Specialty Pharmacy

Serono, Priority Alliance May Be Sign of Things to Come Within SP Fertility Sector

Reprinted from the August 2005 issue of SPECIALTY PHARMACY NEWS, a monthly newsletter designed to help health plans, PBMs, providers and employers manage costs more aggressively and deliver biotechs and injectables more effectively.

The fertility space is drawing a lot of specialty pharmacy attention right now, with a couple of arrangements recently announced and even more rumored to be on the way.

A recent strategic alliance between manufacturer Serono, Inc. and specialty pharmacy Priority Healthcare Corp. is reverberating throughout the industry, which had $6.5 billion in total national drug expenditures last year. Under the arrangement, Priority's Freedom Drug, a fertility pharmacy, becomes the preferred specialty pharmacy for Serono fertility products in the United States. The companies will also collaborate on the development and promotion of new fertility-awareness and patient-education programs that will be offered through Serono's Fertility LifeLines.

"We both have unique qualities as far as experience goes," contends Kim Rondeau, president of Freedom Drug and executive vice president of pharmacy sales and marketing with Priority. "This is an unprecedented offering."

"In the end, we want to create long-term value in [the fertility] market," says Bharat Tewarie, M.D., executive vice president of reproductive health at Serono. "In addition to bringing the best products and doctors, the next step is to provide patients with the best partners and services. By combining our knowledge and relationships, we will satisfy the needs of our customers better."

Financial terms of the arrangement were not disclosed.

Deal May Prompt Similar Alliances

The Priority/Serono arrangement "came out of left field, in my opinion," comments an executive, who asked not to be identified, at another specialty pharmacy. "It is pretty ingenious, though," he contends. He adds that, to him at least, the deal has "kind of screwed up the marketplace. Most health plans have Serono or Organon, but if you have Organon products and Priority as your specialty pharmacy provider, what do you do? They've taken the competitors out, which is good for Priority. This potentially can really cause some problems from the perspective of aligning everyone's incentives."

Jeff Casberg, director of pharmacy with Connecti-Care, echoes the concerns. "I'm not so much in favor of this type of arrangement," he says. "When companies do this, it doesn't give health plans as many options."

But, he asserts, "If [the relationship] can provide better pricing, this might be a selling point." This apparently is exactly what Serono and Priority plan to do. "We will provide more services to the managed care networks," says Rondeau, "while reducing the overall cost through utilization management." Kaylen Silverberg, M.D., medical director of the Texas Fertility Center, elaborates on the specifics: "They are dropping their prices 30% to 35%. We've never seen this decrease in price before." He also cites the enhanced level of service and "one-stop shopping" as additional benefits. "This is a totally different way of doing business. A lot of outside-the-box thinking went into this….There is no trick to dropping the price, but the question is how to provide enhanced value to these entities."

The alliance reportedly has led to scrambling among specialty pharmacies to similarly align themselves with manufacturers. Talk of alliances involving more than one specialty pharmacy and another big fertility drug manufacturer, Organon, has also been heard. When asked if the company could confirm one such report, Ans van Heeswijk, Organon's manager of company communications, replied, "Organon is supporting all of the members within the fertility community and will continue with this support in the future. We are not seeking any specific alliances in the distribution channels, but will support all appropriate customers including Schraft's and ivpcare and others." Still, more than one industry insider expects an arrangement involving Organon to be announced as early as this month.

In other fertility services-related news, specialty pharmacy ivpcare and fertility technologies provider Extend Fertility announced that they have formed an exclusive partnership designed to offer specialty pharmacy services and enhanced customer support to Extend Fertility clients.

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