Specialty Pharmacy How is Traditional Pharmacy Practice Positioned

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1 Specialty Pharmacy How is Traditional Pharmacy Practice Positioned Nick Calla Vice President, Industry Relations Cardinal Health Specialty Solutions August 19, 2016

2 Today s Learning Objectives Understand the context and trends of the specialty pharmacy industry and the various stakeholders interests Recognize and identify characteristics of specialty pharmacies and products and applicable situations for retail class of trade Evaluate specialty pharmacy growth opportunities and challenges for your business Describe and discuss the unique attributes of specialty pharmacy services Explain the processes involved with specialty prescription dispensing practices 2

3 The Evolving Market of Specialty Drugs 3

4 What is Specialty Drug? Specialty products (drugs) are generally defined as high-cost prescription drugs that treat complex conditions and require special handling and administration, a patient adherence 4

5 Top Specialty Drug Therapies Express Scripts. (2015). The Express Scripts 2014 Drug Trend Report. 5

6 Growth in Specialty Drugs Medical and pharmacy benefit specialty drug expenditures as a percent of total drug spend: forecast to be above 50% in 2018* 2013 Prime Therapeutics LLC. Internal Data. URAC Specialty Pharmacy White Paper: The Patient-Centered Outgrowth of Specialty Pharmacy. 6

7 Growth in Specialty vs. Traditional Drugs 7

8 What is a Specialty Pharmacy? Specialty pharmacies must offer a full range of clinical and operational services to enhance the safety, quality, and affordability of care for patients Clinical Services Health care provider access: Specially trained pharmacists, nurses, and clinicians are accessible to patients around the clock to provide guidance and insight on disease states, as well as the use and management of specialty drugs Physician consultations: Consults directly with physicians to address patient side effects, adverse drug reactions, non-compliance, and other patient concerns Care management: Performs disease and drug-specific patient care management services that meet the unique needs of each patient and incorporate multiple safeguards when dispensing and delivering the drug to ensure patient safety Clinical outcome measures: Collects data and tracks outcomes for specific patients Patient adherence programs: Manages patient adherence and persistency of drug regimens Operational Services Supply chain management: Adheres to rigorous storage, shipping, and handling standards to meet product label shipping requirements, such as temperature control and the timely delivery of products in optimal conditions Care coordination: Offers coordinating services with other health care providers, including those providing skilled nursing services, custodial care, infusion administration, and direct-to-physician distribution Insurance navigation: Expedites access to therapy by working directly with insurers and navigating their benefits, utilization management, and prior authorization processes Patient assistance: Facilitates eligible patients enrollment in patient assistance programs and access to charitable resources Plan optimization: Aligns economic incentives across medical and pharmacy benefits while helping patients navigate the complexity of sometimes-siloed benefit structures REMS programs: Manages care for manufacturer Risk Evaluation and Mitigation Strategies (REMS) program requirements, including REMS reporting, Phase IV trials, the dispensing of FDA trial drugs under strict protocols, and related clinical and cognitive counseling 8

9 Specialty Process Prescription Origination Benefits Investigation/Appeals Prior Authorization REMS Co-pay assistance Dispensing Patient Monitoring Reporting 9

10 An Historical Comparison of Key Specialty Pharmacy Functions Provides Market Context Specialty Pharmacy pre 2000 Specialty Pharmacy since 2000 Fragmented providers Mostly medical benefits High degree of assignment of benefits Home infusion Pack & Ship de Novo Startups Little to none brand identification Relatively few products Low touch pre adherence management Select provider networks Pharmacy benefit > medical benefit Benefits Investigations & Prior Authorizations Specialty infusion Contract driven Consolidation and investment Limited distribution networks Hundreds of products High Touch Source: Bill Sullivan, Specialty Pharmacy Solutions, 2014 Armada Specialty Pharmacy Summit 10

11 The Maturity of the Specialty Market is Creating a More Competitive Landscape 11

12 Specialty Pharmacy Market Share $98.3B Specialty Pharmacy Revenues (in billions) BioPlus, $0.8, 1% Cigna, $0.9, 1% Avella, $1.1, 1% Humana SP, $1.7, 2% Prime Therapeutics, $2.5, 3% All other retail, mail and SPs, $24.9, 25% CVS Health, $29.6, 30% Express Scripts, $17.2, 17% Diplomat, $3.4, 3% Briova/OptumRx, $6.5, 7% Walgreens, $9.8, 10% SOURCE: Fein AJ Economic report on retail, mail and specialty pharmacies. Pembroke Consulting, Inc., and Drug Channels Institute. January

13 Three Keys to Specialty Pharmacy Success Prescription Access Access to the specialty prescription referral from the prescribing physician. Rx Patient Access Must be in the payor s specialty pharmacy network to be reimbursed. Many MCO s have closed specialty pharmacy networks. Active engagement is required with each plan to gain access Patient Product Access Manufacturers may require pharmacy specific approval for a distributor to sell specific products to the pharmacy Complexity and requirements vary Product 13

14 Environmental Challenges and the Specialty Pharmacy Value Proposition The high cost, high management of specialty pharmacy demands the close coordination of activity and patient management among the key stakeholders PATIENT PHYSICIAN PAYER PHARMACEUTICAL MANUFACTURER Service Expectation Service Expectation Service Expectation Service Expectation Toll-free, 24-hour clinical support Benefits verification Direct home delivery Internet community Clinical extension of the office Compliance management Customized dose delivery Reimbursement coordination Patient education services Coding and billing assistance Competitive pricing Customized programs (e.g. disease treatment management and clinical support) Reduction in wasted drug Dedicated payer/sales support Shipping and delivery Nationwide distribution Special handling Overnight delivery Patient and office assistance Direct patient interaction Patient/physician reimbursement coordination Clinical trial drug delivery Indigent care / patient assistance programs (PAPs) REMS execution Measurement Measurement Measurement Measurement Improved outcomes Increased satisfaction Time savings Patient satisfaction More patients Cost savings Member satisfaction Patient satisfaction Prescriber satisfaction Improved patient access Regulatory compliance Increase sales 14

15 Examples of Manufacturer Limited Distribution Pharmacy Networks 15

16 Manufacturer s Shifting Channel Management Strategies Toward the Limited End of the Continuum Fewer Patients Orphan Exclusive/limited distribution partners enhance patient services, limit manufacturing costs, and ensure robust surveillance data. Revlimid Zytiga Larger Patient Populations Sprycel Cometriq Gilotrif Caprelsa Ibrutunib Tarceva Gleevec Nexavar Sutent Exclusive Distributor or specialty pharmacy Limited 2-20 specialty pharmacies (e.g., oral Oncology) Managed Orders routed to/from single point of contact Open Channel Traditional distribution channels (e.g., retail availability 16

17 The Challenge Educate in house pharmacies Provide availability Products Pricing Services Accreditation 17

18 In 2015, 250 Specialty Pharmacy Locations Have Achieved Full URAC Accreditation 18

19 Where is the Playing Field? Specialty at retail pharmacy focuses on the convergence of highly utilized specialty therapies that intersect with the Retail Pharmacy channel Traditional Drugs Specialty Drugs The overlap of common specialty therapies is key to winning at retail Driven by chronic diseases with maintenance patterns in large patient populations and for specific disease states associated with market specific concentrations (e.g. HIV, HCV, RA, etc.) Recurring business from loyal patients who want a convenient, discreet and face-to-face pharmacy transaction for their specialty oral solids and popular self-injected drugs Open network claims, government and any willing provider payers 19

20 Options to Enter the Specialty Market Partner Acquire Build Pros Fastest Market Entry Low start-up costs Have expertise Access to limited distributions Bridge to long-term solution / prove concept Instant Market entry/ competitive footprint Likely to purchase favorably Access to limited distributions Predictable ROI Customizable business framework Systems well integrated Increased availability of data Automation/State of the art Cons Profit sharing/ Fee for Service = Lower potential ROI Partnerships can be challenging Cost of management (more than expected) Difficulties of partner dissolution (if necessary) Expensive/ High Premium Capital Restrictions/ more useful elsewhere Cultural differences Systems integration issues Loss of acquired clients Few remaining with ability to complete on large scale Wall Street opinion (if public) Long timeline Large CAPEX Uncertain ROI Difficult obtaining expertise Scale insufficient to drive purchasing No Access to limited distributions Unwilling to do business with others Infrastructure Intensive 20

21 Thank you!