Specialty pharmacy market offers expansion opportunity for PBMs

Drug Cost Management Report, Sept 12, 2003

PBMs are rushing to enter the specialty pharmacy market, as payers are beginning to cover more injectable drugs, biotech drugs, and other high-tech, high-cost products under the pharmacy benefit. A new book, entitled Specialty Pharmacy: Stakeholders, Strategies and Markets, from AIS examines this evolving market and its impact on a number of health care sectors.

Caremark was one of the first companies to offer specialty pharmacy management and distribution services, along with market leaders Priority Healthcare and Accredo Health. More recently, a wave of PBMs including MIM, Express Scripts, and Anthem have expanded into the specialty pharmacy market. Other PBMs, including AdvancePCS and Medco Health Solutions, have also made investments in specialty pharmacy.

PBMs are strongly positioned to compete in this market, despite their late entry. Virtually all of PBMs' assets can be leveraged for specialty pharmacy, including an established membership base, mail-order capabilities, relationships with payers and manufacturers, historical data and data analysis capabilities. The five largest PBMs alone have access to almost a quarter of a billion members (including a great deal of overlap).

The key for PBMs such as Medco, Express Scripts and AdvancePCS is to win the specialty pharmacy business from their PBM clients. AdvancePCS stands to gain a strong foothold in specialty pharmacy with the proposed Caremark deal, and analysts anticipate more consolidation as PBMs attempt to strengthen their specialty pharmacy ties.

Specialty Pharmacy: Stakeholders, Strategies and Markets is available from AIS for $235. Call (800) 521-4323.

Figure 5. Major Players in the Specialty
Pharmacy Market, by Annual Revenue

                                 Specialty Pharmacy
Company Name                    Revenues (millions)

Priority Healthcare                          $1,200
CVS ProCare                                  $1,121
Caremark Therapeutic Services                  $944
Accredo Health                                 $654
Curascript                                     $400
Chronimed                                      $397
Option Care                                    $320
MIM Corporation/BioScrip                       $170
Express Scripts SDS                            $163
McKesson                                       $100
Curative Health Services                        $78
AmerisourceBergen                               $40
Anthem Rx Direct Specialty                      $24

Source: AIS's Specialty Pharmacy: Stakeholders, Strategies and
Markets.

Figure 6. Specialty Pharmacy Covered
Lives/Patients of Selected Vendors

                              Specialty   Total PBM Membership
Company Name                   Rx Lives        (if applicable)

Option Care                 200,000,000                     NA
AdvancePCS                   20,000,000             75,000,000
Prescription Solutions        2,500,000              5,500,000
Curative Health Services        300,000                     NA
Accent Rx                        50,000                     NA
Ivpcare                          45,000                     NA
Caremark                         34,000             24,000,000
BioScrip (ScripSolutions)        32,000              9,000,000
IVSolutions                       1,300                     NA
Anthem Prescription               1,000              4,963,879
Management

NA=not applicable.

Source: AIS's Specialty Pharmacy: Stakeholders, Strategies and

Markets.