Specialty Pharmacy:
“The Inside Story”
John Aforismo, B.Sc. Pharm., R.Ph
Chairman & Founder
RJ Health Systems International, LLC
1. Current Reimbursement Trends
2. Payor Models
3. Managed Care Expectations
Payor Issues
Pharmacy
Network
Contracts
Home
Infusion
Contracts
Specialty
Pharmacy
Contracts
Manufacturer
Incentives
What issues
are Payors
struggling
with?
Specialty
Formularies
Physician
Contracts
Specialty
vs
Buy & Bill
Reimbursement: Trends
AWP?
Average
Wholesale
Price
ASP?
Average Sales
Price
HCPCS
Drug Code
vs
NDC
AMP
Average
Manufacture
Price
SWP
Suggested
Wholesale
Price
PAYORS
Reimbursement
Methodologies?
AAC
Average
Acquisition
Cost
MAC?
Maximum
Allowable
Cost
WAC?
Wholesale
Acquisition
Cost
Reimbursement: Trends
• Payors (commercial & federal government) are using
variations of the following:
1.
ASP (average sales price)
2.
AWP (average wholesale price)
3.
WAC (wholesale acquisition cost)
4.
SWP (suggested wholesale price)
5.
AMP (average manufacturer’s price)
6.
AAC (average acquisition cost)
7.
MAC (maximum allowable cost)
•
Pharmacy benefit
•
Medical benefit
New Reimbursement Methodologies
MAC (Maximum Allowable Cost)
• “A list of prescription medications established by a
health plan (PBM or Third Party) which will be covered
at a generic product level price.”
• Pharmacy Benefit:
• Medical Benefit:
• HCPCS Drug Code Level
• NDC Level
Acquisition costs used as reference
New Reimbursement Methodologies
Average Acquisition Cost (AAC)
• Used for Medicaid
• Surveys of Pharmacy Purchases
• Reflects the final drug price paid by the pharmacy after
subtracting discounts
• Each state reimbursement would be different
• NA DAC- National Average Drug Acquisition Cost
Potential New Benchmark from CMS
NADAC National Average Drug Acquisition Cost
• Developed in response to FDB ceasing publication of
AWP in September 2011
• More precise than AWP/MAC
• For Medicaid Drug Reimbursement
Is A New
National Benchmark
Needed?
Reimbursement: Observations
Reimbursement Observations
Present Payor Contracts
Retail Pharmacy
• Brand name drugs:
• Usually AWP discounts range from AWP−14% to AWP−16%
(plus dispensing fee) ($1.40 – $1.50)
• Generic drugs:
• MAC plus dispensing fee (AWP-76 or MAC) ($1.40 – $1.50)
Mail Order Pharmacy
• Brand name drugs:
• AWP discounts range from AWP−23% (plus a small or no dispensing fee)
• Generic drugs:
• AWP− (plus a small or no dispensing fee)
Reimbursement Observations
Specialty Pharmacy
• AWP discount can vary by drug with maximum discounts
seen of AWP–35%
• Payors requiring NDC on claim when HCPCS Drug Codes
is supplied.
Specialty Pharmacy
Managed Care Expectations
Specialty Patient Workflow
Benefits Verification
Initial Prescription
Received
Compliance &
Persistence
Prior Authorization & Step
Therapy
Clinical Reassessment
Member
Outreach
Billing
Proactive Clinical
Assessment
Care Coordination
Clinical
Intervention
Personalized
Education
Dispensing &
Shipping
Payor/Management:
ICD 9
ICD 10
Office
Supportive
Code
Reimbursement
CMS
1500/UB04
Claim Form
CPT Drug
Code
Admin Code
857
Electronic
Transfer
Min
Max Dose
Drug Units
NDC Drug
Name
Strengths
HCPCS Drug
Code
RJ Health Systems International, LLC
30 Cold Spring Road
Rocky Hill, CT 06067
Phone: 860-563-1223
Fax: 860-563-1650
E-Mail: [email protected]
Specialty Pharmacy:
“The Inside Story”
Stephen Lagano, Founding Principal,
Altometrixs, LLC
Today’s Objectives
• Overview Specialty Pharmacy And Market
• Identify Significant Impactful Trends
• Identify Key Stakeholders And Their Expectations
• Review The Specialty Pharmacy Business/Financial Model
• Business/Patient Impact – Reimbursement & Care
Perspective
• Discussion Into The “Future”
Discussion Guide
Specialty Pharmacy
Market
Stakeholders
SP Business/Financial Model
Reimbursement Trends
Into the “Future” Discussion
Trends
What is Specialty?
Confusion:
• “Specialty” is term used to describe products, markets, companies, programs, etc.
Clarity:
• For consistency the term “Specialty” will be utilized to describe products ,certain
therapeutic areas and channels:
Specialty Products
• Injectable and infusion therapies (can
be an oral drug)
• High-cost ($5,000 and up per patient
per year) therapies
• Therapies that require complex care
(“high touch” services)
• Special handling
Specialty Channels*
• Specialty Distributors
• Servicing physicians
• Clinics, etc.
• Specialty Pharmacies
* - Specialty products can go through the
retail channel
Specialty Pharmacy
Specialty Pharmacy:
• Specialty pharmacy is a “closed door” pharmacy that is delivering
high cost drugs for complex therapies that require patient case
management and “high touch” services
• Specialty pharmacies provide day-to-day patient management
services to optimize the patient’s clinical outcomes, including:
• Coordination of care across all providers
• Patient counseling and support to assist with injection technique
• medication side effects and disease complications
• Recognizing and responding to suboptimal responses to therapy
• Identifying insurance coverage and reimbursement support
services to assist the patient with out-of-pocket expenses that may
limit the patient’s access to the drug
Specialty Markets
Specialty Markets:
• The specialty markets is an aggregate of specialty of
specialty products under therapeutic categories
• Common specialty markets therapeutic areas*:
•
•
•
•
•
•
•
•
Rheumatoid Arthritis
Multiple Sclerosis
Oncology
HIV/AIDS
Human Growth Hormone
Hepatitis C
Infertility
Auto-Immune
* - Sample list not meant to be exhaustive
The Specialty Markets Are About Growth
Drug Spend - Prescriptions
Drug Spend: 2006 - $270B, 2011 - $320B, 2016 - $404B
Sources: HIRC & IMS Estimates
Multiple Influences Affecting Specialty
Complex “Picture”
Health Care
Reform
New & Improved
Specialty Biologics
Patient Pool
Increases
Affordable
Care Act
“Actual
Care Act”
Innovation
?????
Quality of
Care
Rising Health
Care Costs
Provider Pool
Decreases
Costs/drug
Spend
Increase
Increasing Challenges = Increasing Opportunities
Trends Impacting Specialty
Patient
Protection Act
Health Care
Reform
Affordable
Care Act
Multiple Moving Parts – “Not All in the Same Direction”
More
Patients
ACO/Health
Exchanges
Technology
“Push”
Comparative
Effectiveness
Research
Trends Impacting Specialty
Patient
Health Care
Costs/Drug
Spend
Provider
Plan
Employers
Increasing costs/spend
Cost
Containment
Utilization
Management
Pharmacy/Medical Benefit
Management
Outcomes
Demonstrated
Value
Decision/Payment Criteria
Trends Impacting Specialty
Increasingly
Orphan Drugs
Drug
Pipeline
REMs
Requirements
Simple /Traditional
Retail/
Specialty
Channels
Reimbursement
Needs
Complex/Specialty
Limited/
Restricted
Channels
Therapeutic
Expertise
Critical
Patient
Needs
Trends Impacting Specialty
Generics
Employment
Situation
Other
Simple /Traditional
Important
“Stuff”
Biosimiliars
Complex/Specialty
Copay
Programs
TBD
TBD
Multiple Stakeholders & Multiple Interests
Payer
Data, SP/Plan
Performance
Patient
Physician
Patient Info, care
planning & mgt
Patient, Program
Support Services
Reimbursement
Data, SP/ patient
performance
Data,
Data, Referrals
HUB/
Patient
Center
Specialty
Pharmacy
Mfg
Funds
Data, Referrals
Data
Stakeholder – SP Value Propositions
Stakeholder
Service(s)
Value Proposition
Patient
Benefits Investigation, Clinical/patient
assessments, product fulfillment
Product availability, financial support on OOP
expenses, increased compliance and
persistency, increase overall quality of life
Physician
Coordinated support for patient care,
reimbursement support,
Collaborative partner to extend, execute and
report on patient care
Payer
Implement drug utilization requirements
and report on patient and SP performance
Cost savings through appropriate drug
utilization, compliance data reporting to
validate performance
Manufacturer
Patient delivered benefits support,
compliance and disease management
services, inventory management and data
Provides valuable data that provides insight
into patients and business performance,
deliver services that increase compliance &
persistency and supply chain efficiencies
through inventory management and
decreased returns
HUB/Patient
Support Center
Interfacing with HUB for referrals,
coordinate product fulfillment, benefits
verification, services and data
Coordinated care/data between SP, HUB and
physician
SPECIALTY PHARMACY BUSINESS
MODEL AND REIMBURSEMENT
TRENDS