As the graying of America continues unabated, seniors now represent 14.5% of the US population—one in seven Americans. The oldest Baby Boomers are turning 70 this year, and according to US Census data, starting in 2011 and continuing until 2030, roughly 10,000 Baby Boomers celebrate their 65th birthday each day. With advanced age comes increased consumption of healthcare services, prescription medications and increased reliance on long-term care (LTC) facilities, including nursing homes, skilled nursing facilities and rehabilitation centers.

The old are getting older, too: By 2050, an estimated 27 million people will need long-term care services and support, up from 15 million in 2000, according to CDC statistics.

These facts have been cited for many years, but what is less noticed is how trends in gerontology are changing the LTC industry, and the pharmacy businesses serving it. Speaking at an investor meeting last spring, Gregory Weishar, CEO of PharMerica, said this “sleepy little business” is evolving as the concept of “age in place” grows widespread: seniors are staying in their own homes longer (increasing the need for home health services), or moving to assisted living facilities (a business growing faster than nursing homes) and a variety of senior communities that provide a higher level of healthcare than in the past.

PharMerica, the No. 2 institutional pharmacy company serving the LTC industry, is addressing these trends by expanding its home infusion service business, and developing a sideline in specialty pharmaceutical services, primarily for oncology products. The No. 1 company in LTC pharmacy, Omnicare, has undergone its own dramatic change, being acquired by CVS Health in 2015. A year later, that action by CVS is already benefitting its bottom line profitability.

Aside from these two market leaders, there are approximately 1,200 independent LTC pharmacies, which operate in much the same relationship to the market leaders as independent community pharmacies do to the chain drugstores. In particular, the bigger firms are consolidating the industry by acquiring the independents; PharMerica alone says it sets aside $100 million annually for this purpose.

Evidence of how contested this arena is becoming can be found in the formation, in 2014, of the Senior Care Pharmacy Coalition, a Washington, DC advocacy group sponsored in part by the major wholesalers who serve the independent LTC pharmacies. It advocates for many of the same issues as independent community pharmacies, such as PBM reimbursements, federal rules on compounding and conflicting CMS guidances.

QuintilesIMS, in its annual Use of Medicines report, pegs pharmaceutical sales to LTC at $16.7 billion in 2015, up only 3% from the year before and well off the overall industry growth of 12.2% (the figure does not include home health; it also represents ex-manufacturer pricing and not the discounting that occurs with most pharmaceutical sales). A major factor in revenue growth is the increasingly tighter reimbursement policies of CMS; besides Medicare itself (which pays for most elderly pharmaceutical dispensing), the Medicare Advantage plans that many insurers offer contain the same formulary lists and reimbursement tiers that put pressure on pharmaceutical revenues for all types of patients.

Per CMS data, there are more than 15,000 skilled nursing facilities (an SNF is a nursing home certified to accept Medicare payments); many are privately held (and around 70% are for-profit), but many are also run by charitable organizations or community health services. And while Argentum, a trade association of senior living communities, counts 7,000 assisted-living, independent-living and memory-care facilities among its membership, there are some 45,000 other senior living facilities in the US.

A senior, residing perhaps at an independent living facility, is likely to go to the local pharmacy or visit a local doctor, just as in younger days. But for most SNFs, some assisted-living facilities and an undetermined number of other living arrangements, the LTC pharmacies are the main source of medications.

LTC pharmacies play a more central role, generally speaking, than retail pharmacy does for general-population healthcare. Because many nursing home residents have limited cognitive skills combined with many comorbidities, there are extensive federal regulations and professional best practices on how their care is managed. Some LTC pharmacies provide the consultant pharmacists that are required to review a resident’s medication regimen monthly, which is designed to ensure that medications are being prescribed for medically valid reasons.

“Consultant pharmacists look at the resident’s overall medication profile to ensure elements such as appropriate indication for a medication, minimization of drug interactions, appropriate medication and lab monitoring, polypharmacy issues, and proper medication administration,” says Kimberly Binaso, PharmD, VP of clinical services at Managed Health Care Associates (MHA), a group purchasing organization for post-acute care facilities. “They also serve as an educator and advisor to the facility, typically serving on various committees and conducting quarterly in-house services on a chosen disease state or regulatory topic.” As such, consultant pharmacists have a key role to validate, challenge and modify the initial drug selections made by the attending physicians and other health practitioners.

The American Society of Consultant Pharmacists (ASCP; Alexandria, VA) counts 8,000 such pharmacists in its membership, including students.

Besides these third-party consultant pharmacists, there are others involved in selecting medicines for LTC residents. These include the prescribing physician or nurse practitioner (who specify the initial prescription), the nursing staff (who are in a position to recognize symptoms that may call for a given therapeutic treatment option to be prescribed), the medical director of the facility, and the pharmacy & therapeutic (P&T) committee members who are responsible for shaping the formularies that will be used by an LTC facility.

Influencing the influencers
Generics occupy roughly the same market share in LTC as in the general population—around 85%. But new therapies are having a profound impact.

“In recent years, the range of medications prescribed in nursing homes and other LTC facilities has been greatly expanded, to include more therapies that are used for the long-term management of chronic conditions such as cancer, HIV, end-stage cardiomyopathy, multiple sclerosis, inflammatory conditions, diabetes, hepatitis C, autoimmune diseases and others, many of which were unheard of in nursing home settings only a few years ago,” says Dr. Richard Stefanacci, DO, chief medical officer at The Access Group (Berkeley Heights, NJ).

While this represents market opportunity, makers of branded therapies know that gaining a foothold in highly regulated class of trade is particularly challenging, thanks to a confluence of complex factors that are at play in the LTC arena. To overcome the many barriers, manufacturers need to deliver strong messaging that underscores the clinical and long-term economic advantages of their branded product particularly with regard to generic competitors in the same therapeutic class. “You really have to sell the full value of your product over the entire episode of care,” says Frank Grosso, RPh, CEO, executive director, ASCP.

“If your brand-name drug is a me-too drug with little discernible benefit over generic, then you really don’t have a sustainable market in LTC—because managing drug costs is the predominant factor when there is no discernible reason to justify keeping patients on the branded therapy,” says Grosso. “Drug companies must demonstrate longitudinal value over the entire episode of care for a brand—that’s a very different way of marketing for pharma companies but creates huge opportunity.”

“Today, roughly 57% of those in LTC settings are Medicare, Medicaid and so-called ‘dual eligible’ patients (those who are covered by both Medicaid and Medicare), while 29% are covered by private insurance, and the remainder are private-pay patients,” says Grosso. He notes that the 57% who have Medicaid or Medicare or are dual eligible don’t have access to all of the 746 Medicare Part D plans that are in existence today. “Rather, they typically only have access to the 231 so-called ‘benchmark plans’ (a subset of the total available Part D plans on the market today),” says Grosso. “The benchmark plans are lower-cost plans with more restrictions in terms of formulary designations and prior authorization restrictions, and in the post-acute setting, the pressure is on for physicians to only prescribe through those 231 benchmark plans to avoid out-of-pocket costs for low-income beneficiaries and skilled nursing centers.”

“It’s not an insurmountable task for brand teams, but it requires targeted effort to get the product on as many of the 746 traditional Part D plans, and the 231 lower-cost benchmark plans, as well,” he adds.

John Doyle, DrPH, MPH, SVP at QuintilesIMS, notes that analyzing the continuum of care for LTC residents is essential to marketing success. “Nowhere is the mantra to make sure the ‘right patient gets the right drug at the right time’ more important than in the LTC setting. It’s extremely important that drugs fit well into the prevailing disease-management protocols and pathways and the individual patient’s overall care plan.” “They should be modeling their products using market research, interviews, electronic medical records and physical chart reviews in concert with the LTC to take stock of what care and risk really looks like today in the LTC setting, and they should be tracking outcomes and correlated cost data,” he adds. “The goal is to simulate ‘what the situation looks like with my product on your formulary.’” He notes that this approach is already being used in some health technology assessments integrated delivery networks (Kaiser Permanente and others) so drug companies “don’t need to reinvent the wheel—they just need to align their approach with the specific challenges and opportunities in the LTC setting.”

Because there are so many HCPs with prescribing authority, including geriatricians, nurse practitioners and physician assistants who also have prescribing authority, pharma companies do well to pay closer attention to all of them. “Pharmaceutical companies are increasingly deploying a dedicated LTC sales force to provide this information directly to LTC health care practitioners and pharmacies,” says Binaso of MHA.

Published by Pharmaceutical Commerce, November 7, 2016