For many health systems, investment in specialty pharmacy can generate positive patient outcomes alongside substantial revenues. We've seen tremendous growth of health system-owned specialty pharmacies (HSSPs) across the past decade. In fact, Advisory Board first wrote about the movement towards HSSPs in 2016, and has since published a library of resources to support pharmacy leaders as they start and grow their specialty pharmacy.

Still, health systems are grappling with how to transition their specialty pharmacy from a strategic investment to a sustainable, mature business. A lot of this pressure can be traced back to three key challenges.

1. Anticipating the future of 340B savings

HSSPs invest substantial resources into patient care, which helps them garner high patient satisfaction rates and strong clinical outcomes—even besting clinical trials in some cases. However, most HSSP leaders say that these levels of care would not be possible without the benefit of 340B savings.

Health system leaders are wrestling with whether to continue investing in robust staffing to support growth and superior outcomes, or to experiment with leaner staffing models in anticipation of limits on 340B-related savings.

Specialty medication glossary

Health systems can be reassured by the fact that 340B is unlikely to completely disappear. However, they must monitor key issues that may influence their ability to access 340B savings in the future.

• Pharmaceutical manufacturers are increasing barriers for covered entities to access 340B discounts, such as with the ongoing 340B contract pharmacy debate.
• States like New York are making moves to shrink their participation in the 340B program through requiring Medicaid patients to purchase their medication through the state.
• Some health plans are requiring pharmacies within 340B covered entities to pass through 340B savings to the health plan instead of retaining it within the covered entity.

2. Managing access to and complexity in the pipeline of specialty drugs

We've seen tremendous growth in the specialty pharmacy market, and it is poised for more, largely driven by new-to-market drugs. On the surface, this growth could be a win for HSSPs: drugs with bigger margins, treatments for patients who may not have had such options previously, and improvement in the overall quality of care. However, these new drugs are also introducing new complexities.

• Some of the specialty drugs with the highest spend are about to lose patent protection, opening them up to biosimilar competition. At least six biosimilars for Humira are anticipated to enter the market next year and biosimilars for Stelara, Prolia, and other top specialty drugs are following close behind.
• Manufacturers are creating new versions of drugs that were once administered by providers but can now be self-administered. This also may create new opportunities for HSSPs as drugs move out of the infusion center and into the specialty pharmacy.
• Many of the new-to-market drugs can only be dispensed by a limited number of specialty pharmacies that demonstrate their ability to provide additional patient education, monitoring, and other protocols. Competition to dispense these drugs is fierce.

3. Demonstrating and communicating value

Successful HSSPs are finding that the ability to demonstrate outcomes and communicate the specialty pharmacy's value is becoming increasingly critical to access both limited distribution drugs and to be included in health plan pharmacy networks.

Clear bagging for provider-administered specialty medications

Emerging value-based care models may also increase the demand for specialty pharmacy outcomes data, including the impact on total cost of care. However, HSSP leaders almost universally report facing challenges to effectively collecting and analyzing patient outcomes data.

• Tracking outcomes data is time-intensive and laborious, generally requiring a dedicated pharmacy analytics team. Although the most sophisticated HSSPs have built robust teams to track and report on this data, most HSSPs have neither the staff expertise nor the bandwidth.
• Each pharmaceutical manufacturer requires different types of data from the specialty pharmacies included in its limited dispensing network. Managing the wide variety of data types and formats adds additional complexity for health systems looking to be considered as a potential limited distribution partner.

Six years ago, Advisory Board began writing about specialty pharmacy. Since then, we've seen massive growth in HSSPs across the country. We anticipate that the next six years will be full of many more changes in this rapidly evolving space.

We continue to ask: what will specialty pharmacy look like in the future? One thing is clear. HSSPs will need to adapt to market changes and think beyond the initial investment to meet future challenges head on.

If you are interested in contributing your perspective to Advisory Board's ongoing research on the future of specialty pharmacy, please email Chloe Bakst (bakstc@advisory.com). We welcome conversations from the health system, pharmaceutical manufacturer, PBM, or health plan point of view.