When You Have to Shop at the Specialty Pharmacy

October 17, 2009
Bradley Schmidt

The prevalence of specialty pharmacy networks is increasing and in the coming years will threaten the existence of the “buy-and-bill” model that currently guides many physician drug-purchasing habits. Will you be ready?

According to Roderic Bryant, the prevalence of specialty pharmacy networks is increasing and in the coming years will threaten the existence of the “buy-and-bill” model that currently guides many physician drug-purchasing habits.

David Suchanek, RPh writes that the rise of specialty pharmacies came in response to “pharmaceutical and biologic products that have high acquisition costs, are difficult to manage, and present reimbursement challenges.”

Part of the high costs of these drugs stems from physician markup which Bryant indicates can bring a 300 to 400 percent return on investment for some specialties through the buy-and-bill model. Reimbursement through a specialty pharmacy more closely resembles a Medicare methodology, lowering reimbursement amounts significantly, sometimes covering little more than acquisition costs.

For now, Bryant says, payers are operating on an optional model with few health plans requiring mandatory usage of specialty pharmacies, but cautions that health care providers should be aware that they will have to deal with them in the future, and prepared for both the benefits and challenges that they present.

Benefits of specialty pharmacies to physicians

  • Benefit and eligibility verification is done by the pharmacy
  • Drugs are shipped directly to providers
  • Physicians experience reduced inventory purchases
  • If an outside billing company is used, physicians may pay lower fees
  • Depending on state laws, physician tax bills can be lowered by eliminating drug purchases, as well as taxes on drug revenue.

Challenges

  • By introducing another entity into the delivery of care, there is a risk of possible patient dissatisfaction.
  • Payers have their preferred specialty pharmacies and by accepting multiple health plans, it’s possibly that physicians could have to deal with multiple specialty pharmacies.
  • Physicians will have to rethink inventory management, particularly when managing multiple specialty pharmacies. Practices may even have to move to a patient-specific-inventory model.
  • Specialty pharmacies remove local contacts and pharmacy support.
  • Inconsistent specialty pharmacy policies, procedures, and processes could result in staff confusion and possible delivery delays. Another wrinkle: some specialty pharmacies will not ship drugs with an outstanding patient financial obligation,
  • Changing dosages becomes a more cumbersome process.

The Silver Lining

1) Some of what you’re losing by adding a specialty pharmacy into the monetary equation, you’ll gain back in terms of outsourced business processes.

2) Though “practices must prepare for the changing trends in payers’ approaches to injectible therapy management,” Bryant says that providers should not assume they must accept a move to a mandated specialty pharmacy just because they receive a strongly worded letter from a payer. Because the specialty pharmacy largely removes drug purchasing as a revenue center, payers understand that physicians will want (and need) to make up costs elsewhere and will mostly be open to negotiating various fees.

Bryant recommends negotiating infusion, case rate, facilities, administrative, and professional fees. These are justified, says Bryant, because they will “support patients’ in-office infusions and allow your practice to remain dedicated to patient care and access.”