SUPPLY AND LOGISTICS B
ringing a new treatment for a rare disorder to market is often only half the challenge. Reaching niche patient
populations, handling complex delivery needs, and getting insurers to cover costly As orphan drug spending in the US reaches
record highs, rare disease drug manufacturers are now exploring new distribution strategies. In contrast to other types of drugs, many rare disease treatments require specialty pharmacies to facilitate their unique dosing or storage needs. In recent times, some specialty pharmacies have begun consolidating with insurers and hospital systems, allowing them to have an advantage when it comes to distributing treatments targeting more prevalent rare diseases. But as major specialty pharmacies increase their market foothold, smaller ones still offer price and access advantages for drug manufacturers targeting ultra-rare diseases. Moreover, price pressures from new and upcoming gene therapies – which can cost more than $1m – have the potential to dramatically change traditional distribution models.
Multiple distribution partners
disease as any condition affecting less than 200,000 people. Rare diseases can range from narcolepsy, which affects 200,000 US patients, to amyotrophic lateral sclerosis with 15,000 patients, and the ultra-rare disease Hutchinson-Gilford progeria with 20 patients. Most US Food and Drug Administration (FDA) have targeted rare diseases, highlighting the need for improved distribution strategies. Companies targeting more prevalent rare diseases have begun moving away from exclusive agreements and towards arrangements with multiple distribution partners, experts say. Because of vertical integration between
specialty pharmacies and payers, an exclusive sales agreement with one specialty pharmacy could limit cover options, says Dr Randy Vogenberg, principal at the Institute for Integrated Healthcare. If that specialty pharmacy has merged with a major payer, it
could be challenging to get reimbursement from another major insurer, he explains. In September 2021, wholesale pharmacy
Walgreens Boots Alliance made a majority stake investment in the specialty pharmacy Shields Health Solutions, while the insurer For rare diseases with around 50,000 patients or more, a “hub-and-spoke” model involving multiple specialty pharmacies often offers the best reimbursement and access opportunities, explains Patti Engel, CEO of Health. Under this model, a centralised specialty pharmacy “hub” can direct patients to “spokes” of other specialty pharmacies that accept different insurance models, she says. With the hub-and-spoke system, drug manufacturers normally sell their treatment to specialty pharmacies, and therefore don’t have to pay administration and delivery service fees, Engel adds. However, this means manufacturers can’t control the mark-up on their drug or the effort a pharmacy puts into negotiating payer coverage, she explains.
Specialty pharmacy consolidation While consolidation among specialty pharmacies is not yet at the same rate as that seen with wholesale pharmacies and pharmacy similar trend, says a drug distribution expert. According to the Drug Channels Institute (DCI), four specialty pharmacies – CVS Specialty, Accredo/Freedom Fertility, Optum Specialty Pharmacy, and Alliance Rx Walgreens Prime/ Walgreens stores – accounted for three quarters of US specialty drug spending in 2020. The total specialty drug revenue of $176bn in 2020 represented a 9.1% increase over the previous year’s total. Consolidated services normally lead to a lower net cost for drug manufacturers, Vogenberg explains. However, when a manufacturer is using a consolidated distribution solution, it becomes more costly to switch the distribution system when needed, he notes. It is a slightly different story when it
comes to the even smaller group of ultra-rare diseases. For these disorders, an exclusive agreement with one specialty pharmacy is
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