Dignity gets into specialty pharmacy business

Drugs from Dignity

Dignity Health, a not-for-profit health system, has entered into a joint venture with Shields Health Solutions, a company that helps hospitals set up specialty pharmacies, to get into the specialty pharmacy market. The company will distribute medications for more than 20 complex diseases, and it is going to expand services to its broader national network of CommonSpirit Health, reported Steven Ross Johnson of Modern Healthcare.

According to Peggy Sanborn, VP of strategic growth, M&A, and partnership integration at Dignity Health, “As we look to the future of how healthcare is delivered across the U.S., it is clear that the continuum of care must extend beyond the doctor/patient relationship when treating complex disease states.”

Sanborn related that Dignity began its specialty pharmacy program at the end of last year in the Phoenix market and has since expanded into Sacramento, California. The provider will enter six more of its service markets during the next few months. Sanborn added that the specialty pharmacy located at Dignity Health's St. Joseph's Hospital and Medical Center in Phoenix is going to serve as the central hub for the drug program and will service all Dignity Health locations.

"We're really looking at overall patient demand and opportunities to provide services that may be challenging to acquire in a particular geography and where really there's an unmet need that we are going to be able to come in and address," Sanborn explained.

Eventually, the health system intends to grow the program across CommonSpirit's network. That organization was created when Dignity and Catholic Health Initiatives merged in February, making it the second the largest not-for-profit health system with 142 facilities and more than 700 care sites across 21 states.

At this time Dignity does not have plans to expand the scope of the pharmacy to dispense non-specialty drugs. The organization said that it is focusing on expensive, specialty drugs partly because orders can take several weeks to get to patients. An analysis by the Congressional Budget Office discovered that in 2015 brand-name specialty drugs accounted for 30 percent of total net spending on prescription drugs in Medicare and Medicaid while accounting for only 1 percent of all prescriptions filled in each program.

The specialty pharmacies used to be the sole domain of health insurance companies and pharmacy benefit managers, but hospitals have begun to create their own specialty pharmacies to lower the cost of such drugs. The American Society of Health-System Pharmacists conducted a 2016 national survey of pharmacy practices in hospital settings; it revealed that 9 percent of 1,100 hospitals said they had a specialty pharmacy, but they were more common among large hospitals. About 47 percent of hospitals with 600 or more staffed beds had a specialty pharmacy.

According to Matt Conway, executive vice president of client operations at Shields, hospitals are much more interested in specialty pharmacies over the past three years as therapies have become costlier and more complex. He expected that more hospitals will look into forming their own specialty pharmacies. As he explained, "It's a topic that's become top of mind for pretty much every hospital."

Other surveys have shown that the use of specialty drugs is increasing by approximately 17 percent per year and makes up 50 percent of total spending on prescription drugs. Since 1990, the number of specialty drugs available has increased from 10 to 300, with another 700 in the pipeline.