February 2013 Edition | Vol. 7, Issue 2

The Evolving Dynamics of Specialty Pharmacy in Oncology

By: Deni Deasy Boekell, Senior Director, Commercial Planning, Kantar Health

With the increasing use of specialty drugs in the oncology marketplace, competition among them is proving to be a trend worth watching as they are positioned to become a dominant player. As noted by J.P. Morgan, specialty drugs revenue in the pharmaceutical industry increased 7.9%, in 2011, compared with 2% growth in traditional drug sales (Figure 1).

Figure 1: Sales Growth for Specialty and Traditional Drugs 2011

Source: Healthcare Technology & Distribution. J.P. Morgan; May 23, 2012.

Within four years, specialty drugs are expected to account for up to 35% of pharmaceutical manufacturer sales.¹ The largest category of specialty drug spend is in oncology with $30.6 billion spent in 2011.²  Leading the charge is Rituxan, followed by Herceptin, Avastin, Gleevec, Revlimid, Alimta, Xeloda, Velcade, Tarceva and Sutent. Oncology specialty drugs will continue to grow, driven primarily by the introduction of novel and expensive oral oncolytics (Figure 2).

Figure 2: Percent of All U.S. Cancer Patients Treated with Branded Oral Oncolytics

Source: Kantar Health CancerMPact^®, Patient Metrics, U.S. Available from www.cancermpact.com

Although there is not one universally accepted definition of specialty pharmaceuticals there is a core set of qualities that is common across most of these products.  Among them is cost. Specialty drugs tend to be very expensive and often carry high out of pocket costs. They usually target specific patient populations, such as orphan diseases, chronic conditions (e.g., rheumatoid arthritis) or complex diseases (e.g., HIV, cancer); are often associated with significant side effects; and therefore, may require high levels of patient monitoring and counseling. In addition, many specialty drugs are biologics that have special handling requirements as well as complex dosing and administration regimes.

Distribution Channel Options

When it comes to managing and dispensing specialty drugs, specialty pharmacies are fundamentally better equipped to handle them than retail pharmacies, which are more commonly configured for higher volume, traditional oral medications.

To meet the need for pharmacy services on self-administered (oral and self-injected) specialty drugs, specialty pharmacies evolved and are operated by a variety of entities including health plans, pharmacy benefit managers, and retail pharmacy chains, though many independent specialty pharmacies also exist. Many major retail pharmacies are investing in developing specialty drug capabilities to capitalize on the growing market.

Currently, three SPs—Express Scripts, CVS Caremark, and Walgreens—make up more than 50% of the specialty drug market, while the rest of the market is comprised of hundreds of smaller specialty pharmacies including Diplomat Pharmacy and Omnicare’s Advanced Care Scripts.

Factors Driving Increased Use of Specialty Pharmacies

A number of factors are driving the rising use of specialty pharmacies, including:

• Increased high-cost specialty product volume, especially oral oncolytics;
• Pipeline shifts to oral specialty products presaging future marketed specialty drug growth;
• Payer demand to control specialty spend
  •  58% of plan sponsors with over 25,000 members cite rising specialty costs as their greatest concern³;
• Growing physician acceptance of orals; and
• Manufacturer desire to improve safety and supply chain control.

Just two years ago, 60% of oncologists preferred prescribing an IV drug over a therapeutically equivalent oral option; however, in 2012, just over 50% of oncologists preferred prescribing an IV drug regimen.⁴ In a 2012 Kantar Health Oncology Market Access survey (N=150), among oncologists who responded, they indicated they are more likely to prescribe an oral versus an IV drug because of increased convenience for patients and the support they receive with administrative, financial and clinical management issues from a specialty pharmacy.⁵

Impact of Specialty Pharmacy Networks on Payers

For payers, improved specialty pharmaceutical care not only supports patient outcomes, it also reduces unnecessary spend due to incorrect dosing, and emergency department visits to resolve drug-drug interactions or difficult-to-tolerate side effects. Payers may also use a specialty pharmacy to check a patient’s biomarker status, which ensures what patients are qualified to receive biomarker-targeted drugs (Figure 3). Pfizer uses five specialty pharmacies to support Xalkori for ALK-positive non-small cell lung cancer.

Figure 3: The Value Specialty Pharmacies Provide to Health Plans for Cancer Treatment

Source: Kantar Health Managed Care Organization Survey, August 2012 and April 2011

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