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Contributor: Optimizing Specialty Contracting to Control Costs and Improve Patient Outcomes


To control the costs of managing a complex patient population, the market is turning to value-based contracting to drive positive outcomes.

From 2017 to 2018, the use of specialty medicines among patients grew by 5%, more than twice the rate of other pharmaceuticals,1 and specialty drugs represented almost 50% of total prescription drug spending in 2020.2 As a strategy to control the costs associated with managing a complex patient population, the market is turning to value-based contracting, which links reimbursement or payment for a product to positive clinical outcomes. These trends have paved the way for an increase in limited distribution drugs (LDDs), or therapies only made available to a small number of specialty pharmacies, to give manufacturers greater oversight and control over the quality of patient care and support.

Specialty drugs are the future of medicine, but they require high-touch care coordination and concerted follow-up to ensure patients remain adherent and can manage potential side effects to realize the full value of therapy. As a result, payers have looked to narrow their networks as a means to control outcomes and contain costs, which in turn dictates where patients can fill their prescriptions. Today, there is a range of pharmacy options for payers to assess.

Evaluating Specialty Pharmacy Types

Payers have traditionally pursued individual contracts with a variety of specialty pharmacy (SP) types, including health system SPs (HSSPs), independent SPs, and chain SPs, based on their LDD access and ability to maintain patient adherence and promote positive health outcomes. Each pharmacy type brings advantages and constraints for payers and their patients.

HSSPs are on track to become the fastest-growing sites of care over the next 5 years,3 offering a valuable opportunity for payers to broaden their reach and meet patients at the community-level. HSSPs are uniquely positioned to access both electronic health record and claims data and may provide outcomes assessment data for payers. As these pharmacists are in regular communication with providers (whether inside or outside the health system), patients benefit from a level of high-quality, coordinated care that promotes better adherence and outcomes. A study by the CDC showed that patients working with an HSSP had an 89% medication adherence rate compared with 74% for patients filling prescriptions at specialty pharmacies outside of their health system.4 Moreover, well established HSSPs may have broader access to LDDs compared with larger SPs.

Independent community pharmacies that offer specialty dispensing (independent SPs) may provide more extensive clinical services in niche therapeutic areas. Additionally, independents often have higher agility in terms of adopting and customizing clinical programs to meet patient and payer needs. While independent SPs may be a part of certain LDD networks, they typically do not have access to the vast majority of specialty drugs on the market.

Chain SPs, or major retail pharmacies with specialty channels, have greater access to LDDs than independent SPs. Due to their large number of physical stores, they are a convenient option for patients. However, given the high volume of specialty prescriptions they dispense every day, chain SPs may have less time and bandwidth to dedicate to individualized patient care and follow-up. As a result, they may experience lower customer service ratings compared with other types of SPs.

The pharmacy landscape has changed significantly in recent years, and payer networks must follow suit to ensure they are taking advantage of the patient benefits and quality of care each type of pharmacy provides. It’s important for payers to consider how they can evolve and optimize their specialty contracting strategies—not only to control costs, but also to increase patient access to high-quality care that leads to better outcomes.

Driving Value Through a Centralized Contracting Organization

One emerging option for payers is to work with a specialty pharmacy services administration organization (PSAO), a centralized contracting organization that aggregates and supports multiple types of specialty pharmacies at once. Composed of a mix of HSSPs, independent SPs, and medically integrated dispensers, specialty PSAOs create access to a larger network of high-performing pharmacies and enable payers to utilize the trust and familiarity patients have at local and regional facilities, in addition to independents. By expanding their networks using a specialty PSAO, payers can open more community-based care options to keep patients close to their provider and ensure the pharmacies in their network are in the communities that need them. In turn, payers benefit from improved clinical measures such as medication adherence, reduction in emergency department visits, and more positive health outcomes, which ultimately reduce overall costs.

Having one organization in charge of contracting and ensuring accreditation of SPs also provides more convenience for payers, as it can consolidate the process for contracting with multiple specialty pharmacies. In addition, specialty PSAOs provide access to some of the most robust data sets in the health care ecosystem, including clinical outcomes and adherence measures, allowing payers to leverage those statistics to generate insights that better inform future decision making.

As we continue to navigate unprecedented challenges within the health care ecosystem, payers must look critically at their current specialty contracting strategies and evaluate how they can evolve them to better meet the needs of a changing pharmacy and patient landscape. Payers can leverage centralized contracting organizations to create an optimized pharmacy network that controls costs and facilitates better clinical outcomes.


1. Medicine use and spending in the U.S.: a review of 2018 and outlook to 2023. IQVIA. May 9, 2019. Accessed January 28, 2021. https://www.iqvia.com/insights/the-iqvia-institute/reports/medicine-use-and-spending-in-the-us-a-review-of-2018-and-outlook-to-2023

2. The rising costs of specialty drugs. Advanced Medical Reviews. January 15, 2020. Accessed January 28, 2021. https://www.admere.com/amr-blog/the-rising-costs-of-specialty-drugs

3. Pedersen CA, Schneider PJ, Scheckelhoff DJ. ASHP national survey of pharmacy practice in hospital settings: prescribing and transcribing – 2016. Am J Health Syst Pharm. 2017;74(17):1336-1352. doi:10.2146/ajhp170228

4. Neiman AB, Ruppar T, Ho M, et al. CDC Grand Rounds: improving medication adherence for chronic disease management—innovations and opportunities. MMWR Morb Mortal Wkly Rep. 2017;66(45):1248-1251. doi:10.15585/mmwr.mm6645a2

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