Opinion: Big Storm Brewing for American Specialty Pharmacies and Patients

Specialty pharmacies dispense some of the most expensive, sensitive, and life-saving medications to patients, the kinds of medications that can cost more than $100,000 a year. Unfortunately, the way these prescriptions are being filled today is often chaotic and ripe for fraud, is different in each state, and potentially is about to get even worse for patients. 

Before we get into the details of this brewing crisis around the dispensing process, let’s take a quick look at the sector. There were 729 accredited specialty pharmacy locations in 2017, a number that doubled from 2015 according to Drug Channels research. These pharmacies account for 40% of the $450 billion annual pharmaceutical market, with a rapidly increasing share of the 4.25 billion retail prescriptions in the United States each year.  

“Of the $181 billion in 2016 sales of specialty drugs, $45 billion in sales was in the oncology market, the largest single therapeutic category. Medications for autoimmune issues came in second at $37 billion,” according to a 2018 article in Drug Topics. 

Specialty pharmacies are a major part of the American medication experience for many patients, including those navigating cancer, blood disorders, liver disease, and infertility. When new prescriptions come in to these pharmacies, they go through what is often a very slow prescriber credential verification process that can involve manually calling or looking up licenses for the prescribing physicians on various board websites. When refills arrive, the pharmacies usually don’t verify prescriber licenses at all. The prescriber’s license could have expired, or the physician moved to a new state, had their license revoked, retired, or passed away. 

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This means that patients are sometimes getting drugs from unlicensed prescribers or are being kept waiting for medications because of slow manual verification. It’s a process that lets through a lot of fraud and abuse. It’s also a process with regulations that vary significantly from state to state. In our research, eight states have ruled that all refills are void when the prescriber’s license becomes inactive; another 20 states limit the number of refills allowed after license inactivity. The National Association of Specialty Pharmacies reports that only three states have these policies.

This is a serious issue already for patients and for anyone concerned about medication fraud and abuse. Now, the problem is potentially getting much bigger. 

The Centers for Medicare and Medicaid Services (CMS) has been accelerating what is called “clawbacks.” It is requiring medical organizations to return payments they made for earlier services tied to expired or fake provider credentials, most recently with Medicare finding $26 million in erroneous payments. This kind of attention to fraud and errors is healthy because we all need to focus on making healthcare more affordable, safe, and fair. 

However, it means that specialty pharmacies will likely be facing big bills from CMS for when they have dispensed medications to patients without properly confirming the prescriber credentials. We know the rate of those mistakes is high - we’ve seen it as high as 40% on some rosters - and that specialty pharmacies don’t have the technology and credential verification processes in place to do the verifying that would protect them from these cases. 

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What can be done? How do we update the predispense verification process for specialty pharmacies so that patients get their medications quickly and accurately while also combating medication fraud and helping specialty pharmacies avoid huge financial penalties?

It’s time for specialty pharmacies to take action. Pharmacies aren’t ready for increased oversight, providers can’t help because their credentialing process is hard enough already, and patients are often left dangerously stuck in the middle. It’s an easy problem to fix with predispense verification technology ready to be implemented. It’s a problem we should all want to fix for a medical system that fights abuse and protects patients.

John Bou is COO and Co-Founder of Modio Health.