Specialty Pharmaceuticals and the Emergence of Sub-Specialty Pharmacy

Products in the FDA pipeline continue to push the pharmaceutical market toward the specialty sector. This changing environment is also transforming the specialty market itself. The market is evolving from large-volume specialty pharmaceuticals to custom products which target small, unique patient profiles. The evolution of new, unique “ultra-orphan” pharmaceuticals* forces those in specialty pharmacy to ask some basic questions regarding the dominant specialty-pharmacy business model.

First, is the distribution model the same (or should it be) for a $10,000 medication versus a $100,000 medication?

Second, is the level of care required for these different types of patients the same (or should it be) for markets with 500,000 patients versus 5,000 patients?

Third, is the physician support the same for disease states seen daily (or at least weekly) versus those seen only a few times per year?

In just a few short years the definition and the requirements for specialty medications has changed dramatically. In yesterday’s view, most “specialty” medications consisted of self-injectable products that could be delivered directly to a patient’s home with limited need for in-depth patient services.

Today, more and more products are requiring infusion services, extensive patient support and registry or RiskMAP programs. Many times these products serve patient populations of less than 10,000 and sometimes even less a few hundred patients nationally. The diseases are so rare that once identified, the physician, the pharmacist and the patient all need to be included in the circle of education demonstrating a dilemma in the specialty pharmacy market. As new drugs directed toward these rare diseases are introduced for a US patient base of 10,000 patients or less, how can an individual physician or pharmacist (outside of a teaching facility), become an expert?

Some of these disease states include but are not limited to:

• Severe primary IGF-1 deficiency
• Acromegaly
• Cryopyrin associated periodic syndromes (CAPS)
• Phenylketonuria (PKU)
• Hereditary angioedema

Manufacturers need to do additional research in addressing these disease states: This research begins with asking some basic questions about the product and the support the manufacturer, the physician, the pharmacist and the patient will each require. Manufacturers should begin by asking a series of key questions including:

• Is the product expensive to manufacture? Will I have adequate product available at launch, during the first year or to meet anticipated patient demand?
• Do I want physicians to have access to product for buy-and-bill distribution?
• Do I want hospitals or sponsored clinics to have access?
• Where are most of the injections/infusions expected to be done—MD office, hospital/clinic, or infusion suite?
• How will this product be positioned by the various listing agencies?
• How will the product be positioned in the managed care arena?

Answers to these questions help the manufacturer identify the most effective distribution model. Once a model is determined, the manufacturer must pick worthy channel providers, which is where the current challenges in the specialty pharmacy sector exist.

With increased competition among the large specialty providers, margin opportunity will continue to be squeezed out of the distribution channel, fundamentally changing the existing specialty distribution model. The margin pressure will force large specialty pharmacies to focus on increasing volume while cutting costs, effectively eliminating the ability to develop customized solutions for the ultra orphan segment. Manufacturers can create unique distribution solutions to address specific needs if they understand where to find solutions and how to structure contractual relationships that drive results. As the “personalized medicine” market develops, current models will change and new models will emerge to provide market-based solutions. Some of those emerging models are already here, but that’s another story.

ABOUT THE AUTHOR

Dean P. Erhardt, MBA, Is a Principal with D2 Pharma Consulting LLC ([email protected]; 314.308.2028). D2 provides strategic outsourced solutions for the commercialization, distribution and marketing of pharmaceuticals, medical devices and biologics.

Ed. note: See also page 16.