Pharmaceutical Commerce - November/December 2011 - (Page 1)

Business Strategies for Pharma/Bio Success WWW.PHARMACEUTICALCOMMERCE.COM NOVEMBER/DECEMBER 2011 Supply Chain Logistics Legal Regulatory Specialty Drugs Are Generating a New Paradigm: Commercial Innovation Specialty drug market success requires patient-focused and therapy-specific channel and services strategies By Ron Krawczyk, Jennifer Hamilton, Jason Bogroff, Blue Fin Group Drug Shortages Continue to Rise, With No Near-term Resolution A combination of regulatory processes and business practices are worsening an already bad drug shortage situation By Nicholas Basta With specialty drugs there is no margin for error when it comes to execution. Specialty drugs have fewer patients, fewer physicians and higher costs than traditional oral solid therapies. This has created a situation where many specialty drugs are underperforming because physicians have lost confidence in the ability to get patients started on therapy. Once this state of affairs occurs it is difficult to overcome. For specialty drugs, payer requirements for prior authorizations, step edits, costsharing and detailed documentation are the nature of the game. Whether these payer cost- and utilization-management tactics become positive or negative factors is influenced by a specialty drug’s channel and services strategies. Too often channels and services for a specialty drug are an afterthought. Market success for specialty drugs depends on flawless execution of attracting a patient to a therapy, initiating the patient on therapy and ensuring completion of the regimen. This is enabled by channel and services strategies aligned with the patient journey and with the Manufacturer Regulators Payers Controllers Distributors Influencers Dispensers Service Providers HHS Commercial Health Plan Wholesaler OIG Medicare CMS Medicaid Pharmacy Benefit Manager Specialty Distributor Warehousing Retail Chain FTC SEC Employers (self-insured) FDA Federal Government States Self (cash) Employers Warehousing Hospital Chain Staff Model Manufacturer Direct Group Purchasing Organization Retail Pharmacy Mail Order SPP Long Term Care Patient Services Home Health Hospital VA/DOD ITP Clinic/ Office Logistics Prescriber Consumer/Patient BLUE FIN’S “CHESSBOARD” OF SPECIALTY PHARMA PLAYERS Blue FIN’s “Chessboard” of specialty pharma players The $300-billion US pharma industry has a problem: in an era of reduced margins, payer skepticism and higher taxes, it can’t make enough product to meet demand. A sporadic number of drug shortages has blossomed into a near-constant battle among pharmacies, especially at hospitals, to get supplies to keep patients on therapy—even to scheduled needed surgeries. In the worst cases, patients have reportedly died; in other cases, procedures are being delayed and patients with chronic conditions are stretching out their supplies and hoping for the best. Hospital pharmacies are racking up extra costs—estimated at over $216 million nationally—to acquire sufficient stocks. “Drug shortages are a national health crisis,” said ASHP executive VP and CEO, Henri Manasse, PhD, ScD, in a mid-summer statement. PhRMA, in a statement around the same time, called the drug shortages “rare,” noted continued on page 26 > needs of providers and payers. What makes these drugs unique? How are they different from typical blockbuster oral solids that most of us know? When is a drug considered specialty? Ask an independent specialty pharmacist what makes a drug a specialty drug and you’ll often hear, “specialty is all about cost.” The pharmacist will take a bottle of Gleevec (imatinib, Novartis) off the shelf, “This drug is treated as a specialty drug yet patients take it just like any other oral solid therapy. It’s considered a specialty drug because it costs $40,000 per year.” The pharmacist will then pick up a bottle of warfarin. “Warfarin is a drug that requires high-touch monitoring and support, yet it’s not classified as specialty. If any drug should be specialty it’s warfarin, but it’s not because it’s available as a generic and low cost.” Cost is the most frequent specialty drug criteria used by payers. According to the latest EMD Serono Specialty Digest, 80% of payers use high cost (at least $15,000 per year) as a criterion for classification as specialty. Special continued on page 18 > Brand Marketing & Communications With Coupons, Pharma is Saying ‘Let’s Make a Deal’ to Consumers Pharma marketers become adept at refining coupon and voucher programs, while technology options multiply. Meanwhile payer criticism mounts By Bob Sperber While sampling has been the traditional method of getting patients to try new therapies, the use of coupons or vouchers—often targeted directly to consumers rather than physicians—are on the increase. In these difficult economic times, such financial incentives are attracting more consumer interest, and the availability of these consumer discounts is being magnified by Web-based promotions in addition to conventional print media. In parallel, coupons and vouchers are demonstrating value in raising or maintaining patient adherence to therapy—a good thing from most healthcare payers’ perspective—but are attracting more criticism from them when the incentives are plainly directly at countering higher-copay, higher-cost second- or third-tier formulary positions. The contention is that pharma marketers are circumventing the plans’ goals in steering patients to lower-cost drugs. IMS Health told the New York Times, in an article published at the beginning of this year, that use of coupon programs has tripled since 2006. continued on page 14 > MENDOTA, IL PERMIT 200 PRSRT STD US POSTAGE PAID http://WWW.PHARMACEUTICALCOMMERCE.COM

Table of Contents for the Digital Edition of Pharmaceutical Commerce - November/December 2011

Pharmaceutical Commerce - November/December 2011
Contents
Editorial
Op-Ed
Top News
Business/Finance
Brand Marketing & Communications
Supply Chain/Logistics
Information Technology
Manufacturing & Packaging
Legal & Regulatory
Meetings and Editorial Index

Pharmaceutical Commerce - November/December 2011

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