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Biopharmaceutical manufacturers turn to a direct-distribution model to leverage opportunities for cost-effective drug delivery and personalized health management services
The federal government defines a rare disease as one that affects fewer than 200,000 people in the United States, and the National Institutes of Health estimates that 6,000 rare disorders affect approximately 25 million Americans. Most of these “orphan diseases” are serious, crippling, or life-threatening disorders that pose a desperate need for therapeutic advancements. The wide range of conditions that fall within this definition of orphan diseases has led to the emergence of an informal subcategory—called ultra-orphan diseases—to describe extremely rare conditions. While the term has no formal legal definition, the treatments for these very rare, ultra-orphan diseases have become known as “ultra-orphan drugs.”
Today, specialty drugs for these ultra-rare disorders are being developed and introduced, with product distribution managed by large specialty pharmacies. Their role in the marketplace is generating significant attention since an individual who has a rare orphan disease typically uses therapies valued at $150,000 annually. For example, a hemophilia patient with an inhibitor can cost upwards of $1 million a year—challenging the budgets of individuals, employers, and health plans. The addition of just one patient to a designated population pool can impose potentially catastrophic expenses if the condition is not effectively managed.
This is where specialty pharmacies provide highly valuable services. They are under contract with managed care organizations, self-insured companies, and government programs to provide and monitor drug distribution and networks, perform drug utilization review, and deliver outcomes and disease management. While most of these companies strive for efficient and effective delivery of therapy, there is a new breed of specialty pharmacy focused solely on orphan disorders that also offers patient-specific health management services, providing consumers and their families with individualized guidance, coaching, and empowered self-care.
By acting as the manufacturer’s agent, rather than simply as a trading partner, this specialty-pharmacy, direct-distribution model provides benefits to all of the involved parties—manufacturer, patient, physician and payer. The approach, pioneered by Centric Health Resources, not only connects individuals with specialty pharmaceuticals, but it also offers a comprehensive blend of tailored programs that are quickly becoming an important part of effectively addressing the multitude of issues surrounding the treatment of rare, ultra-orphan diseases. This distinctive model goes beyond simply mitigating costs—it actually improves patient compliance with therapy, drives better outcomes, and provides additional long-term support for patients and their caregivers.
Fostering a culture of caring and a conviction that patients with chronic disorders require more than just clinical therapy, this innovative model focuses on the patient and aligns the incentives of all participants in the continuum of care. It is a comprehensive approach that addresses multiple aspects of a patient’s life and results in positive behavior change that benefits all constituents involved in the delivery of care—patients, manufacturers, payers and physicians.
These personalized services have been incorporated into a direct distribution and health management model that is now available to manufacturers of specialty products. It has become an attractive option since the model also offers flexibility, allowing manufacturers to bundle or unbundle a full range of services.
The ultra-orphan disease landscape
Ultra-orphan diseases include rare chronic disorders, such as alpha-1 antitrypsin (AAT) deficiency, hemophilia, primary immune deficiencies, hereditary angeoedema, chronic inflammatory demyelinating polyneuropathy (CIDP), pemphigus and many others. Because they collectively affect so many Americans, finding treatments for these diseases is a serious public health concern.
According to a recent survey conducted by the National Organization for Rare Diseases (NORD), the rare disorders community is underserved and burdened in a number of areas. Among their key findings were:
The case for the direct distribution model
Reimbursement pressures on the specialty drug distribution channel have created challenges for manufacturers and specialty pharmacies, driving a fundamental change toward a fee-for-service approach to specialty pharmacy distribution. A logical evolution of this change is for manufacturers to look at pharmacy distribution, with manufacturers of orphan and ultra-orphan therapies opting to distribute products directly to consumers—bypassing traditional distribution channels.
The direct distribution model virtually eliminates the costs and resources generally associated with multiple touch points for getting the specialty product into the hands of the patient. As a result, the price of the drug remains transparent and stable, without unnecessary mark-ups along the way that typically inflate the costs for patients and payers. Attractive pricing reflects efficiencies associated with integration as well as lower overhead.
FIG 2. DIRECT DISTRIBUTION
This model is already garnering tremendous interest and may become the de facto standard going forward since it addresses the unique, complex needs of the ultra-orphan drug marketplace—responding to market forces that span margin pressures, patient needs, and increased requirements to track patient data and report outcomes. It also offers the opportunity for pharmaceutical companies to demonstrate value to patients, physicians and payers, adapt to a changing regulatory environment, and garner support from the patient community through engaging patient advocacy groups as partners in the provision of services.
A flexible menu of hub, specialty pharmacy, health management, and FDA compliance services can be delivered in both a bundled or unbundled platform:
Manufacturers appreciate this flexible arrangement since they can use one service, a selection of services, or all of the services—whichever customized approach best serves their needs. A broad range of programs are available to support clinical trials all the way through distribution.
This type of supply management platform serves both patients and manufacturers because it creates an ideal environment for keeping patients on service—at home or on the road. Patient compliance and program loyalty have proven to lead to an improved return-on-investment for manufacturers. In addition to improved margins and better pricing management, the direct distribution model also provides data, aids inventory control and forecasting, connects with the patient community, and promotes retention and overall health management.
The bottom line: an integrated service model allows for a focus on individual well-being and compliance, driving better outcomes for patients and improved performance for manufacturers.
This innovative business platform requires the expertise of a development team of healthcare professionals with extensive experience in rare, chronic disorders and the capabilities to conduct specialized patient outreach programs. Their individual and collective resources can be applied to centralized areas of operation, services, supply management, and data reporting, promoting a vertically integrated best-in-class offering that maximizes opportunities for consistent patient experiences.
Services should target an entire disease or condition, as opposed to operating in silos. These include: health management, intake “hub,” third party logistics, administration, reimbursement/collection support, nursing, population- or company-specific wholesale/pharmacy outcomes measurement and reporting, data analytics and reporting, and risk evaluation and mitigation strategies (REMS) and post-market surveillance, if required.
Warehouse facilities should be compliant to Current Good Manufacturing Practices (cGMP), featuring a pharmacy facility that is fully equipped and has the skill to inventory and distribute low-volume, ultra-orphan products. An integrated model reduces the costs associated with managing multiple vendors, reduces the risk of service breakdowns resulting from fragmented coordination among partners, and provides channel integrity by reducing the risk of counterfeiting or diversion.
Efficient and rapid implementation of the model should involve a multiphase ramp-up to meet the manufacturer’s needs:
Tailoring services for better outcomes
A direct distribution model delivers an advantageous pricing platform that can concurrently provide comprehensive health care management services for ultra-orphan patients. This translates into ongoing patient assessments, the development of an individual care plan between patient and physician, targeted educational interventions, patient monitoring, and outcomes data collection and reporting. Centralized areas of operation, services, supply management, and data reporting also support a vertically integrated, best-in-class offering that maximizes opportunities for consistent patient experiences.
Its scope includes the clinical, psychological, lifestyle, social, financial, and other related effects, and offers alternatives to treat each facet of the patient’s life. Direct distribution accompanied by comprehensive health management also protects consumer interests through services that optimize care, increase therapeutic compliance, improve safety and promote customer retention. It can successfully advance optimal reimbursement from healthcare payers nationwide, support value-based benefit design initiatives and pay-for-performance demands, and enhance the standards of excellence for manufacturers facing the challenges and special requirements of bringing ultra-orphan drugs to market.
As manufacturers transition to this innovative approach to distribution, they will engender patient loyalty, adherence to therapy, and results that ultimately benefit all corporate and consumer stakeholders. PC
SIDEBAR: A Meeting for Addressing Ultra-Orphan-Disease Medication Management
Centric Health Resources’ first-ever conference, “Innovative Approaches to Addressing the Needs of Ultra-Orphan Disorders,” September 9 and 10, 2008, highlighted the need to find ways to deliver high-cost, low-volume drugs to the patients who desperately need them. More than 50 representatives from manufacturers, consulting firms, patient advocacy groups, venture capital firms, and other industry professionals attended this Centric-sponsored conference.
The event kicked off with dinner and networking, and continued the next morning with a full-day conference focused on trends in the marketplace—from the perspective of the FDA, payers, patient advocacy, health management, legal, and venture capital—and ended with presentations and discussion regarding innovative approaches for the orphan marketplace.
Save the date for the 2009 “Innovative Approaches” conference to be held on August 25 and 26 in St. Louis, Mo. Please call Penny Bemus at 636-519-2758 or e-mail email@example.com for more information, participation, and sponsorship opportunities.
1 U.S. Food and Drug Administration. http://www.fda.gov/orphan/taxcred.htm
2 Meyers, Abbey S.; National Organization for Rare Disorders (NORD); Workshop on Ultra-Orphan Genetic Disease Therapeutics; Washington, DC May 8-9, 2003; http://www.rarediseases.org/news/speeches/workshop_ultraorph_gen_disease
3 National Institute for Health and Clinical Excellence; Appraising Orphan Drugs.
4 Employee Benefit Advisor Raw Bar; http://eba.podhoster.com/index.php?sid=1026
5 Testimony before the House Appropriations Labor, Health and Human Services, Education and Related Agencies Subcommittee, March 14, 2001; http://www.rarediseases.org/news/speeches/house; accessed October 23, 2008
6 The National Organization for Rare Diseases and the Experiences of the Rare disorder Community; http://www.rarediseases.org/pdf/Eval_Final_Paper.pdf; accessed November 4, 2008
ABOUT THE AUTHOR
Penny Bemus, MBA, JD, is Vice President, Business Development, for Centric Health Resources (17877 Chesterfield Airport Rd. Chesterfield, MO 63005; tel: 636 519 2400; www.centrichealthresources.com). Previously, she was managing partner and board member of Legacy Pharmaceutical Packaging LLC, A St. Louis-based contract packaging company, and has held management positions with Huttig Building Products, Inc. and General Electric.