Managing Specialty Rx from a Contract Perspective

Best practices for managing specialty medication costs from a contract perspective fall into three main buckets: defining specialty and limited distribution medications, securing pricing discount guarantees, and aligning drug rebates.

What is a specialty medication? Make sure you always understand the definition of a specialty medication and get a specialty drug list from the pharmacy benefit provider for that particular contract you are reviewing. Knowing the specialty list is absolutely imperative because once you know it, you will know what the limited distribution list is.

A limited distribution list is medications that are created by a manufacturer that have an exclusive arrangement with one particular specialty pharmacy to be dispensed. There are a lot of limited distribution drugs, including most of the new, novel therapies. It’s really important that you know which drugs are defined as specialty and which drugs are defined as limited distribution, and then make sure your clients’ contract includes drug pricing discounts for those drugs under an overall specialty guarantee. You may see a schedule or target specialty discount guarantee, but specialty now accounts for more than 40% of pharmacy plan spending and so it’s important to make sure you have hard guarantees around that spend.

The pharmacy benefits contract might include different guarantees for limited distribution vs specialty medications, but you want to make sure that you have those guarantees in place and the associated rebates that apply to those specialty medications. You’ll want to check whether those rebates apply to medications filled through mail order and retail, or just retail, and whether they apply to limited distribution medications.

Managing the high-costs of specialty medications in your self-funded clients’ pharmacy benefits contracts requires a comprehensive approach that includes in-depth contract and clinical oversight. To learn more about proven contract and clinical management strategies your clients can implement to manage specialty medications in pharmacy benefit plans, check out our Definitive Guide to Managing Pharmacy Benefits.

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