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Specialty Pharmacy: “The Inside Story”. John Aforismo, B.Sc. Pharm., R.Ph Chairman & Founder RJ Health Systems International, LLC. AGENDA Current Reimbursement Trends Payor Models Managed Care Expectations. Payor Issues. Reimbursement: Trends. AMP Average Manufacture Price. SWP

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specialty pharmacy the inside story

Specialty Pharmacy:“The Inside Story”

John Aforismo, B.Sc. Pharm., R.Ph

Chairman & Founder

RJ Health Systems International, LLC



  • Current Reimbursement Trends
  • Payor Models
  • Managed Care Expectations
reimbursement trends
Reimbursement: Trends


AverageManufacture Price


Suggested Wholesale Price


Average Acquisition Cost


Average Wholesale Price


Maximum Allowable Cost


Average Sales Price


Reimbursement Methodologies?


Drug CodevsNDC


Wholesale Acquisition Cost

reimbursement trends1
Reimbursement: Trends
  • Payors (commercial & federal government) are using variations of the following:
      • ASP (average sales price)
      • AWP (average wholesale price)
      • WAC (wholesale acquisition cost)
      • SWP (suggested wholesale price)
      • AMP (average manufacturer’s price)
      • AAC (average acquisition cost)
      • MAC (maximum allowable cost)
        • Pharmacy benefit
        • Medical benefit
new reimbursement methodologies
New Reimbursement Methodologies

MAC (Maximum Allowable Cost)

  • “A list of prescription medications established by a health plan (PBM or Third Party) which will be covered at a generic product level price.”
  • Pharmacy Benefit:
  • Medical Benefit:
      • HCPCS Drug Code Level
      • NDC Level

Acquisition costs used as reference

new reimbursement methodologies1
New Reimbursement Methodologies

Average Acquisition Cost (AAC)

    • Used for Medicaid
    • Surveys of Pharmacy Purchases
    • Reflects the final drug price paid by the pharmacy after subtracting discounts
  • Each state reimbursement would be different
  • NA DAC- National Average Drug Acquisition Cost

Potential New Benchmark from CMS


NADAC National Average Drug Acquisition Cost

  • Developed in response to FDB ceasing publication of AWP in September 2011
  • More precise than AWP/MAC
  • For Medicaid Drug Reimbursement

Is A New

National Benchmark


reimbursement observations
Reimbursement Observations

Present Payor Contracts

Retail Pharmacy

  • Brand name drugs:
    • Usually AWP discounts range from AWP−14% to AWP−16% (plus dispensing fee) ($1.40 – $1.50)
  • Generic drugs:
    • MAC plus dispensing fee (AWP-76 or MAC) ($1.40 – $1.50)

Mail Order Pharmacy

    • Brand name drugs:
      • AWP discounts range from AWP−23% (plus a small or no dispensing fee)
    • Generic drugs:
      • AWP− (plus a small or no dispensing fee)
reimbursement observations1
Reimbursement Observations

Specialty Pharmacy

  • AWP discount can vary by drug with maximum discounts seen of AWP–35%
  • Payors requiring NDC on claim when HCPCS Drug Codes is supplied.
specialty pharmacy
Specialty Pharmacy

Managed Care Expectations

specialty patient workflow
Specialty Patient Workflow

Benefits Verification

Proactive Clinical Assessment

Initial Prescription Received

Prior Authorization & Step Therapy

Clinical Reassessment

Care Coordination

Compliance & Persistence

Clinical Intervention

Member Outreach

Personalized Education


Dispensing & Shipping

payor management



Claim Form


Electronic Transfer

contact information

RJ Health Systems International, LLC30 Cold Spring RoadRocky Hill, CT 06067 Phone: 860-563-1223 Fax: 860-563-1650E-Mail: info@rjhealthsystems.com

specialty pharmacy the inside story1

Specialty Pharmacy: “The Inside Story”

Stephen Lagano, Founding Principal, Altometrixs, LLC

today s objectives
Today’s Objectives
  • Overview Specialty Pharmacy And Market
  • Identify Significant Impactful Trends
  • Identify Key Stakeholders And Their Expectations
  • Review The Specialty Pharmacy Business/Financial Model
  • Business/Patient Impact – Reimbursement & Care Perspective
  • Discussion Into The “Future”
discussion guide
Discussion Guide

Specialty Pharmacy




SP Business/Financial Model

Reimbursement Trends

Into the “Future” Discussion

what is specialty
What is Specialty?

Specialty Products

Specialty Channels*

  • Injectable and infusion therapies (can be an oral drug)
  • High-cost ($5,000 and up per patient per year) therapies
  • Therapies that require complex care (“high touch” services)
  • Special handling
  • Specialty Distributors
    • Servicing physicians
    • Clinics, etc.
  • Specialty Pharmacies
  • * - Specialty products can go through the retail channel
specialty pharmacy1
Specialty Pharmacy
  • Specialty Pharmacy:
    • Specialty pharmacy is a “closed door”pharmacy that is delivering high cost drugs for complex therapies that require patient case management and “high touch” services
    • Specialty pharmacies provide day-to-day patient management services to optimize the patient’s clinical outcomes, including:
      • Coordination of care across all providers
      • Patient counseling and support to assist with injection technique
      • medication side effects and disease complications
      • Recognizing and responding to suboptimal responses to therapy
      • Identifying insurance coverage and reimbursement support services to assist the patient with out-of-pocket expenses that may limit the patient’s access to the drug
specialty markets
Specialty Markets
  • Specialty Markets:
    • The specialty markets is an aggregate of specialty of specialty products under therapeutic categories
    • Common specialty markets therapeutic areas*:
      • Rheumatoid Arthritis
      • Multiple Sclerosis
      • Oncology
      • HIV/AIDS
      • Human Growth Hormone
      • Hepatitis C
      • Infertility
      • Auto-Immune

* - Sample list not meant to be exhaustive

the specialty markets are about growth


The Specialty Markets Are About Growth

Drug Spend - Prescriptions

Drug Spend: 2006 - $270B, 2011 - $320B, 2016 - $404B

Sources:HIRC & IMS Estimates

multiple influences affecting specialty
Multiple Influences Affecting Specialty

Complex “Picture”

Health Care Reform

New & Improved Specialty Biologics

Patient Pool Increases

“Actual Care Act”

Affordable Care Act



Quality of Care

Provider Pool Decreases

Costs/drug Spend Increase

Rising Health Care Costs

Increasing Challenges = Increasing Opportunities

trends impacting specialty
Trends Impacting Specialty

Affordable Care Act

Patient Protection Act

Health Care Reform

Multiple Moving Parts – “Not All in the Same Direction”

Comparative Effectiveness Research

ACO/Health Exchanges



More Patients

trends impacting specialty1
Trends Impacting Specialty





Health Care Costs/Drug Spend

Increasing costs/spend

Cost Containment

Demonstrated Value

Utilization Management


Decision/Payment Criteria

Pharmacy/Medical Benefit Management

trends impacting specialty2
Trends Impacting Specialty

Increasingly Orphan Drugs

REMs Requirements

Reimbursement Needs

Drug Pipeline

Simple /Traditional Complex/Specialty

Retail/ Specialty Channels

Critical Patient Needs

Limited/ Restricted Channels

Therapeutic Expertise

trends impacting specialty3
Trends Impacting Specialty

Employment Situation


Other Important “Stuff”

Simple /Traditional Complex/Specialty

Copay Programs




multiple stakeholders multiple interests
Multiple Stakeholders & Multiple Interests




Data, SP/Plan Performance

Patient Info, care planning & mgt

Patient, Program Support Services


Data, SP/ patient performance


Data, Referrals

Specialty Pharmacy


HUB/ Patient Center

Data, Referrals