Specialty pharmacies have been designated by numerous industry experts as the fastest growing segment of the pharmacy industry. This is based on the number of new specialty pharmacies opening up nationally, plus the rise in the number of existing pharmacies expanding their operations via the addition of specialty pharmacy services. With a projected annual growth rate of about 20% per year according to the AMCP (American Society of Managed Care), many entrepreneurs are investing in the continued success of specialty pharmacies as a lucrative business model. Yet the industry is still in its infancy according to several experts. Spending on specialty pharmacy and services was almost $87 billion in 2012. However, Drug Channels estimated that in 2014 alone, “retail, mail, and specialty pharmacies dispensed about $78 billion in specialty pharmaceuticals.”
Although we must all keep in mind that it is virtually impossible to come up with an exact number for pharmacies dispensing specialty medications, estimates project that this will quadruple by the end of next year (2020), with spending reaching around $400 billion (or slightly less than 10% of the US health spending in total). Add in the fact that of the 27 new drugs approved in 2013 by alone by the FDA, 14 were specialty pharmaceutical medications, and just such statistics are reminding many of the famous California Gold Rush of 1848. Perhaps we should call it the “Specialty Pharmacy Gold Rush”? It is clear that the prospect of success regarding starting up a specialty pharmacy is there, but remember that it is directly proportional to the number of specialty pharmacies “panning for the gold” that is rapidly expanding.
Which Specialty Model Is a Lucrative Startup Now?
An analysis in 2012 by UnitedHealthcare reveals that about 51 percent of spending on specialty drugs is for cancer, rheumatoid arthritis, and multiple sclerosis. These are followed by HIV, hepatitis C, respiratory conditions, anticoagulants, growth deficiency, and transplants. Originally, the pharmacies that were classified with the “Specialty Pharmacy” designation were primarily dealing with the preparation of IV and injectable medications. This however rapidly expanded into many other types and models of specialty pharmacies that have proven to be successful business models. A quick look at several lucrative “winners” currently in the specialty pharmacy game are listed below for your review.
Compounding Pharmacies –
Dermatologicals were a perfect prescription type for specialty pharmacies to embrace. Any pharmacist can tell you that each dermatologist has their own “secret sauce” that most chain drug stores always turned away. Add in the explosion of compounding opportunities (examples such as penile implant solutions, veterinary medications, the delivery of medications in alternative strengths, dosage forms and flavors for infants are just a few) and the number of compounding pharmacies has increased exponentially in the last decade alone. Compounding pharmacies additionally must meet the 503B FDA facility requirements established in the Quality Compounding Act of 2013, plus meet USP 797 compliance guidelines.
Mail-Order Pharmacies –
This market segment of specialty pharmacies is undergoing rapid growth and equally rapid change. Most of the specialty pharmacies have contracts with Pharmacy Benefit Managers (PBM), but some are independent mail order pharmacies specializing in a specific niche or disease such as cystic fibrosis, hospice, nuclear, COPD and respiratory medications, plus oncology and cancer. The major mail order pharmacies are associated with many insurance providers and large retail chains such as Walgreens, Humana, Aetna and Caremark. The three largest are Express Scripts, OptumRx (UnitedHealthcare) and CVS Health.
IV and Infusion Pharmacies –
Special permits are required for the operation of this type of specialty pharmacy practice. One specific application for a permit requires a detailed written response to a list of 21 clinical and operational questions which are based on your Policies and Procedures. Additional equipment, supplies, logs and records are necessary. Sterile compounding equipment is a must (such as Laminar Flow Hoods), plus storage and handling requirements pertaining to both the ingredients and the specialty drugs prepared must be strictly adhered to. As with other types of compounding pharmacies, IV and infusion pharmacies additionally must meet the 503B FDA facility requirements established in the Quality Compounding Act of 2013, plus meet USP 797 compliance guidelines.
Specialty pharmacy startups were again at the forefront of discussions earlier this year after the release of an article by HealthLeaders Magazine (a division of Simplify Compliance). The study stated that the commercial pharmacy spending rate in the USA had risen to a new high that greatly exceeded the previous five year average of a 14% increase. The spending rate increased by over 18%, far exceeding the already optimistic economic projections that analysts were expecting. What’s important to note from the study for our current discussion regarding a specialty pharmacy startup’s viability is the fact that oncology and immunotherapy drugs were cited in the report as the most significant drivers of the higher spending rate seen. One can then extrapolate that data to predict that investments made in the startup of a pharmacy dealing with both oncology and immunotherapy drugs will most likely yield a lucrative return or result. That’s obviously dependent in the end on how well the business startup is planned and executed, plus the proper management of the business and operation afterwards.
How Do I Start Up a Specialty Pharmacy?
Opening and starting up a specialty pharmacy requires both expertise and experience to result in a successful business operation. Yes, it is similar in many respects to starting up a “traditional” retail pharmacy. However, in addition to the list of steps followed in the planning and execution of more “traditional” pharmacies, there are numerous equipment, policies, procedures and operational considerations. How a business owner chooses to get into the specialty pharmacy market is an investment decision. While more and more pharmacies are entering the specialty pharmacy market, the market is not without its challenges. Let a nationally renowned pharmacy consulting firm like Healthcare Consultants help you get the most out of your investment and guide you through the entire process.
Who Can Help Me Start Up a Specialty Pharmacy?
If you’re considering opening or starting a Specialty Pharmacy, or perhaps expanding or turning a portion of your existing pharmacy business into a specialty pharmacy, then Healthcare Consultants can help you! HCC has helped plan and open more specialty pharmacies nationally than perhaps any other Pharmacy Consulting firm in the industry. Plus HCC offers the additional advantage of Pharmacy Staffing and Pharmacy Management, being in the pharmacy recruitment and staffing business for over 30+ years now, as well as being recognized as one of the premier Pharmacy Consulting agencies in the nation. With a proven track record and a history of success, HCC can plan and execute a strategy so you can win in the Specialty Pharmacy arena. Contact us online now or call us today at 800-642-1652 to discuss how we can help you startup, grow and/or expand your pharmacy business.