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Specialty Pharmacy Channel Distribution Panel Moderated by Mark Zitter April 3, 2013.

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Presentation on theme: "Specialty Pharmacy Channel Distribution Panel Moderated by Mark Zitter April 3, 2013."— Presentation transcript:

1 Specialty Pharmacy Channel Distribution Panel Moderated by Mark Zitter April 3, 2013

2 For specialty agents not subject to manufacturer-imposed limited distribution, my organization… Most Payers Limit the Number of Specialty Pharmacies They Use… Payers n = 103 Percentage of Payers Unsure Other Contracts with greater than 10 third-party specialty pharmacies Contracts with 5-10 third-party specialty pharmacies Contracts with 2-4 third-party specialty pharmacies Contracts with one third-party specialty pharmacy Wholly or jointly owns a specialty pharmacy

3 …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 30%

4 Payers See Plenty of Excess Cost In the System… How much excess cost you could eliminate from cancer treatment without negatively impacting health outcomes? Percentage of Payers

5 …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)

6 Payers Want More Oral Therapy to Go Through Specialty Pharmacy… Share of Total Oral Therapy Distribution What is your organizations preferred method of oral oncology therapy distribution? What percentage of your organizations oral oncology therapy volume goes through each of the following distribution channels? No significant changes from Summer 2011 edition

7 …and So Do Oncology Office Practice Managers What is your organizations preferred method of oral oncology therapy distribution? Share of Total Oral Therapy Distribution What percentage of your organizations oral oncology therapy volume goes through each of the following distribution channels? No significant changes from Summer 2011 edition

8 For Infusible Therapies, Payers Want to Reduce Buy-and-Bill… Share of Total Office-Administered / Infusible Therapy Distribution What is your preferred method of office-administered/infusible oncology therapy distribution? No significant changes from Summer 2011 edition What percentage of your office-administered/infusible oncology therapy volume goes through each of the following distribution channels?

9 …While Practice Managers Like the Status Quo for Distribution Channels What is your preferred method of office-administered/infusible oncology therapy distribution? Share of Total Office-Administered / Infusible Therapy Distribution What percentage of your office-administered/infusible oncology therapy volume goes through each of the following distribution channels? No significant changes from Summer 2011 edition

10 What is your organizations preferred site-of-care for professionally administered therapies in the following categories? Cancer Age-related macular degeneration / RVO Rheumatoid arthritis Multiple sclerosis Hepatitis C Fabry disease Site-of-Care Preferences Vary by Disease, But Payers Dislike the Hospital Percentage of Payers Payers n = 101

11 ASP Payment Has Sent Patients to Hospitals, But Reduced Total Costs Percentage of Payers Payers n = 76 Reduction in costs Migration from physician office to other care delivery sites (hospital, infusion center, etc.) Changes in drug mix Shift from IV products to subcutaneous products None of the above Reduction in aggregate drug use Increase in aggregate drug use Disruption of physician network Increase in costs Improved health outcomes Worsening health outcomes Since adopting ASP-based reimbursements in your commercial population, which of the following has your organization experienced?

12 The Distribution Channel Challenge 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?

13 Specialty Pharmacy Channel Distribution Panel Moderated by Mark Zitter April 3, 2013

14 Specialty Pharmacy Channel Discussion Hospital/Integrated Delivery Network Channel Thomas Blissenbach Director, Business Development Fairview Pharmacy Services, Minneapolis

15 Fairview Pharmacy Services, LLC Specialty Pharmacy 17+ years URAC Standards Payer – Pharma agreements Integrated Care Model

16 Hospital/IDN Channel Relatively small today Hasnt been focus Size matters Specialists = Specialty Drugs Need to do it right Variety of options

17 Hospital/IDN Channel Strengths 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

18 Hospital/IDN Weaknesses Hasnt been focus Expertise Capital/space Payer – Pharma agreements Data capability

19 Hospital/IDN Opportunities Revenue/margin Retain patients Improve outcomes

20 Hospital/IDN Threats Loss of control Missed opportunity

21 Independent Pharmacy Channel Mike Ellis Corporate Vice President, Specialty Pharmacy & Infusion, Walgreens

22 Independent Pharmacy Channel Kurt A. Proctor, Ph.D., RPh Senior Vice President, Strategic Initiatives National Community Pharmacists Association

23 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

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

25 Independent Pharmacists 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

26 Buford Road Pharmacy, Richmond, VA 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 Immunizations Influenza, Pneumonia, Shingles, Meningitis, Hepatitis A & B, Polio, Yellow Fever, Rabies, Tetanus/Diphtheria/Pertussis, Typhoid, Japanese Encephalitis, Human Papillomavirus Health Living Center – Clinical Services

27 Independent Advantages 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 cant

28 Core Message from NCPA 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

29 Specialty Pharmacy and Dramatic Change In the Oncology Channel Discussion Burt Zweigenhaft CEO Onco360

30 Ralph Stayer Flight of the Buffalo (1994) 30 "Change is hard because people overestimate the value of what they haveand underestimate the value of what they may gain by giving that up.

31 Oncology Drug Market Hitting Critical Inflection Point Oncology Rx spend projected to grow to $130B by % 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 31 Sources: The Specialty Pharmacy Times, the National Institutes of Health, and Industry Reports.

32 Purchaser's Demand Call to Action Trend is Unsustainable! Sources: Specialty Pharmacy Times, NIH, HealthSource, ASCO, and Industry Reports. Average Payer Costs Per Cancer Patient 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 32

33 75% Increase In Cancer Incidence Projected By MM New Cancer Cases Projected for 2012…. was 1.4 MM in ,000 New Beneficiaries in Medicare or 3.6 MM a year

34 The Average Oncologists Drug Spend Annually Prescribes $3MM 34 By Drug Admin Route Payer Patient Mix

35 Drugs Used to Drive-Dominate Practice Margins 35 Decline In Rx Margin for Oncologists

36 Care Shifts to Hospitals at Higher Costs 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 36 Source: Community Oncology Alliance, 2011 Study 54% Of Practices Closed, Sent Patients Elsewhere, Or Were Acquired By Hospitals

37 Moving Away From Traditional Drug Buy and Bill 37

38 Oncologist Shortage Crisis = Need Physician Extenders 38 Board Certified Oncology Pharmacists Fill GAP

39 Concordance with Evidence and Outcomes is the Issue

40 Typical Daily Chemotherapy Regimen: Across Multiple Benefits Typical Chemo Administration Kit: Oncology Drug Dispensing is Complex 40

41 Cancer Protocols = Drugs are Inter-dependent

42 Pharma HUB Workflow 42 Patient Support Services 3PL Manufacturer Patient Provider (MD/Hospital ) Oncology Pharmacy Payer Product Payment Data Claims BCOP Key

43 Benefit Fragmentation PBM – Orals and sometimes Injectable Specialty – Orals, Injectable and sometimes Infused newer agents Medical – Infused or Physician-Outpatient Drug Administration 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 Hospitalization Adverse Site of Care Transfers Drug Waste Universal Problem In Cancer - Oncology 43 Payers own ALL Medical Patients but not always the Specialty or Oral Drug Risks due to PBM carve out nature of Industry

44 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 ACOs strive to achieve responsible initiatives and activities to deliver on quality and value Oncology Requires Integrated Benefit Solution 44 Medical Oncology Drugs Specialty Oncology PBM Oral Oncology Care Mgmt.

45 Value Based Continuum of Care Services 45 ServiceDescription Dispensing Total sourcing solution, drug pedigree, ASP + WHATEVER (oral, injected, infused, administration supplies) Guidelines Specialized BCOPs facilitates concordance with evidence and coverage riles NCCN, ASCO, or payer evidence-based guidelines Dosing Controls Treatment day/dose dispensing, including stat and emergency dose capabilities, control waste MTM Medication Treatment Management for patients to improve safety, & reduce adverse events thus contributes value of pharmacists Financial Assistance Dedicated support for patients who need financial assistance Exchanges will need Premium Enrollment Assistance Metrics Data reporting for visibility, accountability and risk sharing performance measures

46 46 Oncology Clinical Service Values… Case Studies Clinical Program Clinical Intervention Intervention Value OncoPaths Concordance Evidence-Based Guidelines$32,128 Off-Label Authorization Controls$9,523 Managing To FDA and Labeling Guidelines$4,677 OncoDose Treatment Day Dispensing Waste Control$3,090 Dose Review and Modification$4,032 Dose Review and Modification$2,018 OncoMTM Adverse Event Safety Monitoring$5,605 Adverse Event Avoidance$2,921 Dose Safety Check Avoided AE$9,523

47 Oncology Pharmacy Channel Requires Unique Competencies 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 47

48 More Change Ahead CMS Driving Bus 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 aboutgreater payment for outcomes, following clinical protocols, risk sharing arrangements (think ACOs) and value based purchasing! General issuewhen does the exception (340B) swallow the rule (ASP)? Tremendous growth of 340B could become the majority of cancer drugs purchased

49 Part B to Part D Late Breaking News 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

50 Machiavelli Circa "Whosoever desires constant success must change his conduct with the times.

51 Specialty Pharmacy Channel Distribution Panel Moderated by Mark Zitter April 3, 2013


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