More Complex Specialty Drug Management, Pandemic Pressures and Inflation Reduction Act Were Some 2022 Trends

· 10 min read

Both the specialty pharmacy market and the home infusion space continued to grow in 2022. Congress finally passed legislation that will allow Medicare to negotiate drug prices with manufacturers for the first time, and many of the impacted agents are expected to be specialty medications. As payers grappled with their drug costs, some implemented new utilization management strategies. And the COVID-19 pandemic, now approaching its fourth year, remained a disruptor in both the specialty pharmacy and home infusion markets. AIS Health, a division of MMIT, spoke with various industry experts on multiple 2022 issues impacting those industries.

AIS Health: Looking back over the past year, what do you think were the most noteworthy occurrences within the specialty pharmacy industry, and why?

Andy Szczotka, Pharm.D., chief pharmacy officer at AscellaHealth: Some of the most noteworthy occurrences in specialty pharmacy in 2022 include the continued increased spending on specialty drugs, the increased emphasis on use of specialty pharmacy patient care management services and the increase in number of new FDA approved specialty drug therapies.

IQVIA estimates that over 55% of all drug spending in 2022 is on specialty drugs and has continued to increase year over year. The continued increase in specialty spending is due to multiple factors, including, but not limited to, access to new, approved therapies for diseases that have not had prior therapeutic options, expansion of therapeutic options within disease states, increased utilization and access to specialty drugs, and the availability of clinical safety and efficacy data that supports the continued or expanded use of these agents as compared to prior therapies.

With the increased emphasis on specialty drug spending and focus on appropriate drug use and value determination for these high-cost agents, there is an increased demand on the patient care management programs to enhance the patient journey and outcomes while on these therapies. Patient-first, specialty-focused care teams, which typically include care coordinators, pharmacists and/or nurses, are all focused on the specific disease state or therapeutic area. They deliver customized care coordination that focuses on the patient process, improving adherence and compliance to therapy, and monitor care and ensure communication among the physician, patient and patient care support teams to enhance health outcomes.

To date, in 2022, the FDA has approved 30 novel drug therapies, six new biosimilar agents and additional gene and cell therapies, including recent approvals of Hemgenix [(etranacogene dezaparvovec-drlb) from CSL Behring LLC], Skysona [(elivaldogene autotemcel) from bluebird bio, Inc.] and Zynteglo [(betibeglogene autotemcel), also from bluebird]. These approvals across the various drug classes represent new therapeutic options for clinicians to use in treatment of the related medical conditions. Most of these therapies are specialty drug products or available through specialty pharmacies and require more customized care management, product distribution and treatment monitoring.

Mesfin Tegenu, CEO and chairman of RxParadigm, Inc.: The growing landscape of biosimilars has been notable. Seven biosimilars were approved in 2022, and multiple biosimilars for [AbbVie Inc.’s] Humira [(adalimumab)] will be entering the market in 2023. The increase in biosimilars entering the market can expand patient access to biologics by increasing treatment options while reducing costs to both the patient and the health care system.

Drew Walk, CEO of Soleo Health: There’s been a significant increase in DIR [i.e., direct and indirect remuneration] fees affecting all pharmacies, including independent specialty pharmacies. In 2019, pharmacy DIR fees hit a record $9 billion, which is an excessive 18% of total Medicare part D rebates.

While CMS will eliminate retroactive DIR fees effective Jan. 1, 2024, more work still needs to be done. The largest impact on our industry is negative reimbursements (PBMs reimbursing pharmacies less than the cost to acquire drug) and patient steering to PBM-affiliated pharmacies.

Escalating costs and pricing pressures — providers are being paid less for reimbursement from private and government payers while product and labor costs continue to outpace reimbursement pressure. Increased industry consolidation and greater industry influence by vertically integrated payers with their own specialty pharmacies are negatively impacting independent specialty pharmacies, causing many independents to exit the market.

Winston Wong, Pharm.D., president of W-Squared Group: 2022 has been an intensive year for the specialty pharmacy industry. The intense activity has been driven by the increasingly complicated and competitive landscape of the immunology class, creating the opportunity for greater competition and price negotiations, as well as the increased focus on novel medications to treat rare and orphan diseases. While the latter does not represent a true contract negotiation opportunity, they do require active management, with these medications being relatively expensive and narrow in their indication.

AIS Health: What do you think were the most noteworthy occurrences within the home infusion industry, and why?

Penny Allen, R.D., CNSC, FASPEN, FNHIA, vice president of nutrition services at Optum Infusion Pharmacy, a division of UnitedHealthcare’s Optum Rx, Inc.: In 2022, stakeholders from across the home infusion care continuum, including the National Home Infusion Association, urged congressional leaders to advance the Preserving Patient Access to Home Infusion Act and increase access to home infusion therapy for Medicare beneficiaries. Ultimately, this was not addressed by Congress in 2022 but remains critical, as Medicare is the only payer without an overall home infusion benefit for Medicare beneficiaries.

Under Medicare Part B, there is coverage for infusion pumps as durable medical equipment under the durable medical equipment and prosthetics/orthotics and supplies benefit. This also covers some drugs and supplies needed for use with the infusion pump, but policy changes have reduced the rate of reimbursement, therefore reducing utilization. However, a 2020 National Home Infusion Foundation report shows overall industry growth exceeded 300% in the past decade.

Without increased access to home infusion, alternatives for Medicare patients are to stay in the hospital, transfer to a skilled nursing or long-term care facility, or forgo medically necessary therapies since many, such as home IV antibiotic therapy or fluid/hydration therapy, are not covered by Medicare. These alternatives result in higher costs for the health care system, as hospital stays and care facilities are higher in cost, and not taking necessary medications can cause further health complications. Looking ahead to 2023, we are hopeful this bill will be reintroduced.

Szczotka: There have been several noteworthy occurrences affecting the home infusion industry. However, there are two factors that play a significant role in the growth seen in the home infusion industry: cost effectiveness and rising preference for home health care.

As compared to hospital treatment, home infusion therapy is cost-effective for a number of reasons including elimination of hospital stays that ultimately saves both the payer and the patient by decreasing hospital utilization, hospital resources and subsequent costs. Additionally, we are also seeing an increase in site-of-care restrictions being implemented as a methodology to lower cost of care. These restrictions require the drug to be administered at a lower cost site of care, such as the home or free-standing infusion centers, limiting the number of infusions that are authorized in the hospital or hospital outpatient infusion center.

Increase in patients’ preference for home therapy is also driving the growth of the home infusion industry. The COVID-19 pandemic brought to light the opportunity and the advantages of home-based care to the patient and the health care community. As a result, patients have become more aware of their options and are reaching out and advocating to receive care at home. Another aspect to consider regarding patient preference is that home infusion also supports the convenience of daily life activities.

Tegenu: Despite the Medicare Part B home infusion therapy (HIT) services benefit that went into effect in 2021, a report released by CMS earlier this year showed that utilization of the benefit has declined since. The new benefit was intended to improve patient access to home infusion services, but the CMS report reveals that access still remains challenging. The decline in the HIT services utilization might be in part due to restrictions in the policy (e.g., the drug must require infusion through an external infusion pump, a professional service (i.e., nursing service) must be physically present in the beneficiary’s home). Passage of the Preserving Patient Access to Home Infusion Act would help Medicare patients have comprehensive access to home infusion services.

Walk: Industry consolidation — there’s been a great deal of consolidation activity, particularly surrounding the merging of providers. Additionally,…leading national companies have been exiting the home infusion business altogether or even leaving select segments within the home infusion marketplace, e.g., shutting down or consolidating service in several regions.

Product shortages — fallout from COVID-19 is still disrupting the supply chain, and its effects on the pharmacy arena are no exception. This is causing providers to quickly pivot to interchangeable medications to keep providing quality patient care.

Wong: The home infusion market is continuing to grow, primarily due to the continued COVID pandemic. Even though it appears that we are past the height of the pandemic, there is still the perception of the need to maintain precautions to minimize the spread of the infection. In addition, there is an increasing interest of shifting the treatment of chronic therapies for cancer, infections, diabetes, etc., as well as a patient preference, to the home, as opposed to a physician office, infusion center or ambulatory clinic.

AIS Health: Could you please comment on the significance of the passage of the Inflation Reduction Act (IRA) and how it could impact specialty drugs?

Szczotka: The IRA includes several provisions that will impact prescription drug benefits and with a goal to reduce drug spending by the federal government for their sponsored programs. Key elements of the IRA will likely impact the prescription drug benefit, including specialty drugs.

The IRA requires drug manufacturers to pay a rebate to the federal government if prices for single-source drugs and biologicals covered under Medicare Part B and nearly all covered drugs under Part D increase faster than an indexed rate of inflation. If price increases are higher than inflation, manufacturers will be required to pay the difference in the form of a rebate to Medicare. Drug manufacturers may respond to the inflation rebates by increasing launch prices for drugs that come to market in the future. Payers may be able to negotiate rebates and/or price protection as part of providing access to these new therapies, but leverage may be limited when there are no therapeutic alternatives available or when drugs are covered under a Part D “protected class.” This may increase the cost of these newly approved therapies.

The IRA amends the design of the Part D benefit. For 2024, the law eliminates the 5% beneficiary coinsurance requirement above the catastrophic coverage threshold, effectively capping out-of-pocket costs at approximately $3,250 that year. Beginning in 2025, the legislation adds a hard cap on out-of-pocket spending of $2,000 and to be indexed in future years. Capping out-of-pocket drug spending under Medicare Part D will be especially helpful for patients who take high-priced therapies, such as specialty drugs. This may improve the affordability of specialty therapies for these patients in the future.

The IRA also provides the federal government the ability to directly negotiate pricing for certain drugs with the highest total spending, including specialty drugs, beginning in 2026. While there will be no immediate impact on specialty drugs, this will be a consideration as the federal government develops their pricing negotiations for these high impact drugs, which also include specialty drug agents.

The impact of these provisions is that it will provide an additional avenue to enhance the accessibility and affordability of specialty medications to patients.

Tegenu: The passage of the Inflation Reduction Act will be critical in changing the landscape of health care. Between the changes in the coinsurance for catastrophic coverage and adding a cap on out-of-pocket spending, these will be a couple of key components implemented to help decrease prescription drug costs for Medicare members and reduce the drug spending by the government. By the end of 2029, the federal government will negotiate prices for a number of high-cost drugs. These changes will impact Medicare beneficiaries with potential ramifications on how drug discounts for commercial plans may be negotiated.

Walk: More questions than answers remain open on implementing the IRA’s Medicare price negotiation provisions and its overall impact on the specialty drug industry.

Soleo Health believes — in the short term — the IRA’s impact should be minimal since:

  • Legislation will have a phased implementation approach with a time frame spanning 2026 through 2029.
  • Current largest drug spend within Medicare B and D indicates the majority of drugs targeted are nearing the end of their patent life cycles, thereby making way for generic versions to enter the marketplace and opening new doors.
  • While the focus is drug pricing reform, it is difficult to predict the impact of the unintended consequences on providers with this newly proposed legislation.

Wong: The impact of the Inflation Reduction Act upon specialty drugs is mostly conjecture at this point. However, what we do know is that the act will allow Medicare to start negotiating costs for some of the more expensive specialty drugs. While technically not a specialty drug, the act places a monthly cap of $35 on insulin, as well as imposes soft restrictions on increasing drug prices faster than the rate of inflation. Probably the largest impact is the lowering of the out-of-pocket limits for Part D patients to $2,000, thus shifting a greater financial liability back to the plan sponsor. The biggest question in my mind is if there will really be an inflation reduction impact since what is being proposed is simply taking the same dollars and shifting away from the patient and towards the payer, which in turn will potentially result in a higher cost somewhere else, e.g. premiums.

AIS Health: How has the COVID-19 pandemic impacted the specialty pharmacy and home infusion industries?

Nancy Kramer, B.S.N., R.N., CRNI, FNHIA, vice president of clinical services at Optum Infusion Pharmacy: The impact of COVID-19 on specialty and home infusion has evolved over the course of the pandemic. In the early days, locked-down patients had few options for outpatient/facility-based treatments, and the demand for home-based care peaked. As outpatient facilities reopened, many patients who experienced care in their home for the first time during the pandemic opted to remain in that setting, citing convenience, comfort and safety as the key drivers of their decision.

Throughout the pandemic, providers and clinicians experienced several phases of shortages. The first phase was the shortage of personal protective equipment (PPE), alcohol-based hand sanitizer and sanitizing wipes. As the shortage of PPE and disinfectant supplies eased, critical drugs (ranging from high-cost biologics to the heparin and saline essential for maintaining vascular access device patency) also experienced a shortage. Then, supply items necessary for infusion therapy (lab tubes, syringes and tubing sets) quickly followed. The first and second years of the pandemic were marked by identifying creative alternatives for PPE and a constant search for costly alternatives to the drugs and supplies patients needed to remain on therapy.

Through it all, providers navigated clinician shortages as some sought better pay available in acute sites of care, while others exited the profession due to burnout and fatigue. Increased salaries associated with recruiting qualified applicants have persisted, and the appeal of home-based care has eased staffing shortages as acute care settings have shifted closer to pre-pandemic levels of operation.

While intermittent shortages persist, specialty and home infusion providers are optimistic entering 2023, stronger for our experiences and more confident in our ability to navigate whatever the future may hold to ensure patients have a choice about where and how they will receive their care.

Szczotka: During the COVID-19 pandemic, society was cautious about being exposed and potentially contracting the virus. As a public health countermeasure, restrictions were implemented for public health safety, which ultimately changed the landscape of how the patient would gain access to health care. Over the course of the pandemic, there was a positive impact on the home infusion industry due to health care provider efforts to provide optimal patient treatment at the home and minimize potential exposure to the virus. These impacts were seen early during the pandemic, but it has become increasingly apparent that the pandemic’s effects are long-lasting.

Specialty pharmacies were uniquely positioned to provide pharmaceutical care during the pandemic since their patients received medications via mail already. However, much like other industries, the specialty pharmacy industry had to evolve as well. For specialty pharmacies, the pandemic impacted the industry’s digital capabilities and home infusion service offerings. Many specialty pharmacies had to find new and innovative ways to communicate with patients. As a result, there was increase in the utilization of digital platforms, such as text messaging and online messaging tools. The home infusion service offerings provided by specialty pharmacies provided a convenient alternative for patients obtaining medications administered by providers that could be administered at the home.

Tegenu: The COVID-19 pandemic led to many challenges in health care, and many industries had to adapt and accommodate the challenges. Home infusion services and specialty pharmacy became increasingly important due to reduced exposure of risk in inpatient settings and convenience. The demand for home infusion services and specialty drugs will continue to grow due to the aging population and increased prevalence of chronic conditions.

Walk: The pandemic challenged the entire health care system, causing health care services companies to quickly review and evaluate their operating models. This forced pharmacy entities and HIT to swiftly adapt by incorporating technology into their offerings to provide virtual interactions whenever possible, without service interruptions.

It also involved ensuring the safety of patients and clinicians. This included protection for clinicians when providing in-person care, which prompted the implementation of many new safety measures during COVID-19.

AIS Health: Were there any specialty drug benefit design trends that emerged in 2022?

Szczotka: Some emerging and continuing benefit design trends are being seen with specialty drugs. While specialty drugs may be costly, they also can provide life-changing options to physicians and patients. Balancing these is being reflected in some of the trends to ensure patient outcomes with continued access and affordability.

Some core specialty benefit trends continuing to expand include having more than a single benefit tier for specialty drugs. More benefits are including both a preferred specialty and nonpreferred specialty tier, similar to the more traditional preferred brand and non-preferred brand tiers for non-specialty drug products. This is creating more five- or six-tier prescription drug benefit designs for plan sponsors.

Additionally, the use of traditional pharmacy benefit tools for utilization management and adherence monitoring continues to expand to specialty agents, including prior authorization, step therapy and quantity limits. These provide mechanisms to ensure that the appropriate drug therapy is being utilized for each patient.

An emerging trend is the carving out of specialty drugs from traditional medical and pharmacy benefit models into a combined specialty carve-out. This allows opportunities to integrate the different benefits to a seamless patient care model, [a] single point of contact, [to] reduce costs, ensure appropriate use of specialty drugs, encourage biosimilar options and enhance the patient experience and improve health outcomes.

Additional trends include the integration of biosimilar products into the specialty benefit offerings and the use of different financial models to help patients with specialty drug affordability and payers with the high burden of large one-time drug costs (i.e., gene therapies).

Tegenu: There weren’t any specific drug benefit design trends that emerged in 2022, but with the increase of very high-cost specialty drugs and cell/gene therapies entering the market, there’s been more focused utilization management to improve medication adherence and optimize outcomes.

Walk: The increasing trend of PBM use of copay accumulators adversely affects patient out-of-pocket spending. This diminishes patients’ ability to afford costly specialty medications.

Wong: Overall, we are continuing to see more complicated benefit designs. Some of the complications are required, e.g., preventive drugs, while others are driven by contract negotiations and management needs. We are seeing more preferred specialty/nonpreferred specialty tiers, resulting in six to eight tier benefits. Manufacturers are continuing to discuss indication-based contracting; however, that has not yet gained much traction from what I can see.

AIS Health: Is there anything I’ve neglected to ask about that you’d like to add?

Wong: The approval trends of the past few years makes me glad to not be sitting at the health plan trying to figure out how to control my costs. I can sleep at night and start a new project the next day.

Contact Allen and Kramer via Jennifer Statham at, Szczotka through Caroline Chambers at, Tegenu at, Walk via Susan Turkell at and Wong at

By Angela Maas

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