Over the past several years, the introduction, utilization and cost share of specialty pharmacy products has been increasing at a rate substantially greater than that of other pharmaceuticals.1 This paper examines the characteristics of specialty pharmaceuticals; the growth of new expertise to handle and manage these pharmaceuticals; and the needs these products create for patients, health plans and practitioners.
Characteristics of specialty pharmaceuticals and how they differ from other medications:
Specialty pharmaceuticals are differentiated from traditional drugs in that they typically require: intense clinical monitoring to manage severe side effects, frequent adjustments in dosage, and/or specialized training for handling and/or administration. Specialty pharmaceuticals are often large, injectable, protein-based molecules, produced through a biotechnology process, but they may also be small molecules produced through traditional pharmaceutical manufacturing methods. Early specialty pharmacy products treated complex conditions affecting smaller distinct disease populations, such as multiple sclerosis, cancer, pulmonary hypertension, hemophilia and hepatitis C. While some recent products have continued to be developed for other small distinct disease populations, many newer products have targeted larger more common chronic diseases requiring maintenance therapy, such as rheumatoid arthritis and asthma.2 Health plans and other payors may vary as to the medications they classify as specialty pharmaceuticals, but the consistent link is that specialty pharmaceuticals demand more attention and management because of their high cost, complex administration procedures, and intense monitoring procedures.
Specialty pharmaceuticals are typically costly, sometimes ranging from $10,000 to over $7,000,000 per patient per year. In addition, other non-drug costs, such as the distribution of the drug, required special laboratory testing, and adjuncts to therapy and nursing services may be added to the costs of the drug therapy. While traditional medications are subject to market forces to control costs, few specialty pharmaceuticals have competing or generic alternatives, because of the unique attributes of each product, high technology production methods and/or patent protection. Some manufacturers may limit the distribution of their drugs to certain pharmacies because of limited production capability, limited target patient populations, or the need to closely monitor patients for safety. Therefore, these drugs are not always available through traditional community or mail service pharmacies.
Specialty pharmaceuticals may also require expertise in administration. The dosage form for most specialty pharmaceuticals is by injection rather than the more conventional tablets, capsules, inhalers or topical agents. Many cannot be self-administered and often require special handling, such as refrigeration or sterile conditions for mixing doses.
Specialty pharmaceuticals may also require intense monitoring. Sometimes severe drug reactions are encountered with these medications. Management of some specialty pharmaceuticals also requires that high technology diagnostics or tests be conducted to determine the outcomes of treatment and to monitor for severe side effects or adverse drug reactions. Additionally, due to the high costs of the therapy, there is an ongoing need for monitoring the patient’s response in order to minimize excess utilization or resources.
Distribution Channel Management of Specialty Pharmaceuticals.
Many health plans have developed alternative approaches to the delivery of specialty pharmaceuticals in order to attempt to control the costs. These approaches are generally categorized as “insourcing” and “outsourcing.”
The insourcing approach is seen when distinct staff is hired to manage this high cost, high demand area. These pharmacists are responsible for purchasing, handling, educating physicians and patients, and monitoring patient outcomes, including safety. The outsourcing approach is represented by contracting with licensed pharmacies that have developed services to meet the unique challenges of dispensing and monitoring the use of these medications. These pharmacies are referred to as “specialty pharmacies.”
Whether a managed care organization chooses to insource or outsource, both approaches have common characteristics and requirements. While each organization may customize its approach to their particular needs, they both:
- Negotiate for discounted purchase prices, either by volume buying or through the use of formularies
- Employ staff with particular expertise in the administration, appropriate utilization, and patient training and monitoring necessitated by these products
- Access centralized distribution points for specialty pharmaceutical manufacturers, which may limit distribution of their products
An additional challenge to managed care organizations, government agencies and patients is the limited distribution channels used by some manufacturers for specialty pharmaceuticals. A number of these products are only appropriate for a small number of patients, and the manufacturing costs are therefore very high. To better serve these meager populations, manufacturers have depended on limited distribution channels for their product handling and distribution. It can be confusing to members and physicians, so communication from case managers and the manufacturers is important.
Specialty pharmaceuticals demand unique management practices for patients, health plans and employers
Patients prescribed specialty pharmaceutical products have distinct needs. Health plans and employers who are paying for these treatments look for ways to manage this area of care. The following services are necessary to accomplish these objectives:
- medication management
- patient management
- cost management
Specialty pharmaceuticals can be high cost products and they may also be used in specific patient populations. To ensure that the medications are used appropriately, payors manage utilization through the use of a prior authorization.3 The authorization includes ongoing monitoring to ensure appropriate use and to reduce the incidence of adverse events. Monitoring can also include measuring disease improvement, laboratory test results, adverse effects and other clinical outcomes.
Pharmacists that handle specialty pharmaceuticals must have the capability to administer prior authorization programs to ensure appropriate use and capture the necessary data for ongoing monitoring. Because specialty pharmaceuticals are often used in cases where it is extremely important for patients to be compliant with their prescription drug therapy, monitoring of adherence is essential, particularly in patients with hepatitis C, HIV or transplant recipients and candidates. Other activities commonly associated with the delivery of specialty pharmaceuticals include contacting the patient to monitor health status and/or changes in the prescription drug regimen, and assessing whether physicians should be contacted. Health plans or specialty pharmacies can either provide or coordinate instruction for patients to learn how to self-administer injectable medications.
Over the past few years, a number of specialty medications have been developed for self-administration, especially for maintenance treatments of chronic diseases. This trend toward outpatient self-treatment will most likely continue.
Pharmacists, who handle specialty pharmaceuticals, and particularly those in specialty pharmacies, dispense higher volumes of these medications than traditional community or mail service pharmacies. As a result, their staffs have a high level of expertise in providing medication therapy management to patients receiving these medications.4 Pharmacists often telephone patients to remind them of refill dates; to provide patient training and education; to monitor for adverse events and to ensure that other aspects of patients’ treatments are fulfilled, such as the scheduling of appropriate lab tests. These pharmacists work closely with physicians and case managers to ensure medication adherence, resolve any problems and coordinate changes in therapy. Some groups also offer disease management programs for specific conditions in which specialty pharmaceuticals are used.
The increasing utilization and high cost of specialty pharmaceuticals require that managed care organizations and other payors employ cost management techniques. One of these techniques is volume purchasing, often through centralized distribution systems. Combining bulk purchasing economies of scale with patient management services can lead to a reduction in product waste, greater identification of adverse events and better achievement of therapeutic effect, potentially lowering overall health costs.
Other cost management strategies can include variations in benefit design. One of the current challenges in managing costs for specialty pharmaceuticals is the reliability of the claims data submitted. Physicians and hospitals submit claims through medical claim systems which have less product detail, are not always electronically submitted and are often difficult to retrieve and analyze. Considerations can include shifting coverage from the medical to the pharmacy benefit, or the reverse. Designating a higher tier copayment or higher percentage of coinsurance will impact cost sharing with the covered beneficiary. Care must be taken when designing the benefit so as not to put a patient in a position where these costly, but important products are unaffordable. A plan can use reasonable minimums and maximums to accomplish this objective.
As the trend toward expanded use of specialty pharmaceuticals continues, the need for the provision of medication therapy management services specifically for these products is becoming more important in order to maximize their value to the patients who need them. The effective use of systems to manage specialty pharmaceuticals culminates in more appropriate medication therapy, better treatment outcomes for patients and improved cost management results.
1 JP Morgan Industry Update, “Specialty Pharmacy: Conduit of Growth for Biotechnology,” March 14, 2003.
2 CuraScript, “2004 Specialty Pharmacy Management Guide & Trend Report,” June 2005.
3 Alex Gilderman and Christine Chow, “Traditional Managed Care Strategies Can Impact Specialty Pharmacy Programs,” Managed Healthcare Executive, July 1, 2004. http://www.managedhealthcareexecutive.com/mhe/content/printContentPopup.jsp?id=105390 (accessed January 3, 2007).
4 PCMA, “The Frontier of Specialty Pharmacy Care: An Examination of Primary Disease States,” October 2005. http://www.pcmanet.org/research/pdf/SP_diseaseStates%20FINAL100505.pdf (accessed January 3, 2007).