Transcript Specialty Pharmacy Channel Distribution Panel

Specialty Pharmacy
Channel Distribution Panel
Moderated by Mark Zitter
April 3, 2013
Most Payers Limit the Number of Specialty Pharmacies They Use…
For specialty agents not subject to
manufacturer-imposed limited distribution, my organization…
1%
3% 3%
1%
26%
Unsure
Other
Contracts with greater than 10
third-party specialty pharmacies
Contracts with 5-10 third-party
specialty pharmacies
Contracts with 2-4 third-party
specialty pharmacies
Contracts with one third-party
specialty pharmacy
Wholly or jointly owns a specialty
pharmacy
37%
Payers n = 103
29%
Percentage of Payers
…But Only a Minority Require Use of Specialty Pharmacy Vendors
Third party vendor use (specialty pharmacy, wholesaler/distributor)
is ______ for your network physicians.
Mandatory
17%
30%
Voluntary
53%
Voluntary, but physician
buy-and-bill
reimbursement is tied to
third-party vendor pricing
Fall 2012 Payers n = 103
No significant differences from Spring 2012 report
Payers See Plenty of Excess Cost In the System…
How much excess cost you could eliminate from cancer treatment
without negatively impacting health outcomes?
Percentage of Payers
Summer 2012 (n = 102)
Mean = 20%
41%
25%
24%
1%-10%
11%-20%
21%-30%
5%
5%
31%-40%
41%-50%
…And Think Most Excess Cost Relates to Drugs and Care Sites
How significantly does each of the following drive excess cost in oncology care?
Significant driver
of excess cost (5)
Above average driver
of excess cost (4)
Mid-range driver
of excess cost (3)
4.32
3.30
Minimal driver of
excess cost (2)
Does not drive
excess cost at all
(1)
1
3.24
3.18
1
Excessive end of life
treatment
Inappropriate drug
Sub-optimal distribution of Sub-optimal selection of
utilization, as defined by prescription drugs (such as
sites-of-care
my organization
buy-and-bill versus
specialty pharmacy)
Payers Want More Oral Therapy to Go Through Specialty Pharmacy…
What percentage of your organization’s oral oncology therapy volume
goes through each of the following distribution channels?
What is your organization’s preferred method of oral oncology therapy distribution?
Summer 2011 oral volume (n = 91)
Share of Total Oral Therapy Distribution
73%
Summer 2012 oral volume (n = 89)
63%
Summer 2013 oral volume (estimated) (n = 86)
51% 53%
Summer 2012 preferred oral distribution channel (n = 102)
26% 27% 24%
19%
9% 10%
0%
Specialty pharmacy
(oncologist not
involved in financing
drug acquisition)
Off-site retail
6%
6%
4% 3%
1%
6% 7%
3%
4%
Buy-and-bill
On-site retail (at the Mail order (through a
(physician acquisition provider’s office)
non-specialty
through a specialty
pharmacy)
wholesaler)
1%
1% 1%
1%
Other
No significant changes from Summer 2011 edition
…and So Do Oncology Office Practice Managers
What percentage of your organization’s oral oncology therapy volume
goes through each of the following distribution channels?
What is your organization’s preferred method of oral oncology therapy distribution?
Share of Total Oral Therapy Distribution
Summer 2011 oral volume (n = 82)
Summer 2012 oral volume (n = 90)
51%
43%
42%
Summer 2013 oral volume (estimated) (n = 81)
43%
Summer 2012 preferred oral distribution channel (n = 100)
27% 29% 27%
23%
18%
14% 14% 13%
13% 10%
6%
Specialty pharmacy
(oncologist not
involved in financing
drug acquisition)
Off-site retail
10%
4%
3% 2% 4%
On-site retail (at the Mail order (through
Buy-and-bill
provider's office)
a non-specialty
(physician
pharmacy)
acquisition through a
specialty wholesaler)
No significant changes from Summer 2011 edition
1%
0% 0%
2%
Other - please
describe
For Infusible Therapies, Payers Want to Reduce Buy-and-Bill…
Share of Total Office-Administered / Infusible Therapy Distribution
What percentage of your office-administered/infusible oncology therapy volume
goes through each of the following distribution channels?
What is your preferred method of office-administered/infusible oncology therapy distribution?
Summer 2011 office-administered / infusible volume (n = 90)
Summer 2012 office-administered / infusible volume (n = 87)
72%
Summer 2013 office-administered / infusible volume (estimated) (n = 83)
68%
Summer 2012 preferred office-administered / infusible distribution channel (n = 102)
62%
49%
45%
33%
22%
26%
3%
Buy-and-bill (physician
Specialty pharmacy (oncologist
acquisition through a specialty not involved in financing drug
wholesaler)
acquisition)
2%
4%
4%
3%
Patient acquisition (brown
bagging)
No significant changes from Summer 2011 edition
1%
4%
Other
1%
…While Practice Managers Like the Status Quo for Distribution Channels
Share of Total Office-Administered / Infusible Therapy Distribution
What percentage of your office-administered/infusible oncology therapy volume
goes through each of the following distribution channels?
What is your preferred method of office-administered/infusible oncology therapy distribution?
Summer 2011 office-administered / infusible volume (n = 79)
Summer 2012 office-administered / infusible volume (n = 89)
Summer 2013 office-administered / infusible volume (estimated) (n = 80)
60%
64%
Summer 2012 preferred office-administered / infusible distribution channel (n = 100)
60%
61%
24%
25% 24%
23%
5%
Buy-and-bill (physician
Specialty pharmacy (oncologist
acquisition through a specialty not involved in financing drug
wholesaler)
acquisition)
5%
6%
8%
Patient acquisition (brown
bagging)
No significant changes from Summer 2011 edition
12%
9%
8%
Other
8%
Site-of-Care Preferences Vary by Disease, But Payers Dislike the Hospital
What is your organization’s preferred site-of-care
for professionally administered therapies in the following categories?
In-office
Physician-affiliated clinic
Freestanding infusion center
Cancer
60%
Age-related macular degeneration
/ RVO
33%
24%
Hepatitis C
15%
8%
Fabry disease
14%
7%
8%
37%
16%
16%
42%
12%
54%
71%
Payers n = 101
Percentage of Payers
3% 5%
18%
31%
8%
13%
Hospital outpatient department
15%
54%
Rheumatoid arthritis
Multiple sclerosis
In-home: Home health care
8%
6%
5%
12%
7%
ASP Payment Has Sent Patients to Hospitals, But Reduced Total Costs
Since adopting ASP-based reimbursements in your commercial population,
which of the following has your organization experienced?
Reduction in costs
63%
Migration from physician office to other care
delivery sites (hospital, infusion center, etc.)
33%
Changes in drug mix
28%
Shift from IV products to subcutaneous
products
22%
18%
None of the above
8%
Reduction in aggregate drug use
5%
Increase in aggregate drug use
Disruption of physician network
Increase in costs
Improved health outcomes
Worsening health outcomes
4%
3%
1%
0%
Payers n = 76
Percentage of Payers
The Distribution Channel Challenge
• Payers know there is waste in the system and want to use distribution channels
that will minimize excess expenditures
• With costs continuing to grow and care delivery becoming increasingly
integrated with financial risk, which specialty distribution channel(s) will win?
• Do we need all these channels? Does each add real and differentiated value?
• How can and should the various channels integrate?
• How can each channel prove its value to payers?
Specialty Pharmacy
Channel Distribution Panel
Moderated by Mark Zitter
April 3, 2013
http://go.zitter.com/nasp
Specialty Pharmacy Channel Discussion
Hospital/Integrated Delivery Network Channel
Thomas Blissenbach
Director, Business Development
Fairview Pharmacy Services, Minneapolis
Fairview Pharmacy Services, LLC
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Specialty Pharmacy 17+ years
URAC Standards
Payer – Pharma agreements
Integrated Care Model
Hospital/IDN Channel
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Relatively small today
Hasn’t been focus
Size matters
Specialists = Specialty Drugs
Need to do it right
Variety of options
Hospital/IDN Channel Strengths
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Ambulatory care
Point of care
Improve adherence
Integrated Care Model
Access to medical record
Therapy Management
Compliments new payment models: ACO, At Risk
Payer Agreements
• Capture
Hospital/IDN Weaknesses
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Hasn’t been focus
Expertise
Capital/space
Payer – Pharma agreements
Data capability
Hospital/IDN Opportunities
• Revenue/margin
• Retain patients
• Improve outcomes
Hospital/IDN Threats
• Loss of control
• Missed opportunity
Independent Pharmacy Channel
Mike Ellis
Corporate Vice President, Specialty Pharmacy & Infusion,
Walgreens
Independent Pharmacy Channel
Kurt A. Proctor, Ph.D., RPh
Senior Vice President, Strategic Initiatives
National Community Pharmacists Association
National Community Pharmacists Association
• Founded in 1898 as the National Association of
Retail Druggists (NARD)
• Represents pharmacist owners, managers, and
employees
• 23,000 non-publicly owned pharmacies
• Single store, multiple locations, regional chains
Independent Pharmacies
1,800 rural independent pharmacies serve as the only pharmacy
provider in their community
Independent Pharmacists
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Patients trust us, choose us
Compete on service now
RPh available 24/7/365
Able to document
Able to bill
Want to care for their patients completely,
including most “specialty” drugs
Buford Road Pharmacy, Richmond, VA
Health Living Center – Clinical Services
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Hemoglobin A1c Test
Blood Sugar Test
Blood Pressure
Bone Density Screening
Cholesterol Screening
Coumadin Clinic
Medication Therapy
Management
• Medicare Part D
Consultation
• Diabetes Management
• Routine & Travel
Immunizations
Influenza, Pneumonia, Shingles, Meningitis,
Hepatitis A & B, Polio, Yellow Fever, Rabies,
Tetanus/Diphtheria/Pertussis, Typhoid,
Japanese Encephalitis, Human Papillomavirus
Independent Advantages
• Niche service experience
• Understand the need to deliver support services
and do so at competitive prices
• Are the pharmacy home for this high-touch
group of patients
• Independent pharmacies provide face-to-face
service that others can’t
Core Message from NCPA
Independent pharmacies in your network will yield
documented patient adherence and monitoring
Independent pharmacists know…
• Their patients
• Their patients’ family
• Their patients’ caregivers
• Their patients’ doctors
• Their patients’ environment
Specialty Pharmacy and Dramatic
Change In the Oncology Channel
Discussion
Burt Zweigenhaft
CEO Onco360
Ralph Stayer Flight of the Buffalo (1994)
"Change is hard because
people overestimate the
value of what they have—and
underestimate the value of
what they may gain by giving
that up.”
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Oncology Drug Market Hitting Critical Inflection Point
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Oncology Rx spend projected to grow to $130B by 2020
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50% of drugs in development are oncology medications
– 36 new cancer drugs next 3 years
– 907 cancer drug clinical trials or FDA review, 2x number in pipeline 6 years ago
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90% of oncology drugs approved in the last five years cost $20,000/3-month cycle
Sources: The Specialty Pharmacy Times, the National Institutes of Health, and Industry Reports.
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Purchaser's Demand Call to Action Trend is Unsustainable!
180,000
Average Payer Costs Per Cancer Patient
160,000
$167,856
140,000
$139,880
120,000
$115,939
100,000
80,000
60,000
$62,752
40,000
20,000
$39,938
$46,398
$53,940
2002
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2005
2006
2010
2011
*2012
Commercial Payer Cancer Cost 2010: * NE Commercial Payer
– $457.6MM per/1MM lives
• (Includes: In-Patient, Out-Patient, E&M, Rx Administration, Drugs, Surgery, Radiation, Imaging and Labs)
– $187.2MM per/1MM lives
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2004
(Includes: E&M, Rx Administration and Drugs)
Cost trend growth faster than CPI & Medical Cost Inflation at 12% - 23%
– Medicare cancer incidence 48 per 1,000 members
– Commercial cancer incidence 9 per 1,000 members
– 35% undergoing treatment
Sources: Specialty Pharmacy Times, NIH, HealthSource, ASCO, and Industry Reports.
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75% Increase In Cancer Incidence Projected By 2030
1.7 MM New Cancer Cases Projected for 2012….was 1.4 MM in 2010
10,000 New Beneficiaries in Medicare or 3.6 MM a year
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The Average Oncologist’s Drug Spend
• Annually Prescribes $3MM
Payer Patient Mix
By Drug Admin Route
1%
4%
15%
8%
Commercial
Infused/Injected
20%
46%
Adjunc ve
65%
Med B
Med D
Oral
41%
Medicaid
Uninsured
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Drugs Used to Drive-Dominate Practice Margins
Decline In Rx Margin for Oncologists
$1,000,000
$900,000
$800,000
$700,000
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
$0
Rx Margins
Rx Administra ons
E&M
2002
AWP-5%
2004
AWP-15%
2005 ASP
+6%
2010 ASP
+6%
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Care Shifts to Hospitals at Higher Costs
Total Oncology Prac ces In Study: 1,042
400
350
300
250
200
150
100
50
0
Clinics Closed
Prac ces Struggling
Financially
Prac ces Sending
Pa ents Elsewhere
Acquired by Hospital
Merged/Acquired by
Another En ty
54% Of Practices Closed, Sent Patients Elsewhere, Or Were Acquired By Hospitals
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Un-sustainable shift in cost with no improvement in care
Leveraging 340b drug costs and Part A versus Part B Medical Billing
Medicare and Payers will burn down reimbursement over time
Source: Community Oncology Alliance, 2011 Study
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Moving Away From Traditional Drug “Buy and Bill”
$4,000,000
Strong YOY MD Referral Growth
$3,500,000
$3,000,000
$2,500,000
2010
$2,000,000
2011
2012
$1,500,000
$1,000,000
$500,000
$0
Riz
Lon
Mar
Ryb
Coh
Chu
MAY
Don
STO
Sil
VEN
OLI
SHA
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Oncologist Shortage Crisis = Need Physician Extenders
Number Of Trea ng Oncologists
17,000
Projected Oncologist Shortage
16,000
15,000
14,000
13,000
12,000
11,000
10,000
2005
2010
Demand
2015
2020
Supply
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Concordance with Evidence and Outcomes is the Issue
Oncology Drug Dispensing is Complex
Typical Daily Chemotherapy
Regimen: Across Multiple Benefits
Typical Chemo
Administration Kit:
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Cancer Protocols = Drugs are Inter-dependent
Pharma HUB Workflow
Product
Payment
Claims
Data
BCOP
Key
Patient
Provider
(MD/Hospital)
Payer
Patient Support
Services
Oncology
Pharmacy
Manufacturer
3PL
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Universal Problem In Cancer - Oncology
“Payers own ALL Medical Patients but not always the Specialty or Oral Drug
Risks due to PBM carve out nature of Industry”
Benefit Fragmentation
• PBM
– Orals and sometimes Injectable
• Specialty
– Orals, Injectable and
sometimes Infused newer
agents
• Medical
– Infused or Physician-Outpatient
Drug Administration
Results In
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Dispensing Fragmentation
Clinical Fragmentation
Poor Outcomes
Analytical and Registry Gaps
Less Patient/Provider Satisfaction
Less Utilization Control
Less Cost Contracting Control
More Adverse Events
Hospitalization
Adverse Site of Care Transfers
Drug Waste
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Oncology Requires Integrated Benefit Solution
• Drugs will be as ASP+ Whatever
PBM Oral
Oncology
• Value of Clinical Services most
important to patient, oncologist,
Pharma and payers
• Leverage combined experience to
optimize benefit integration and control
• ACO’s strive to achieve responsible
initiatives and activities to deliver on
quality and value
Specialty
Oncology
Medical
Oncology Drugs
Care
Mgmt.
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Value Based Continuum of Care Services
Service
Description
Dispensing
Total sourcing solution, drug pedigree, ASP + WHATEVER (oral,
injected, infused, administration supplies)
Guidelines
Specialized BCOP’s facilitates concordance with evidence and
coverage riles NCCN, ASCO, or payer evidence-based guidelines
Dosing Controls
Treatment day/dose dispensing, including stat and emergency dose
capabilities, control waste
MTM
Medication Treatment Management for patients to improve safety,
& reduce adverse events thus contributes value of pharmacists
Financial
Assistance
Dedicated support for patients who need financial assistance
Exchanges will need Premium Enrollment Assistance
Metrics
Data reporting for visibility, accountability and risk sharing
performance measures
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Oncology Clinical Service Values… Case Studies
Clinical
Program
OncoPaths
OncoDose
OncoMTM
Clinical Intervention
Concordance Evidence-Based Guidelines
Off-Label Authorization Controls
Managing To FDA and Labeling Guidelines
Treatment Day Dispensing Waste Control
Dose Review and Modification
Dose Review and Modification
Adverse Event Safety Monitoring
Adverse Event Avoidance
Dose Safety Check Avoided AE
Intervention
Value
$32,128
$9,523
$4,677
$3,090
$4,032
$2,018
$5,605
$2,921
$9,523
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Oncology Pharmacy Channel Requires Unique Competencies
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Board Certified Oncology Pharmacy Experts
Comprehensive Benefit Access Oral-Injected-Infused
Compressed Operational Timelines
Treatment Day & Dose Dispensing
Pathway Concordance with Evidence and Clinical Flexibility
Medication Treatment Management (MTM)
Patient Financial Assistance and Insurance Exchanges
Access to Limited Distribution and Pedigree drugs
Highest Standard Accreditation and Facilities
USP 795 & 797 Compliant Clean Rooms aka NECC
NIOSH Compliant Product Storage & Handling aka NECC
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More Change Ahead CMS Driving Bus
• Near term is tiered ASP….. meaning that the larger the ASAP the
smaller the percentage of add-on payment
• Seems less likely given that sequestration occurred and docs are
now effective getting roughly ASP plus 4.3% or loss of 33% margin
• Longer term payment options:
– Bringing back CAP
– Moving some or all buy and bill drugs intro Part D (Yesterday)
• Coverage options are the ones we always talk about—greater
payment for outcomes, following clinical protocols, risk sharing
arrangements (think ACOs) and value based purchasing!
• General issue—when does the exception (340B) swallow the rule
(ASP)? Tremendous growth of 340B could become the majority of
cancer drugs purchased
Part B to Part D Late Breaking News
• CMS quote, MA = Medicare Advantage plans, which are Medicare
plans offered by a health plan such as Aetna, United,
etc. Patients are able to CHOOSE to brown bag a Med B drug,
and have it covered under Part D so long as the following
stipulations are met:
• Patient is enrolled in a Medicare Advantage plan that offers Part
D coverage
• The drug being prescribed is a Part B drug that CAN ALSO be
covered under Part D
• The patient ELECTS/STATES PREFERENCE to receive the drug from
a pharmacy instead of getting it from their physician
Machiavelli Circa 1469-1527
"Whosoever desires
constant success must
change his conduct
with the times.”
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Specialty Pharmacy
Channel Distribution Panel
Moderated by Mark Zitter
April 3, 2013