Finsights Blog

Who is Responsible? The Evolving Manufacturer SPP Relationship: Part 2

When it comes time to evaluate the quarterly performance of your specialty pharmacies (SPPs) who is going to that meeting and what is their role?

Are the specialty pharmacies presenting their analysis of their data and telling the manufacturer how well they did? If they haven’t achieved the performance targets set out in the agreements, who has the responsibility to hold their feet to the fire?  Many of our manufacturer clients have been struggling with finding the right functional area to do this.

Most manufacturers with a large commercial portfolio of branded pharmaceuticals, have a managed markets function with account managers that call on payer or PBM accounts (such as Express Scripts or Humana) and their associated Specialty Pharmacy Providers (such as CuraScript or RightSource).  These account managers are usually rewarded for formulary wins and are not held accountable for SPP performance.  Consequently, they’re not motivated to hold the SPPs accountable for their performance against the distribution and services agreements.

Manufacturers with a significant proportion of products dispensed in retail pharmacies may have an Account Management team that calls on both retail and specialty pharmacies.  These folks typically are focused on business development with these accounts and also would prefer not to play the role of “bad cop”.

The group managing the manufacturers’ patient services hubs may well be affected by the SPP performance (particularly when it comes to Time to Fill and Fill Rate performance metrics), but at the same time (especially with a voluntary hub) aren’t wanting to negatively impact the relationship with the SPPs they have to work with on a daily basis.

Which leads us back to trade.  Trade is used to playing bad cop.   Distribution agreements managed by trade have evolved from simple Wholesale Distribution Agreements, to Inventory Management Agreements to the “Fee-for-Service” agreements (covered by a whole range of acronyms, but usually incorporating performance metrics with combinations of incentives and deductions).  Recently it has made sense to also give Trade the responsibility for managing Specialty Distributor agreements.

However, with SPPs, the lines get a little blurry.  As they’re dispensing not distributing, enforcing their agreements has not been trade’s role.  As some SPPs (such as CuraScript) can also function as Specialty Distributors and even 3PLs (Third Party Logistics providers) it may mean that the distribution piece is managed in trade but there is a desire to keep the dispensing relationship elsewhere.  Experience has shown most of us the challenges of shared accountability.

Yet, if these agreements must evolve so that SPPs are held accountable for performance (as proposed in Part 1),  then perhaps the Trade function really is best suited to enforcing SPP agreements.  Who do you think should be responsible for enforcing SPP contractual performance?  Should that be the same person who is responsible for SPP account management?

The answer may vary based on the alignment of the SPP.  For a Payer or PBM aligned SPP, Managed Markets will want to retain an account manager for the Payer or PBM side, so the critical question is should there be a separate account manager role for the SPP or a separate role to enforce contract performance?  For independent SPPs, it would be logical that the contract enforcer should be the same person as the overall account manager.   For the retailer-aligned SPPs, and emerging SPPs of Integrated Delivery Networks (such as Henry Ford or Mayo Clinic) there may be a case for separate account and contract-enforcing roles given the scope of their business. For the wholesaler-aligned SPPs, given trade is generally already managing those wholesale relationships adding SPP account management and contract enforcement seems a straightforward decision.

 

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