The Specialty Pharmacy Boom Continues

For 2014, we estimate that retail, mail, and specialty pharmacies dispensed about $78 billion in specialty pharmaceuticals.

How many pharmacies dispensed these drugs? Surprisingly, we still can’t definitively answer this question, as I explain below. To measure specialty pharmacy growth, I worked with a renowned mathematician (pictured at right) to crunch data from URAC, an independent accreditation company.

As the chart below shows, the number of accredited specialty pharmacies is still booming. As of late December 2014, 89 companies with 151 specialty pharmacy locations had achieved “Full Accreditation.” An additional 99 companies are “In Process” and are likely to be accredited in 2015.

WHAT SHOULD WE COUNT, COUNT?

Chapter 3 of our new 2014–15 Economic Report on Retail, Mail, and Specialty Pharmacies analyzes specialty pharmacy market participants, which include:

• Health plans and pharmacy benefit managers (PBMs)
• Independent specialty pharmacies
• Retail pharmacies
• Hospitals and physicians
• Pharmaceutical wholesalers

It’s impossible to count the pharmacies dispensing specialty drugs. Any pharmacy can designate itself a “specialty pharmacy” if its business focus is self-administered specialty pharmaceuticals covered under a patient’s pharmacy insurance benefit. What’s more, some specialty products are in open distribution and can be dispensed by any licensed pharmacy.

A useful proxy for measuring the market size of self-designated specialty pharmacies comes from the number of entities seeking specialty pharmacy accreditation. (See section 3.2.2. of our new report.) Independent accreditation organizations help pharmacies develop and verify their capabilities to manufacturers and third-party payers.

The two major specialty pharmacy accreditation organizations are URAC and the Accreditation Commission for Health Care (ACHC). The Center for Pharmacy Practice Accreditation (CPPA), the new accreditor on the block, expects to begin certifying specialty pharmacies in 2015.

ONE SPECIALTY PHARMACY, TWO SPECIALTY PHARMACIES… AH AH AH AH AH!

To quantify specialty pharmacy growth, we analyzed pharmacy locations with “Specialty Pharmacy Accreditation” in the URAC Directory of Accredited Companies. We use its “Accredited Since” field to determine the year of accreditation.

The chart below shows the locations accredited, by year, along with cumulative accreditations. By the end of 2015, about 250 locations will be URAC-accredited specialty pharmacies.

[Click to Enlarge]

Health plans and PBMs are among the industry’s biggest participants, but the URAC list shows the diversity of specialty pharmacy industry players. For example, our report’s Exhibit 38 highlights 17 health systems and physician practices that have full or in-process URAC accreditation. All have been accredited within the past two years or are in the accreditation process.

Pharmacy industry revenues will continue to shift from traditional brand-name drugs to specialty drugs, so we can expect the boom to continue. You can count on it.

OTHER THINGS TO COUNT

When Sesame Street's YouTube channel hit one billion views, my good friend the Count prepared the video below. (Click here if you can’t see the video.) He is currently preparing to count the drugs in Drug Channels when we hit 1 billion cumulative pageviews. Almost there!