Health System Specialty Pharmacy Research Findings Discussed in Becker's Healthcare Webinar

Published 07/07/2020
by Kathryn Edwards

Gaining payor specialty pharmacy access has long been a challenge for health system specialty pharmacies. In a Becker’s Healthcare webinar on June 30, Jerry Buller, chief pharmacy officer at Trellis Rx, and Andy Pulvermacher, principal consultant at Blue Fin Group, shared findings of a recent market research study commissioned by Trellis Rx to uncover why.

The study was comprised of 20 in-depth, blinded interviews with health system and health plan leaders conducted by a third party market research firm (Reckner/Blueberry). Trellis Rx also conducted unblinded interviews with 9 industry thought leaders to inform the study.

The research revealed misperceptions and misunderstandings that prevent payors and health systems from building mutually-beneficial partnerships today. However, it also found that leaders from both stakeholders groups agreed greater collaboration is needed to improve the value of specialty medications for patients and their organizations.

During the webinar, Buller and Pulvermacher shared key findings from the market research study, including:

  • Payor perceptions of health system specialty pharmacies
  • Need to differentiate the clinically-integrated health system specialty pharmacy from other models
  • Areas of common ground between payors and health systems
  • Strategies health systems must apply to gain payor specialty pharmacy access

Attendees asked many great questions during the webinar, which we have answered below. If you have additional questions or would like to discuss how Trellis Rx’s partnership can help your health system accelerate its specialty pharmacy success and gain payor network access, please contact us.

Q&A Responses

1. Can you share more details on what types of payors participated in the market research?
The leaders who participated in the market research study represented a wide-array of payor organizations:

  • 6 national, 4 regional
  • 12,000 to 15 million covered lives
  • Most payors covered a combination of commercial/private, Medicare, and Managed Medicaid lives

2. Is specialty pharmacy accreditation required to gain access to payor specialty pharmacy networks?
Specialty pharmacy accreditation is typically required to gain access to payor specialty pharmacy networks, though this is not always the case. Some payors may require dual accreditation.

3. How do you counter a health plan stating “a specialty pharmacy is a specialty pharmacy is a specialty pharmacy – the values you present of improved outcomes and patient satisfaction don’t matter to our bottom line”?
Leaders of clinically-integrated health system specialty pharmacies must differentiate their organization’s services from those of other specialty pharmacies. One way to do achieve this is by demonstrating the ability of embedded pharmacist to continually ensure therapy appropriateness and to recommend more efficacious or cost effective options to providers.

In addition, health plans are seeking “wins” with other contracts such as infusion, provider and acute care services. If a health system specialty pharmacy can demonstrate that it is at least “as capable” as a health plan’s current PBM-owned or preferred specialty pharmacy, the health plan may be willing to open its network to achieve certain concessions on a different contract (e.g. infusion, provider, acute care services).

4. What are the most important metrics a health system specialty pharmacy can show to payors?
A health system must perform at or better than other specialty pharmacies on operational metrics like turnaround times, prior authorization submission times, medication access rates, and patient satisfaction. A health system can truly differentiate its clinically-integrated services by reporting on disease-specific clinical outcomes metrics and measuring cost-of-care impact.

5. What type of individuals need to be employed in a health-system specialty pharmacy to negotiate these types of contracts with payers and manufacturers?
A health system will need managed care team members with experience negotiating specialty pharmacy contracts. Unfortunately, most managed care team members do not have this experience so  educating them on the specialty pharmacy requirements and benefits is key. Additionally, a health system will need individuals with strong data analytics skills who can manage reporting requests and requirements.

6. Do the payer contracts with national specialty pharmacies allow them to negotiate health system specific plans? I worry that those agreements exclude us (health systems) from building relationships with payers.
It depends. Often, the contracts do allow them to include other specialty pharmacies. However, if they do so, they may lose preferred pricing. This is one reason why health systems must be competitive with pricing.

7. Is health plan rate negotiation dynamic and ongoing or once per year?
It is typically not an ongoing process, but rather one that happens every 1-3 years. Occasionally there may be requests from a health plan to “amend” a contract with a new program, proposal, or fee schedule mid-cycle. Sometimes a health system can agree to open the contract back up to include specialty pharmacy as part of the negotiations. That said, health systems should begin actively engaging their payor partners around specialty pharmacy well in advance of the contracting process.

8. What impact, if any, does a health system’s access to 340b pricing play in this collaboration between health system and health plan?
As you might expect, 340B pricing was a point of contention for payor pharmacy leaders. Many believe the program gives health systems have an unfair cost advantage. As one said, “They are buying (drugs) at such a low cost, which they’re not willing to pass on to us.”

However, despite negative perceptions, most payor pharmacy leaders were open to 340B pricing if their organizations could benefit from it. Although the exception rather than the rule, some pharmacy agreements call out 340B pricing specifically and even propose reduced reimbursement for 340B eligible prescriptions.

9. Interesting comment about “negotiating” on price. In my experience there is no negotiation. It’s a take it or leave it pricing coming from the payor. Can you elaborate on how to engage payors on being open to talking about pricing?
Most PBM or specialty pharmacy contracts offer one fee schedule which is framed as “take it or leave it.” We have found that in most health system-health plan specialty pharmacy contracts, the health system agrees to “parity pricing” or the same rates that all other preferred specialty pharmacies are receiving. This particularly holds true in states with any willing provider statutes.

By offering to negotiate or accept a lower reimbursement rate, health systems can send a message that they are willing to work with a health plan to achieve a financial goal, an olive branch if you will.

As your health system proves the value of your services on patient outcomes, you will gain opportunity to negotiate on pricing.

10. What are the key factors that should guide a health system in deciding to start a specialty pharmacy?
There are several factors a health system should consider when starting a specialty pharmacy. First, your organization should consider the potential clinical, operational, and financial impact of starting an in-house specialty pharmacy. We recommend completing an in-depth assessment to fully understand your opportunity and the feasibility of the initiative. This process will also help you understand the benefits of working with a partner like Trellis Rx to accelerate speed to market and reduce risk.

If you determine to proceed with starting an in-house specialty pharmacy after completing the assessment, several factors will be key to your success and your ability to engage payors. These include but are not limited to:

11. What key items can you do with your own employee health plan to show the value proposition of your pharmacy?
First, we suggest starting with the basic operational and experiential metrics such as turn-around times, adherence, call center metrics, and patient and provider satisfaction. Once those are on par with or better than the industry average, we recommend highlighting your ability to capture and report on disease-specific clinical outcomes metrics.

Finally, since this is an employee health plan, you are likely able to understand and evaluate the total cost of care. This provides you with the opportunity to propose cost reduction guarantees or risk sharing agreements.

12. How do you address manufacturers that refuse to provide a WAC account to ensure compliance with 340B?
This topic is outside of the scope of our market research study, but there are number of strategies that may be used to address this challenge. We recommend you engage your health system’s legal counsel for guidance.