Specialty at Retail: White Paper and Case Study
New programs enable retail pharmacies to participate in the growing specialty drug market
Specialty drugs are disrupting the pharmacy market, presenting both challenges and opportunities for independent community pharmacies.
A Rapidly Growing Market
The situation is that the number of high-cost specialty drugs is growing rapidly and total spending on specialty drugs is rising dramatically, with no end in sight. A few years ago, specialty drugs were barely a blip on the radar. In 1990 there were a mere 10 specialty drugs, but in 2012 there were more than 300.1 In 2013, 70% of the new drugs approved by the FDA were specialty products2 and hundreds more specialty drugs are in the development pipeline. Reports show that fewer than 4% of individuals use specialty medications3 and these medications represent just 2.3% of prescriptions,4 but they comprise more than 30% of drug spending, which is projected to increase to 50% or more by 2020.
|Total Industry Specialty Spend||$92B||$127B||$179B||$235B|
|Annual Growth Rate||18%||17%||17%||17%|
|Percent of Total Drug Spend||30%||38%||45%||50%|
Source: Insights 2014: Advancing the Science of Pharmacy Care; CVS/Caremark5
The overall trend for non-specialty drugs was -3.8% in 2012 and 0.8% in 2013. In contrast, the overall trend for specialty drugs during this time was 18.3% in 2012 and 15.6% in 2013. Looking ahead, spending on traditional, non-specialty drugs is projected to be relatively flat, with specialty drugs being the primary driver for drug spending growth.6
Considerations in distributing specialty drugs
While currently a significant proportion of these products is managed through the specialty pharmacy channel, many specialty drugs can be dispensed by hospitals, clinics — and even retail pharmacies.
For community pharmacies, the challenge is understanding how to participate in this growth area in a way that fits with a pharmacy’s strategy, staffing, operations, systems and overall capabilities.
In order for retail pharmacies to get into the specialty game, pharmacies need:
- Access to specialty products, which at times is limited by manufacturers
- Access to specialty patients, which can be restricted by payers
- Access to specialty services, including clinical and operational capabilities, which are unique to the provision of specialty drugs and can be complex
Clinical capabilities include providing 24-hour access to pharmacists with disease-state experience, intensive disease-specific counseling, case management, and adherence programs.
Operational capabilities include the ability to store and handle specialty drugs; coordination of refills and prescription renewals; reimbursement assistance, which includes securing prior authorization; benefits investigation; communication with physicians; data systems for tracking and reporting adherence and outcomes; and much more.
Other issues that must be considered include contracting, certification and training, and staffing.
Why specialty drugs matter to independent community pharmacies
Specialty drugs represent a new revenue stream with significant growth potential, represent a source of attractive profits, and are provided to patients who are extremely valuable as they have multiple prescriptions (from 3 to 11 on average). Also, specialty services are a good fit for independent community pharmacies because providing them involves high-touch service, education and counseling, which are strengths of independent pharmacies.
How retail pharmacies can participate
Multiple options exist for retail community pharmacies to offer specialty drugs at retail, including building a specialty pharmacy from scratch (which can be time consuming and expensive), buying a specialty pharmacy (which can be expensive and is not a practical, realistic option for most community pharmacies), or partnering in order to dispense specialty medications and offer specialty services and capabilities from a retail location. Health Mart’s Specialty Solutions program is a form of partnership that is helping retail pharmacies participate in the specialty business.
Specialty drugs are not a short-term fad that will soon go away. They represent an important and growing part of the future pharmacy business. With this is mind, every pharmacy owner can benefit by assessing this growth area and deciding how best to proceed.
To think through the options and make the best decision for your pharmacy, additional information about specialty at retail is available from resources such as:
- National Association of Specialty Pharmacy (NASP)
- Specialty Pharma Journal
- CPO (Chief Pharmacy Officer)
- Specialty Pharmacy Certification Board (SPCB)
- Articles include:
- Community Specialty Pharmacy: The Time Is Now! Specialty Pharmacy Times, August 19, 2014
- Pathways to Specialty Pharmacy: How to Gain a Foothold in a Field Dominated by ESRX, CVS, WAG, Drug Topics, July 10, 2014