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Specialty Pharmacy: “The Inside Story”
John Aforismo, B.Sc. Pharm., R.Ph Chairman & Founder RJ Health Systems International, LLC
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AGENDA Current Reimbursement Trends Payor Models
Managed Care Expectations
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Payor Issues What issues are Payors struggling with?
Home Infusion Contracts Pharmacy Network Contracts Manufacturer Incentives Physician Contracts Specialty vs Buy & Bill Specialty Formularies Specialty Pharmacy Contracts
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Reimbursement: Trends
AWP? Average Wholesale Price AMP Average Manufacture Price SWP Suggested Wholesale Price AAC Average Acquisition Cost MAC? Maximum Allowable Cost ASP? Average Sales Price PAYORS Reimbursement Methodologies? HCPCS Drug Code vs NDC WAC? Wholesale Acquisition Cost
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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
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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
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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
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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
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Is A New National Benchmark Needed?
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Reimbursement: Observations
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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 AWP discounts range from AWP−23% (plus a small or no dispensing fee) AWP− (plus a small or no dispensing fee)
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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.
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Managed Care Expectations
Specialty Pharmacy Managed Care Expectations
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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 Billing Dispensing & Shipping
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NDC Drug Name Strengths Office Supportive Code
Payor/Management: ICD 9 ICD 10 Reimbursement CPT Drug Code Drug Units HCPCS Drug Code NDC Drug Name Strengths Min Max Dose Admin Code Office Supportive Code CMS 1500/UB04 Claim Form 857 Electronic Transfer
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CONTACT INFORMATION RJ Health Systems International, LLC 30 Cold Spring Road Rocky Hill, CT Phone: Fax:
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Specialty Pharmacy: “The Inside Story”
Stephen Lagano, Founding Principal, Altometrixs, LLC
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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”
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Discussion Guide Market Trends Stakeholders
Specialty Pharmacy Market Trends Stakeholders SP Business/Financial Model Reimbursement Trends Into the “Future” Discussion
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What is Specialty? Confusion: Clarity:
“Specialty” is term used to describe products, markets, companies, programs, etc. Clarity: For consistency the term “Specialty” will be utilized to describe products ,certain therapeutic areas and channels: 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
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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
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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
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The Specialty Markets Are About Growth
Drug Spend - Prescriptions Drug Spend: $270B, $320B, $404B Sources: HIRC & IMS Estimates
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Multiple Influences Affecting Specialty
Complex “Picture” Health Care Reform Rising Health Care Costs Patient Pool Increases Provider Pool Decreases New & Improved Specialty Biologics Quality of Care Affordable Care Act “Actual Care Act” Innovation Costs/drug Spend Increase ????? Increasing Challenges = Increasing Opportunities
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Trends Impacting Specialty
Patient Protection Act Affordable Care Act Health Care Reform Multiple Moving Parts – “Not All in the Same Direction” ACO/Health Exchanges Comparative Effectiveness Research More Patients Technology “Push”
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Trends Impacting Specialty
Patient Provider Plan Employers Health Care Costs/Drug Spend Increasing costs/spend Cost Containment Utilization Management Demonstrated Value Outcomes Pharmacy/Medical Benefit Management Decision/Payment Criteria
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Trends Impacting Specialty
Increasingly Orphan Drugs REMs Requirements Reimbursement Needs Drug Pipeline Simple /Traditional Complex/Specialty Retail/ Specialty Channels Limited/ Restricted Channels Critical Patient Needs Therapeutic Expertise
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Trends Impacting Specialty
Generics Employment Situation Other Important “Stuff” Simple /Traditional Complex/Specialty Copay Programs Biosimiliars TBD TBD
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Multiple Stakeholders & Multiple Interests
Specialty Pharmacy Patient Physician HUB/ Patient Center Mfg Payer Data, SP/ patient performance Funds Patient, Program Support Services Reimbursement Data, Data, Referrals Data Data, SP/Plan Performance Patient Info, care planning & mgt
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Stakeholder – SP Value Propositions
Service(s) Value Proposition Patient Benefits Investigation, Clinical/patient assessments, product fulfillment Product availability, financial support on OOP expenses, increased compliance and persistency, increase overall quality of life Physician Coordinated support for patient care, reimbursement support, Collaborative partner to extend, execute and report on patient care Payer Implement drug utilization requirements and report on patient and SP performance Cost savings through appropriate drug utilization, compliance data reporting to validate performance Manufacturer Patient delivered benefits support, compliance and disease management services, inventory management and data Provides valuable data that provides insight into patients and business performance, deliver services that increase compliance & persistency and supply chain efficiencies through inventory management and decreased returns HUB/Patient Support Center Interfacing with HUB for referrals, coordinate product fulfillment, benefits verification, services and data Coordinated care/data between SP, HUB and physician
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Specialty Pharmacy business Model and Reimbursement trends
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