In-House Pharma Feeling the Pressure From Drug Industry Competition

Tony Hagen @oncobiz
Published: Wednesday, Feb 10, 2016
Steve D’Amato

Steve D’Amato

Newer, more stringent USP 800 regulations on cleanrooms are a couple of years off, thanks to a postponement of implementation, but they’re still a worry for independent oncology practices, whose in-house pharmacy staff may sit up nights wondering about the stability of their drug revenues.

The newer regulations, set to debut in 2018, could require separate cleanrooms and storage, an appointed supervisor, special garb, and annual competency training. Like many other tasks and requirements at oncology practices, these things are not subsidized by payment from the Centers for Medicare & Medicaid Services or any other plan. “I spend thousands of dollars a year to have my cleanrooms and hoods certified and maintained,” says Steve D’Amato, executive director of New England Cancer Specialists, in Scarborough, Maine. “That’s an unreimbursed service, but it’s the cost of doing business.”

New England Cancer Specialists is the last independent oncology practice in Maine, and the challenges of drug procurement and dispensing are among their chief concerns. The Northeastern practice has four locations in Maine and a satellite facility in New Hampshire. Like all independents, they must grapple with increasingly aggressive policies among payers, pharmacy benefit managers, and pharma companies. Competition from specialty pharma is ever-present.

For the New England group as well as for Florida Cancer Specialists (FCS), the nation’s largest independent oncology practice, the battlefield strategy is the value mantra: the constant broadcast of the message to payers and pharma that independents can deliver lower cost and greater efficiency in handling and dispensing of drugs.

“What I tell payers is, ‘Look, you’re trying to extract savings out of small, community oncology practices and all you’re doing is driving them into the arms of hospital systems, where you’re going to get charged three times as much when they go into that site of care,’” says Ray Bailey, RPh, the pharmacy director for FCS. “That’s the most compelling argument to the payers. You need to work with and partner with community oncology, because that’s your most cost-effective site of care. And I think they’re understanding that, or at least my experience with payers is they’re understanding that.”

Of course, FCS has the advantage of size. Established in 1984, it now encompasses 90 practice locations and 190 physicians throughout the panhandle state. Such an extensive network makes FCS a distribution channel whose interests cannot be treated lightly. It has a well-organized in-house pharmacy operation, says Bailey. Many independent practices that have joined FCS over the years did not have orals included in their dispensaries, and that changed when they became part of the larger system, Bailey says. “Thirty-five percent of our business is orals now, and it’s going up and could very well be 50% in the next five years,” he says.

Things could change for the worse if Congress is persuaded by the pharmacy benefits manager (PBM) industry to change the “any willing provider” language currently in the Medicare Modernization Act covering Medicare Part D (pharmacy benefit). Right now, patients have a choice of providers including the practice pharmacy or dispensary. PBMs want to change these laws in order to restrict patient access and choice. For most practice pharmacies, as much as 50% of their business is at stake in this struggle, Bailey says (Figure 1).

Getting left out of the discussion on drug distribution also is troubling. “It’s the commercial lines of business where the pharmacy benefit managers have been very effective in getting to large employer groups and regional carriers in selling their pharmacy benefit plans to them. We don’t even get to come to the table to talk about pricing and benefit. It’s a totally unfair way of doing business, and our patients don’t get the care our model can provide them,” he says.

Better Systems Needed to Demonstrate Value

To break through these barriers, it is increasingly necessary to demonstrate the value independent oncology practices can deliver, Bailey and D’Amato say. Drugs have to be used judiciously, and costs have to be trimmed wherever possible, and this has to be demonstrated by implementing quality control systems and measures of performance that provide the proof. “There’s both risksaving and there’s reward if the practice is able to show these savings,” says Bailey. “The challenge to us is going to be to beef up our care management and information technology infrastructure, so that we can collect this type of data.”

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