How Mergers Change Specialty Pharmacy

May 03, 2019

As the healthcare landscape continues to change at a rapid pace, drug manufacturers need to take a long, hard look at their marketing and commercialization options.

PwC Health Research Institute dubbed 2016 the year of “merger mania” in healthcare. Yet, three years later, the industry is still in the throes of multiple merger and acquisition deals that directly affect the specialty pharmacy industry.

At the 2019 Asembia Specialty Pharmacy Summit, held in Las Vegas, Nevada, Dean Erhardt, president and CEO, of D2 Pharma Consulting LLC, discussed how the evolving healthcare landscape means that key players must re-evaluate to thrive under these new market forces.

In his talk, “Market Disintermediation: Mergers, Mega Players and Media Hype,” Erhardt discussed how so much change in the industry-thanks, in part, to those mergers-have affected the specialty pharmacy industry.

“From an integration perspective, you’ve got a pharmacy benefits manager (PBM) and a specialty pharmacy,” he said. “We’re seeing a market now where half a dozen of those PBMS have literally 90% of the market share in the U.S. We’re seeing half a dozen payers, maybe seven, where 60% of the covered live. That changes how people need to think going forward. From a manufacturer perspective, how do they design their opportunities? From a specialty pharmacy perspective, how do they think about gaining in-network and taking care of business, as it were?”

Erhardt discussed some of the major changes the industry is undergoing and highlighted four key areas where specialty pharmacy will need to become more agile in order to compete: personalized medicine, patient engagement, performance-driven measurement outcomes, and digital applications.

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“If you’re not getting on board with these four areas, and being more flexible in your approach, you are going to find yourself quickly left behind,” he explained. “These four elements are really going to be the crux of what’s going on that will drive change in the next few years.”

In terms of “getting on board” with these elements, Erhardt was circumspect. He conceded that many PBMs and specialty pharmacies may have difficulties maintaining agility as they merge into larger corporate entities. But he said that technology can help.

“I think people will have to take a lot at a lot of the outside vendors that are developing technologies that have the flexibility to overlap patient managements systems and do that outbound activity that can feed right into their customer care management programs,” he said. “The larger the company, the more difficult it is to be flexible, the more difficult it is to change your systems. But if you want to be competitive and provide the types of services that, frankly, a lot of mid-sized and smaller specialty pharmacies are moving toward, you need to be let outside vendors provide new solution opportunities.”

Erhardt also discussed the importance of data moving forward-getting information out to the patient as well as pulling information back so they can stay current with accreditations and other requirements.

“Ultimately, what pharma companies will want is the ability to look at long-term data and say, ‘We can recognize a patient is falling off this drug, and 80% of the time, with other patients, it happens between month three and four. What do I need to change to help that patient stay more compliant so we can get more value out of this medication?” he explained.

Bend the cost curve

Ultimately, Erhardt argued, payer organizations will need to be able to bend the cost curve, as previous efforts have not borne fruit.

“In a changing environment, with the anti-kickback statute, we have several unanswered questions that we’re going to have to get to,” he said. “It’s going to be interesting to see what happens with more rumored mergers out there. With Magellan up for sale, where do they land? Do Walmart and Humana ever make the deal they’ve been dancing around for 10 years? What other changes may happen in the next year? How fast will some of these new technologies be adopted and by whom? Each player will have to watch carefully. There’s a lot of change-change creates chaos but there is also a lot of room for different players to figure out how to create opportunity within all that chaos.”

Kayt Sukel is a science and health writer based outside Houston.

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