When talking about specialty pharmacy, I am reminded of the famous words of Supreme Court Justice Potter Stewart as he ruled on a 1964 obscenity case. Justice Stewart wrote in his short concurrence that hardcore pornography was hard to define, but that "I know it when I see it." The same may be said for specialty pharmacy.
Generally, specialty pharmacy programs are designed to address drugs and biologics that are high in cost and difficult to manage, and have challenging reimbursement issues. These products often are problematic from all perspectives, including those of manufacturers, prescribers, patients, pharmacies, and payers. Specialty pharmacy programs evolved to address these issues by focusing on improving the access, delivery, disease state management, and financial support associated with these agents. Originally, specialty pharmacy could best be defined as a "cottage industry" that sprang up to support pharmacy benefit managers (PBMs) as they struggled with the management of increasingly high-cost agents. However, over the past 20 years, specialty pharmacy has grown significantly, and many observers feel that it now is "the next big thing."
Speaking about the future of specialty pharmacy, Zach Gerger, PharmD, DO, President, The Pharmacy & Therapeutics Society, noted that "traditional methods of reimbursement and clinical decision making around specialty health products are not working, and together we need to define the new way forward" (Personal communication). Figures from the Employee Benefit News
indicate that in 2003 the specialty pharmacy industry had $40 billion in overall drug spending, which rose to $78 billion in 2008.1
That is a 95% growth rate in just 5 years, which is not surprising given the numbers and types of drugs and biologics coming into the marketplace. Currently, approximately 50% of all drugs approved by the US Food and Drug Administration fall into the specialty category, and the biologics' share of the pharmaceutical market has moved from approximately 15% in 2005 to more than 21% in 2010. This growth also has been subject to a confluence of other market factors such as declining reimbursement rates, shifts in coverage from the medical to the pharmacy benefit, increasingly complex monitoring requirements, and much greater emphasis on cost control. These factors have contributed to the evolution of specialty pharmacy as a way to better manage these high-cost drugs.
The trend in specialty pharmacy is to include virtually any drugs/disease states that are high cost, with the current focus on management of high-cost disease states such as cancer, HIV/AIDS, rheumatoid arthritis, multiple sclerosis, hepatitis C, infertility, solid organ transplant, growth hormone deficiency, and Crohn's disease.
The provision of specialty pharmacy programs is currently dominated by the PBM industry, with much of the business provided by their own specialty operations. However, with the rapid growth of specialty pharmacy, opportunities are available for other players to enter the market. Many large hospital organizations are successfully moving into this market. As integrated service delivery networks, many organizations provide home and clinic infusion services, retail pharmacy services, and extensive clinical pharmacist support for targeted disease state management initiatives. In addition, many hospitals now are exploring the opportunity to get into the insurance/PBM business themselves. Integration creates a comprehensive portfolio that allows effective delivery of specialty pharmacy services.
Mike Flagstad, RPh, MS, Chief Executive Officer of Visante Inc, an organization that provides consulting services to both the PBM and hospital markets, observes that "there is certainly a lot of growth and change in the specialty market, but more importantly, a lot of opportunity. We (Visante) are seeing increasing interest from hospitals in creating specialty pharmacy service lines, and our consultants have already helped hospitals to successfully do this in Michigan, Nebraska, Tennessee, Massachusetts, Utah, Indiana, and Mississippi. One of the primary areas where hospitals interested in entering this market need support is in the management of billing and reimbursement associated with specialty pharmacy. Although hospitals may be well positioned in terms of service delivery and disease state management, they typically are not providing the financial infrastructure to effectively support a full-scale specialty pharmacy program" (Personal communiction).