Dispensing Pharmacy: An Option for Private Practices

Hennessey:
Our pharmacy dispenses both. In terms of volume, we move more non-oncology drugs. Most of our patients in treatment see us more than a dozen times a year. Fresh out of treatment, our patients still come in three to four times a year. We dispense a vast amount of chronic medications, for example beta-blockers and medications that treat hypertension. We do not stock the high-cost oncolytics. And we do not carry medications for colds or flu. We like to send patients back to their primary care providers for those types of medications. Overall, our physicians are managing a lot of chronic and long-term issues. So we try and make sure that our pharmacy is a one-stop shop for those types of patients.

Kovach:
Our practice stocks the following: oral oncolytics, antibiotics, antifungals, AIs, diuretics, steroids, antiemetics, warfarin, Arixtra, and supplements, such as iron and MagOx.

Gerards:
Our plan is to dispense oncology and oncology support drugs only at this time.

D'Amato:
Our plan is to dispense all agents related to oncology care, not just oral oncolytics.

Hennessey:
We use the Rx3000 Pharmacy Management System, which to be honest we are not really thrilled with.

Kovach:
We are using QS1.

Gerards:
We plan to use QS1.

D'Amato:
We will be using QS1 with a beta interface with our Nucleus Solution product.

Hennessey:
Our program does not yet have an EMR. We have a lot of electronic connectivity, but we do not yet have that "middle" piece.

Kovach:
Our practice built an in-house EMR.

Gerards:
Our hospital uses McKesson. Our practice is multispecialty, so our EMR is not oncology specific.

D'Amato:
We use Altos Solutions.

Hennessey:
Our mix is about 60 percent commercial payers and 40 percent public or government payers. We include Medicare+ Choice with the commercial payers. Our practice has a pretty diverse commercial payer mix. BlueCross BlueShield makes up about 35 percent, and the rest is scattered among a number of national payers. The good news is it’s diverse; the bad news is that it’s more policies and regulations to keep up with.

Kovach:
Our payer mix is about 60 percent Medicare and 30 percent BlueCross and BlueShield.

Gerards:
The payer mix for the multispecialty group practice is about 50 percent Medicare and 50 private payers. The payer mix for our oncology practice is 65 percent Medicare and 35 percent private payers.

D'Amato:
My practice sees about 55 percent Medicare, 25 percent Anthem commercial payers, a smattering of other private payers, and only 1 to 2 percent Medicaid or State-aid.

Hennessey:
We rarely have patients come in just to use our pharmacy. And for a lot of patients who are going to be on a long-term agent, we would probably have the prescription run through a specialty pharmacy because they will get reduced co-pays if they receive it quarterly versus monthly at our practice. The challenge there—as we all know—is ensuring that our patients are staying on their meds. We’ve known a long time about the challenges related to AIs. But it's been interesting to hear about the compliance issues related to chemotherapy agents or biologics. However, some of the specialty pharmacies are coming up with their own outbound calling programs to meet that need.

Kovach:
Our practice does fill monthly AIs. The QS1 system has a tickler file as a reminder, so we are able to track patient compliance and any issues that arise.

Gerards:
We will leave that up to our patients. Some of our patients are local; others travel quite a distance for treatment. As a specialty pharmacy, we can offer the same reduced co-pay, so the patient's cost would be the same.

D'Amato:
We obviously want those patients to use our pharmacy on a regular basis—not just to have their prescriptions filled, but also to be able to assess patients and act as a resource for patients on a regular basis.

D'Amato:
Looking forward, our practice will likely wait for payer approval for the expensive oncolytics. Once the medication is approved, we will order it for next-day delivery. I would try to work with my wholesaler if it was a medication that I was never going to use again. So, if for some reason the patient was unable to receive the medication, as long as the medication had not been opened, we would try to return it to the wholesaler and get compensation.

Kovach:
Our practice uses a similar system. If our physicians switch the therapy on a patient when he or she comes in and we have the medication on our shelf, I would try and return it to the wholesaler. We also take a look at our schedule and see if another patient who is on the same medication is coming in soon.

Gerards:
Our practice would use also the same system: restock medications for future use if the medication is not used and has not been opened.

Hennessey:
It is rare for our practice to run into this situation. As I stated previously, our pharmacy does not stock the high-cost oncolytics. We run through our inventory fairly quickly. We have enough throughput that even if we don't use a medication we expect to, we will probably have a pretty good chance of getting it off the shelf in a month or so.

Kovach:
Again, we are a small practice with only three physicians. In 2009—our first full year of dispensing medications because we did not have a dedicated staffer in 2008—our pharmacy realized about a $90,000 profit. In 2010 we doubled that amount and saw about an 18 percent margin.

Hennessey:
I think it's important for your practice to first answer the question: "What do you want your pharmacy to be?" Because the drugs will have a positive margin unless you are doing something wrong. Your practice will figure out if it is going to be paid for a drug fairly quickly. So the question really becomes: "How are you going to allocate the cost of the pharmacist?" You can make an argument to allocate that cost to the infusion side or to the oral chemotherapy side. So if you absolutely need to make a profit on your pharmacy, you might need to reallocate labor costs. Simply put, if your practice can manage three components—drug margin, labor costs, and bad debt, your pharmacy will be in good shape. We do see a positive margin on the drugs we dispense. Our biggest cost is the labor cost for our pharmacist and pharmacy technician, followed by bad debt.

D'Amato:
While we have not yet started dispensing, our practice developed a pro forma based on what we have seen in other practices. After putting in our data—our 14 physicians, our patient mix, and the number of prescriptions we generate—a conservative estimate is that our practice will see about $100,000 in profit the first year. But what we’ve heard from our panelists is that if a dispensing pharmacy is managed correctly and with adequate staffing, break-even should be the worst that you do, while providing a great patient service.

Gerards:
Our situation is a little unique. Our practice looked at opening a pharmacy a few years ago and opted not to go that route. We have since reconsidered the situation and anticipate a margin of about $100,000.

D'Amato:
"White bagging" and "brown bagging" are two drug management trends that payers instituted to help lower costs. "Brown bagging" is when a payer sends drugs directly to the patient, requiring them to carry the drug to the practice or program for administration. Because of safety concerns and other issues raised by providers, most payers only use the “brown bagging” method for self-administered drugs and biologics—not for physician-administered drugs.

"White bagging" is when drugs are shipped directly to a practice or program for administration to a patient. The payer negotiates special pricing with a specialty pharmacy organization, reducing the payer's cost of the drug. The drug is then delivered "just in time" and is labeled for a specific patient. The specialty pharmacy bills the patient for the drug co-pay and/or coinsurance. The oncology provider bills only for drug administration to the patient. It is my opinion that providers should deny all "white bagging" efforts.

Hennessey:
That number will vary based primarily on staffing. If you need an incremental pharmacist, you will need to fill a high number of prescriptions. If there is no incremental staffing, your pharmacy can likely afford to fill a much lower number of prescriptions. Oncology is a low-margin high-variable-cost business. Failing to get reimbursed or collect co-pays even rarely can do great economic harm.

Kovach:
It could be as few as one or two scripts, depending on the drug(s).

Gerards:
That number would depend entirely on the drugs dispensed and prescriptions written. As of yet, our practice has not made a significant financial investment, so any prescriptions kept at our practice versus sending them out is an improvement.

D'Amato:
Our practice has not started dispensing medications yet, so it is difficult to give a number at this time.

Hennessey:
Not in any formal sense. From the payer perspective, this lack of a formal compliance program makes us less competitive than big specialty pharmacies. Our pharmacy can identify if a 30-day supply of medication is lasting 35 days, but some of the better specialty pharmacies do outbound calls in the first week, particularly for medications with a side-effect profile that might discourage patients from compliance.

Kovach:
Our compliance program is generated from our EHR. Patients on oral chemotherapy have monthly CBCs [complete blood counts], and a "no-show" will be flagged. The nurse then e-scribes our pharmacy technician to refill the medication. Also the QS1 tickler system lets the pharmacy technician know to check to see if the patient is to continue on the medication or if there has been a change.

Gerards:
Our nurses are already following up on patients once the financial counselors let them know the drugs have shipped. (The specialty pharmacies notify our financial counselors when the product ships.)

D'Amato:
We are developing a compliance program prior to the opening or our dispensing pharmacy.

Hennessey:
Our pharmacy only services our practice patients, and we have a level of service and inventory that is pretty unique. We also price competitively, and we get that feedback from our patients. Our pharmacy probably could not meet Walmart’s price on tamoxifen, but then again we don't have to.

Kovach:
Our practice communicates regularly with our payers and patients. We also engage in advocacy efforts, such as communicating and educating Congress about issues related to anti-cancer drugs and administration.

Gerards:
Our practice does not foresee the retail pharmacies stocking oncolytics. Those medications are too pricey, and we are a smaller population city. Plus, our pharmacy does not plan on carrying stock like Z-packs, so we don’t worry about a Walmart or other retail pharmacy coming in with cheaper prices.

D'Amato:
I don’t know how that will or will not affect our pharmacy.

Hennessey:
We did not use a consultant, but we received good advice from the US Oncology network partners who had already crossed this bridge.

Kovach:
Our practice did not engage a consultant.

Gerards:
We did not believe it was worth the financial investment.

D'Amato:
We did not use a consultant.

Hennessey:
The number of oral chemotherapy products should grow. I think we are still waiting for that one product that will take off. It's not Xeloda. I would have expected oral Hycamtin to be used more for lung cancer patients who live farther away from the practice. Maybe Tykerb might be the tipping point—if it is ever deemed "equivalent" to Herceptin. Oral administration would have to compare favorably to 52 weekly infusions; although, I think it is fair to question whether you would get the patient compliance you see in clinical trials. For example, it has been documented that some patients don’t take their Gleevec as prescribed, and I would assume that other oral chemotherapies have similar compliance risks.

Kovach:
In the near future, we see oral drugs having a positive impact, but eventually AWP [average wholesale price] will go down.

Gerards:
About 30 percent of the drugs in the pipeline are oral agents. Frankly, our practice does not want that much coming out of our infusion area and bottom line.

D'Amato:
There are hundreds of oral drugs in development. New oral agents will continue to be approved, thus the need for a comprehensive assessment and adherence program integrated with a dispensing pharmacy. Infusional therapy will always be around, and we will likely see more oral and infusional combination therapies. This scenario should benefit the dispensing pharmacy, assuming we can serve an adequate number of patients.

Hennessey:
Our state requires that a RPh or PharmD be present during all opening hours. If not, the pharmacy needs to be locked. So your practice needs to have infusion drugs in an area outside the "lockable zone."

Kovach:
Our practice has an FTE certified pharmacy technician. We have also cross-trained three other staff so that they are able to carry out pharmacy-related functions when the technician is out, for example during vacation or illnesses.

Gerards:
Our practice plans to staff our pharmacy with a financial counselor and a pharmacy technician. It is considered a physician dispensing model, but the physician’s nurse will actually make the drug handoff to the patient.

D'Amato:
In Maine, we do not need a pharmacist to dispense medications, so we also plan on using a registered nurse and a pharmacy technician to fill our prescriptions.

Hennessey:
Our state requires that a RPh or PharmD be present during all opening hours. If not, the pharmacy needs to be locked. So your practice needs to have infusion drugs in an area outside the "lockable zone."

Kovach:
Our practice has an FTE certified pharmacy technician. We have also cross-trained three other staff so that they are able to carry out pharmacy-related functions when the technician is out, for example during vacation or illnesses.

Gerards:
Our practice plans to staff our pharmacy with a financial counselor and a pharmacy technician. It is considered a physician dispensing model, but the physician’s nurse will actually make the drug handoff to the patient.

D'Amato:
In Maine, we do not need a pharmacist to dispense medications, so we also plan on using a registered nurse and a pharmacy technician to fill our prescriptions.

Hennessey:
Our pharmacy is open 9 am to 5 pm, five days a week—the same as our office hours.

Kovach:
Our pharmacy is also open five days a week.

Gerards:
Monday through Friday.

D'Amato:
Monday through Friday from 8 am to 5 pm.