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Specialty Pharmacy:“The Inside Story”John Aforismo, B.Sc. Pharm., R.Ph
Chairman & FounderRJ Health Systems International, LLC
AGENDA
1. Current Reimbursement Trends2. Payor Models3. Managed Care Expectations
Payor Issues
What issues are Payors struggling
with?
Home Infusion
Contracts
Pharmacy Network Contracts
Manufacturer Incentives
Physician Contracts
Specialtyvs
Buy & BillSpecialty Formularies
Specialty Pharmacy Contracts
Reimbursement: Trends
AWP?
Average Wholesale
Price
AMP
AverageManufacture
Price
SWP
Suggested Wholesale
Price
AAC
Average Acquisition
Cost
MAC?
Maximum Allowable
CostPAYORSReimbursement Methodologies? WAC?
Wholesale Acquisition
Cost
ASP?
Average Sales Price
HCPCS
Drug Codevs
NDC
Reimbursement: Trends• Payors (commercial & federal government) are using
variations of the following:1. ASP (average sales price)
2. AWP (average wholesale price)
3. WAC (wholesale acquisition cost)
4. SWP (suggested wholesale price)
5. AMP (average manufacturer’s price)
6. AAC (average acquisition cost)
7. MAC (maximum allowable cost)
• Pharmacy benefit
• Medical benefit
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 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
Needed?
Reimbursement: Observations
Reimbursement Observations
Present Payor ContractsRetail 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 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
Managed Care Expectations
Specialty Patient Workflow
Initial Prescription Received
Benefits Verification
Proactive Clinical Assessment
Care Coordination
Personalized Education
Dispensing & Shipping
Member Outreach
Clinical Reassessment
Clinical Intervention
Billing
Compliance & Persistence
Prior Authorization & Step Therapy
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
CMS1500/UB04Claim Form
857Electronic Transfer
CONTACT INFORMATION
RJ Health Systems International, LLC30 Cold Spring RoadRocky Hill, CT 06067
Phone: 860-563-1223 Fax: 860-563-1650
E-Mail: [email protected]
Specialty Pharmacy: “The Inside Story”
Stephen Lagano, Founding Principal, Altometrixs, LLC
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
Market TrendsStakeholders
SP Business/Financial Model
Into the “Future” Discussion
Specialty Pharmacy
Reimbursement Trends
What is Specialty?
Confusion: • “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:
• 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 Products
• Specialty Distributors• Servicing physicians• Clinics, etc.
• Specialty Pharmacies
* - Specialty products can go through the retail channel
Specialty Channels*
Specialty PharmacySpecialty 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: • 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 GrowthDrug Spend - Prescriptions
2006 2011 2016
Branded Generic Specialty
% A
nn
ual S
pen
d
0%
10%
20%
30%
40%
50%
60%
70%
80%
68%
57%
27%
14%18%
33%
18%
25%
40%
Drug Spend: 2006 - $270B, 2011 - $320B, 2016 - $404B
Sources: HIRC & IMS Estimates
Multiple Influences Affecting Specialty
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
Complex “Picture”
Trends Impacting Specialty
Health Care Reform
Multiple Moving Parts – “Not All in the Same Direction”
Patient Protection Act
Affordable Care Act
More Patients
ACO/Health Exchanges
Technology“Push”
Comparative Effectiveness
Research
Trends Impacting Specialty
Health Care Costs/Drug
Spend
Increasing costs/spend
Provider Employers
Cost Containment
Outcomes Demonstrated Value
Patient Plan
Utilization Management
Pharmacy/Medical Benefit Management
Decision/Payment Criteria
Trends Impacting Specialty
Drug Pipeline
Simple /Traditional Complex/Specialty
Retail/ Specialty Channels
Therapeutic Expertise
Critical Patient Needs
Limited/ Restricted Channels
Increasingly Orphan Drugs
Reimbursement Needs
REMs Requirements
Trends Impacting Specialty
Other Important
“Stuff”
Simple /Traditional Complex/Specialty
Biosimiliars TBD TBDCopay
Programs
Generics Employment Situation
Multiple Stakeholders & Multiple Interests
Specialty Pharmacy
Patient Physician
HUB/ Patient Center
Mfg
Payer
Data, SP/ patient performance
Funds
Patient, Program Support ServicesReimbursement
Data,
Data, Referrals
Data
Data, SP/Plan Performance
Data, Referrals
Patient Info, care planning & mgt
Stakeholder – SP Value PropositionsStakeholder 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
ManufacturerPatient 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
SPECIALTY PHARMACY BUSINESS MODEL AND REIMBURSEMENT TRENDS