Demystifying the World of Specialty Pharmacy

1. Demystifying the World of Specialty Pharmacy Claire T. Nolan, PharmD

2. Disclosure I do not have any financial relationships with any commercial interest related to the content of this activity. This activity has not received commercial support.

3. Getting to Know the Audience • What is your role in your practice? • What is your area of practice? • Are you confident that you can delineate between a specialty medication and a non-specialty medication? • Do you feel that you have an understanding of what goes on in the specialty pharmacy between the time of prescribing and drug delivery?

4. Objectives At the conclusion of this presentation the participant will be able to: • Identify key aspects of medications classified as specialty products and the distribution models that define access. • List and describe the myriad of specialty pharmacy offerings beyond the dispensing of specialty medications. • Describe current and future trends in the world of specialty pharmacy.

5. Specialty Medications and Distribution Channels Images available from: https://www.alvinisd.net/Page/25030 and https://ya-webdesign.com/explore/vector-logistics-shipping-icon/. Accessed March 26, 2019.

6. Specialty Designation • Continues to evolve • Not necessarily binary (e.g., yes or no) • Can depend on who you ask

7. URAC definition • In a 2011 white paper, URAC described a specialty medication as a medication that meets five of the following eight criteria • Treats a specific, mainly chronic, and often rare condition • Usage initiates with a specialist • Not administered orally • Requires special handling • Use involved unique distribution and administration channels, such as special distribution management and specialized paperwork • Costly, ranging from $6,000-750,000 per year • Usage requires a high degree of patient management, such as increased supervision or counseling • Use results in patients requiring reimbursement assistance The Patient-Centered Outgrowth of Specialty Pharmacy. Why Patient Management Strategies are Critical to 21st Century Providers. URAC Specialty Pharmacy White Paper. Available from: http://valuedpharmacyservices.com/wp-content/uploads/2013/10/White-Paper-Web-Site-Specialty-Pharmacy.pdf. Published 2011. Access February 2, 2019.

8. NASP Definition NASP = National Association of Specialty Pharmacy Definitions of Specialty Pharmacy and Specialty Medications. National Association of Specialty Pharmacy. Available from: http://naspnet.org/wp-content/uploads/2016/06/633570_864cb572b8b042909a3f207eaf764d7a.pdf. Published February 24, 2016. Accessed February 2, 2019.

9. AMCP • Products typically consist of large, unstable, protein-based molecules produced through a biotechnology process • Treat complex conditions affecting distinct populations or target maintenance of more common chronic conditions • Demand more attention and management including patient education to promote appropriate utilization, storage, administration, and safety • Are available in non-traditional dosage forms • Many are available in non-traditional dosage forms that may require special handling and may not be self-administered • High cost, sometimes ranging from $10,000 to over $250,000 per patient per year • Associated with other non-drug costs (e.g., special laboratory testing, adjunct therapies, needles and syringes) including high technology diagnostics or tests that must be conducted to determine treatment outcomes and monitor for safety • Few competing or generic alternatives are available • Distribution may be limited to designated distribution channels, leading to lack of product availability through a tradition community or mail service pharmacy AMCP = Academy of Managed Care Pharmacy Concept Series Paper on Specialty Pharmaceuticals. Academy of Managed Care Pharmacy. Available from: http://www.amcp.org/WorkArea/DownloadAsset.aspx?id=9305. Published November 2006. Accessed March 26, 2019.

10. Specialty Designation Complexities • Definitions are often in paragraph form • Per AMCP, there is variability in how health plans and other payers classify medications • Manufacturer-defined distribution channels and payer contracts impact access • Information about product availability may not be immediately available when a new product is approved Concept Series Paper on Specialty Pharmaceuticals. Academy of Managed Care Pharmacy. Available from: http://www.amcp.org/WorkArea/DownloadAsset.aspx?id=9305. Published November 2006. Accessed March 26, 2019.

11. Defining Limited Distribution • Manufacturers of specialty products sometimes select a limited “network” of specialty pharmacies that will have access to distribute that product • Networks are usually limited to fewer than 13 pharmacies • Distribution models can be exclusive, semi-open, open, etc. • In order to be considered for inclusion in the network for a given product, specialty pharmacies are offered the opportunity to submit a proposal that most often includes a “patient journey” presentation prior to approval of the drug Toman A. The Ins and Outs of Limited Distribution Specialty Drugs. Specialty Pharmacy Times. Available from: https://www.specialtypharmacytimes.com/news/the-ins-and-outs-of-limited-distribution-specialty-drugs. Published January 25, 2018. Accessed February 26, 2019.

12. Proposal Process • Usually begins around the time the manufacturer is preparing to submit to the FDA for approval • Examples of information the manufacturer may request from the specialty pharmacy:

13. The Patient Journey Presentation • In person presentation • Representative from the specialty pharmacy walks the manufacturer team through a typical “patient journey” through care • May include proposed offerings that are not currently in place that may be specific to the new product • For example, a nurse adherence or clinical management program • Manufacturers are looking for things that set the entity apart at every stage of fulfillment and clinical management

14. Limited Distribution Models • As the driver of the product distribution model, manufacturers seek to find a balance between patient access and control. Image available from: http://clipart-library.com/clipart/204485.htm. Limited Distribution Networks – Specialty Pharmacies. Access Market Intelligence. Available from: https://accessmarketintell.com/wp-content/uploads/2014/09/Limited-Distribution-Networks.pdf. Accessed March 14, 2019.

15. From the Perspective of the Manufacturer • Limited distribution networks offer: • Specialization relevant to the product, leading to increased chances of therapy success • Lower distribution costs and higher reimbursement rates • Influence over patient service offerings • Better control over product supply Toman A. The Ins and Outs of Limited Distribution Specialty Drugs. Specialty Pharmacy Times. Available from: https://www.specialtypharmacytimes.com/news/the-ins-and-outs-of-limited-distribution-specialty-drugs. Published January 25, 2018. Accessed February 26, 2019.

16. Specialty Pharmacy Offerings Images available from: https://clipartimage.com/images/clipart-223837.html and http://clipart-library.com/partnership-cliparts.html. Accessed March 26, 2019.

17. What Makes a Pharmacy a Specialty Pharmacy? • Specialty pharmacies offer services above and beyond those typically offered at a traditional retail pharmacy • A unique staffing model • Comprehensive patient support services • Manufacturer solutions • Payer services • Industry partnerships

18. A Unique Staffing Model • Access • On call pharmacists available 24/7 to respond to urgent patient/provider requests and troubleshoot delivery issues • Pharmacists with specialized expertise • Board certification through the Board of Pharmacy Specialties • 12 designations available • Examples include oncology, compounded sterile preparations, infectious diseases, pediatrics • Certified Specialty Pharmacist (CSP) credential through NASP • Knowledge of managed care aspects of medication management for complex conditions • Pharmacoeconomics • Adherence monitoring and intervention BPS Specialties. Board of Pharmacy Specialties. Available from: https://www.bpsweb.org/bps-specialties/. Accessed March 26, 2019. Concept Series Paper on Specialty Pharmaceuticals. Academy of Managed Care Pharmacy. Available from: http://www.amcp.org/WorkArea/DownloadAsset.aspx?id=9305. Published November 2006. Accessed March 26, 2019.

19. A Unique Staffing Model • Specialty pharmacies have unique departments with team members not often seen in traditional pharmacy settings • Managed care/payer relations • Inside and outside sales associates • Industry relations • Patient support associates • Shipping specialists • Prior authorization and reimbursement specialists • Nurse specialists • Data analytics and reporting teams

20. Comprehensive Patient Support Services • 24 hour access to highly qualified clinical pharmacy specialists • Patient education and support materials • Adherence support • Prior authorization facilitation • Benefits investigation and financial assistance (i.e., enrollment in patient assistance programs) • Physician follow up and consultation • Shipping coordination • Coordination of nursing services • Injectable and IV therapy administration training • Multi-lingual support Hagerman J, et al. Specialty pharmacy: A unique and growing industry. American Pharmacists Association. Available from: https://www.pharmacist.com/specialty-pharmacy-unique-and-growing-industry?is_sso_called=1. Published July 1, 2013. Accessed March 14, 2019. Limited Distribution Networks – Specialty Pharmacies. Access Market Intelligence. Available from: https://accessmarketintell.com/wp-content/uploads/2014/09/Limited-Distribution-Networks.pdf. Accessed March 14, 2019.

21. Adherence Support • Solutions for patients • Proactive outreach • One week (exact timing may vary) in advance of next scheduled fill • Based on day supply calculation from most recent fill • Adherence assessment, clinical evaluation, shipping coordination, etc. • Triage to qualified clinician when appropriate • Adherence packaging • Blister packs, rolls with pouches, etc. • Single drug or multi-drug approach • Adherence technologies • Smart pill bottles • Mobile apps • Ingestible pill sensors Crowe M. Do You Know the Difference Between These Adherence Measures? Pharmacy Times. Available from: https://www.pharmacytimes.com/contributor/michael-crowe-pharmd-mba-csp-fmpa/2015/07/do-you-know-the-difference-between-these-adherence-measures. Published July 5, 2015. Accessed February 6, 2019. Aungst T. Mobile Technology to Improve Medication Adherence. Pharmacy Times. Available from: https://www.pharmacytimes.com/contributor/timothy-aungst-pharmd/2015/04/mobile-technology-to-improve-medication-adherence. Published April 27, 2015. Accessed April 1, 2019. Image available from: https://www.pinterest.com/pin/46161964915072745/?lp=true. Accessed April 1, 2019.

22. Patient Education and Support Materials • Sometimes developed in collaboration with the manufacturer of a product • Branded patient materials • Satisfy REMS requirements • Address specific risks that may impact safety and efficacy • May supplement manufacturer-supported nurse adherence programs • Specialty pharmacies may ship OTC products intended to mitigate frequently encountered side effects, with instructions for use • Supplies for product administration at no additional cost • Needles, syringes, alcohol swabs, sharps container, etc. What’s in a REMS? U.S. Food and Drug Administration. Available from: https://www.fda.gov/Drugs/DrugSafety/REMS/ucm592636.htm. Last updated January 26, 2019. Accessed April 1, 2019.

23. Financial Assistance • Studies have demonstrated that patients are more likely to abandon therapy if their out-of-pocket cost exceeds a given threshold • Specialty pharmacies deploy dedicated teams to support: • Prior authorization coordination • Manufacturer-sponsored copay assistance programs • Need-based patient assistance programs • Foundation support Ness S. Medication Financial Assistance Programs. Pharmacy Times. Available from: https://www.pharmacytimes.com/publications/issue/2011/may2011/medication-financial-assistance-programs-. Published May 17, 2011. Accessed April 1, 2019.

24. Manufacturer Solutions • Clinical trial and/or product launch support services • Market training and education • REMS support and registry programs • Adherence management • Patient enrollment in financial solutions (e.g., patient assistance programs) • Reporting • Pharmacoeconomics analyses • Hub services Hagerman J, et al. Specialty pharmacy: A unique and growing industry. American Pharmacists Association. Available from: https://www.pharmacist.com/specialty-pharmacy-unique-and-growing-industry?is_sso_called=1. Published July 1, 2013. Accessed March 14, 2019. Limited Distribution Networks – Specialty Pharmacies. Access Market Intelligence. Available from: https://accessmarketintell.com/wp-content/uploads/2014/09/Limited-Distribution-Networks.pdf. Accessed March 14, 2019.

25. Reporting • Adherence • Medication possession ratio (MRP) • Proportion of days covered (PDC) • Persistence • Abandonment • Safety • ADE reporting (manufacturer may or may not specify as mandatory) • Efficacy • Disease-state or drug-specific data collection during proactive outreach for scheduled shipment of next fill Brody J E. The Cost of Not Taking Your Medicine. Available from: https://www.nytimes.com/2017/04/17/well/the-cost-of-not-taking-your-medicine.html. Published August 17, 2017. Accessed February 6, 2019. Crowe M. Do You Know the Difference Between These Adherence Measures? Pharmacy Times. Available from: https://www.pharmacytimes.com/contributor/michael-crowe-pharmd-mba-csp-fmpa/2015/07/do-you-know-the-difference-between-these-adherence-measures. Published July 5, 2015. Accessed February 6, 2019.

26. Hub Services • Allow manufacturers to maintain a connection to patients throughout the entire life cycle of a prescription medication • Assurance to manufacturer of efficient product distribution • Establish and maintain patient engagement with therapy • Ensure patient compliance • Prevent therapy abandonment • Hubs come in a variety of forms: • Manufacturer-based • Affiliations with specialty pharmacies, manufacturers, or PBMs • Free-standing operations • Service offerings are as diverse as the products and patients they are designed to support Clark J and Kaddis A. Continuing Evolution of Hub Services. Pharmacy Today. Available from: https://www.pharmacytoday.org/article/S1042-0991(16)31650-4/fulltext. Published January 2017. Accessed April 1, 2019. Toman A. Hub Services: Simplifying Specialty Pharmacy. Specialty Pharmacy Times. Available from: https://www.specialtypharmacytimes.com/news/hub-services-simplifying-specialty-pharmacy/P-2. Published September 6, 2018. Accessed April 1, 2019.

27. Hub Services • Offerings are similar to those available through a specialty pharmacy • The difference is that hub services are devoted to a specific product, allowing for development of deep expertise. • Example hub offerings: • Financial support services (e.g., benefits investigation, copay support, financial assistance, prior authorization support, etc.) • Distribution channel navigation • Quick start programs • Product delivery • Drug administration • Site-of care redirection • Patient support services (e.g., nurse adherence programs) • Data reporting Clark J and Kaddis A. Continuing Evolution of Hub Services. Pharmacy Today. Available from: https://www.pharmacytoday.org/article/S1042-0991(16)31650-4/fulltext. Published January 2017. Accessed April 1, 2019. Toman A. Hub Services: Simplifying Specialty Pharmacy. Specialty Pharmacy Times. Available from: https://www.specialtypharmacytimes.com/news/hub-services-simplifying-specialty-pharmacy/P-2. Published September 6, 2018. Accessed April 1, 2019.

28. Nurse Adherence Programs • A drug-specific ”high touch” patient management protocol designed to: • Increase adherence and persistence • Improve outcomes • Provide mitigation strategies for anticipated side effects • Collect valuable post-marketing data • Stream-line the patient care process through care team collaboration • Frequently implemented for oral oncolytic products • Provides supplemental support to patients that may be seen in clinic less frequently than they would be if they were receiving infusion therapy Rice G, et al. Exploring Nursing Adherence Programs for Oral Oncolytics. Specialty Pharmacy Times. Available from: https://www.specialtypharmacytimes.com/publications/specialty-pharmacy-times/2012/june-2012/exploring-nursing-adherence-programs-for-oral-oncolytics. Published May 25, 2012. Accessed April 4, 2019.

29. Example Nurse Adherence Program Cadence Rice G, et al. Exploring Nursing Adherence Programs for Oral Oncolytics. Specialty Pharmacy Times. Available from: https://www.specialtypharmacytimes.com/publications/specialty-pharmacy-times/2012/june-2012/exploring-nursing-adherence-programs-for-oral-oncolytics. Published May 25, 2012. Accessed April 4, 2019.

30. Nurse Adherence Programs • The goal of pre-administration consultation is to provide the patient with all the information he or she will need to be successful on therapy • The basics (e.g., understanding dosing, administration, , safe handling, storage, etc) • Expectation setting • Anticipated timing of side effects and what to do to prevent or manage • Awareness that dose reduction or interruption protocols exist and that implementing these protocols can actually improve the likelihood of therapy success • Establish trust and an additional point of contact for patients • Data collected during follow up calls can be shared with the care team, allowing for appropriate intervention and ongoing management • Regular contact allows nurse team members to connect patients to additional resources (e.g., patient assistance programs) as needed, further increasing the likelihood that patients remain on therapy • Include triage (e.g. escalation) protocols Rice G, et al. Exploring Nursing Adherence Programs for Oral Oncolytics. Specialty Pharmacy Times. Available from: https://www.specialtypharmacytimes.com/publications/specialty-pharmacy-times/2012/june-2012/exploring-nursing-adherence-programs-for-oral-oncolytics. Published May 25, 2012. Accessed April 4, 2019.

31. Payer Services • Competitive pricing • Coordination of benefits • Data reporting • Specialty drug management • Pipeline monitoring ”Drug don’t work in patients who don’t take them.” Former U.S. Surgeon General C Everett Coop Hagerman J, et al. Specialty pharmacy: A unique and growing industry. American Pharmacists Association. Available from: https://www.pharmacist.com/specialty-pharmacy-unique-and-growing-industry?is_sso_called=1. Published July 1, 2013. Accessed March 14, 2019. Limited Distribution Networks – Specialty Pharmacies. Access Market Intelligence. Available from: https://accessmarketintell.com/wp-content/uploads/2014/09/Limited-Distribution-Networks.pdf. Accessed March 14, 2019. Toich L. What Makes a Specialty Pharmacy Attractive to Payers? Specialty Pharmacy Times. Available from: https://www.specialtypharmacytimes.com/conferences/nasp-2017/what-makes-a-specialty-pharmacy-attractive-to-payers. Published October 5, 2017. Accessed April 7, 2019.

32. Specialty Drug Management • Site of service coordination • Utilization management protocols Hagerman J, et al. Specialty pharmacy: A unique and growing industry. American Pharmacists Association. Available from: https://www.pharmacist.com/specialty-pharmacy-unique-and-growing-industry?is_sso_called=1. Published July 1, 2013. Accessed March 14, 2019. Limited Distribution Networks – Specialty Pharmacies. Access Market Intelligence. Available from: https://accessmarketintell.com/wp-content/uploads/2014/09/Limited-Distribution-Networks.pdf. Accessed March 14, 2019. Toich L. What Makes a Specialty Pharmacy Attractive to Payers? Specialty Pharmacy Times. Available from: https://www.specialtypharmacytimes.com/conferences/nasp-2017/what-makes-a-specialty-pharmacy-attractive-to-payers. Published October 5, 2017. Accessed April 7, 2019.

33. Pipeline Monitoring • Specialty pharmacies designate resources to monitor ”the pipeline” • What they’re watching for: • Emerging trends • Special designations from the FDA • Fast track, breakthrough, accelerated, priority • Orphan • REMS • “PDUFA” date and market readiness of the manufacturer • Expected market share • Anticipated distribution model • Therapy-specific clinical support needs • Probable place in therapy

34. Industry Partnerships • Specialty pharmacies may partner with third parties to provide specialty pharmacy expertise to organizations for which specialty makes up only a portion of their business portfolio • Examples: • Coverage determinations for small regional health plans • Refill reminder calls for traditional brick and mortal retail pharmacies that dispense some non-limited distribution specialty products • 340B support for health systems • Clinical trial enrollment and data collection for research partners • Advanced data analytics for publication

35. Industry Trends Images available from: http://www.nresult.com/datafyer/trend-analysis/ and http://www.clipartpanda.com/categories/trends-clip-art. Accessed April 4, 2019.

36. Industry Trends • Approval Trends • Biosimilars • Pay for value implications • Accumulator adjustment programs • DIR and DIR trends

37. Historic Approval Trends 2017 NEW DRUG THERAPY APPROVALS. U.S. FDA. Available from: https://www.fda.gov/downloads/AboutFDA/CentersOffices/OfficeofMedicalProductsandTobacco/CDER/ReportsBudgets/UCM591976.pdf. Published January 2018. Accessed April 10, 2019. Biosimilar Product Information. U.S. FDA. Available from: https://www.fda.gov/drugs/developmentapprovalprocess/howdrugsaredevelopedandapproved/approvalapplications/therapeuticbiologicapplications/biosimilars/ucm580432.htm. Last updated March 14, 2019. Accessed April 10, 2019. New Drug Approvals. U.S. FDA. Available from: https://www.fda.gov/Drugs/DevelopmentApprovalProcess/DrugInnovation/ucm629491.htm. Last updated April 2, 2019. Accessed April 10, 2019. Pharmaceutical Commerce. FDA set an all-time record of new drug approvals in 2018. Available from: https://pharmaceuticalcommerce.com/brand-marketing-communications/fda-set-an-all-time-record-of-new-drug-approvals-in-2018/. Published January 2, 2019. Accessed April 10, 2019.

38. Anticipated Approval Trends • Key 2019 approvals anticipated in oncology, orphan conditions (e.g., muscular dystrophy, cardiomyopathy), and multiple sclerosis • Continued increase in specialty pharmacy footprint as a result of new specialty drug approvals • Evolving role for specialty in the FDA’s expanded access program Tharaldson A. 2019 Specialty Pipeline Highlights. Specialty Pharmacy Times. Available from: https://www.specialtypharmacytimes.com/publications/specialty-pharmacy-times/2019/january-2019/2019-specialty-pipeline-highlights. Published January 23, 2019. Accessed April 10, 2019. Steiber D. Top Trends for 2019 in Specialty. Specialty Pharmacy Times. Available from: https://www.specialtypharmacytimes.com/publications/specialty-pharmacy-times/2019/january-2019/top-trends-for-2019-in-specialty. Published January 22, 2019. Accessed April 10, 2019.

39. Biosimilars • Per the FDA, a biosimilar is a biological product that is highly similar to and has no clinically meaningful difference from an existing FDA-approved reference product • Biologics are not the same as generics (the burden or proof is higher for biosimilars • Generic manufacturers must prove bioequivalence • Biosimilars manufacturers must demonstrate a lack of clinically meaningful differences in efficacy and safety • The FDA makes an additional determination as to whether or not a biologic product is deemed interchangeable with a reference product • State law dictates the ability of pharmacies to substitute interchangeable biologic products for reference products • The “Purple Book” (Lists of Licensed Biological Products with Reference Product Exclusivity and Biosimilarity or Interchangeability Evaluations) is the FDA’s resource for healthcare professionals and patients Biosimilars. United States Food and Drug Administrations. Available from: https://www.fda.gov/Drugs/DevelopmentApprovalProcess/HowDrugsareDevelopedandApproved/ApprovalApplications/TherapeuticBiologicApplications/Biosimilars/default.htm. Last Updated: 09/06/2018. Accessed March 1, 2019. 

40. Biosimilars • While the FDA has approved 17 biosimilars, uptake has remained slow and lags behind that in Europe • Barriers to uptake: • Patent disputes and brand manufacturer lifecycle management strategies • Rebate practices • Confusing policy language • Industry awareness and education Biosimilars. U. S. Food and Drug Administration. Available from: https://www.fda.gov/Drugs/DevelopmentApprovalProcess/HowDrugsareDevelopedandApproved/ApprovalApplications/TherapeuticBiologicApplications/Biosimilars/default.htm. Last Updated September 6, 2018. Accessed April 8, 2019. Medicines. European Medicines Association. Available from: https://www.ema.europa.eu/en/medicines/field_ema_web_categories%253Aname_field/Human/ema_group_types/ema_medicine/field_ema_med_status/authorised-36/ema_medicine_types/field_ema_med_biosimilar/search_api_aggregation_ema_medicine_types/field_ema_med_biosimilar?sort=field_ema_public_date&order=desc. Accessed April 8, 2019. Barrett J. The Era of Specialty: An Update on Current Industry Trends. Specialty Pharmacy Times. Published November 15, 2018. Accessed April 8, 2019. D’Arrigo T. Delayed launches and patent litigation limit biosimilar availability. Pharmacy Today. Available from: https://pharmacist.com/article/delayed-launches-and-patent-litigation-limit-biosimilar-availability. Published September 25, 2018. Accessed April 8, 2019.

41. Pay for Value Implications • Private markets are slowly beginning to adopt value-based arrangements (VBAs) as they relate to prescription drugs • Reimbursement tied to efficacy (as opposed to volume) • Create incentives for manufacturers to work closely with industry partners to create drug management programs that drive efficacy and safety • May incorporate ”money back guarantees” for drugs that do not achieve therapeutic goals, reimbursement for hospital stays, etc. • Federal barriers currently prevent Medicare and Medicaid recipients from benefiting from these types of arrangements • For example, Medicaid best price law prevents lower drug costs from being applied situationally Image available from: https://www.atkearney.com/web/health250/7.-payer-coverage. Accessed April 8, 2019. White J. "American Patients First" Plan Marks a Good First Step: Here's What Should Happen Next to Lower Drug Costs. Available from: https://www.specialtypharmacytimes.com/publications/specialty-pharmacy-times/2018/september-2018/American-Patients-First-Plan-Marks-a-Good-First-Step-Heres-What-Should-Happen-Next-to-Lower-Drug-Costs. Published September 12, 2018. Accessed April 8, 2019.

42. Accumulator Adjustment Programs • Historically, manufacturer payments (e.g., copay assistance programs, “coupon cards”, etc.) have applied towards a patient’s deductible • For plans that implement copay accumulator programs, manufacturer payments no longer count toward a patient’s deductible or out-of-pocket maximum. • Cost shifting to patient • It is estimated that at least 28% of commercially insured patients will be affected in 2019 • Expect to see this trend to continue • Significant savings to plan sponsors and payers • Specialty medications disproportionately affected • Concerns are mounting • Prescription adherence, abandonment (e.g., never filled), and premature discontinuation • More than one in four brand name specialty prescriptions are abandoned during the deductible phase (three times the abandonment rate when there is no deductible) Fein AJ. Copay Accumulators: Costly Consequences of a New Cost-Shifting Pharmacy Benefit. Drug Channels. Available from: https://www.drugchannels.net/2018/01/copay-accumulators-costly-consequences.html. Published January 3, 2018. Accessed February 5, 2019. Fein AJ. Copay Accumulator Update: Widespread Adoption As Manufacturers and Maximizers Limit Patient Impact (rerun). Drug Channels. Available from: https://www.drugchannels.net/2018/12/copay-accumulator-update-widespread.html. Published December 17, 2018. Accessed February 5, 2019.

43. DIR • Medicare makes partially capitated payments to Part D sponsors in exchange for delivery of prescription benefits to Medicare beneficiaries • Per CMS statute, final plan payments by CMS must be based on the actual cost incurred by the Part D sponsor • Part D sponsors (or the relevant PBM) often receive additional compensation after the point-of-of sale which changes the final cost of the drug to the payer • E.g., rebates from manufacturers or pharmacy concessions • Post point-of-sale compensation = Direct and Indirect Remuneration (DIR) • Factored into CMS’s final calculation of payment to be received by Part D sponsors True North Political Solutions. White Paper: DIR Fees Simply Explained. Specialty Pharmacy Times. Available from: https://www.specialtypharmacytimes.com/news/white-paper-dir-fees-simply-explained/P-1. Published October 25, 2017. Accessed April 8, 2019. Medicare Part D – Direct and Indirect Remuneration (DIR). CMS.gov. Available from: https://www.cms.gov/newsroom/fact-sheets/medicare-part-d-direct-and-indirect-remuneration-dir. Published January 19, 2017. Accessed April 9, 2019.

44. DIR Trends • Increase in DIR reported by Part D sponsors • DIR growth has outpaced the increase in drug costs since 2010 • Main driver of this increase is manufacturer rebates • Increased beneficiary cost sharing obligations • Due, in part, to higher point-of-sale prices • Potential for reduced premiums and decreased liability to plans • Loss of revenue for pharmacies • Drug acquisition cost is ultimately greater than payment received from Part D sponsor • Clawbacks (e.g., PBM charges a DIR fee after the point-of-sale transaction is complete) • Loose association with quality measures without explanation of calculation • Proposals for legislation • Federal and state True North Political Solutions. White Paper: DIR Fees Simply Explained. Specialty Pharmacy Times. Available from: https://www.specialtypharmacytimes.com/news/white-paper-dir-fees-simply-explained/P-1. Published October 25, 2017. Accessed April 8, 2019. Medicare Part D – Direct and Indirect Remuneration (DIR). CMS.gov. Available from: https://www.cms.gov/newsroom/fact-sheets/medicare-part-d-direct-and-indirect-remuneration-dir. Published January 19, 2017. Accessed April 9, 2019.

45. Summary • The specialty definition is not always binary and continues to evolve. • Manufacturer-driven distribution models define access to specialty products. • Specialty pharmacy offerings are as diverse as the products they are designed to support. • The specialty pharmacy industry continues to evolve and become an increasingly important player in the healthcare market.

46. Questions? Images available from: https://www.psychologytoday.com/intl/blog/how-do-life/201407/asking-the-right-questions. Accessed April 10, 2019.