How low-cost medications succeed in the specialty pharmacy channel

September 14, 2018

Full article published in Pharmaceutical Executive Magazine

 

The phrase “specialty pharmacy” brings to mind high-touch therapies supported by HUBs, financial assistance, free drug programs, home nursing, and dutifully developed clinical protocols.  As such, it makes sense that manufacturers faced with launching a therapy in the specialty space would consider including many of the above program features in their planning.  In fact, most manufacturers begin their launch planning with the directive to build a best-in-class service model that fully supports the providers, patients, and caregivers who use their product.  “Spare no expense!” they often say. 

 

With many specialty therapies, “sparing no expense” is a viable option.  The prices charged for these drugs allow manufacturers to afford high touch services.  The challenge is not if the program features can be included, but rather how to synchronize the right combination of program features and vendors to ensure a seamless program. 

 

But what about therapies where “sparing no expense” is not an option? 

 

 

Archbow Consulting teamed up with Pharmaceutical Executive in their September 2018 issue to explore how to overcome the fundamental complexities that may limit the financial success of a low-cost therapy in the specialty channel.

 

Read the full article here, or a summary below.

 

What if a manufacturer is launching a specialty drug into a disease state that will put it in direct competition with relatively low-cost retail therapies or a specialty therapy with enormous volume projections? 

 

For these therapies, the challenges become increasingly complex. Even though the price point is often constrained, the product must be launched in the specialty channel where customized requirements can be accommodated.  It is these launches where a complete understanding of the entire distribution chain and patient support options is required to build a program that is both cost-conscious and supports the unique needs of the therapy.

 

Consider a drug with a WAC price of $500.  The core cost to process a specialty referral and ship a product without customized program features has been published at well over $100 per shipment.  That instantly makes a home nursing visit that costs $400 not viable.  The same applies for any combination of services with a total cost of $400.

 

When you consider that the wholesaler/3PL, distributor, pharmacovigilance, and other required services outside of specialty pharmacy must still fit within the budget, the situation becomes even more complex.

 

Meeting the challenge of fitting low-cost therapies into the specialty channel requires a highly-organized and cost-conscious approach to program design.  Distributors, 3PL providers, specialty pharmacies, clinical services, and free drug offerings each have their own cost.  To find success in this approach, manufacturers must:

  • Understand the value of each service to the specific therapy

  • Eliminate overlap and unnecessary features

  • Practice aggressive contracting

 

The additional - and often more formidable - challenge for manufacturers is to raise awareness across internal stakeholders of the limitations a low-cost therapy will face.  This alignment will provide the manufacturer the best chance of achieving an elegant program design that supports a successful launch.

 

Our specialty pharmacy experience has allowed us to see first-hand what it takes to successfully launch a low-cost medication in the SP channel.  If your next product may benefit from this approach, we can help.

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