Specialty Pharmaceuticals and the ACO Model

San Antonio—Specialty pharmaceuticals is the fastest growing segment of the pharmaceutical market in the United States. Industry projections have the growth rate at 20% per year. The care and delivery of specialty pharmaceuticals over the years has migrated toward the new accountable care organization (ACO) model. To avoid further carve-out by ACOs, the specialty pharmacy segment must understand and find ways to participate in this unique marketplace, according to Mike Baldzicki, executive vice president of industry relations and advocacy for Armada Health Care. Mr. Baldzicki discussed this topic during a webinar titled Examine the Impact of Accountable Care Organizations on the Specialty Pharmacy Channel. The webinar was available to AMCP meeting attendees.

Specialty Pharmacy Overview

Mr. Baldzicki opened the webinar highlighting specialty market dynamics. He noted that on average, a specialty drugs costs more than $2500 for a 30-day supply. By 2014, there will be $123 billion spent on specialty therapies in the United States, with 15% to 17% annual growth. Furthermore, specialty drugs make up 40% of the products in the pharmaceutical pipeline.

A challenge for those involved in specialty pharmacy is “no clear consensus on definitions, terminology, and language in specialty pharmacy,” he said. “The Specialty Pharmacy Association of America [SPAARx] has come up with a definition of specialty pharmacy and an array of terms and definitions behind specialty pharmacy.” According to SPAARx, specialty pharmacy incorporates 3 synergistic components:

•   The specialty pharmacy service model—structured to include the patient as an integral member of the care team through high-touch, patient-centric therapy management and support services

•   Satisfaction with the specialty pharmacy patient journey—by meeting and exceeding the unique clinical and administrative needs of patients on specialty medication regimens in an environment of continuous quality improvement

•   The specialty pharmacy standard of care—structured to support expert and reliable therapy fulfillment according to rigid quality and patient safety standards, and the efficient resolution of administrative and financial barriers to access

Mr. Baldzicki shared key insights for the specialty pharmacy provider landscape. The impact of healthcare reform will drive change even further to the specialty pharmacy channels by health information technology, reimbursement changes, state Medicaid programs, biosimilars, and specialty tiers and benefit design. Also, large specialty pharmacy providers are currently being challenged to prove their value with the customers, the payers, employers, etc.

The distribution channels for specialty products include specialty pharmacy, physician office, outpatient and home infusion, and retail. While these channels “involve an array of layered aspects, overall, in market share it is still in the specialty pharmacy space,” which represents 50% of specialty products, according to Mr. Baldzicki.

He also highlighted the main drivers of managed care organizations’ specialty pharmacy costs based on the perspective of per-member per-month. See Table for the 13 key therapeutic areas in specialty pharmacy. Referring to key therapeutic areas, Mr. Baldzicki explained that these biological and injectable agents typically cost from $10,000 to $250,000 per year; national costs for these specialty drugs have increased 20% annually and are expected to reach $26 billion. Injectable spending is expected to increase 20% to 40% annually. Furthermore, more than 75% of specialty drug spending goes to just 5 categories: oncology, HIV/AIDS, renal disease, transplant medications, and hemophilia. Considering just injectables, Mr. Baldzicki said that about 80% of spending goes to colony stimulating factors, products for hepatitis C, hemophilia factors, growth hormones, rheumatoid arthritis, interferons for multiple sclerosis, and intravenous immunoglobulin.

Trends and Issues Facing ACOs

“There is so much going on and I really try to focus on 3 major areas based on healthcare reform of what I believe will continue to evolve and really change the marketplace within specialty pharmacy,” said Mr. Baldzicki. The areas he cited included ACOs, comparative effectiveness research (CER), and state focus on health insurance exchanges and Medicaid. For the presentation, he focused on trends and issues facing ACOs.

He said that hospitals, physician practices, private health plans, and other entities are in the process of forming ACOs or have already formed them. The number of ACOs sponsored by physician groups has grown by 500% between September of 2011 and 2012. Accountable care arrangements require ACOs to define certain processes for patient care, including evidence-based medicine, patient engagement, reporting on quality and cost measures, and coordination of care. Mr. Baldzicki explained that ACOs must document how ACO participants and ACO providers/suppliers will comply with and implement each process and describe provisions for internal assessment of cost and quality of care that include continuous improvement of care practices.

“One of the biggest challenges is going from volume-based care to value-based care,” he said.

Data from the Centers for Medicare & Medicaid Services (CMS) and industry surveys illustrated the ACO marketplace and found:

•   There are 488 total ACOs across the country—of those, 253 have contracts with CMS, meaning that Medicare ACOs account for 52% of total ACOs

•   More than 40% of Americans live in areas with at least 1 ACO

•   As of February 2013, ACOs covered 37 million to 40 million Medicare and commercial patients

“Specialty pharmacies are trying to figure out how to get involved in the game within the ACO models. There are still many variables to consider,” said Mr. Baldzicki. For example, the ACO must consider whether high-cost products should be in the clinical environment where they must assume the direct risk for the patient’s care.

“The time is ripe for us as specialty pharmacy partners to try to engage this market segment and figure out how we can work together,” he added.

Mr. Baldzicki acknowledged that there are barriers in how the formation of an ACO will reduce costs and improve quality, such as absent or poor data hinders better performance. “At the end of the day, it is all about looking at the barriers and how you can achieve better health and better care to lower costs,” he said.

Healthcare organizations face opportunities and challenges in the post-reform era, noted Mr. Baldzicki. These include the impact of ACOs and payment bundling pilots, integrated healthcare systems, Medicaid expansion, development of health insurance exchanges, patient education and navigation support, CER, and the need for new solutions to ensure patient access.

“Convergence of market forces and implementation of healthcare reform will have significant impact on companies; as such, organizations must monitor and be prepared to respond to a myriad of changes to ensure commercialization success,” he concluded.