq
NextGen
Meditech
Total
Scripts
420,009
7,961
15,527
52,178
495,675
• Filled at a pharmacy of patient choice or
insurance requirements
• Traditionally, health systems haven’t
heavily participated in this space.
Retail Pharmacy Options /
Opportunities
• Hospital based
• Clinic based
– In high volume clinics, other distribution routes
(technology)
• Free standing
• “Meds to Beds” – mobile delivery, counseling in
room, connected to EMR.
• Mail order – can monitor compliance/adherence
• Discharge prescriptions, ED prescriptions
• Employee prescriptions – control costs, clinical
initiatives
Retail Pharmacy Concerns
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What about competition with locals?
Non-profit / for profit?
Shrinking margins
DIR fees (Direct & Indirect Remuneration)
Specialty Pharmacy Details
• Specialty drugs are high cost drugs (>$1,000) that
require special handling, data gathering and reporting.
They are used to treat complex and chronic patients.
• Complex patients include cancer, MS, CF, and
inflammatory conditions. These disease states
represent less than 4% of patient population and
account for greater than 50% of health spending.
• Other disease states include transplant, dermatology,
HIV, and Hepatitis C
• The specialty pharmacy market is more than $150.8
Billion (IMS Health Study) and is growing at a rate of
17 – 20% per year
Specialty Pharmacy Trend
Average
Specialty
Prescription
cost = $2,654
Specialty Pharmacy Details
• The current system relies primarily on 3rd party
pharmacies to provide these drugs, which creates
fragmentation of the care to these patients. This
fragmentation results in higher readmissions and
other preventable costs.
• Bottom line – Health systems are not able to
provide complete services to these complex
patients.
Why do Health Systems (IDNs) lose Complex
patients?
Health
System’sPatients
Complex Patient
Specialty
Top 55 Health Systems Average $200M SP NR & $60M
Profit Opportunity
Leak
Does IDN Have Relevant
Clinical Program?
Leak
Does IDN Have Specialty
Pharmacy Capabilities?
Leak
Does IDN Have The
Necessary Payer Contracts?
Leak
Does IDN Have Access to Drug?
Health System’sDispense
Dispensed
Complex
Specialty
ScriptPatient Scripts
Top 55 Health Systems Under 5% Opportunity Captured
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Captured by
For-Profit
Specialty
Pharmacy
Companies
Specialty Pharmacy Challenges
• As more health systems develop the ambulatory specialty
pharmacy strategy, several issues become apparent.
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The ambulatory specialty pharmacy industry is a different trade
of business that large retail pharmacies and PBM owned
specialty pharmacies dominate.
To dispense these specialty pharmacy drugs, health systems
need to develop special handling process, data collection, and
reporting capabilities.
Health systems need to develop a way to compete with large
specialty pharmacies owned by PBM’s and large retailers
Health systems need to develop a way to convince/sell to
manufacturers and payers to obtain access to the limited
distribution channels
Questions for your system
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Potential volumes?
Accreditation process?
Payer mix?
Provider based specialty clinics?
Dedicated resources?
Partner?
340b impact?
Accounting challenges
• Revenues reported are revenues collected
• No large allowances as in other areas of
healthcare
• Immediate adjudication
• Less bad debt
• Drug spend is difficult to budget
• 80% of budget for pharmacies is drugs
Accounting Challenges
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340b benefit – where to account for it
Separate cost center
Benefit must stay in CE
How does this make the finances of the
pharmacy look?
• Need to look at financial impact of
pharmacy to the organization as a whole
Other thoughts
• Should you form a new company?
• Pharmacy managed prior authorizations
• Pharmacy managed renewal process
Drug Shortages
Senate Finance Committee Hearing on
“Drug Shortages: Why They Happen and
What They Mean” December 7, 2011
“In the past five years, shortages have rapidly
escalated, increasing from 70 in 2006 to 231 as
of this November, and there appears to be no
end in sight. “
Hot off the Press!
PHRMA’s Website
Sampling of Drug Shortages affecting Inpatient
Hospital setting
Generic Name or Active Ingredient Status
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Aprepitant (Emend) Capsules
Resolved
Atropine Sulfate Injection
Currently in Shortage
Bleomycin Sulfate for Injection
Currently in Shortage
Calcium Chloride Injection, USP
Currently in Shortage
Calcium Gluconate Injection
Currently in Shortage
Cefazolin Injection
Resolved
Cefotaxime Sodium (Claforan) Injection Currently in Shortage
Ceftazidime and Avibactam (AVYCAZ) Currently in Shortage
Chloramphenicol Sodium Succinate Injection Currently in Shortage
Dextrose 5% Injection Bags
Currently in Shortage
Sampling of Chemotherapy /Supportive
Medication Shortages
Chemotherapy
Chemotherapy
Bendamustine
Leucovorin
Bleomycin
Mannitol
Carboplatin
Mesna
Cytarabine
Methotrexate
Dacarbazine
Methylene Blue
Daunorubicin
Ondansetron
Dexrazoxane
Paclitaxel
Doxorubicin
Sodium Thiosulfate
Fludarabine
Thiotepa
Fluorouracil
Vinblastine
http://www.ashp.org/DrugShortages/Current
Cited Reasons for Drug Shortages
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Supply/Demand issues
Production issues
Aging manufacturing plants
Shortage of raw materials
Generic manufacturing not profitable
Gray market hoarding medications
A Matter of Simple Economics: Supply and
Demand
 Increased demand for certain drugs can
be caused by:
– competing manufacturers that have
discontinued or withdrawn the product from
the marketplace
– shortage of raw materials
○ Foreign source
○ Manufacturer not relinquishing exclusive raw
material contracts when the product is discontinued
(usually because they are working on a “next
generation” generic that will be soon marketed)
How manufacturing and supply chain issues
can cause drug shortages
www.FDA.gov
Aging Production Plants
• Shortage of methotrexate and doxorubicin
was triggered by an FDA inspection of a
generic manufacturing plant in Ohio. The
Ben Venue Laboratories flunked because
there was mold on the walls, rust from
aging equipment falling into the medication
and other violations of good manufacturing
practice.
The Perfect Storm that Creates Drug
Shortages for Generic Products
 Medicare restrictions on average sale prices (which
can only be updated every six months) for generic
medicines
 just-in-time inventory supply practices at hospitals
 reverse-auction contracts from large group
purchasing organizations for supplying generic drugs
 tougher FDA manufacturing and inspection standards
for domestic companies (which can raise costs)
 increased global competition from low-cost suppliers
in India and China
Gray Market
Gray Market
They buy up drugs for everything from
cancer to infections, stockpile them, then
sell them to hospitals at massive markups.
The average markup on drugs is 650%
FDA is accepting cases of gray market
abuse that it would refer to the
Department of Justice.
Drug Shortages by Primary Reason for
Disruption in Production and Supply
Dosage Forms and Drug Source Affected
FDA Response
 Work with manufacturers that report drug
shortage issues
 If necessary, ask alternative manufacturers
to increase production
 Expedite the review of data to support
approval of a new generic drug product
 Allow importation of product from other
countries until the shortage is resolved
 Assist manufacturer in instituting a drug
allocation program to limit distribution
FDA Response
Conclusions
 Drug Shortages affect patient safety
 Resources are available to assist in
managing the drug shortage
 Best to research therapeutic alternatives
proactively
 Best to have an organizational agreement on
prioritizing patients and/or placing restrictions
for use
 Best to not hoard drugs that are on shortage
or their alternatives
Biosimilars
What is a Biosimilar?
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bi·o·sim·i·lar
ˌbīōˈsim(ə)lər/
noun
noun: biosimilar; plural noun: biosimilars
a biopharmaceutical drug designed to have
active properties similar to one that has
previously been licensed.
• "copycat drug makers use an innovator's
research data to make biosimilars"
FDA Definition
• A biosimilar product is a biological product
that is approved based on a showing that
it is highly similar to an FDA-approved
biological product, known as a reference
product, and has no clinically meaningful
differences in terms of safety and
effectiveness from the reference product.
Only minor differences in clinically inactive
components are allowable in biosimilar
products.
Biologics are complex and made in
cellular systems
Synthetic
Peptide
Bacteria, Yeast
Protein
Without
Sugars
Mammalian
protein
With Sugars
32x
1x
Acetylsalic
ylic acid
0.18kDa
Recombinant
Insulin1
~5.8 kDa
833x
Monoclonal antibody2
~150 kDa
Kozlowski S, et al. N Engl J Med 2011;365(5):385–8; Revers L & Furczon E. Canadian Pharmacists Journal 2010;143(3):134–9
http://www.fda.gov/downloads/AdvisoryCommittees/CommitteesMeetingMaterials/Drugs/AdvisoryCommitteeforPharmaceuticalScienceandClinicalPharmacology/UCM315764.pdf Accessed July 10, 2015
Revers L & Furczon E. Canadian Pharmacists Journal 2010;143(4):184–91
All images are stock photos, royalty free and purchased from 1Canstock or 2Shutterstock
Biologic Drugs with over $1 Billion in US sales
(2013)
Drug Name
Humira
Remicade
Enbrel
Neulasta
Rituxan
Avastin
Epogen/Procrit
Avonex
Herceptin
Lucentis
Prolia, Xgeva
Neupogen
Exclusivity and Patent
Expiration
2016
2018
2028
2015
2013
2019
2013
2026
2019
2020
2022
2013
2013 US Sales
$5,240,000,000
$4,400,000,000
$4,260,000,000
$3,450,000,000
$3,410,000,000
$2,640,000,000
$2,630,000,000
$1,900,000,000
$1,830,000,000
$1,730,000,000
$1,230,000,000
$1,170,000,000
Biosimilar Products Approved by the EMA as
of December 7, 2015 (1)
Biosimilar Trade
Name
Epoteins
Abseamed
Binocrit
Epoetin Alfa Hexal
Retacrit (2)
Silapo
Filgrastims
Accofil
Biograstim
Filgrastim Hexal
Grastofil
Nivestim
Ratiograstim
Tevagrastim
Zarzio (3)
Marketer
Active Substance
Reference Drug
Year of Approval
Medice
Sandoz
Hexal
Hospira
Stada
epoetin alfa
epotein alfa
epotein alfa
epotein zeta
epotein zeta
Eprex/Erypo
Eprex/Erypo
Eprex/Erypo
Eprex/Erypo
Eprex/Erypo
2007
2007
2007
2007
2007
Accord
AbZ-Pharma
Hexal
Apotex
Hospira
Ratiopharm
Teva
Sandoz
filgrastim
filgrastim
filgrastim
filgrastim
filgrastim
filgrastim
filgrastim
filgrastim
Neupogen
Neupogen
Neupogen
Neupogen
Neupogen
Neupogen
Neupogen
Neupogen
2014
2008
2009
2013
2010
2008
2008
2009
Biosimilar Products Approved by the
EMA as of December 7, 2015 (1)
Follitropins
Bemfola
Ovaleap
Finox
Teva
follitropin alfa
follitropin alfa
GONAL-f
GONAL-f
2014
2013
Sandoz
somatropin
Genotropin
2006
Eli Lilly
insulin glargine
Lantus
2014
Hospira
Celltrion
infliximab
infliximab
Remicade
Remicade
2013
2013
Growth Hormones
Omnitrope (4)
Insulins
Abasaglar (5)
Monoclonal
Antibodies
Inflectra
Remsima
1.(1) Two additional biosimilars were approved by the EMA but subsequently had their authorizations withdrawn.
2.(2) BPCIA application to market in the United States rejected by the FDA
3.(3) Approved in the United States as a biosimilar under the BPCIA with trade name Zarxio
4.(4) Approved in the United States under the 505(b)(2) pathway
5.(5) Original EU trade name was Abasria; tentatively approved in U.S. under 505(b)(2) pathway with trade name Basaglar
Current US Market
• Filgrastim (Neupogen)
– Granix - Teva
– Zarxio – Sandoz (Novartis)
• Infliximab (Remicade)
– Inflectra (Pfizer)
• Adalimumab (Humera)
– ABP 501 (Amgen)
– Expected approval 9/2016
Biosimilar Example
Remicade Inflectra
Number Remicade Inflectra
Remicade
Reimburs Reimburs Remicade Net Inflectra Net
of Vials Cost
Cost
ement ement
340B
3647
$423
$411
WAC
561
$1,043
$887
GPO
32
$1,043
$869
Total
4240
$822
$1,003
$1,456,028
$2,160,337
$822
$1,003
-$124,166
$65,323
$822
$1,003
-$7,066
$4,293
$1,324,796
$2,229,953
Biosimilar Example
340B Qty
340B
WAC
Qty
WAC
GPO
Qty
GPO
Neupogen
300
Neupogen
480
90
$114
0
330
$184
30
$457
80
Granix 300
90
$77
0
$232
0
Granix 480
330
$122
30
$371
80
Xarxio 300
90
$83
0
$234
0
Xarxio 480
330
$132
30
$373
80
0
Reimbu
rsemen
Net
t
Margin Margin
$301 $16,866
$456
$481 $48,088 $64,954
$230 $13,769
$247
$368 $50,298 $64,067
$262 $16,155
$263
$420 $62,719 $78,874
Billing and Coding
• Filgrastim
– Neupogen
• J1442
Excludes Biosimilars
ASP = $1.003/mcg
• Filgrastim TBO
– Granix or Zarxio
• J1447
•
ASP = $0.767/mcg
340B in 2017
Intent of the 340B Program
Permits eligible safety net providers “to
stretch scarce Federal Resources as far
as possible, reaching more eligible
patients and providing more
comprehensive services.”
Reference: H.R. Rep. No. 102-384(II), at 12 (1992
340B Program: Overview and Benefits
• Provides discounts on outpatient drugs to certain safety
net covered entities
• Average savings of 25-50%
 Savings may be used to:
Reduce price of pharmaceuticals for patients
Expand services offered to patients
Provide services to more patients
• Estimated $6-$6.5 billion dollars in 340B drug purchases
last year
• Manufacturers that participate in Medicaid and Medicare
Part B must also participate in 340B
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340B: A New Era
• Increased scrutiny by Congress and pressure to
constrain program growth; some are proposing to limit
the program to uninsured patients only or exempt
certain categories of drug products
• Pharmaceutical industry stepping up lobbying efforts
• Some independent pharmacists and oncologists have
raised concerns
• Questions raised about whether patients are benefiting
and whether hospitals are undermining care
• Concerns over contract pharmacy growth and over
commercialization
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Office of Pharmacy Affairs (OPA)
• Office of Pharmacy Affairs
– Health Resources and Service Administration
(HRSA)
– 340B oversight agency
– Certification and recertification of eligible
entities
Eligible Entities
• Disproportionate Share
Hospitals (11.75%)
• Federally Qualified Health
Centers
• Federally Qualified Health
Center Look-Alikes
• Native Hawaiian Health
Centers
• Tribal/Urban Indian Health
Center
• Ryan White HIV/AIDS
Program Grantees
• Tuberculosis Clinics
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Children’s Hospitals
Critical Access Hospitals
Free Standing Cancer Hospital
Rural Referral Centers (8%)
Sole Community Hospitals
(8%)
Comprehensive Hemophilia
Diagnostic Treatment Centers
Title X Family Planning Clinics
Sexually Transmitted Disease
Clinics
Black Lung Clinics
340B Eligible Patient
• An individual is a patient of a 340B covered entity (with the
exception of State-operated or funded AIDS drug purchasing
assistance programs) only if:
– the covered entity has established a relationship with the
individual, such that the covered entity maintains records of the
individual's health care; and
– the individual receives health care services from a health care
professional who is either employed by the covered entity or
provides health care under contractual or other arrangements
(e.g. referral for consultation) such that responsibility for the care
provided remains with the covered entity; and
– the individual receives a health care service or range of services
from the covered entity which is consistent with the service or
range of services for which grant funding or Federally-qualified
health center look-alike status has been provided to the entity.
Disproportionate share hospitals are exempt from this
requirement.
Patient Eligibility (cont)
• An individual will not be considered a patient of
the covered entity if the only health care service
received by the individual from the covered entity
is the dispensing of a drug or drugs for
subsequent self-administration or administration
in the home setting.
• Exception: Individuals registered in a State-operated
or funded AIDS Drug Assistance Program (ADAP) that
receives Federal Ryan White funding ARE considered
patients of the participant ADAP if so registered as
eligible by the State program.
• For more information: Final Notice Regarding Section
602 of the Veterans Health Care Act of 1992 Patient
and Entity Eligibility
Eligible Drugs
• Generally, the 340B Program covers the following outpatient
drugs:
– FDA-approved prescription drugs;
– Over-the-counter (OTC) drugs written on a prescription;
– Biological products that can be dispensed only by a prescription
(other than vaccines); or
– FDA-approved insulin.
• Drugs purchased through the 340B Program must be limited
to outpatient use and provided to eligible patients.
• Some manufacturers may voluntarily offer discounted prices
on inpatient drugs or medical supplies, such as syringes, that
are not 340-covered drugs, but that is a choice and is not
related to the 340B Program.
Alphabet Soup of Drug Costs
• Average Wholesale Price (AWP)
– The average price a wholesaler pays to acquire
• Doesn’t really exist (list price on a car)
• Wholesale Acquisition Cost (WAC)
– Industry standard of the actual price the wholesaler pays
• Group Purchasing Organization Cost (GPO)
– Prime vendor cost
– 20-30% below WAC
• 340B Price
– Manufacturer calculated quarterly and reported to CMS
– Excludes vaccines
– Required in order for the drug to be paid for by Medicaid
Alphabet Soup of Drug Cost (cont)
• Ceiling Price
– The “lowest” 340B price
• Sub-ceiling Price
– 340B Prime Vendor (Apexus) negotiated price below
the 340B ceiling price
• Average Sale Price (ASP)
– The average price paid by all buyers from the
wholesaler
• Calculated quarterly by the manufacturer and reported to
CMS
• Average Manufacture Price (AMP)
• Maximum Allowable Cost (MAC)
Drug Pricing Example
Generic Drug X
Drug X
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AWP = $993.44
WAC = 790.70
GPO = $142.07
340B = $110.72
ASP = $156.50
Inpatient Purchases = 49 boxes
Outpatient Purchases = 14 boxes
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AWP = $812.79
WAC = 343.29
GPO = $343.29
340B = $96.13
ASP = $156.50
GPO Exclusion
• Traditional 340B Facilities
– Cannot purchase eligible medications using a
GPO contract for outpatient administered
medications
– Must purchase eligible medications using a
wholesale acquisition account (WAC)
– Does not apply to Rural Referral Facilities,
Critical Access Hospitals or Sole Community
Hospitals
Orphan Drug
• Rare Diseases
– Less than 200,000 patients in the US
– More than 200,000 but the costs of drug
development exceeds the expected sales
– Orphan drug status may be for the drug or a
particular indication
• Example: Remicade does not have orphan drug
status for Adult Rheumatoid Arthritis (RA), but does
have orphan drug status for Juvenile Rheumatoid
Arthritis
Orphan Drug Exclusion
• Applies to:
– Critical Access Hospitals
– Sole Community Hospitals
– Rural Referral Facilities
– Free Standing Cancer Hospitals
Medicaid and 340B
• Medicaid
– Duplicate discounts must be avoided
• Carve Out
– Avoids duplicate discounts
– Forces the GPO exclusion moving GPO $ to
WAC $
• Carve In
– Requires SD hospitals to bill at acquisition cost
– No provision for a fee or mark up
• SD Medicaid requests that SD facilities carve
out
340B Prime Vendor
• Apexus
– 340B Prime Vendor
– 340B Group Purchasing Organization (GPO)
– Contract sub-ceiling prices
– Contract non-340B medications
– Contract non-340B supplies, etc
– 340B Support Services
What to Consider When Buying Software
• Split Billing (Split Buying)
• Manual / Separate Inventory Method
• Least Expensive Option
• Compliance Challenges
• Software
• Wholesaler Driven?
• Interface With Current EHR?
• Fee Structure
• Audit Capabilities
• Audit Support
340B: Rural Impact in 2017
• Congressional scrutiny- target on hospitals
• GPO Exclusion -DSH to Sole Community
conversion decision
• Audit Findings- analysis
• Recertification- annual process
• Mega regulation?
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What If 340B Eligibility Is Significantly
Restricted?
 Dramatic loss in savings that will adversely impact patient
care:
◦ Vital programs and services would be curtailed
◦ Pharmacies would close and
◦ Patients would lose access to affordable medications
 Many hospitals and other entities would withdraw from
340B
 Costs would increase for patients and taxpayers
 Many jobs would be in jeopardy
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What Do You Do With The Bottom Line?
• Use the “costs not reimbursed” and “340B
savings” as your base-line/starting point
• Calculate the savings from clinical pharmacy
programs (reduced hospital re-admissions,
reduced emergency room visits)
• Report clinical outcomes data
• Report indigent care data
• TELL YOUR STORY TO:
– Administration
– Lawmakers
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How We Use Our 340B Savings
• Improve or Expand Access (Especially e Under Insured,
the Uninsured or Low Income Patients)
• Pharmaceuticals
• Discharge Prescriptions at No Charge for Patients
Expressing a Need
• Patient Care services
• Contract Pharmacy Services Expand the Service
Area Beyond the Reach of the Hospital
Questions to Reflect On
• How is the 340B program changing?
• What are entities doing with the program savings?
• How can you track your program savings?
• How can your participation in patient safety initiatives improve the
value of the 340B program?
• How can you share your story?
• What does the recipe for 340B success look like?
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Recipe for 340B Success!
 Update OPA database
 Authorizing official
 Alternate contact
 Entity information
 Perform regular
audits/reviews of 340B
policies and procedures
 Recertify annually
 Work with your
Congressional leaders
 Determine Medicaid option
 Determine Orphan Drug
option
 Know your community
benefit/savings
 Registration/quarterly
updates for new items or
changes
 Stay informed/educated!
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340B Health Membership
Valuable
Information &
Services
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Expert &
Accessible
Staff
Exceptional
Support and
Advocacy
Timely information to members and corporate partners
Experts in 340B since program inception
The ONLY 340B hospital advocacy organization
Multiple advocacy partnerships and alliances
Strong Congressional/government relationships
Independent from the government, government contractor(s) and
drug industry
Over 80 years of collective 340B staff/counsel expertise
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