New approaches to specialty distribution

The recent market

news surrounding the difference between gross and net pricing for branded products brought to light the inefficiencies in today’s product distribution and management models. It is becoming increasingly evident that the industry is due and preparing for an innovative change. The methods that were well suited to the blockbuster products of yesterday are antiquated to support the complex therapies of today and the future. A new method leveraging technology to connect patients with these expensive therapies must be created. A channel focused on both the complete support of patients along with the direct distribution of products by manufacturers through an independent, non-biased entity removing layers of historical inefficiencies is on the horizon.

Many years ago, when the potential for personalized medicine became a reality for products, such as Provenge (sipuleucel-T), the possibility of a manufacturer going direct-to-patient emerged. While initially thought to be practical only for products tailored for individualized use, the potential for broader utilization became a quick, apparent reality. Specialty pharmacies stepped in to address this need. Today, most specialty prescriptions are now fulfilled by payer- or PBM-owned pharmacies. Not only is there a lack of efficiency but these organizations are inherently providing services based upon the cost containment strategies of their parent organizations.

The healthcare industry is faced with an increased focus on cost containment. For example, the cost of products used for the treatment of Hepatitis C or the introduction of immuno-oncolytic agents will only drive this pressure. As such, the industry is looking for solutions to address the challenge. We are seeing new programs being developed from all aspects of the continuum. These efforts encompass new initiatives from the employer side of the table, such as the new Healthcare Transformation Alliance. This is an organization focused on removing the multiple layers and inefficiencies for employer groups. Their primary goal is to attempt to gain control over rising medication costs. The challenge with this initiative is that the necessary, innovative tools have not been brought to market to enable this to become truly effective. For example, the Alliance has been left with leveraging the traditional PBM functionality to manage access while contracting directly with the manufacturers.

A good first step, but is there potential to go one step further? The industry needs to look for solutions to remove costs and inefficiency from the system; to take greater control over the distribution of expensive therapies, and eliminate redundant and unproductive steps along the path.

One potential avenue to meet these objectives is to enable manufacturers to connect directly with the patients to shorten the supply chain, to evolve the “Hub” programs of today into the direct distribution programs of tomorrow. Alongside this, the relationship between the employer groups, payers and manufacturers needs to continue to evolve, perhaps into a direct contractual relationship. This model is best suited for those products we deem today as specialty products. By using a neutral third party intermediary, such as an independent company like PharmaCord, manufacturers could not only ship product directly to the patients, but also support these same patients with benefits verification, prior authorization tools, financial assistance counseling along with clinical intervention programs. Another added value is the increased efficiency through the channel management process; a cornerstone for the collection of valuable data elements. These comprehensive data elements, in turn, become the building blocks for establishing outcomes-based, predictive reporting and the measurement of value-based care.

Consider the path as we know it today—from manufacturer – to wholesaler – to pharmacy – through a PBM – to the patient. Each of these steps cost valuable time and money. Now let’s look at the model of the future—from manufacturer – through PharmaCord – to the patient. The time has come to consider a change that positively affects the patient journey using efficient channel management.

ABOUT THE AUTHOR

David Hileman is executive vice president and COO of PharmaCord (Louisville, KY, pharmacord.com). He has a 30-year career in patient services and biopharma channel strategy, most recently as operational leader at Omnicare Specialty Group, which included RxCrossroads, of which he was a founding member in 2001. He has a BS in pharmacy and a BS in business administration from Ohio Northern University.

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