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Understanding Specialty Pharmacy Distribution: The Oncology Practice Perspective

Innovations in Oncology Management, Vol. 2 No. 2
Dawn Holcombe, MBA, FACMPE, ACHE
President, DGH Consulting, South Windsor, CT

An Interview with Dawn Holcombe, MBA, FACMPE, ACHE, President, DGH Consulting, South Windsor, CT; Executive Director, Connecticut Oncology Association, South Windsor, CT

To discuss the use of specialty pharmacy services, Innovations in Oncology Management™ recently spoke with Dawn Holcombe, President of DGH Consulting, and Executive Director of the Connecticut Oncology Association, who brings 30 years of management experience in hospital, system, network, and physician practices. She is a former president of the Medical Group Management Association’s Administrators in Oncology/Hematology Assembly and a Fellow in the American College of Medical Practice Executives. In addition, she serves as the editor-in-chief of Oncology Practice Management and is on the editorial advisory board for Value-Based Cancer Care.

Q: During the past decade, we have seen a substantial increase in the number of oncology drugs distributed through specialty pharmacies. What has been the impact on practices and institutions that deliver cancer care?

Dawn Holcombe (DH): Specialty pharmacy distribution has had a considerable impact on providers who deliver oncology care. Although there may be advantages for payers and manufacturers, specialty pharmacy distribution often creates an operational and financial burden for oncology practices.

For example, in terms of distribution, there may be concerns about supply chain integrity, especially if the drug is dispensed and sent directly to the patient. Many oncology drugs are subject to very tight stability and temperature parameters. If an oncology drug is “brown bagged” to the patient or even “white bagged” to the office, the practice cannot be certain of how the drug was stored or handled when it was not in the practice’s possession. Regardless of the specific means of distribution, the practice remains accountable, safety concerns notwithstanding, and therefore assumes the risk for managing the patient.

Oncology practices also have concerns about specialty pharmacies’ dispensing policies. Monetarily, specialty pharmacies are incentivized to dispense on a fixed schedule. However, sometimes patients do not tolerate their cancer therapies, and midstream adjustments may become necessary. Unfortunately, specialty pharmacies may not become aware of therapeutic changes until after the drug has been shipped. If the specialty pharmacy ships a 30-day supply of an expensive oral cancer drug that is poorly tolerated, then both the patient and the insurer are paying for drugs that ultimately are not used.

Q: To what extent is limited specialty pharmacy distribution an issue for practices and institutions that deliver cancer care?

DH: Although limited distribution may be advantageous for manufacturers, especially if their drugs are subject to stringent US Food and Drug Administration regulatory requirements (eg, Risk Evaluation and Mitigation Strategies), oncology practices may have a different perspective.

When physicians and institutions are allowed to use their usual distribution channels to obtain specialty drugs, there is very little disruption. However, issues can arise when manufacturers decide to limit availability of specialty drugs to a few commercial specialty pharmacy vendors, because it may require that a whole new business relationship is set up between the practices and the dispensing vendors.

In addition, limited specialty pharmacy distribution has led to several financial challenges, especially for hospitals that were forced to acquire oncology drugs outside of their typical processes, because they were no longer able to receive discounts that were offered by their usual distribution channels. As a result, the net cost of drugs rose substantially in some cases.

From a broader perspective, oncology practices are concerned that payers may begin to financially incentivize patients to use preferred specialty pharmacy networks through higher copayments for using out-of-network pharmacies. This is already a common benefit design strategy for limiting access to certain medical providers, and it could be used to limit patient choices to pharmacy providers.

Q: To what degree is in-office dispensing mitigating the impact of specialty pharmacy, especially in “any willing provider” states?

DH: There is certainly a growing interest in in-office dispensing. The primary reason practices may prefer to dispense drugs is the ability it gives them to control all the aspects of the patient experience, including timely access to treatment, medication adherence monitoring, coordination of care, and patient satisfaction.

Contrary to some beliefs, in-office dispensing is not a major revenue generator relative to overhead costs for many clinics and institutions; practices want to use in-office dispensing to improve the overall patient experience and the quality of care.

Q: From an oncology practice perspective, what are the advantages of choosing specialty pharmacy distribution for oncology drugs, when the option is available?

DH: Oncology practices may be comfortable using certain specialty pharmacies with which they have developed a good working relationship. Practices seek a knowledgeable point of contact at the specialty pharmacy who can provide the answers they need in a timely manner. The specialty pharmacy must also demonstrate that they can dispense and ship oncology drugs reliably, accurately, and in a timely manner. Once a level of trust is established, it becomes much easier for the practice to work with a specialty pharmacy.

In addition, there are cases when alternatives do not exist; in those cases, specialty pharmacy distribution may be the only viable option for patients to receive cancer drugs. There may also be circumstances where reimbursement policies in certain regions (from both public and private payers) have changed so significantly that the treating physician or cancer center cannot afford to buy the drug at the reimbursement level that has been set, and a specialty pharmacy may be the only option for patients getting the drug.

Finally, because some specialty drugs are associated with considerable costs, ordering from a wholesaler and stocking the drug may put the practice in a financially precarious situation. In that case, the practice may rely on the specialty pharmacy to supply the drug.

Q: Are practices taking advantage of the value-added services provided by specialty pharmacies? Why or why not? Which services are they using?

DH: In my experience, there has been limited practice use of support services offered by specialty pharmacies. Some oncology practices are concerned about gaps in the continuity of care that may occur with the use of specialty pharmacy services. Specifically, practices are concerned about communication gaps that may take place when specialty pharmacies interact directly with patients without notifying the practice. If this occurs, it is nearly impossible for the practice to know whether its recommendations are aligned with what the specialty pharmacy is recommending to the patient. The lack of care coordination has been shown to result in avoidable complications, unnecessary inpatient admissions, and increased costs,1 and is a legitimate concern in oncology care and for the healthcare community at large.

In order for practices to loosen the reins and use specialty pharmacy services such as benefits investigation and prior authorization support, treating physicians must trust that the specialty pharmacy can perform these functions as reliably and efficiently as the practice or institution’s administrative staff. A specialty pharmacy that can effectively coordinate with practices and provide them with additional resources and education may provide considerable value to smaller practices with low margins and limited staff.

Q: Do you have any other practical tips to offer colleagues about working with specialty pharmacies?

DH: In my experience, successful, effective working relationships require a one-on-one relationship with a representative of the specialty pharmacy. The practice administrator or point person has vetted this person and knows who he or she is calling. Likewise, the specialty pharmacy knows who to call at the practice, and the relationship evolves over time.

The practice should be actively engaged in ensuring that there is 2-way communication between the physician and the specialty pharmacy about the patient, because problems tend to arise when the specialty pharmacy is a complete stranger to the treating physician.

The bottom line is that the treating physician is the only one who has the patient’s medical records, and he or she is ultimately responsible for every aspect of the patient’s care. When patient care functions are delegated to external parties such as specialty pharmacies, it is still the practice’s responsibility to make certain that all parties are aligned through effective, coordinated communication, and we hope that this can be accomplished without an accompanying burden of resource utilization and additional costs to the payer, the patient, and the physician.


  1. Burton R, Coleman E. Health policy brief: improving care transitions. Health Affairs. September 13, 2012. Accessed July 9, 2015.

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