New Agents Make Inventory Management More Difficult and Precarious

Meir Rinde
Published: Tuesday, Apr 11, 2017
Josh Cox, PharmD, BCPS

Josh Cox, PharmD, BCPS

The rapidly growing use of oral oncolytics has provided a powerful incentive for independent practices to open in-house dispensaries. By dispensing these drugs, physicians can make sure patients are taking their medicine, monitor side effects, and recover some of the revenue no longer coming from chemotherapy, which has become less profitable in recent years. The Community Oncology Alliance (COA) counts at least 820 practices that have in-house dispensaries or pharmacies, many of which were started within the last several years (Figure).


This figure shows drug distribution shares, by percentage, of the major channels in oncology. Source: Genentech.

However, the transition to newer agents can lead to a number of challenges, many of them tied to the very high cost of the new generation of therapies. Practices may find themselves carrying more short-term debt while they wait for money from payers. They may also experience financial losses if coverage is denied after drugs are purchased or if medicines are spoiled because of refrigerator malfunctions and other mishaps. In addition, there are the daily battles with pharmacy benefit managers (PBMs), which steer members toward their own specialty pharmacies, reducing practices’ revenue opportunities and complicating oversight of patient compliance with treatment plans.

Careful management of pharmaceutical spending has always been necessary in order for a practice to manage its financial health. However, this has become even more critical now because targeted therapies can be so expensive. When new agents become available, payers may take up to 1 year to integrate them into their systems, leaving pharmacy managers waiting months for reimbursement. “I have seen a smaller practice get into a situation where it had major issues associated with cashflow because of denials or lag times in reimbursements for some of the expensive products that are out there,” said Josh Cox, PharmD, BCPS, director of pharmacy at Dayton Physicians Network, a Dayton, Ohio-based string of 8 oncology centers, and co-chair of the COA Community Oncology Pharmacy Association. “Those problems tend to be on the front side when a new drug is developed. Reimbursement and coverage tend to catch up, and the problem resolves itself.”

Even for established drugs, slow bill processing by payers can compound problems caused by eligibility determinations for expensive therapies, which can end up making denials even more costly, said Jeff Liticker, PharmD, oncology pharmacy manager at University of Texas Southwestern Medical Center in Dallas. “You could be into a treatment 3 or 4 cycles before you find out from the insurance company that you’re missing a piece of information or they’re now going to deny it because a marker wasn’t drawn or a marker didn’t fit with their guidelines,” he said. For example, a physician may obtain authorization to use pembrolizumab (Keytruda) for a patient whose PD-L1 levels satisfy the requirements described in the drug package insert, only to see payment denied because the payer finally reviewed the patient’s test data and found the levels did not meet the payer’s own higher cut point. “The costs can add up very quickly before you realize there is an issue,” Liticker said.

In addition to payer logistics, practices that dispense newer medicines must reckon with the high cost-sharing responsibilities common in commercial insurance policies. Plans that mandate bigger co-pays for today’s more expensive agents demand careful attention to collections and diligent financial counseling. “Years ago, if we didn’t collect the co-pay from some patients, it wasn’t that big a deal. Now, if we’re missing 2 or 3 patient co-pays, that quickly adds up,” Liticker said. However, many patients cannot afford a co-pay of several thousand dollars, forcing conscientious practices to work hard to obtain charitable funds. Christina Patterson, a physician assistant who manages the dispensary at Cancer Care Associates of York in Pennsylvania, said co-pay assistance from foundations seemed to dry up last summer, and money is particularly scarce for patients with certain common cancers. “There are so many men on Zytiga or Xtandi, and prostate funding is very, very low, if it’s even available. You can hardly ever find funding for colorectal cancer,” she said.  

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