Albertsons Cos. is the latest of a growing number of supermarkets to dive into the specialty pharmacy business with its late May acquisition of MedCart Specialty Pharmacy, which provides customized care services and medication management for patients dealing with complex diseases, such as cancer and rheumatoid arthritis.
“MedCart Specialty Pharmacy has built an exemplary operation which complements our patient-centered care strategy and pharmacy services growth plan,” says Mark Panzer, senior vice president of pharmacy health and wellness for the Boise, Idaho-based retailer. “Their team has done a tremendous job establishing a service culture that focuses on the patient.”
Functioning as a new business unit under Albertsons’ pharmacy team, Livonia, Mich.-based MedCart will continue to operate as it did prior to the acquisition, providing its specialty prescription services and medications from two facilities in Michigan. MedCart is accredited by the Utilization Review Accreditation Commission (URAC).
Albertsons is one of the largest food and drug retailers in the U.S., operating stores across 35 states and the District of Columbia under 20 banners. With this acquisition, the retailer joins the ranks of supermarkets including Kroger, Publix, H-E-B, Walmart, Giant Eagle, Meijer, Hy-Vee and Price Chopper, which have launched specialty pharmacies in recent years.
The Boom in Specialty
The specialty pharmacy business is booming, according to Adam J. Fein, Ph.D., president of Philadelphia-based Pembroke Consulting and CEO of Drug Channels, who estimates that for 2016, retail, mail, specialty and long-term care pharmacies dispensed about $115 billion in specialty pharmaceuticals. This is up from $98 billion in 2015.
“Given the challenges of accessing and dispensing specialty drugs from a retail setting, many drugstore and grocery chains instead operate central-fill specialty pharmacies,” explains Fein.
While he notes that, “specialty dispensing at retail pharmacies constitutes a minority of the specialty drug market,” with about 16 percent of specialty prescription revenues coming from retail chains and supermarkets, some grocers are indeed making a name in specialty.
“Kroger is the country’s second-largest supermarket and seventh-largest pharmacy,” says Fein. “It has been an active acquirer of both supermarkets and specialty pharmacies. We estimate that Kroger Specialty Pharmacy was the eighth largest specialty pharmacy in 2016.”
The Kroger Co. of Cincinnati, Ohio, which acquired Axium Pharmacy Holdings in 2012, purchased the outstanding shares of the Orlando-based ModernHealth in July 2016, creating a combined specialty pharmacy that operates as a wholly-owned subsidiary of The Kroger Co.
Through his Drug Channels Institute and Drug Channels industry blog, Fein helps senior executives in the pharmacy business to navigate the increasingly complex pharmaceutical industry with its new generation of specialty drugs.
“To remain competitive, it has never been more crucial to master the fundamental commercial industry concepts, understand the rapidly evolving relationships among the players in the drug channels landscape, and stay current with industry trends,” asserts Fein in his blog.
Specialty pharmacies are the future, and the growth in this industry sector is rapid, he says.
“We project that the pharmacy industry’s revenues will exceed $483 billion in 2020. Almost all of the growth will come from specialty drugs,” predicts Fein in Drug Channels 2020 Outlook for Specialty Pharmacy Revenues. “Meanwhile, pharmacy revenues from traditional drugs will be almost flat, despite higher demand.”
Frequent mergers and acquisitions, like those of Kroger and ModernHealth, and Albertsons and MedCart, contribute to the fast-changing pulse of the specialty pharmacy business.
“A growing number and diversity of pharmacies are battling for control of the specialty market,” asserts Fein. “More than half of all accredited specialty pharmacy locations are independently owned businesses. These companies constitute an active market for the buying and selling of specialty pharmacy companies.”
The Rise in Accreditation
While there is no official definition of a “specialty pharmacy,” the American Pharmacists Association (APhA) in Washington, D.C., defines it as facilities “focusing on high cost, high touch medication therapy for patients with complex disease states.” Medications in specialty pharmacy range from oral to cutting edge injectable and biologic products for treatments ranging from cancer, multiple sclerosis and rheumatoid arthritis to rare genetic conditions.
“Given this self-designation [of specialty pharmacies], independent accreditation organizations can help a pharmacy develop and verify its capabilities to manufacturers and third-party payers,” explains Fein, who finds that accreditation of specialty pharmacies is also on the rise.
With accreditation, he notes, “Pharmacies owned by PBMs, wholesalers, insurers, retailers, and providers can now prove that they are special.”
The three primary organizations offering accreditation for specialty pharmacies are: Accreditation Commission for Health Care (ACHC), Utilization Review Accreditation Commission (URAC) and The Center for Pharmacy Practice Accreditation (CPPA).
Drug Channel’s “State of Specialty Pharmacy Accreditation in 2017” found that more than 2,500 unique pharmacy locations have received specialty accreditation.
However, just the ACHC data alone included more than 2,000 newly accredited locations from retail pharmacies within the supermarket chains of Albertsons, Meijer and Price Chopper. When Drug Channels excluded these supermarket locations, it identified 499 unique pharmacy locations, a 32 percent increase over its 2016 analyses.
Last year ushered in a flurry of accreditations for grocery chain specialty pharmacies. In January of 2016, Hy-Vee, based in West Des Moines, Iowa, which in 2014 had purchased Amber Pharmacy, an Omaha, Neb.-based specialty pharmacy solutions provider, was awarded full Specialty Pharmacy Accreditation from URAC.
Grand Rapids, Mich.-based Meijer, which acquired the national specialty pharmacy and health services company Aureus Health Specialty Pharmacy in May 2015, announced it had received its Specialty Pharmacy at Retail accreditation from the Cary, N.C.-based ACHC in June 2016.
Giant Eagle of Pittsburgh, Pa., which acquired the Cleveland-based Rx21 Specialty Pharmacy in 2013 to allow the company to provide enhanced services to Hepatitis C and organ transplant patients and providers, was awarded full Specialty Pharmacy Accreditation from URAC for its pharmacy subsidiary in August 2016.
Publix, based in Lakeland, Fla., received its URAC Specialty Pharmacy Accreditation in December 2016, as did H-E-B of San Antonio, Texas. In the case of H-E-B, the certification was awarded by both the URAC and the ACHC for H-E-B Specialty Pharmacy division to deliver specialized clinical services to patients with complex and chronic diseases in more than 260 H-E-B stores across Texas.
Prescription for Success
Supermarkets are not only embracing the specialty pharmacy business, they are offering their customers unique value, convenience and quality care.
A 2016 patient satisfaction survey from the Livingston, N.J.-based Zitter Health Insights revealed that Amber Pharmacy, a wholly owned subsidiary of Hy-Vee, is the No. 1 ranked specialty pharmacy in the U.S. for patient satisfaction with pharmacy employees.
The survey, which polled more than 3,000 patients across 38 American specialty pharmacies, gave Amber Pharmacy’s pharmacists, nurses, pharmacy technicians and billing department a score of 100 percent, while its customer service representatives scored 95 percent.
Kroger’s merger with ModernHealth, one of the nation’s largest independent specialty pharmacies, allowed for important expansion of the retailer’s comprehensive specialty pharmacy services, including IVIG for patients requiring IV-based therapies for autoimmune and primary immune deficiency diseases, and comprehensive medication management for HIV, cystic fibrosis, transplant, hepatitis C, rheumatoid arthritis and dermatology.
Supermarkets with specialty pharmacies also offer customers the added value of expert pharmacist care and nutritional advice. Giant Eagle, which has a team of more than 900 retail pharmacists, is positioned to support its customers with complex health conditions throughout their treatment. As part of its patient-centric services, Giant Eagle offers nutrition advice and personalized meal planning from its team of