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With specialty Rx focus, diplomat sees competitive advantage.

FLINT, Mich. -- Diplomat Pharmacy believes its image of independence bodes well for its future.

"We're an independent specialty pharmacy--we're independent of outside pressures from chain pharmacies, wholesalers or pharmacy benefits managers ownership," said chairman and chief executive officer Phil Hagerman in an interview last summer. "We believe that independence, that chance to be solely focused on specialty, is a competitive advantage."

He noted that the company leveraged its 2014 initial public offering as a rebranding opportunity, adding that Diplomat had acted as "a quiet, behind-the-scenes" company. The decision to go public was made in part as a chance for the company "to step out into the spotlight."

Hagerman said demand for services for limited-distribution drugs has driven Diplomat's business and holds potential for traditional pharmacy retailers. "If they can find a solution for the limited-distribution drugs that they can't get and they make sure the doctor is satisfied with that solution, that opens a door for them to dispense all the other drags that the doctor is looking for at specialty," he said.

Hagerman noted that retailers are recognizing the need to find access to limited-distribution drags to make sure they maintain their status with doctors.

Diplomat senior vice president of operations Bob Fleckenstein said the lines between specialty and retail pharmacy practice will blur. "We are already seeing this with the release into general distribution of the new blockbuster HCV [hepatitis C] drags," he said. "Access to these drags represents tremendous opportunity to the retail pharmacist, but with the additional revenue comes the need to provide additional services, including services to remove financial barriers and the clinical wraparound services to ensure that payors' monies are well spent.

"Additionally, there must be the ability to report on all such activities and present the value proposition to both payors and manufacturers."

Diplomat has made significant investments in its technology, infrastructure and service fines to build a scalable foundation for growth and enhance key operating metrics. "We believe our investments in technology, both completed and in-process, will enhance our data collection and delivery capabilities and services valued by our health care partners in order to exceed the needs of our patients," Fleckenstein said. "Diplomat continuously evaluates new technology solutions to help drive better patient care or improve the patient experience. Once the evaluation is completed, we implement innovations that give us the most return for our investment."

Hagerman was optimistic about the likelihood for health plan coverage through pharmacy benefits versus medical benefits. But he noted that there will still be an important role for specialty pharmacies to perform on the medical benefits side. "We have to be willing to bill on the medical benefits side, despite the challenges," he asserted. "There are sometimes barriers on the medical side that don't exist on the pharmacy side."

Diplomat president Gary Kadlec noted that specialty pharmacy requires a higher level of expertise and an extra touch. "The patients themselves can be apprehensive," he said. "The physicians are busy. The medications have a lot of different side effects and protocols that you have to watch for. The complexity of the specialty pharmacy area is a step higher than what we normally see."

In January, the company announced the results from its 2015 patient survey. Every year, Diplomat engages an independent third-party agency to evaluate the levels of satisfaction, study the customers' experiences and track its service delivery performance over time.

For 2015, Diplomat received a satisfaction rating of over 98% from patients in all four survey categories: overall satisfaction (99%), telephone courtesy (99%), helpfulness of pharmacists (98%) and helpfulness of patient care staff (99%).

The survey also found that 95% of patients would recommend Diplomat to their family, friends and coworkers. Providing back-end services to retailers that fill specialty prescriptions for patients is a key function at Diplomat Pharmacy. The work entails access issues such as prior authorizations as well as appeals and efforts with health care foundations to overcome financial barriers for patients.



4100 S. Saginaw St.

Flint, Mich. 48507

Key pharmacy executive: Phil Hagerman, Chairman, CEO

Phone: (888) 977-9118


* TRADE CLASS--Specialty pharmacy

* PHARMACY RANK--10 in sales, 86 in pharmacies

** Full-year results

Pharmacy sales--$3.37 billion (+51.8%)

Overall sales--$3.37 billion

** Number of pharmacies--20 (3 specialty/retail pharmacies, 17 specialty pharmacies)

** Number of states operating--12 *

* Diplomat is licensed and has the ability to ship medications to all 50 states.
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Publication:Chain Drug Review
Date:Jul 25, 2016
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