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Competitive forces sharpen as manufacturers look for the right channel partners
If anything, the world of hub services has become more active, more crowded, less organized but more profitable than it was last year when Pharmaceutical Commerce covered the topic. More players are showing up (even as some of them quibble with the term “hub services”); and with the continuing growth in sales and product launches of specialty pharmaceutical products, the entire field is lifting economically. Whether the counterpressures from healthcare providers, and healthcare reform itself, will squelch the nascent movement, depends on performance of the outsourced hub providers, and the willingness (and regulatory leeway) of pharma manufacturers to fund the hub services.
There might be no better indicator of the dynamism of the field than that of Sonexus Health, a company that came into being about a year ago, and opened a new headquarters and distribution center in Lewisville, TX, last spring. Mike Mullen, CEO, reports that the facility is already maxed out, and the company is looking to expand its distribution center.
Other news of note:
• Diplomat Pharmacy, a fast-growing specialty pharmacy that provides delivery of specialty pharmaceuticals as an outsourced hospital pharmacy and through a national network of local pharmacies, is about to announce EnvoyHealth, a separate business subsidiary that will handle hub-related services for patients. The company tells Pharmaceutical Commerce that “EnvoyHealth will operate as a separate unit, divided both physically and digitally from Diplomat by key-locked doors and firewalls. While it runs with the same clinical excellence Diplomat has always offered, the services are distinct from the company’s specialty pharmacy operations, to ensure the complete objectivity required of a hub provider.”
• CVS Caremark, the combined retail chain and pharmacy benefit manager (PBM), is rolling out its CVS Specialty Connect program nationally by mid-year. Specialty Connect enables the 15—20% of patients who initially cannot obtain their specialty products from a local pharmacy with a direct-to-patient delivery service, combined with follow-up care management (in pilots, CVS/pharmacy says that half of patients obtain their drug from a local CVS pharmacy.) The Pharmacy Benefit Management Institute awarded Specialty Connect its 2014 Rx Benefit Innovation Award last month.
• Walgreens Specialty Pharmacy combined off-loading its Pharma Dynamics business unit (which provided patient support) to CareMetx, an outsourced hub provider, and taking a minority ownership in the firm. The move combines the larger call-center resources of Pharma Dynamics with the advanced IT platform developed by CareMetx, which will now be more broadly connected to Walgreens pharmacies.
• United Drug plc, the Dublin, Ireland, pharma-services conglomerate, has reorganized a group of business units and recent acquisitions into Ashfield Commercial and Medical Services (US HQ: Philadelphia); although the company is not specifically creating a hub-services unit, Ashfield Commercial contains elements, including patient call centers, managed-markets access consulting and, notably, contract sales, all of which can be coordinated for new specialty-pharmaceutical commercialization, says Mary Anne Greenberg, president of the North American division.
• Armada Health Care, a “specialty pharmacy channel management” company, is going live with the Vision data-sharing platform, intended to provide both pre- and post-scrip medical information to manufacturers and pharmacy members of its ASPN network, a grouping of smaller or local pharmacies, infusion centers and other healthcare facilities. Mike Baldzicki, EVP for industry relations at the firm, notes that its network has grown in the past year from about 550 facilities to nearly 700.
• H. D. Smith, the largest private drug wholesaler in the US, has set up the H. D. Smith Specialty Solutions business unit and within that, Smith Medical Partners to work with specialty pharmacies. In October, it completed its acquisition of Triplefin, a patient support firm; “Together, our organizations have already integrated many of our functions, and established an end-to-end service value chain touching all aspects of prescription medicine distribution and support,” said Dale Smith, chairman, in a statement.
• Omnicare Specialty Care Group (SCG) opened a new patient solutions center in Louisville, KY this past year—the third one there, combined with three others in Cincinnati, Orlando and Philadelphia. In the pharma industry, “there is a desire to consolidate vendors—furthering the need for end-to-end solutions,” says Amit Jain, SVP Omnicare Sales and Marketing. Omnicare SCG also benefits from the parent company’s Long Term Care division, which has 175 pharmacies nationwide; SCG is able to leverage this for unique dispensing challenges and patient/physician support.
Inventiv’s view of how services are evolving. Credit: inVentiv
• In the buzz-y new-media/Web-services space, specialty pharmaceutical dispensing has attracted venture capital from, among others, Altus, which has put $2 million into ZappRx, a Cambridge, MA startup that hopes to coordinate prescriptions, lab tests and medical data for specialty pharmacies and health providers.
All these ventures, and others, are recognizing the expectation that in a few short years, specialty pharmaceuticals will represent 50% of overall pharmaceutical spending (it’s currently in the 20—30% range, depending on who one speaks with). While the pharma industry spends several billion dollars annually on patient assistance programs (PAPs) and $5—6 billion on copay assistance, there has been little accounting of the full range of hub services, which include dispensing costs, patient support and counseling, copay assistance, adherence programs and what is now being called “BI/BV” (benefit investigation/benefit verification). As insurers, providers and the federal government grind through the components of the Affordable Care Act, and especially with the growth of Accountable Care Organizations (ACOs) who are charged with providing a level of care at a fixed cost, hub services are both in greater demand, and present a greater degree of confusion to both patients and providers.
“In a way, we’re heading for a collision of interests—everybody wants to be in charge of the patient, including providers, pharmacies and, through hub services, manufacturers,” notes Clelia Biamonti, PhD, principal consultant with Blue Fin Group (Atlanta). “Manufacturers try to exert some control over their commercial channel configurations, but the various parties will be compelled to work together in different ways across the patient journey.”
“Manufacturers are looking for ways to accommodate the needs of multiple stakeholders,” says Erica Toatley, senior director of operations at Lash Group, a unit of AmerisourceBergen. “The hub model—a centralized, strategic approach to delivering integrated services provides value to stakeholders throughout the treatment process.”
The field has also seen a prominent warning shot fired by the Dept. of Justice. In January, DoJ announced a $15-million settlement with BioScrip, a specialty pharmacy and hub services provider hired by Novartis to manage patients taking Exjade (deferasirox, a blood chelation agent). According to DoJ’s allegation, “Between February 2007 and May 2012, Novartis orchestrated a scheme whereby it offered kickbacks, in the form of patient referrals and under the guise of rebates, to BioScrip, a specialty pharmacy, in exchange for BioScrip increasing its Exjade refills through biased recommendations to patients.” Novartis had a limited distribution system for the drug and, it is alleged, funneled patient referrals through BioScrip in order to increase its dispensing. DoJ has filed amended claims against both BioScrip and Novartis.
Some industry observers look at the BioScrip litigation as a reason for pharma companies to keep hub services separate from pharmacy dispensing, since the hub providers typically do not seek reimbursement from CMS or other government insurers (and thus avoid federal anti-kickback statutes); the funding of the hub services can be assessed at fair market value and included in the manufacturer’s distribution costs. But there are dozens of specialty pharmacies, handling millions of prescriptions annually, who have not run afoul of federal statutes, so the point is debatable.
Speed bumps on the patient journey
What are the essential hub services? For years, specialty pharma companies have recognized that there can be an extra effort needed to get some patients on therapy, most obviously when the specialty drug is not on formulary. The “prior authorization” process, when required by a payer, can be an arduous process for the patient alone, and some physicians’ office managers are adept at it and some are not. After the BI/BV process, there are multiple ways that a drug can be dispensed: through a local pharmacy, through a national specialty pharmacy (particularly when the manufacturer has restricted distribution to that pharmacy), through the dispensing networks maintained by the giant PBMs, or through a hospital system’s pharmacy and the group purchasing organization that it might belong to. Many specialty pharmaceuticals are for chronic care; and while providers can offer that ongoing care, manufacturers can also see the value in funding a patient-support provider to ensure that treatment is top-notch. The role of “care coordination” among pharmacists, doctors, insurers and patient-support organizations comes into play.
Special consideration is given for drugs that are marketed with a Risk Evaluation and Mitigation Strategies (REMS) program—an FDA requirement imposed on manufacturers; and for orphan drugs, which typically affect small numbers of individuals in widely diverse areas, whose available healthcare resources might be limited. One hub services provider, Centric Health Resources (a unit of Dohmen) has specialized in “ultra-orphan” drugs (fewer than 20,000 patients nationally).
Call Center Activities. Credit: inVentiv
From a patient perspective, hub services can be a lifeline to managing complicated, chronic conditions. A critical service is the call center, staffed by nurses, pharmacists and other care coordinators, who give drug-administration advice, help with reimbursement problems, locate patient assistance services and “triage” the prescription—determine the best method for having the drug administered (which could include a local pharmacy pickup, a visit to an infusion center, a visit by a home health specialist, among other alternatives). Many drugs have side effects whose severity also needs to be ministered to.
ACOs (there are several hundred now set up across the country) present a new level of complexity. “In addition to our range of existing patient services, we’re hiring community services specialists to coordinate care with ACOs,” says Jan Nielsen, president of access and patient support at Sonexus. “Our experience is that ACO practices vary widely from state to state.”
“We’ve done extensive training of our staff in patient navigation services, covering the material that CMS uses to train the navigators for health exchanges, but going beyond that to in-field services for patient support,” says Valerie Sullivan, head of inVentiv’s Patient Access Solutions group. “This is the cutting edge frontier in patient support.”
“We’re seeing a tendency for manufacturers to anchor their services to either affordability or clinical education support,” says Derek Clothran, a VP at Lash Group. “For a product that has found its way onto the formulary, with a clear prior authorization component, there is less of a reimbursement issue, and more of an affordability one.” Finding copay support or referrals to foundations becomes the primary service at that point, he says. After affordability is addressed, clinical education, including reminder programs and the like, become the primary need. “As a result, we’ve seen manufacturers positioning affordability and clinical education much differently than in the past.”
Tech to the rescue
CareMetx’s deal with Walgreens highlights the growing importance of having the right IT infrastructure in place to handle hub services. The company has invested heavily in developing a SaaS-based hub services system that supports “all hub activity, including call center triage, reimbursement case management, PAPs and clinical therapy management,” according to the president, Mark Hansan. One face of this software is for coordinating hub activities; another face, involving analytics tools and dashboards, provides trend data out to manufacturer clients.
Another fairly young hub services company, Occam Health, is banking on a platform it developed called Cloud Script to change the economics of hub services. “Patient assistance programs and reimbursement adjudication have been around for a while in the hub, but more modern tools are changing the efficiency of these processes,” says president Rujul Desai. “Our software can cut operational costs by 30%, by drastically reducing the amount of time case managers spend looking for information and similar non-productive activities.”
The data-gathering and -reporting activities are only going to get more complex as more health providers install electronic-health record (EHR) systems, generating more detailed data that payers, manufacturers and almost anyone else in healthcare want to see. “Modern IT tools bring transparency, and that’s what the industry needs,” says Desai.
That transparency, though, creates additional pathways for the growing number of companies involved in following up the writing of a prescription. Vendors of patient adherence programs get involved (inVentiv Patient Access Solutions says that it’s working closely with another inVentiv unit, Adheris, that connects with retail-pharmacy programs, says Sullivan); vendors of coupons and copay offset programs; and the care coordination activities emanating from insurers and health systems themselves.
But the home run, at the moment, appears to be how well a hub services provider can intersect with the CRM systems used by field sales forces and multichannel marketing programs from manufacturers. “A rep who ‘gets it’ in terms of what patient services his employer is providing, and communicates that effectively to physicians, keeps the whole drugmaker’s effort from falling apart,” says Blue Fin’s Biomanti. “In setting up hub services agreements for our manufacturer clients, we insist on getting all the marketing and sales managers on board, and having the field sales force trained.”
That’s one of the assets that Ashfield Commercial and Medical Services is banking on in winning business from pharma clients, says Mary Anne Greenberg. The company has a contract sales force (Ashfield, plus the recent acquisition of a European-based organization, Pharmexx), and “we’ve invested considerable resources in training these staffs in our patient-support activities,” she says.
Similarly, inVentiv Health has a substantial contract sales force, and Patient Access Solution’s Sullivan says that her group taps into that expertise, as well as the consulting services offered by Campbell Alliance, another inVentivv asset. “In former times, patient services sponsored by pharma companies died because they weren’t integrated into brand management,” she says. “Now, brand owners have a strategic opportunity to launch specialty products successfully by bringing these elements together.”
Indeed, many hub service providers—especially those like Sonexus, Smith Medical Partners, Dohmen, AmerisourceBergen Specialty Group and others that combine hub services with distribution-center logistics, tout their ability to improve the “speed to therapy” of a patient during a new product launch. As the specialty space gets more crowded, those market access issues common to broad-based branded drugs become a differentiator.
“Specialty products by their very nature require more hand-holding of patients; that’s why this whole field has taken off,” comments Dave MacLeod, a VP at inVentiv who works with Sullivan. “Specialty will remain strong for these services, but there are cost challenges to applying it to broader therapy areas like diabetes.” Still, he says, the logic for keeping patients with chronic conditions on therapy might create opportunities for hub-service types of activities in the future.
Are the Feds onboard?
Everything looks sunny for an expansion of hub services—possibly even into non-specialty branded products—except for one very dark cloud: whether the restrictions that exist for federally funded patients under current law will extend to all the patients coming onto health exchanges under the Affordable Care Act. Under current law, Medicare, Medicaid and other patients are excluded from coupons or copay-offset programs, and manufacturer-funded patient support of these patients runs perilously close to the situation Novartis and BioScrip currently find themselves in.
Resolution of this is expected in the near future. On the specific question of copay assistance, HHS Commissioner Kathleen Sebelius issued a letter late last year saying that health exchanges could be considered not to be a federally funded program (since private insurers provide the coverage). But the Pharmaceutical Care Management Assn., among others, shot right back saying that Sebelius’ letter was not a definitive regulatory decision. (PCMA, which represents most of the PBMs, has consistently been critical of copay assistance as a method of going around formulary decisions its member companies make.)
Manufacturers are “proceeding very conservatively” at this point, says inVentiv’s Sullivan, “waiting for more definitive guidance from CMS.” Blue Fin’s Biomanti says that among a recent run of clients her firm has worked with, there has been a fairly even split between those factoring a potential restriction, and those who are not, “and one client who’s proceeding at full speed regardless.”
“Many manufacturers have taken a ‘business as usual’ position while the debate continues,” says Lash Group’s Toatley. “We anticipate the need for robust patient support offerings to increase, or minimally shift, from free product to competitive copay support offerings. Regardless, patients and healthcare providers need education and support to navigate the new sources of coverage.”
Hub services potentially provide efficiencies in providing healthcare to patients, and it’s not easy to overlook that the activity is both compassionate toward many patients, and could affect health outcomes beneficially, thus creating a better level of performance for all parties involved. The argument is also expressed that hub services shouldn’t be reserved as a premium service for those on generous commercial health plans, and excluded from patients depending on public resources. But the massive machinery that is the US healthcare system will be grinding through these policy questions for years to come.