Pharmaceutical Commerce - November/December 2009 - (Page 8)

Top News HdmA Analyzes evolving Specialty distribution Business Survey shows close interplay between manufacturers and their trading partners for supplemental services With overall pharma sales volumes staying relatively flat, more attention is focusing on the specialty pharmaceutical sector, which is growing at least twice as fast, and which involves a host of add-on services not commonly encountered with non-specialty distribution. There are three main players in this distribution process, according to a just-released study from the Center for Healthcare Supply Chain Research, the research foundation of HDMA (Arlington, VA): • conventional wholesaler/distributors, who take title to the product and deliver to hospitals, home health entities and retail pharmacies; • specialty distributors, who take title and deliver to physician practices, such as freestanding, physician-owned or –operated clinics; • specialty pharmacies, who do not take title, and most often distribute to providers for administration or directly to patients. Most of the respondents were specialty distributors (67%); less than 1% were specialty pharmacies and the remainder conventional distributors. About 81% of the products are branded, and the remainder generic, according to the survey results and the definition for “specialty pharmaceutical” applied by the Center: a product that has two or more of a group of characteristics, including cost ($600/month 49% 14% 29% 33% 13% 25% 3% 18% Kits 2% 0% 2% 9% 0% 1% 0% 0% 2% 0% 0% 10% 20% 30% 40% 50% FedEx Ground 13% or more), the need for special handling, biologic origin, ongoing clinical monitoring, have restricted distribution, or addressing therapeutic needs like oncology, autoimmune diseases or hematology (among others). Trending toward oral According to the manufacturers surveyed, 69% of specialty pharmaceuticals are either injected or intravenous, 25% oral (tablets or capsules), although they note that the number of oral products is growing. Fig. 1 shows how the products are packaged, now and for products under development. Fully 60% of current products require refrigeration and, in turn, a cold chain system for delivery. When it comes to actually transporting the products (Fig. 2), both manufacturers and distributors favor (in rough order) UPS Air, FedEx Air, UPS Ground, or LTL/common carrier. Interestingly, distributors make significant use of other modes, including couriers and the US Post Office. Another differentiator is the use of insurance; 27% of manufacturers “always” insure delivery, while 80% of distributors “never” do so. 50% 83% 63% 83% 63% 67% 63% 67% 50% 50% Besides reliability of delivery and cost, specialty distributors will compete for business from manufacturers on the basis of supplementary services. Fig. 3 shows the types of services currently available. These are over and above what might be considered standard services, such as handling returns and chargebacks, and providing marketing services such as advertising or e-mail blasts to retailers. On the financial side, the survey found that 82% of manufacturers offer patient assistance programs (PAPs), 73% copayment assistance, and 73% pre-authorization/benefits investigation. Group purchasing organizations (GPOs) also figure in the equation: 46% of product sales are contracted through a specialty, hospital or retail GPO. The report notes that AmerisourceBergen, McKesson and US Oncology have in-house GPOs, which help position them competitively toward the clinics that are their customers. The Center’s report, “2009 Specialty Pharmaceuticals: Facts, Figures and Trends,” is available for purchase from HDMA (hcsupplychainresearch.org). PC 86% 71% 57% 57% 57% 43% 43% 29% 29% 29% 29% 29% 29% 29% 29% 14% 14% 14% 14% Solution in a vial FedEx Air Account management Customer call centers Electronic billing /reporting Home delivery/infusion and orals Loyalty/incentive programs Analytics/consulting Clinical Pathways Formulary management Medication Therapy Management (MTM) Patient assistance/grants program management Patient counseling Bottles UPS Air Prefilled syringes LTL /Common Carrier Blister packs UPS Ground Lyophilized powder in a vial U.S. Postal Service 50% 13% 33% 0% 33% 6% 17% 6% 0% 0% 20% 40% Refill reminders Reimbursement services/consulting Standardized billing Utilization management Claims/copayment collection Infusion bags Courier Patches Fig. 1. Manufacturer Packaging Trends Company operated vehicle Other DHL Other Fig. 2. Manufacturer and Distributor Shipping Preferences 60% 80% 100% Medication preauthorization Sampling programs Treatment initiation and education None of these 0% 0% Fig. 3. Service Offerings by Specialty Distributors Currently Marketed Products Products in Development 20% 40% 60% 80% 100% Credit: Center for Healthcare Supply Chain Research Manufacturer Responses Distributor Responses UPS and Genzyme Are About to Go Live on a California- and GS1-Compliant Track-and-Trace System UPS gets ready to receive GS1 product-tracking data from anyone Give the parties involved in this project this credit: they stuck to their guns. UPS Healthcare Logistics (Atlanta), Genzyme (Cambridge, MA) and Accenture (Chicago) have worked together since January 2008 and, despite the postponement of California’s e-pedigree legislation (until 2015), and without clear guidance from 8 NovemBer/deCemBer 2009 FDA that the GS1 product-coding standards will be an acceptable drug-tracking methodology, have established a GS1-compliant, unit-level serialization system that is expected to go live in Q1 2010. For Genzyme, the effort is a followthrough on a longstanding position to protect its product from diversion throughout the supply chain. For UPS, the project represents a stake in the ground that the company will facilitate track-and-trace technologies for its clients. For Accenture (which provided project-scoping and design services), the project is something of a payoff from its years-ago Project JumpStart to get serialization technology deployed in biopharma distribution. According to Dan Gagnon, a director in the UPS group, the decision was made early on to sidestep use of RFID tags in favor of 1D and 2D barcodes: “the impacts of RFID on sensitive healthcare products are still unknown and the investment is not cost-effective for companies.” Genzyme then proceeded to build in the necessary barcoding technology, while UPS needed compatible barcode readers and to rework its warehouse processes. In a major undertaking, UPS revamped its internal IT systems to accept barcode information in an EDI-compatible manner while meeting the continued on page 29 > www.PharmaceuticalCommerce.com http://www.hcsupplychainresearch.org http://www.hcsupplychainresearch.org http://www.PharmaceuticalCommerce.com

Table of Contents for the Digital Edition of Pharmaceutical Commerce - November/December 2009

Pharmaceutical Commerce - November/December 2009
Contents
Editorial
Op-Ed
Top News
Business & Finance
Brand Marketing | Communications
SupplyChain | Logistics
Information Technology
Packaging & Drug Delivery
Legal | Regulatory
Executive Training & Development
Editorial Index | Meetings

Pharmaceutical Commerce - November/December 2009

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