Patient focus strengthens specialty player

Drug Store News,  April 19, 2004  by Michelle L. Kirsche

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Fresh off a one-year exclusivity period as the sole distributor of a breakthrough HIV/AIDS drug, StatScript Pharmacy is strengthening its loyalty programs to retain its bread-and-butter patient base--a move showcasing the patient-focused mindset behind the retailer's growing specialty pharmacy trade.

Beginning this month, StatScript, the retail arm of Chronimed, a specialty pharmacy distributor of HIV/AIDS, organ transplant and biotech injectable medications, no longer holds the exclusive rights to distribute the HIV therapy Fuzeon (enfuvirtide). The drug helped boost Chronimed's HIV business, up 47 percent in the second quarter of its fiscal year 2004. The one-year distributorship was forged as a result of a limited supply of the drug at rollout after Fuzeon received accelerated U.S. Food and Drug Administration approval March 13, 2003.

The distributorship award, however, validated StatScript's HIV/AIDS business, Henry Blissenbach, chairman and chief executive officer, told Drug Store News. Until then, Blissenbach said, the company had not received proper credit from Wall Street. The exclusivity agreement also demonstrated to manufacturers that Chronimed has the internal capabilities to handle a major distribution effort.

To retain its existing Fuzeon patient base, StatScript established a loyalty program, including regular small-group meetings with pharmacists to talk about life on and challenges associated with Fuzeon treatment.

In a separate patient program, Chronimed partnered with Aetna this February to help organ and bone marrow transplant recipients receive medication counseling services from pharmacists specializing in transplant case management, as well as automatic refill reminders to ensure they adhere to prescribed regimens--non-adherence is the largest underlying cause of transplant rejection. A full program rollout is anticipated in June.

Aetna, however, simultaneously delivered a blow to the specialty pharmacy distributor. Chronimed, while allocating a significant portion of its resources to HIV/AIDS and organ transplant medications, failed to generate enough oncology business to remain a player in the Aetna oncology arena. As a result, last year Aetna cut Chronimed out of that portion of its business for a loss to Chronimed of about $10 million.

The new transplant patient program, however, should offset declines in oncology and bolster Chronimed's transplant business, which grew $3.5 million, or 17 percent, over the same period in 2003 because of a successful strategy of utilizing StatScript stores in key locations to gain transplant center referrals. For example, two transplant centers are within walking distance of the Philadelphia store, and four transplant centers are in the immediate area of the StatScript location in Chicago.

In keeping with its positive growth trend, Chronimed/StatScript Pharmacy walked away from 2003 with a mid-December acquisition expected to add $7 million in revenue and $800,000 in pretax operating income to the second half of fiscal 2004. On Dec. 10, the company acquired Accent Rx, a mail service pharmacy specializing in HIV and transplant medications, which management considers a perfect fit to its menu of specialized therapy management services.

Those specialized services helped the company hit record revenues of $435 million, up 9.6 percent, for its fiscal year ended June 27. Fiscal 2003 net income totaled $5 million, or 40 cents per share, an increase from $3.7 million, or 30 cents per share, in fiscal 2002.

Chronimed also is looking to bolster future revenues by building its biotech injectables business in the areas of hepatitis C, rheumatoid arthritis and multiple sclerosis. "Six months into the process, our first half combined revenues have grown 24 percent over last year," Blissenbach said. "These three disease areas account for more than 14 percent of our total business, or $37 million in revenue.

"The way we continue to grow our business and guard against being vulnerable is by being increasingly less dependent on HIV and introducing other areas of business," Blissenbach told Drug Store News. "Transplant moved in about two years ago, and now it holds about 15 percent of our business. I would expect over time, as revenue grows, the percent of revenue coming from HIV will approach 75 percent. Transplant and biotech will make up the other 25 percent. It may even be two-thirds and one-third."

Revenue from the transplant side, however, will change in the face of a 10 percent cut in the reimbursement rate dictated by the new Medicare Modernization Act for drugs covered under Medicare Part B. Blissenbach said while the impact will be offset partly by generic drug substitutions and changes in transplant service offerings, the net impact could be a loss of $1 million to $1.5 million.

However, Blissenbach said when the full Medicare program rolls out in 2006, it will be a positive for StatScript. "Biotech injectable drugs, particularly for rheumatoid arthritis, will be covered then where they aren't now," he said.