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4/11/2014

Specialty Pharmacy Presents Opportunities for Hospitals, Health Systems

Cheryl A. Thompson

As the nation’s spend on specialty medications continues to grow, hospitals and health systems are pursuing the patient care and revenue opportunities that come from integrating a specialty pharmacy.

Kevin Colgan

Kevin Colgan, corporate director of pharmacy for Rush University Medical Center in Chicago, gives partial credit to accountable care organizations.

“It’s not only the big financial opportunity,” he said of specialty pharmacy’s appeal to hospitals and health systems.

A health care organization that operates a specialty pharmacy, Colgan explained, can collect robust data and determine which of the expensive medications work best.

“That would be a game-changer for an accountable care organization,” he predicted.

Commercial insurers spent 18.4% more on specialty medications in 2012 than in 2011 and 1.5% less on traditional medications, according to the Express Scripts Drug Trend Report update for October 2013. Medicare’s spend on specialty medications increased by 24.1% during that time.

Prognosticators at the pharmacy benefit management company expect specialty medications to represent half of commercial insurers’ and Medicare Part D plan sponsors’ expenditures for pharmaceuticals by the end of this decade.

Scott Knoer

Scott Knoer said he started proposing a specialty pharmacy for the Cleveland Clinic immediately after arriving as the chief pharmacy officer in 2011.

With a decade of experience at Fairview Health Services, which has operated its specialty pharmacy since 1992, initially serving only transplant patients, Knoer said he knew well the opportunity for revenue.

“It took three years to get the capital approved, but I got $6.5 million for a 20,000-square-foot specialty pharmacy facility,” he said.

The “go-live” date for the facility is in August, Knoer said, noting that his design incorporates the existent mail-order pharmacy. A full build-out will occur in a couple years. At that time, he said, there will be 66 full-time equivalents dedicated to the specialty pharmacy.

“I was able to convince my C-suite that this was a good investment,” Knoer said of Cleveland Clinic’s highest-level executives. “But every organization has different thresholds for ROIs. . . . I had to put together a business plan that demonstrated that the return on this [investment] was better” than that projected for the other multimillion-dollar projects under consideration.

Rush’s specialty pharmacy started operating in mid-January just as a clinical pharmacist started working in the hepatology clinic, Colgan said.

The next week, clinical pharmacists started working at the multiple sclerosis and neurology clinics, he said. In week 3, a clinical pharmacist started at the rheumatology clinic; in week 4, a clinical pharmacist started at the gastroenterology clinic.

“In those first four weeks, we had 50 referrals for new starts,” Colgan said, referring to the clinical pharmacists and the groundwork they—rather than the clinics’ physicians and staff—laid for patients new to the prescribed medication.

Rush’s specialty pharmacy, part of a 44-site pilot program for the University HealthSystem Consortium, filled the initial prescriptions for 28 of those 50 patients, Colgan reported at the end of February. Of the 22 other patients, 12 had prior-authorization paperwork under review at their insurance company. For the remaining 10 patients, he said, “we had to do warm transfers [of prescriptions] to a preferred pharmacy.”

Breakeven for the specialty pharmacy was reached “in months, not years,” Colgan said.

JoAnn Stubbings

The University of Illinois Hospital and Health Sciences System started its specialty pharmacy in the 1990s to serve the growing number of patients who received transplants at the Chicago hospital, said JoAnn Stubbings, assistant director for specialty pharmacy services.

Transplant pharmacy services for these patients consisted of managing their prescriptions every month and sending supplies by mail, Stubbings said.

Additional experience at the oncology pharmacy, one of several outpatient pharmacies, put the department of ambulatory care pharmacy services in a good position to dispense specialty medications as drug therapy became more complex, she said. The oncology pharmacy provides onsite infusion services and dispenses take-home medications.

When the medication assistance program became fully staffed in 2001, Stubbings said, “We had all of these elements to be able to grow our specialty pharmacy business.”

Growth came after the department began capitalizing on opportunities in the health system’s gastroenterology, multiple sclerosis, and rheumatology clinics, she said.

“You have to make this extra effort in the clinics to actually offer your services,” Stubbings said. “You offer your pharmacy as a choice to the patient” for filling the prescription.

She pointed to the assignment of a clinical pharmacist to the gastroenterology clinic, which treats inflammatory bowel disease, as “kind of the beginning of our new specialty pharmacy business.”

The department built a call center in 2012 and staffs it with a technician, two pharmacists, and several pharmacy students, she said. That staff, she explained, lays much of the groundwork for the specialty pharmacy to dispense medications efficiently and not get bogged down in handling clinical issues and other matters.

Yet, not all the efforts by the clinical pharmacists and call center staff result in business for the health system’s specialty pharmacy, Stubbings said.

The dispensing of specialty medications for pulmonary hypertension is an example. “We can’t fill [those prescriptions] because they’re restricted,” she said. “So we do all the workup—we do everything—and then we just turn it over to the specialty pharmacy” contracted by the drug company.

Finding a way to pay for a pharmacist to help a patient when the revenue for handling the drug product goes to another pharmacy is, in Stubbings’ opinion, probably the biggest challenge there is in health system–based specialty pharmacy.

St. Jude Children’s Research Hospital in Memphis just started the “planning stages” for its specialty pharmacy, Steve Pate, director of home infusion and specialty pharmacy services, said at the end of February.

Steve Pate

Pate said he came to the facility to develop its home infusion pharmacy first and then the specialty pharmacy after working for a home infusion company that had a specialty pharmacy branch.

“We’ve been very purposeful in seeking out the skill mix” for the two pharmacies, he said. Some of the new staff members have a background in home infusion; others have a background in specialty pharmacy, particularly prior authorization and cold-chain management.

As for conversations with third-party payers and the drug companies with a limited or restricted distribution model for specialty medications, Pate said St. Jude emphasizes its patients’ reliance on the facility for care.

“There’s not another pharmacy out there, there’s not another clinical staff out there, that’s going to manage our patients any better than we do,” he said.

To date, Pate said direct conversations with drug companies have been successful regarding a few medications that normally have restricted distribution.

“We want to be able to dispense everything that our patients need so that we can fully manage their medication needs,” Pate said. “When things start getting fragmented off, that makes the process much more difficult on our side.”

St. Jude, which is in the same city as the airport hub for FedEx Express, plans to ship medications worldwide to its patients, Pate said. “We’re already able to FedEx medications to multiple states because we’re already licensed in those states as a pharmacy provider.”

The pediatric facility, according to its 2013 annual report, treats patients from the 50 states and around the world and never sends a bill to a child’s family. 

Knoer, at the Cleveland Clinic, advised anyone trying to decide between building a specialty pharmacy practice or partnering with one to first understand the opportunity for the particular hospital or health system.

“You have to mine your prescribers’ data,” he said.

First, Knoer advised, determine the medications that are prescribed for such diseases as cancer, hepatitis C, multiple sclerosis, and rheumatic disease—conditions that tend to be treated with specialty medications.

Then, he urged, determine the number of physicians who specialize in treating each of those diseases and identify the specialty medications that those physicians prescribe and the volumes.

With the opportunity understood, Knoer said, the next consideration is whether the manufacturers of those specialty medications limit their distribution.

Knoer also suggested working with the people at the hospital or health system who negotiate contracts with third-party payers.

The goal, he said, is to have the specialty pharmacy “carved in” and thus able to fill the prescriptions for specialty medications.