The overall market for specialty medications has grown dramatically over the past decade, and that trend is expected to continue for at least the next five years. Health systems, patients and pharmacies will experience shifting market dynamics that add challenges to providing specialty care, including price increases, an aging population driving increased utilization and a growing wave of innovative therapies that add new patients to the specialty pool.
In response, health systems have sharpened their focus on integrating specialty pharmacy care to now include pharmacy needs within their hospitals to help improve patient outcomes and experiences. By 2028, health system-owned specialty pharmacy programs are expected to capture more than 25% of the specialty pharmacy market by offering a more efficient and effective care model for patients.
Most large health systems have an advantage in responding to industry changes because they operate in-house specialty pharmacy programs. Those programs have become a key component of the growth strategy for many health systems, with more than 95 percent of large health systems operating their own in-house specialty pharmacy program. With these integrated specialty pharmacy capabilities in place, health systems can respond to changing market dynamics, improve patient outcomes while lowering total cost of care, and utilize the specialty pharmacy program to underwrite health system expansion. Looking ahead to 2025 and beyond, these are the key market dynamics that health system leaders will lean on in-house specialty pharmacies to tackle.
Responding to market dynamics
Since 2019, more than 200 drugs have come to market through limited distribution drug (LDD) networks, a nearly 20 percent increase from the previous five-year period. In most cases, the health system delivers this care, which underscores the critical advantage of having an integrated specialty pharmacy care model in place to seamlessly treat those patient populations.
Over the past several years, there have been significant changes in specialty pharmacy market dynamics, particularly as it relates to 340B contract pharmacy arrangements. The 340B program, in short, provides discounts on drugs for hospitals that service underserved patients. Several dozen drug manufacturers have placed restrictions on how 340B drugs may be distributed beyond the covered entity, or health system, that purchases the drug, significantly limiting the use of contract pharmacies. Health systems with integrated specialty pharmacies can help mitigate these losses by bringing those prescriptions back in-house, while providing improved services and outcomes to patients. Those systems that increase their focus on recapturing this business through onsite programs can also further stretch those 340B resources to support more patient care.
Emerging therapeutics create opportunity and challenges
GLP-1 medications, including Mounjaro and Ozempic, have dominated the spotlight as promising new treatments for Type 2 diabetes, obesity and an expanding list of other possible indications. Today, many of my conversations with health systems inevitably veer toward weight loss drugs and their potential implications.
The new therapies present both opportunities and challenges as the GLP-1 market evolves, with new manufacturers entering the market and new indications emerging. Those changes create needs for structural support around the therapies. Patients, pharmacists and prescribing physicians need current data, educational resources and financial aid mechanisms to ensure the new treatments realize their full impact.
GLP-1s offer a reminder of the constant hum of biotech innovation and integrated health systems’ specific ability to help patients access new treatments, which come onto the market constantly. That churn of new medications creates the need to tackle new patient access pathways, particularly in the rare and orphan disease space which includes metabolic dysfunction-associated steatohepatitis.
Complex and high-cost specialty therapies often get distributed to a limited number of hospitals and pharmacies, hence their designation as “limited distribution drugs.” I expect many new products to follow the limited distribution path and for drug manufacturers to lean on health system-based specialty pharmacies for distribution.
New partnership models
As the health system specialty pharmacy channel continues to expand, we anticipate more insurers and pharmacy benefit managers (PBMs) – a third-party company that acts as an intermediary between insurance providers and pharmaceutical manufacturers to manage prescription drug benefits – will seek to partner with health system networks.
The aim of those partnerships: improved patient outcomes and lower costs.
Both insurers and PBMs play crucial roles in the healthcare ecosystem, and there has never been a greater need for new partnership models given the number of specialty patients and the costs of their medications are both rising.
By partnering with health system specialty pharmacies, insurers and PBMs can provide personalized support to patients, including medication adherence programs, care coordination and help navigating insurance coverage. This integrated approach helps optimize therapy outcomes and manage the high costs associated with specialty medications. It also supports patients in their journeys as they manage complex diseases. These diagonal partnerships create a more sustainable healthcare ecosystem, where traditionally disparate entities work together to lower costs and treat patients more holistically.
An evolving marketplace has placed specialty pharmacy care squarely in the middle of conversations about improving the quality and cost of patient care at large. With an elevated position in the healthcare ecosystem, integrated specialty pharmacies need to prepare for the changing tides and find ways to optimize patient care. By building strategies around new regulations, emerging therapies and forging partnerships that can improve patient care, they are uniquely positioned to bring significant value for a rapidly growing patient pool.
Specialty pharmacy will continue to play a critical role in health systems’ financial and operational performance nationwide. As the specialty market continues to evolve, health systems are uniquely positioned to bring significant value for steadily growing patient numbers and expand and improve access to care and treatment. These treatments include providing high-touch care to new patient populations being treated with complex therapies and access to shifting partnership models with payers and PBMs that help to capitalize on savings. The future looks bright for the integrated specialty pharmacy model – for health systems, providers, and most importantly, for patients.