Drug Channels Institute’s (DCI’s) newest evaluation finds that individuals within the specialty pharmacy market proceed to get extra various—though revenues stay extremely concentrated.
We have now recognized almost 1,800 allotting websites with specialty pharmacy accreditation—about 40% of that are owned by hospitals, doctor practices, and different healthcare suppliers.
Alas, specialty pharmacies owned by the three largest pharmacy profit managers (PBMs) have essentially the most brass of their pocket, as they accounted for two-thirds of prescription revenues from pharmacy-dispensed specialty medication.
Learn on for DCI’s newest overview of the 2023 market and revenues of the largest market individuals, together with key specialty pharmacy traits.
GONNA MAKE YOU NOTICE
That is our third market analyses tailored from DCI’s new 2024 Financial Report on U.S. Pharmacies and Pharmacy Profit Managers.
Listed below are the primary two articles:
I’M SPECIAL
For 2023, DCI estimates that U.S. prescription allotting revenues from specialty prescription drugs reached $243 billion. Specialty medication accounted for almost 40% of the pharmacy business’s prescription revenues (however a better share of payers’ web spending).
Pharmacies that compete to dispense specialty therapies are owned by a various set of organizations. These pharmacies are operated by pharmacy profit managers, retail chains, well being plans, pharmaceutical wholesalers, doctor practices, hospital methods, and different organizations. There are additionally many impartial specialty pharmacies.
The chart under quantifies this range by categorizing, per company possession, the variety of pharmacies with specialty accreditation. Our methodology accounts for the truth that some pharmacy areas have accreditation from multiple group.
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For 2023, DCI’s unique evaluation recognized 1,749 distinctive pharmacy areas with accreditation from one or each of the 2 organizations that now dominate accreditation for specialty pharmacies: Accreditation Fee for Well being Care (ACHC) and URAC. Solely about 3% of whole U.S. pharmacy areas are accredited as a specialty pharmacy. The general variety of accredited areas grew slowly in 2023 in comparison with the earlier yr, however was greater than 5 occasions bigger than the 2015 determine.
According to DCI’s earlier analyses and predictions, hospitals and well being methods have emerged because the fastest-growing individuals within the specialty pharmacy market. For 2023, they accounted for one out of 4 accredited specialty pharmacies. Hospital-owned pharmacies are capable of generate important earnings by taking part instantly in the 340B Drug Pricing Program. In response to modifications in producers’ insurance policies relating to exterior contract pharmacies, hospitals proceed to construct in-house specialty pharmacy operations.
Different healthcare suppliers accounted for an extra 14% of accredited specialty pharmacies. This class contains medical practices and physician-owned clinics. Most of those areas concentrate on two medical specialties—oncology and urology—that incessantly prescribe patient-administered specialty medication.
SO SPECIAL
The chart under ranks the most important pharmacies based mostly on estimated revenues from the allotting of specialty prescription drugs. We focus on most of the particular person firms listed under in Part 3.3. of our new report.
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Observations on the figures above:
- Market share for the allotting of specialty medication stays extremely concentrated with the most important PBMs. Regardless of the vast range of business individuals proven by the accreditation figures, the highest three firms accounted for two-thirds of prescription revenues from pharmacy-dispensed specialty medication: CVS Well being, Cigna, and UnitedHealth Group. These companies are all owned by vertically built-in organizations that additionally personal a PBM.
The focus of specialty allotting revenues outcomes largely from methods utilized by payers and producers to slim specialty drug channels. Payers typically beleive that the capabilities of those massive specialty pharmacies are superior to these of a typical retail pharmacy. These elements have shifted allotting to the most important specialty pharmacies owned by vertically built-in organizations.
- Mail pharmacies accounted for greater than three-quarters of the business’s $243 billion whole prescription revenues from specialty medication. As a result of presence of PBM-owned pharmacies, retail pharmacies have restricted publicity to the allotting of specialty medication. In consequence, many retail chains function central fill specialty mail pharmacies to take part within the specialty market. The income figures above embody all allotting codecs of the respective companies.
For instance, the determine for Walgreens contains AllianceRx Walgreens Pharmacy (ARxWP), Walgreens specialty pharmacy areas inside hospitals, the Walgreens retail specialty pharmacies, and specialty medication distributed inside Walgreens retail drugstores. The ARxWP enterprise suffered important income and buyer losses throughout 2022 and 2023.
- Specialty medication’ share of revenues declined barely for 2023. Specialty medication’ share of the pharmacy business’s whole prescription allotting revenues has grown considerably, from 24% in 2013 to just about 40% in 2023. Specialty medication’ share of plan sponsors’ pharmacy profit prices is increased than their share of prescription revenues, as a result of rebates don’t impression prescription allotting revenues.
Specialty’s share declined barely throughout 2023. Components behind the slower development in specialty medication’ share relative to conventional medication included the launch of generic nonbiological specialty medication, slower development in checklist costs for some specialty medication, the excessive stage of gross sales from of anti-obesity GLP-1 medication, and the launch of specialty merchandise with checklist costs under these of aggressive merchandise.
- Unbiased specialty pharmacies retain a small however important presence. Unbiased pharmacies are the most important class of accredited specialty pharmacies however account for a minority of whole specialty allotting revenues. Lots of the largest impartial specialty pharmacies function absolutely or wholly as central fill mail pharmacies.
The specialty pharmacy shakeout started about six years in the past. Since then, fewer new specialty pharmacies have began up, whereas most of the largest impartial firms have been acquired. Over the previous few years, shopping for and promoting exercise for specialty pharmacy firms has slowed considerably. The remaining impartial specialty pharmacies are typically well-capitalized, usually with the monetary backing of personal fairness companies.
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NOTES FOR NERDS
- Most firms don’t report prescription revenues from specialty medication. DCI has subsequently used varied strategies and first sources to estimate the info. In some circumstances, the businesses offered us with income figures. Sure information have been up to date based mostly upon new disclosures because the earlier version of our report.
- As famous within the exhibit’s footnotes, DCI has made varied changes to account for the professional forma impression of mergers and acquisitions in addition to sure consumer transitions among the many largest PBMs. Professional forma revenues are computed based mostly on the yr through which an acquisition was accomplished. Yr-over-year development charges have been additionally computed based mostly on the prior yr’s professional forma revenues.
- Revenues within the “All different retail, mail, long-term care, and specialty pharmacies” class come from the various pharmacies now competing to dispense these costly therapies. As we focus on in Chapter 3 of the total report, the specialty market’s development continues to attract many firms into the enterprise of allotting specialty medication.
- The market measurement determine excludes estimated revenues from provider-administered specialty medication billed below a affected person’s medical profit.
A MESSAGE FROM CHRISSIE
Listed below are some additional ideas on the specialty pharmacy market. Click on right here when you can’t see the video.
