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Hospitals face specialty pharmacy challenges with insurer competition

Health systems are increasingly opening their in-house specialty pharmacies to drive better patient outcomes and bolster potential revenue, but they face stiff competition from payers who also see the same opportunity and have the power to keep their members’ costly and complex drugs within subsidiaries and affiliates.

That’s the case at the University of Illinois Health Sciences System, where Matthew Rim works in a team of three pharmacists to run their in-house operation, managing complex and very expensive drugs for conditions like rheumatoid arthritis, cancer and Hepatitis C. He said they end up only being able to fill the prescriptions of about half of their patients on specialty drug treatments.

“We are actually losing patients to those vertically-integrated payers, or PBM-owned specialty pharmacies, because we are not able to get contracted with them, and there are restrictions that we have to transfer care to whatever pharmacy is owned by them,” said Rim, associate director of specialty pharmacy services at the health system. “So even if patients want to stay within our system and getting their medications from us, we have no choice but transfer out.”

Insurers like UnitedHealth Group, Aetna and Humana have acquired or built out their own specialty arms to keep drug spending within their vertically integrated companies. And insurers are only growing their specialty business; UnitedHealth Group, for instance, owns specialty pharmacy Optum Specialty Pharmacy, acquired specialty pharmacies Diplomat and Avella Specialty Pharmacy in 2019 and 2018, respectively.

Hospitals argue pharmacy services are a care coordination issue. When a patient is sent outside the health system, clinicians have no way of knowing if the prescription is filled and refilled. However, in an in-house hospital specialty operation, pharmacists have access to patient electronic medical records, and clinicians can easily find out when a patient receives their treatment and can conduct follow-up calls, according to Jerry Buller, chief pharmacy officer at Trellis Rx, which partners with health systems to build and manage specialty pharmacies.

“Health systems have shown that the locally embedded approach results in higher satisfaction, better adherence, faster turnaround times, and ultimately improved clinical outcomes,” Buller said.

At Vanderbilt University Medical Center, the percentage of patients who get their specialty medications filled on time is around 93{f771d91d784324d4be731abc64bffe0d1fd8f26504ceb311bcfd8e5b001778f4}, according to Tara Kelley, executive director of specialty pharmacy services. She said they analyze a lot of data on prescriptions and the outcomes for a patient. With the drugs being expensive, it’s imperative for their clinicians to prescribe the most effective treatments. In 2019, specialty drugs accounted for 48{f771d91d784324d4be731abc64bffe0d1fd8f26504ceb311bcfd8e5b001778f4} of total prescription drug expenditures, according to the American Society of Hospital Pharmacists. That figure is only expected to grow.

“When we identify measurable metrics that we can track our patients progress, we focus on sharing those with the provider in potentially changing therapy based on that data,” Kelley said.

That faster turnaround time can also lead to better outcomes. The therapies almost always come with prior authorization and other documentation requirements. An out-of-hospital pharmacy first has to contact a clinician’s office to notify them of prior authorization requirements, and then providers have to fulfill documentation and usually fax information back to the pharmacy.

“That at process takes sometimes a couple of weeks,” Rim said. “For certain conditions, you need to figure that out right away because it may be dangerous to wait even a couple of days.”

With access to the EMR and clinicians a phone call or email away, in-house pharmacy can take only days to get the drug into patient hands.

Like other fee-for-service services, pharmacies get paid for dispensing drugs to patients, usually varied rates that are dependent on contracts with both insurers and drug manufacturers, according to Kelley at Vanderbilt.

“The prescriptions that our providers are writing, if it goes to an external pharmacy, that’s just leakage outside the system,” Kelley said. “If there’s a specialty pharmacy in place to fill those prescriptions, then that revenue is held within the health system.”

Vanderbilt has an expansive specialty pharmacy, with over 40 full-time pharmacists and at least 20 pharmacy technicians who are stationed throughout clinics that focus on diseases like multiple sclerosis and pulmonary conditions. Vanderbilt’s operation started ten years ago and initially focused on their employee health plan. But over the last five years, growth by hospitals and provider-owned practices has been exponential.

In 2018 alone, about 76{f771d91d784324d4be731abc64bffe0d1fd8f26504ceb311bcfd8e5b001778f4} of hospitals with over 600 beds operated a specialty pharmacy, in comparison to a little under half in 2016, according to American Society of Hospital Pharmacists. Growth in accountable care organizations and risk-based payments also makes having a specialty pharmacy another value proposition, according to George Zula, vice president of specialty pharmacy programs at health system solution provider Acentrus.

“Going back to total cost of care, and the performance metrics that our health systems are able to deliver, I think that’s something else that the C-suite should be paying attention to,” Zula said.

Vanderbilt and the University of Illinois both have entire teams outside of the pharmacists that help manage insurer contracts and manage the data that is required to keep those contracts. Drug distributor and wholesaler AmerisourceBergen is seeking to capitalize on that challenge. The company charges hospitals a fee for every prescription filled using their PSAO, which was launched in April.

AmerisourceBergen’s senior vice president of specialty services Angela Ward said their new service is for hospitals that buy their drugs from the wholesaler, and they have contracts in the works with about 12 systems and physician-led practices so far.


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