Shields has helped a dozen of the nation’s largest health systems build specialty pharmacy programs. In doing so, we have identified five common challenges that health systems face when building a successful specialty pharmacy program: (1) accessing payors, (2) obtaining limited distribution drugs, (3) developing and integrating the specialty care model, (4) capturing and retaining patients and (5) managing compliance and administration. All are solvable challenges for health systems, but each requires a unique set of knowledge and skills to do well.
Accessing Commercial Insurance:
The first challenge a hospital faces when opening a specialty pharmacy is the difficulty in filling specialty prescriptions for patients with commercial insurance. While a hospital can fill specialty scripts for patients with Medicare and Medicaid (not including managed Medicaid plans) relatively easily, the same cannot be said for commercial insurance. Different from insurance contracts for the medical benefit, pharmacy benefit contracts are managed by a pharmacy benefit manager
(“PBM”).Almost all PBMs have in-house specialty pharmacies and are currently profiting off a hospital’s specialty drug prescriptions. Thus, existing incentive structures make it difficult, in some cases nearly impossible, to access the specialty pharmacy networks of commercial insurers.
Despite URAC accreditation being considered the gold standard for specialty pharmacy compliance, gaining URAC accreditation is often not enough for commercial insurers. For example, one national insurer will require a hospital-owned specialty pharmacy (“HSP”) to have filled prescriptions for two years with dual accreditations (ACHC and URAC) and to meet numerous other requirements before even being considered for its specialty network. In addition to dual accreditation, another insurer requires a HSP to score higher than 90% on seven separate sections of an assessment. This assessment is not shared in advance and the HSP can only take the assessment once per year. Despite providing an integrated care model that is superior to the status quo, PBMs prevent HSPs from offering their services to the vast majority of patients.
Obtaining Limited Distribution Drugs:
In addition to payor challenges, hospitals opening a specialty pharmacy face the arduous task of gaining access to big pharma’s limited distribution networks. In our experience, 30% of the fill opportunity is restricted by limited distribution networks. Although most networks are eventually accessible, each manufacturer has different clinical and reporting requirements. However, infrastructure and reporting capabilities do not always translate into drug access. For example, Biogen’s Spinraza was recently released exclusively through Accredo (specialty pharmacy) and CuraScript (specialty distributor), both of which are subsidiaries of the largest PBM, Express Scripts. In this case, patients are only able to access Spinraza through Accredo’s specialty pharmacy, regardless of patient preference or Accredo’s quality of care.
Developing and Integrating the Specialty Care Model:
Delivering superior patient care and better outcomes should always be the first priority in designing a hospital-owned specialty pharmacy program. Fortunately, HSPs can fully integrate outpatient specialty drug therapies into their existing care models. In our experience, it is essential to work with each specialty clinic (Oncology, Neurology, Rheumatology, Infectious Disease, Cystic Fibrosis, Pediatric Endocrinology and more) to integrate outpatient pharmacy into the existing clinic workflow. Properly integrating this care is essential to increasing physician and nurse adoption.
Pharmacy liaisons are critical to maintaining regular communication with patients and elevating medication issues or concerns to the physician, who can then rapidly adjust the therapy to better suit the patient. Clinical integration is the key differentiator for HSPs compared to the typical specialty pharmacy, where medication issues only become apparent when the patient returns for their next scheduled appointment or dire issues arise.
Capturing and Retaining Patients:
Even after building out a HSP, gaining access to payors and LDDs, and integrating the specialty care model, HSP’s face an uphill battle of identifying and signing up patients for their HSP. Across our network, we have found that only 3% of patient visits result in a qualified script for the specialty pharmacy. Many visits do not result in a new script and if the visit does result in a specialty script, it may not qualify due to payor and drug lockout. Thus, identifying new qualified patient becomes a serious challenge. At Shields, we have developed a proprietary software platform that tests claims for upcoming patient visits and shares a clinic schedule with an embedded care liaison who can meet with the patient during their visit.
Identifying eligible patients is just the first step, as the HSP then faces the even more challenging task of retaining patients. HSPs are competing with Fortune 50 pharmacies (CVS, Walgreens, ExpressScripts, United Healthcare) who have unlimited resources to reengage lost patients. Despite having a superior care model, hospitals will need to remain constantly engaged with their patient and constantly provide white-glove customer service.
Managing Compliance and Administrative Requirements:
The final major hurdle that hospitals face when opening a HSP is the new compliance and administrative responsibilities that are unique to specialty pharmacy and require significant resources. If the specialty pharmacy program is participating in the 340B pricing program, the hospital can be audited at any time by both HRSA and drug manufacturers. It is essential that the 340B program is managed with the highest level of scrutiny and compliance, so the health system is not at risk of repaying previously captured discounts.
Additionally, billing through the pharmacy benefit is a completely different process than that of the medical benefit and requires experience to ensure the collection of all claims. As a part of this RCM process, support staff will need familiarity with processing pharmacy benefit prior authorizations and site-of-care authorizations for infusions. Time to therapy will be extended and claims may be denied if these prior authorizations are not completed properly.
HSPs have the ability to completely transform clinical care for their most vulnerable patients by providing a superior care model where all aspects of a patient’s clinical care are integrated and coordinated by the health system. As health systems are asked to take risks and participate in a value-based healthcare system, it is essential that medication adherence is managed to the highest level. Without this, patients are at risk of re-admissions, or even worse, faster progression of their condition. None of the hurdles listed above are insurmountable, but they do require significant knowledge and expertise. Every HSP is competing with some of the largest companies in the U.S. that have access to near-unlimited resources, so expertise is critical to succeed in this space.