In our previous blogs, we’ve talked about the top benefits of contracting with a specialty pharmacy and dispensing fee models, in this third and final installment, we’re going to discuss what happens once you’ve contracted with a specialty pharmacy.
For years, covered entities received savings from the 340B program largely by contracting with retail pharmacies. The brick-and-mortar storefronts in their local communities provided the most benefit for covered entities in the early years of the program when many trailblazers were independent pharmacies.
In the past five or six years, however, there’s been a significant uptick in hospitals contracting with specialty pharmacies. Specialty drugs are different from other prescription medications in a few ways:
- Often prescribed to treat rare or complex health conditions
- Generally higher cost medications, associated with higher costs to manage
- Sometimes have additional wholesaler requirements
- Usually shipped to the patient or administered in a clinical setting (such as oncology infusion drugs)
- Rarely have brick-and-mortar locations where patients pick up the medications
- Sometimes have limited distribution models
Because specialty drugs — and relationships between covered entities and specialty pharmacies — are slightly different when compared with non-specialty medications and retail pharmacies, it’s worth exploring the nuances of what to know, what to look out for and the pros and cons of those relationships.
Contracting with specialty pharmacies — pros and cons
There are, of course, advantages and disadvantages of contracting with specialty pharmacies, as we discussed in our first blog of this series. The higher cost of specialty drugs means that potential 340B savings is higher as well, and covered entities can, therefore, earn more savings with fewer pharmacy contracts. However, specialty drugs have a higher dispensing/administration fee than other medications. Additionally, insurance companies, not covered entities, decide which specialty pharmacies patients must use to fill their drugs; meaning there’s no guarantee it will be the specialty pharmacy that the covered entity has contracted with. It is key that covered entities assess their specialty pharmacy network at least quarterly and overlay their own specialty pharmacy operations for efficiency and successful integration.
So, you have a specialty pharmacy contract … what now?
There are some special considerations and processes covered entities should be aware of that must be initiated once a relationship has been established with a specialty pharmacy:
Request wholesaler accounts — for each contract with a specialty pharmacy, a covered entity needs a designated account with the specialty pharmacy division of their wholesaler. Without this, the covered entity will not be able to replenish most of the specialty drugs that the pharmacy is dispensing, because those drugs are not on the regular wholesaler drug catalog.
Alert the wholesaler of the specialty items that need to be added to the price catalog, or reach out to the manufacturer/third-party vendor to request access and replenishment permissions resulting from limited distribution drugs.
Review HRSA notices for information regarding specialty drugs and limited distribution plans — HRSA compiles and posts notices from pharmaceutical manufacturers that dictate which specialty pharmacies fill and replenish which specialty drugs. The manufacturer makes the determination on which specialty pharmacies they choose to have relationships with, and often has specific requirements or processes that covered entities must be aware of in order to replenish those drugs.
The manufacturer notice may share not only which one or two specialty pharmacies the drug must be filled through, but also how covered entities should contact them with replenishment requests, information on package configurations and more. If a covered entity does not check HRSA’s manufacturer notice page regularly for changes in replenishment policies, they may face challenges receiving impacted specialty drugs.
Working with specialty pharmacies can be complex but having a 340B management and compliance partner like Sentry to help you navigate the nuances can make all the difference.