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Specialty Pharmacy Channel Distribution Panel. Moderated by Mark Zitter April 3, 2013. Most Payers Limit the Number of Specialty Pharmacies They Use…. For specialty agents not subject to manufacturer-imposed limited distribution, my organization…. Payers n = 103. Percentage of Payers.

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Specialty pharmacy channel distribution panel

Specialty Pharmacy Channel Distribution Panel

Moderated by Mark ZitterApril 3, 2013

Most payers limit the number of specialty pharmacies they use
Most Payers Limit the Number of Specialty Pharmacies They Use…

For specialty agents not subject to

manufacturer-imposed limited distribution, my organization…

Payers n = 103

Percentage of Payers

But only a minority require use of specialty pharmacy vendors
…But Only a Minority Require Use of Specialty Pharmacy Vendors

Third party vendor use (specialty pharmacy, wholesaler/distributor)

is ______ for your network physicians.


Fall 2012 Payers n = 103

No significant differences from Spring 2012 report

Payers see plenty of excess cost in the system
Payers See Plenty of Excess Cost In the System… Vendors

How much excess cost you could eliminate from cancer treatment

without negatively impacting health outcomes?

Percentage of Payers

And think most excess cost relates to drugs and care sites
…And Think Most Excess Cost Relates to Drugs and Care Sites

How significantly does each of the following drive excess cost in oncology care?

Significant driver of excess cost (5)

Above average driver of excess cost (4)

Mid-range driver of excess cost (3)

Minimal driver of excess cost (2)

Does not drive excess cost at all (1)

Payers want more oral therapy to go through specialty pharmacy
Payers Want More Oral Therapy to Go Through Specialty Pharmacy…

What percentage of your organization’s oral oncology therapy volume

goes through each of the following distribution channels?

What is your organization’s preferred method of oral oncology therapy distribution? 

Share of Total Oral Therapy Distribution

No significant changes from Summer 2011 edition

And so do oncology office practice managers
…and So Do Oncology Office Practice Managers Pharmacy…

What percentage of your organization’s oral oncology therapy volume

goes through each of the following distribution channels?

What is your organization’s preferred method of oral oncology therapy distribution? 

Share of Total Oral Therapy Distribution

No significant changes from Summer 2011 edition

For infusible therapies payers want to reduce buy and bill
For Infusible Therapies, Payers Want to Reduce Buy-and-Bill…

What percentage of your office-administered/infusible oncology therapy volume

goes through each of the following distribution channels?

What is your preferredmethod of office-administered/infusible oncology therapy distribution? 

Share of Total Office-Administered / Infusible Therapy Distribution

No significant changes from Summer 2011 edition

While practice managers like the status quo for distribution channels
…While Practice Managers Like the Status Quo for Distribution Channels

What percentage of your office-administered/infusible oncology therapy volume

goes through each of the following distribution channels?

What is your preferredmethod of office-administered/infusible oncology therapy distribution? 

Share of Total Office-Administered / Infusible Therapy Distribution

No significant changes from Summer 2011 edition

Site of care preferences vary by disease but payers dislike the hospital
Site-of-Care Preferences Vary by Disease, But Payers Dislike the Hospital

What is your organization’s preferred site-of-care

for professionally administered therapies in the following categories? 

Payers n = 101

Percentage of Payers

Asp payment has sent patients to hospitals but reduced total costs
ASP Payment Has Sent Patients to Hospitals, But Reduced Total Costs

Since adopting ASP-based reimbursements in your commercial population,

which of the following has your organization experienced?

Payers n = 76

Percentage of Payers

The distribution channel challenge
The Distribution Channel Challenge Total Costs

  • Payers know there is waste in the system and want to use distribution channels that will minimize excess expenditures

  • With costs continuing to grow and care delivery becoming increasingly integrated with financial risk, which specialty distribution channel(s) will win?

  • Do we need all these channels? Does each add real and differentiated value?

  • How can and should the various channels integrate?

  • How can each channel prove its value to payers?

Specialty pharmacy channel distribution panel1

Specialty Pharmacy Total CostsChannel Distribution Panel

Moderated by Mark ZitterApril 3, 2013


Specialty pharmacy channel discussion hospital integrated delivery network channel

Specialty Pharmacy Channel Discussion Total CostsHospital/Integrated Delivery Network Channel

Thomas Blissenbach

Director, Business Development

Fairview Pharmacy Services, Minneapolis

Fairview pharmacy services llc
Fairview Pharmacy Services, LLC Total Costs

  • Specialty Pharmacy 17+ years

  • URAC Standards

  • Payer – Pharma agreements

  • Integrated Care Model

Hospital idn channel
Hospital/IDN Channel Total Costs

  • Relatively small today

  • Hasn’t been focus

  • Size matters

  • Specialists = Specialty Drugs

  • Need to do it right

  • Variety of options

Hospital idn channel strengths
Hospital/IDN Channel Strengths Total Costs

  • Ambulatory care

  • Point of care

  • Improve adherence

  • Integrated Care Model

  • Access to medical record

  • Therapy Management

  • Compliments new payment models: ACO, At Risk Payer Agreements

  • Capture

Hospital idn weaknesses
Hospital/IDN Weaknesses Total Costs

  • Hasn’t been focus

  • Expertise

  • Capital/space

  • Payer – Pharma agreements

  • Data capability

Hospital idn opportunities
Hospital/IDN Opportunities Total Costs

  • Revenue/margin

  • Retain patients

  • Improve outcomes

Hospital idn threats
Hospital/IDN Threats Total Costs

  • Loss of control

  • Missed opportunity

Independent pharmacy channel

Independent Pharmacy Channel Total Costs

Mike Ellis

Corporate Vice President, Specialty Pharmacy & Infusion,


Independent pharmacy channel1

Independent Pharmacy Channel Total Costs

Kurt A. Proctor, Ph.D., RPh

Senior Vice President, Strategic Initiatives

National Community Pharmacists Association

National community pharmacists association
National Community Pharmacists Association Total Costs

  • Founded in 1898 as the National Association of Retail Druggists (NARD)

  • Represents pharmacist owners, managers, and employees

  • 23,000 non-publicly owned pharmacies

  • Single store, multiple locations, regional chains

Independent pharmacies
Independent Pharmacies Total Costs

1,800 rural independent pharmacies serve as the only pharmacy provider in their community

Independent pharmacists
Independent Pharmacists Total Costs

  • Patients trust us, choose us

  • Compete on service now

  • RPh available 24/7/365

  • Able to document

  • Able to bill

  • Want to care for their patients completely, including most “specialty” drugs

Buford road pharmacy richmond va
Buford Road Pharmacy, Richmond, VA Total Costs

Health Living Center – Clinical Services

  • Hemoglobin A1c Test

  • Blood Sugar Test

  • Blood Pressure

  • Bone Density Screening

  • Cholesterol Screening

  • Coumadin Clinic

  • Medication Therapy Management

  • Medicare Part D Consultation

  • Diabetes Management

  • Routine & Travel ImmunizationsInfluenza, Pneumonia, Shingles, Meningitis, Hepatitis A & B, Polio, Yellow Fever, Rabies, Tetanus/Diphtheria/Pertussis, Typhoid, Japanese Encephalitis, Human Papillomavirus

Independent advantages
Independent Advantages Total Costs

  • Niche service experience

  • Understand the need to deliver support services and do so at competitive prices

  • Are the pharmacy home for this high-touch group of patients

  • Independent pharmacies provide face-to-face service that others can’t

Core message from ncpa
Core Message from NCPA Total Costs

Independent pharmacies in your network will yield documented patient adherence and monitoring

Independent pharmacists know…

  • Their patients

  • Their patients’ family

  • Their patients’ caregivers

  • Their patients’ doctors

  • Their patients’ environment

Specialty pharmacy and dramatic change in the oncology channel discussion

Specialty Pharmacy and Dramatic Change In the Oncology Channel Discussion

Burt Zweigenhaft

CEO Onco360

Ralph stayer flight of the buffalo 1994
Ralph Stayer Channel DiscussionFlight of the Buffalo (1994)

"Change is hard because people overestimate the value of what they have—and underestimate the value of what they may gain by giving that up.”

Oncology drug market hitting critical inflection point
Oncology Drug Market Channel DiscussionHitting Critical Inflection Point

  • Oncology Rx spend projected to grow to $130B by 2020

  • 50% of drugs in development are oncology medications

    • 36 new cancer drugs next 3 years

    • 907 cancer drug clinical trials or FDA review, 2x number in pipeline 6 years ago

  • 90% of oncology drugs approved in the last five years cost $20,000/3-month cycle

Sources: The Specialty Pharmacy Times, the National Institutes of Health, and Industry Reports.

Purchaser's Demand Call to Action Trend is Unsustainable! Channel Discussion

  • Commercial Payer Cancer Cost 2010: * NE Commercial Payer

    • $457.6MM per/1MM lives

      • (Includes: In-Patient, Out-Patient, E&M, Rx Administration, Drugs, Surgery, Radiation, Imaging and Labs)

    • $187.2MM per/1MM lives

      • (Includes: E&M, Rx Administration and Drugs)

  • Cost trend growth faster than CPI & Medical Cost Inflation at 12% - 23%

    • Medicare cancer incidence 48 per 1,000 members

    • Commercial cancer incidence 9 per 1,000 members

    • 35% undergoing treatment

Average Payer Costs Per Cancer Patient

Sources: Specialty Pharmacy Times, NIH, HealthSource, ASCO, and Industry Reports.

75 increase in cancer incidence projected by 2030
75% Increase In Cancer Incidence Projected By 2030 Channel Discussion

1.7 MM New Cancer Cases Projected for 2012….was 1.4 MM in 2010

10,000 New Beneficiaries in Medicare or 3.6 MM a year

The average oncologist s drug spend
The Average Oncologist Channel Discussion’s Drug Spend

  • Annually Prescribes $3MM

Payer Patient Mix

By Drug Admin Route

Drugs used to drive dominate practice margins
Drugs Used to Drive-Dominate Practice Margins Channel Discussion

Decline In Rx Margin for Oncologists

Care shifts to hospitals at higher costs
Care Shifts to Hospitals at Higher Costs Channel Discussion

  • Un-sustainable shift in cost with no improvement in care

  • Leveraging 340b drug costs and Part A versus Part B Medical Billing

  • Medicare and Payers will burn down reimbursement over time

54% Of Practices Closed, Sent Patients Elsewhere, Or Were Acquired By Hospitals

Source: Community Oncology Alliance, 2011 Study

Moving away from traditional drug buy and bill
Moving Away From Traditional Drug Channel Discussion“Buy and Bill”

Oncologist Shortage Crisis = Need Physician Extenders Channel Discussion

Board Certified

Oncology Pharmacists

Fill GAP

Oncology drug dispensing is complex
Oncology Drug Dispensing is Complex Channel Discussion

Typical Daily Chemotherapy Regimen: Across Multiple Benefits

Typical Chemo Administration Kit:

Pharma hub workflow
Pharma HUB Workflow Channel Discussion

Patient Support Services











Oncology Pharmacy



Universal problem in cancer oncology
Universal Problem In Cancer - Oncology Channel Discussion

“Payers own ALL Medical Patients but not always the Specialty or Oral Drug Risks due to PBM carve out nature of Industry”

Benefit Fragmentation

Results In

Dispensing Fragmentation

Clinical Fragmentation

Poor Outcomes

Analytical and Registry Gaps

Less Patient/Provider Satisfaction

Less Utilization Control

Less Cost Contracting Control

More Adverse Events


Adverse Site of Care Transfers

Drug Waste

  • PBM

    • Orals and sometimes Injectable

  • Specialty

    • Orals, Injectable and sometimes Infused newer agents

  • Medical

    • Infused or Physician-Outpatient Drug Administration

Oncology requires integrated benefit solution
Oncology Requires Integrated Benefit Solution Channel Discussion

  • Drugs will be as ASP+ Whatever

  • Value of Clinical Services most important to patient, oncologist, Pharma and payers

  • Leverage combined experience to optimize benefit integration and control

  • ACO’s strive to achieve responsible initiatives and activities to deliver on quality and value

Care Mgmt.

Value based continuum of care services
Value Based Continuum of Care Channel DiscussionServices

Oncology pharmacy channel requires unique competencies
Oncology Pharmacy Channel Requires Unique Competencies Channel Discussion

  • Board Certified Oncology Pharmacy Experts

  • Comprehensive Benefit Access Oral-Injected-Infused

  • Compressed Operational Timelines

  • Treatment Day & Dose Dispensing

  • Pathway Concordance with Evidence and Clinical Flexibility

  • Medication Treatment Management (MTM)

  • Patient Financial Assistance and Insurance Exchanges

  • Access to Limited Distribution and Pedigree drugs

  • Highest Standard Accreditation and Facilities

  • USP 795 & 797 Compliant Clean Rooms aka NECC

  • NIOSH Compliant Product Storage & Handling aka NECC

More change ahead cms driving bus
More Change Ahead CMS Driving Bus Channel Discussion

  • Near term is tiered ASP….. meaning that the larger the ASAP the smaller the percentage of add-on payment

  • Seems less likely given that sequestration occurred and docs are now effective getting roughly ASP plus 4.3% or loss of 33% margin

  • Longer term payment options: 

    • Bringing back CAP

    • Moving some or all buy and bill drugs intro Part D (Yesterday) 

  • Coverage options are the ones we always talk about—greater payment for outcomes, following clinical protocols, risk sharing arrangements (think ACOs) and value based purchasing!

  • General issue—when does the exception (340B) swallow the rule (ASP)?  Tremendous growth of 340B could become the majority of cancer drugs purchased

Part b to part d late breaking news
Part B to Part D Late Breaking News Channel Discussion

  • CMS quote, MA = Medicare Advantage plans, which are Medicare plans offered by a health plan such as Aetna, United, etc.  Patients are able to CHOOSE to brown bag a Med B drug, and have it covered under Part D so long as the following stipulations are met:

  • Patient is enrolled in a Medicare Advantage plan that offers Part D coverage

  • The drug being prescribed is a Part B drug that CAN ALSO be covered under Part D

  • The patient ELECTS/STATES PREFERENCE to receive the drug from a pharmacy instead of getting it from their physician

Machiavelli circa 1469 1527
Machiavelli Channel DiscussionCirca 1469-1527

"Whosoever desires constant success must change his conduct with the times.”

Specialty pharmacy channel distribution panel2

Specialty Pharmacy Channel DiscussionChannel Distribution Panel

Moderated by Mark ZitterApril 3, 2013