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Video Transcript: Supply Chain v. Value Chain: Evaluating the Role that Distributors and Specialty Pharmacies Play in Product Success

Webisode transcriptions completed by third-party vendor. AmerisourceBergen Specialty Group assumes no liability for the accuracy of the content.

Gina: New distribution models. Advances in reporting and clinical services. Managed care’s influence on specialty pharmacy. How are trends and issues like these affecting interactions between distributors, specialty pharmacies and manufacturers, and what impact do they have on product usage? Join us to find out. “In the Know” starts now. 

Hello and welcome to “In the Know,” your source for insight and analysis on the issues that matter to specialty pharma. I’m your host, Gina Clark.

Today, we’ll discuss how distributors and specialty pharmacies are evolving to support the changing needs of manufacturers and patients. We’ll learn how manufacturer relationships with specialty pharmacies can improve patient access to medications, and we’ll explore the role that new technologies play in advancing manufacturer business decisions and just-in-time patient care.

Joining us today are two guests. Neil Herson, President of ASD Healthcare and Mark Johnson, President of US Bioservices.

Thanks to you both for joining us.

Neil: Thank you, Gina.

Mark: Thank you, Gina.

Neil, issues like reimportation, pedigree and counterfeiting have been greatly discussed in the specialty space in recent years. To what extent have distributors addressed these challenges?

Neil: Distributors have really been involved with all these legislations over the past years. Prior to 2008, there were really no standards, although the PDMA from 1987 had really set the guidelines, but I think the whole secondary market was all about re-importation and re-selling of counterfeit product. That has all changed. We now have track and trace, we have pedigree. California instituted an act for pedigree in 2008, and that requirement says that manufacturers by 2015 have to have all their products tagged. So basically, I think distributors are actively involved with the manufacturers in setting new standards as we move forward. 

A question to both of you. Many manufacturers have had to reevaluate their distribution models due to issues like REMS requirements. To what extent are distributors and specialty pharmacies working together to create a more closed-loop model that provides more complete product and patient data? Mark?

Mark: Well in the most extreme cases, as products are released, the FDA requires generally a registry. The registry involves patients, prescribers, as well as the distributors. The specialty pharmacy really acts as sort of the lynch pin there, gathering data across the three entities and ultimately aggregating that information back to the Food and Drug Administration. What we have done with the distributors, is we have figured out a way to link through inventory tracking. Tracking where the product is, so we understand where it is distributed and ultimately dispensed, so that we can report those statistics back to both the manufacturer as well as the FDA.  

Neil, any additional thoughts on REMS and the closed-distribution model?

Neil: I think it really highlights the value of specialty in the marketplace, in that we are able to create programs that create this value because you are really looking at specific disease states, outcomes that need to be managed, and having the distributor in the middle of the supply chain and the specialty pharmacy really holds all the value.

Again a question for both of you and we’ll start with Neil. In what situations would a manufacturer want to consider a limited distribution model for its product?

Neil: The key issue, I believe, would be data capture, and how do you create a hub or a network where you can control where the product goes, who’s actually prescribing it and where the product actually ends up and is it being used correctly. I think that’s the key when you look at limited distribution, and the only way you can do that is through a controlled model where you have one port of access.

Mark, additional thoughts on that?

Mark: Well I think today with the requirements around adverse events, side affects, the ability to actually control who is dispensing that product on your behalf is critical. I agree totally with Neil in that data is an important component. If you limit the number of specialty pharmacies that are actually able to dispense that medication, you have fewer points of entry with regard to data. In addition to that, the specialty pharmacy develops a certain amount of expertise and focus in terms of that particular disease state, is able to deal more effectively with the patients around that disease state because it is a smaller number. It is able to guide them through the treatment regimen to ensure they stay on a product until their treatment regimen is completed.

Again to both of you, and I’ll start with Mark. What advantages does a limited distribution model present? What reservations might prevent a manufacturer from pursuing this route? 
 
Mark: Well I think limited distribution with a limited number of pharmacies again gives you greater control. It gives you greater access to data; it develops more of a partnership with that specialty pharmacy than you might have with a broader network. Some of the limitations of a limited distribution network are the payers who own their own specialty pharmacies today are beginning to put more and more pressures on the manufacturers as these limited distribution products are released to ensure that they’re included in the net work because they want to make sure that they’re driving as many products as they can through their own pharmacy benefit management system so that they can again aggregate data, report it back to their payers and to their members.

Neil, other perspectives?

Neil: There are certain threats to the manufacturer in that they’re going to feel a lot of pressure from other wholesalers who want to participate in the program. So all of a sudden you’re really creating issues within the whole supply chain, which could have a huge effect in the marketplace. Currently, there are models in place that are set up where the wholesalers provide discounts back to their members, and by going in a limited model, that changes the whole model and how it’s distributed and now products would have to be drop-shipped in order to be effective in this supply chain.    

Interesting. Mark, to you, what should manufacturers expect from specialty pharmacies in terms of reporting or clinical services, and how has this changed in recent years?

Mark: Well there’s a much deeper connection today between the specialty pharmacy and the manufacturer than there once was. Again, with these limited distribution products and with a smaller number of patients, the potential adverse events and outcomes, the manufacturers are very interested in getting this data back directly from the specialty pharmacies. I think what’s really changed, is there’s a direct link now between the specialty pharmacy and the manufacturer, and the data is not being distributed back to them through a third party. Again, I think also with the expertise of focus that the specialty pharmacy brings, there’s a greater amount of consultation and communication with the manufacturer about communication we’re seeing back from the patient, things that we’re hearing from the prescriber that, in a normal sense, things that a manufacturer might not have access to.    

Mark, how are managed care organizations influencing the specialty pharmacy market and patient’s access to medications?

Mark: It’s an interesting phenomenon lately in that a number of the specialty medications that used to be covered under the medical benefit are now moving to the pharmacy benefit, and the pharmacy benefit managers are using the same techniques that they were successful with 10 or 20 years ago, with more of the retail and mail. So what we’re seeing is different formulary construction, we’re seeing step therapies, we’re seeing therapeutic substitution, really making sure that ultimately the patient and the payer get the best value for the dollars being spent on that particular drug regimen. If a manufacturer wants to be able to influence the payer, in terms of where that product sits on the formulary and how easy it will be for their patient to access it, they ultimately have to demonstrate efficacy in terms of the clinical outcome of that product, so that there is a nice correlation between the dollars spent and then value achieved.   

Mark, in what ways can manufacturers work with specialty pharmacies to improve access to medications as well as to ensure that patients stay compliant with their prescribed therapies?

Mark: I think it goes back to the previous point; again, the best way to make sure that a specialty pharmacy can help is if the payer is supportive of the product and the therapy it’s being used for. That goes back to the demonstration of the fact that there is good value for the dollars being spent. Once that’s achieved, there are a number of different ways that a manufacturer can help. With high co-payments and high co-insurance, the installation of a patient assistance program sponsored by the manufacturer will ensure that dollars out-of-pocket are no longer an impediment to the patient receiving the medication. In addition to that, if they’re concerned about patient compliance and the ability of a patient to continue through therapy, they can set up benchmarks where they’re actually rating the different specialty pharmacies so they can rate their performance against each other. There’s nothing better than a little competition to make people try to improve their performance as they see what their peer groups are doing with regard to patient compliance. An additional kicker sometimes is that there are incentive programs put in place to reward that compliance or reward the jobs that the specialty pharmacies do, with the improved or increased patient contact to ensure that they do complete their therapy.

Very interesting. A question for both of you, and I’ll start with Neil. How have new technologies affected your businesses and services that distributors and specialty pharmacies provide?

Neil: I think we’ve seen some major changes obviously with new technologies in the marketplace, personalized medicine, nanotechnology, new therapies coming to market. At the same time, we as distributors have had to adapt to some of the needs of the customers. A good example is we’ve introduced an RFID enabled technology called Cubixx for consignment inventories to help our customers manage costs on site, and evaluate their inventories so that they don’t go over their budgets.

And Mark, any new technologies impacting specialty pharmacy?  

Mark: Well, from a specialty pharmacy perspective, access to data across our 4 constituents: the patient, the prescriber, the payer, and the manufacturer are just critical. Our ability to actually be able to aggregate and silo data so that they can see it on a real time basis is especially important. What’s really interesting now is the ability for us and other specialty pharmacies to be able to begin to communicate with patients via social media. Whether it be email or twitter, there are a number of techniques that are being employed now to remind patients about their therapy, to gather data that we can report back to the prescriber, and begin to use that real time interface as a way to improve patient care, and ensure that patients complete their therapy regimen.   

Another question for both of you. What about changes in health policy? In what ways do you expect these changes to impact your areas in the specialty pharmaceutical market? Neil?
 
Neil: Well, health policy is obviously ever-changing and we wait for new changes, but at the same time, the biggest issue we face today is reimbursement and making sure our patients are being taken care of, and that they can afford the products, specifically when it comes to these high-dollar injectables. I am actively involved in intravenous immunoglobulins, which unfortunately are Part B medication and are infused to patients and are really under reimbursed, specifically by Medicare, Medicaid. These patients should be seen in the home versus in the outpatient, and right now, with the way reimbursement works, physicians are sending the patients to the hospital. Well these patients are all immune-compromised and should really be taken care of in the home setting, and unfortunately the reimbursement is not where it needs to be so we are actively involved in Washington in educating congressmen, senators, and explaining to them the problems that we face and making them understand the nuances that are required in order to reimburse these therapies. Hopefully in the next coming year we will see some changes there.

Mark, additional thoughts on the impact of health policy?

Mark: Health policy, I think in its current state, is kind of a double-edged sword. One is that more individuals will gain access to care, based upon the new plans and the requirements of health insurance. The bad part of that sword is with limited dollars to spend and a broader population to cover, we can expect that reimbursement will go down. It’s especially problematic for a specialty pharmacy that really does deliver high-touch services, and as we take a look at the drugs that we’re covering, the adverse effects, the side effects, the patient concern, and the interaction that we constantly have with these patients, our ability to continue with that communication might be limited, which I think spells, potentially, a bad outcome for the patients because they’ll drop off therapy faster. The dollars that were spent early on in therapy will be wasted because there will be no ultimate benefit for the dollars spent or the therapy prescribed.

Neil, what challenges or concerns are you hearing from your down-channel customer base, such as health systems or alternate sites of care that pharmaceutical manufacturers should be aware of? 
 
NH: I think the biggest issue that they all face today is reimbursement, and obviously the MMA that was passed recently has certainly had a huge impact on how drugs are reimbursed, and obviously Part B, which is a critical part of our business being in specialty, is a real concern to us, and I foresee this being a major problem in the coming years. As new products come to market, we have over 800 therapies in front of the FDA right now, and they just cannot cope with the quantity of products that need to come to market to take care of these patients. So I think we’d like to see small governmental involvement in getting these drugs approved far quicker than they are today.

Industry stakeholders like distributors and specialty pharmacies are working more closely today with manufacturers, payers, and even advocacy organizations. To what do you attribute this increasing interaction?    

Mark: Kind of the key phrase today is transparency. Everyone is interested in knowing what the components are, where the costs are, who’s making what. And I think to be successful and to meet the needs of all the constituents, we’re going to see a greater need for greater transparency and the ability to demonstrate the value of what we’re delivering. People don’t mind, I think, if you in fact can make a small profit, but you have to deliver value somewhere along the chain. That will be the key for us, to demonstrate that value to all the constituents, so the small percent of profit that we actually make is warranted. 

Gentleman, unfortunately it looks like our time is just about up. Thanks again to both of you for sharing your thoughts today.

Mark: My pleasure.

Neil: Thank you.

And thank you for joining us—we’ll be back soon with another webisode. Until then, if it’s on your mind, it’s In the Know.

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