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

Specialty Pharmacy Channel Distribution Panel

Moderated by Mark ZitterApril 3, 2013

For specialty agents not subject to manufacturer-imposed limited distribution, my organization…

1% 3%3%

1%

37%29%

26%

Most Payers Limit the Number of Specialty Pharmacies They Use…

Payers n = 103

Percentage of Payers

Unsure

OtherContracts with greater than 10 third-party specialty pharmaciesContracts with 5-10 third-party specialty pharmaciesContracts with 2-4 third-party specialty pharmaciesContracts with one third-party specialty pharmacyWholly or jointly owns a specialty pharmacy

…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 = 103No significant differences from Spring 2012 report

Mandatory

Voluntary

Voluntary, but physician buy-and-bill reimburse-ment is tied to third-party vendor pricing

17%

53%

30%

Payers See Plenty of Excess Cost In the System…

How much excess cost you could eliminate from cancer treatment without negatively impacting health outcomes?

1%-10% 11%-20% 21%-30% 31%-40% 41%-50%

24%

41%

25%

5% 5%

Summer 2012 (n = 102) Mean = 20%

Perc

enta

ge o

f Pay

ers

…And Think Most Excess Cost Relates to Drugs and Care Sites

4.32

3.30 3.24 3.18

1 1

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)

Payers Want More Oral Therapy to Go Through Specialty Pharmacy…

Specialty pharmacy (oncologist not in-volved in financing drug acquisition)

Off-site retail Buy-and-bill (physician acquisi-tion through a spe-cialty wholesaler)

On-site retail (at the provider’s office)

Mail order (through a non-specialty

pharmacy)

Other

51%

26%

9%6% 6%

1%

53%

27%

10%

4%

4%1%

63%

24%

6%3% 3% 1%

73%

19%

0% 1%

7% 1%

Summer 2011 oral volume (n = 91)


Summer 2013 oral volume (estimated) (n = 86)

Summer 2012 preferred oral distribution channel (n = 102)

Shar

e of

Tot

al O

ral T

hera

py D

istrib

ution

What is your organization’s preferred method of oral oncology therapy distribution?

What percentage of your organization’s oral oncology therapy volume goes through each of the following distribution channels?

No significant changes from Summer 2011 edition

…and So Do Oncology Office Practice Managers

What is your organization’s preferred method of oral oncology therapy distribution?

Shar

e of

Tot

al O

ral T

hera

py D

istrib

ution

What percentage of your organization’s oral oncology therapy volume goes through each of the following distribution channels?


Specialty pharmacy (oncologist not in-volved in financing drug acquisition)

Off-site retail On-site retail (at the provider's of-

fice)

Mail order (through a non-specialty

pharmacy)

Buy-and-bill (physician acquisi-tion through a spe-cialty wholesaler)

Other - please describe

43%

27%

14% 13%

3%0%

42%

29%

14%10%

4% 1%

43%

27%

13%10%

4% 2%

51%

18%23%

6%2% 0%



Summer 2013 oral volume (estimated) (n = 81)

Summer 2012 preferred oral distribution channel (n = 100)

For Infusible Therapies, Payers Want to Reduce Buy-and-Bill…

Buy-and-bill (physician ac-quisition through a specialty

wholesaler)

Specialty pharmacy (oncol-ogist not involved in financ-

ing drug acquisition)

Patient acquisition (brown bagging)

Other

72%

22%

3% 3%

68%

26%

4%1%

62%

33%

4%1%

45%49%

2%4%

Summer 2011 office-administered / infusible volume (n = 90)


Summer 2013 office-administered / infusible volume (estimated) (n = 83)

Summer 2012 preferred office-administered / infusible distribution channel (n = 102)

Shar

e of

Tot

al O

ffice

-Adm

inist

ered

/ In

fusi

ble

Ther

apy

Dis

trib

ution

What is your preferred method of office-administered/infusible oncology therapy distribution?


What percentage of your office-administered/infusible oncology therapy volume goes through each of the following distribution channels?

…While Practice Managers Like the Status Quo for Distribution Channels

Buy-and-bill (physician ac-quisition through a specialty

wholesaler)

Specialty pharmacy (oncol-ogist not involved in financ-

ing drug acquisition)

Patient acquisition (brown bagging)

Other

60%

24%

5%

12%

64%

23%

6% 8%

60%

24%

8% 8%

61%

25%

5%9%



Summer 2013 office-administered / infusible volume (estimated) (n = 80)

Summer 2012 preferred office-administered / infusible distribution channel (n = 100)

What is your preferred method of office-administered/infusible oncology therapy distribution?

Shar

e of

Tot

al O

ffice

-Adm

inist

ered

/ In

fusi

ble

Ther

apy

Dis

trib

ution

What percentage of your office-administered/infusible oncology therapy volume goes through each of the following distribution channels?


14%

8%

13%

8%

31%

15%

7%

16%

8%

71%

54%

42%

37%

8%

3%

7%

12%

5%

6%

5%

15%

24%

33%

54%

60%

In-office Physician-affiliated clinic Freestanding infusion center In-home: Home health care Hospital outpatient department

12%

16%

18%

What is your organization’s 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


Payers n = 101

ASP Payment Has Sent Patients to Hospitals, But Reduced Total Costs

0%

1%

3%

4%

5%

8%

18%

22%

28%

33%

63%


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?

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?



http://go.zitter.com/nasp

Specialty Pharmacy Channel DiscussionHospital/Integrated Delivery Network Channel

Thomas BlissenbachDirector, Business Development

Fairview Pharmacy Services, Minneapolis

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

Hospital/IDN Channel• Relatively small today• Hasn’t been focus• Size matters• Specialists = Specialty Drugs• Need to do it right• Variety of options

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

Hospital/IDN Weaknesses• Hasn’t been focus• Expertise• Capital/space• Payer – Pharma agreements• Data capability

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

Hospital/IDN Threats• Loss of control• Missed opportunity

Independent Pharmacy Channel

Mike EllisCorporate Vice President, Specialty Pharmacy & Infusion,

Walgreens

Independent Pharmacy Channel

Kurt A. Proctor, Ph.D., RPhSenior Vice President, Strategic Initiatives

National Community Pharmacists Association

National Community Pharmacists Association

• 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

Independent Pharmacies1,800 rural independent pharmacies serve as the only

pharmacy provider in their community

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

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

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 can’t

Core Message from NCPA

Independent pharmacies in your network will yield documented patient adherence and monitoringIndependent pharmacists know…• Their patients• Their patients’ family• Their patients’ caregivers• Their patients’ doctors• Their patients’ environment

Specialty Pharmacy and Dramatic Change In the Oncology Channel

Discussion

Burt ZweigenhaftCEO Onco360

Ralph Stayer Flight of the Buffalo (1994)

30

"Change is hard because people overestimate the value of what they have—and underestimate the value of what they may gain by giving that up.”

Oncology Drug Market Hitting Critical Inflection Point

• Oncology Rx spend projected to grow to $130B by 2020

• 50% 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.

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

75% Increase In Cancer Incidence Projected By 2030

33

1.7 MM New Cancer Cases Projected for 2012….was 1.4 MM in 201010,000 New Beneficiaries in Medicare or 3.6 MM a year

The Average Oncologist’s Drug Spend

• Annually Prescribes $3MM

34

By Drug Admin Route Payer Patient Mix

Drugs Used to Drive-Dominate Practice Margins

35

Decline In Rx Margin for Oncologists

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

Moving Away From Traditional Drug “Buy and Bill”

37

Oncologist Shortage Crisis = Need Physician Extenders

38

Board Certified

Oncology Pharmacists

Fill GAP

Concordance with Evidence and Outcomes is the Issue

Typical Daily Chemotherapy Regimen: Across Multiple Benefits

Typical Chemo Administration Kit:

Oncology Drug Dispensing is Complex

40

Cancer Protocols = Drugs are Inter-dependent

Pharma HUB Workflow

42

Patient Support Services

3PL

Manufacturer

Patient

Provider(MD/Hospital)

Oncology Pharmacy

Payer

Product Payment DataClaims BCOP

Key

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”

• 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

• ACO’s strive to achieve responsible initiatives and activities to deliver on quality and value

Oncology Requires Integrated Benefit Solution

44

Medical Oncology

Drugs

Specialty Oncolog

y

PBM Oral

Oncology

Care Mgmt.

Value Based Continuum of Care Services

45

Service Description

Dispensing Total sourcing solution, drug pedigree, ASP + WHATEVER (oral, injected, infused, administration supplies)

Guidelines Specialized BCOP’s 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 assistanceExchanges will need Premium Enrollment Assistance

Metrics Data reporting for visibility, accountability and risk sharing performance measures

46

Oncology Clinical Service Values… Case Studies

Clinical Program

Clinical InterventionIntervention 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

OncoMTMAdverse Event Safety Monitoring $5,605 Adverse Event Avoidance $2,921 Dose Safety Check Avoided AE $9,523

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

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 about—greater payment for outcomes, following clinical protocols, risk sharing arrangements (think ACOs) and value based purchasing!

• General issue—when does the exception (340B) swallow the rule (ASP)? Tremendous growth of 340B could become the majority of cancer drugs purchased

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

Machiavelli Circa 1469-1527

50

"Whosoever desires constant success must change his conduct with the times.”

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

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