Wednesday, August 20, 2014

The Truth Behind Limited Distribution Speciality Drugs

Intelligent Solutions in Pharmacy Benefits
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In the pharmaceutical world, Specialty Drugs are a high cost commodity that are often overlooked. By definition, Specialty Drugs are prescription medications that require special handling, administration or monitoring. They are typically used to treat complex or chronic conditions and though they are necessary for the well-being of many, they are undoubtedly some of the most expensive medications currently available - well over $600 per Rx to $35,000 per Rx for a 30 day supply.

Drugs of this kind can be taken orally, injected or inhaled, and since they are prescribed in different doses, they require extensive management in more areas than just price. To assist in the management of specialty drugs, there is an 11 digit code included within their packaging that provides insight into its strength, name, and even its manufacturer.

Many high cost specialty drugs fall under the category of Limited Distribution Drugs (LDD). Limited distribution refers to the idea that only certain Specialty Pharmacies are approved to handle and distribute these drugs to patients. Manufacturers of LDD Specialty Drugs select one or more Specialty Pharmacy allowed to dispense the LDD. If a Pharmacy Benefit Manager's (PBM) Specialty Pharmacy was not selected to dispense such a drug, the PBM must facilitate the delivery of the drug through one of the drug manufacturer's selected LDD pharmacy(ies). The selected one or more Specialty Pharmacy provides many manufacturer required services including special provider/patient training on the dispensing, dosing, and side effects of the LDD drug. The pharmacy is also responsible for working with providers to be sure that they are aware of the Risk Evaluation Mitigation Strategy (REMS) documents that must be discussed with the patient and completed by both the provider and the patient. REMS documents can be up to 100 or more pages of information.

LDD Specialty Drugs are NOT assigned to the same discounts that are assigned to other Specialty Drugs. The pricing provides increased profits to all PBMs and must be evaluated and negotiated prior to signing a contract.

Typically, LDD Specialty Drugs are assigned significantly lower discounts, if any, costing the client more and increasing PBM profits. Also, the discounts vary depending on which LDD pharmacies are used by the PBM. Thus, a $10,000 drug like Tyvaso at an estimated AWP of $10,000 with NO discount could be Post AWP less 17% with another PBM. Medical brokers do not have clinical algorithms and do not lease MediSpan to quickly determine which PBIRx clients' LDD drug pricing is optimized because of proprietary algorithms used during the RFP process or renegotiation of financial terms after an audit. PBM contracts often address the pricing of LDD drugs in words versus numbers, i.e LDD drugs vary in pricing OR provide Specialty Drug pricing without the inclusion of LDD drugs and their discounts. PBM profitability is ensured through vague information on LDD pricing to prospective clients.

Sutent and Bosulif, oral cancer drugs ranging in price from $4,000 to $14,000 depending on the strength and dosing, will be moved to LDD as of November 1, 2014. For one PBIRx client, the current discount for Sutent is Pre AWP -17.7%. As an LDD drug, Sutent will price at Pre AWP -12% after November 1, 2014 or approximately $10,000 more annually for the $14,000 strength. The client will be subject to a higher cost, while both the client's PBM AND the LDD Specialty Pharmacy will benefit from increased profits. It is also very important to understand the meaning of "Pre" versus "Post" AWP in comparing discounts, especially with high cost Specialty Drugs.

With a robust Specialty Drug Pipeline it is predicted that many new very high cost drugs will be dispensed as LDD drugs, and with Specialty Drug spend climbing upwards to 40% of total pharmacy spend, it is an area where an expert, such as PBIRx, can make a huge difference to a client's bottom line. Currently there are over 600 LDD drugs with various National Drug Codes (NDC).

Watch for more blogs addressing the PBIRx Specialty Tool box, which addresses many other components of managing Specialty Drug costs beyond LDD drugs.

At PBIRx, we use advanced technology to create algorithms that allow us to manage and utilize information about high cost Specialty Drugs so that we can further educate our clients. It is our goal to provide customized solutions to our clients in the management of pharmacy benefit costs resulting in optimal heath care outcomes while minimizing overall health care costs.

For more information on how we can help, visit us online at or contact us at (888) 797-2479 today!

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