Specialty Drug Management: Strategies Consultants Use to Control a Client’s Fastest-Growing Cost

Specialty drug management is how a health plan controls the cost of its most expensive medications while making sure members still get the care they need. These are the infusions, injections and advanced therapies used to treat conditions like cancer, multiple sclerosis and rheumatoid arthritis.

For consultants, it has quickly become one of the first topics clients raise at renewal. A small number of members on specialty drugs can drive a large share of a plan’s spend, and clients want to know what they can do about it. Too often, the answer starts and ends with the pharmacy benefit manager (PBM).

But the PBM only sees part of the picture. Specialty drugs reach a plan in two ways. Some are filled at a pharmacy and paid through the pharmacy benefit, which the PBM manages. Others are given by a doctor or nurse in a hospital, clinic or the member’s home. Those are billed as medical claims and paid by the third-party administrator (TPA). Roughly 45 percent of specialty spend falls into that second group, so much of it never reaches the PBM at all.

That’s good news for consultants, because it opens up savings most clients haven’t tapped. The strategies below cover three areas. The first is making sure each drug is the right one at the right dose. The second is controlling where drugs are given and what the plan pays. The third is keeping high-cost claims from falling through the gap between the TPA and PBM.

Utilization Management Built for High-Cost Drugs

Utilization management (UM) is the review process a plan uses to confirm a treatment is medically necessary before paying for it. Most clients already have it on the pharmacy side, usually through prior authorization and step therapy, which we covered in our look at GLP-1s and the pharmacy cost wave. Drugs billed through the medical benefit often get far less review. A plan might require approval for a drug a member picks up at the pharmacy, yet pay for an infused drug treating the same condition with almost no oversight. Closing that gap is one of the fastest wins a consultant can bring to a client.

Extend Prior Authorization to the Medical Benefit

Ask whether the client’s TPA reviews high-cost infusions and injections before they are given, not just after the bill arrives. A review up front confirms three things: the diagnosis supports the drug, the dose fits clinical guidelines and a lower-cost option has been considered, such as a biosimilar (a lower-cost, highly similar version of a biologic drug). Once a claim is paid, the plan can only try to get money back, and it rarely recovers much.

Watch Dosing and Waste

Many infused drugs come in fixed vial sizes, but doses are often based on a patient’s weight. If the dose needed is just over one vial, the plan pays for a second full vial and most of it gets thrown away. Dose rounding adjusts the dose to the nearest full vial, within a range doctors consider clinically safe. It’s a simple way to cut waste without changing the treatment.

Reauthorization does similar work over time. Approvals that expire and require evidence the drug is working keep a plan from paying indefinitely for a therapy that has stopped helping the member.

Keep Clinicians in the Loop

Specialty decisions are clinical decisions. A review program run by a medical director and nurse team who know the plan’s goals will make better-informed calls than an outsourced queue applying generic criteria. It’s worth asking clients who will review their specialty requests, how quickly and with what authority to work with the prescribing physician on alternatives.

Site of Care and Specialty Pharmacy: The Strategy Most Plans Haven’t Used

The same drug can cost very different amounts depending on where a member receives it. New research from the Employee Benefit Research Institute (EBRI) found that hospital outpatient departments are paid about twice as much per unit, on average, as physician offices for the same drugs. Hospital outpatient departments also handle 59 percent of these treatments. EBRI estimates employers and workers would save about $12.7 billion a year if hospitals paid physician-office rates for them, according to Fierce Healthcare.

Despite that, only 35 percent of commercial plan sponsors have a site-of-care program for specialty drugs, according to Pharmaceutical Strategies Group data highlighted by Drug Channels. For most clients, this is untapped savings.

Why Cost-Sharing Alone Won’t Move Members

The natural first step is to lower copays at preferred sites and let members choose. That helps, but only up to a point. Patients on these drugs often hit their deductible and out-of-pocket maximum early in the year. After that, they pay the same no matter where they go, so a lower copay elsewhere gives them no reason to switch. Cost-sharing works best alongside administrative tools that apply all year long.

Site-of-Care Tactics Worth Raising with Clients

Most site-of-care programs combine a few of the following, matched to the plan’s population and provider landscape:

• Prior authorization for nonpreferred sites, so a hospital outpatient infusion is approved when it’s clinically necessary rather than by default
• Tiered networks that vary member cost-sharing by site of care, instead of removing providers from the network
• Home infusion for stable patients on appropriate therapies, often the most convenient option for the member as well as the lowest-cost one
• Specialty pharmacy sourcing, including white bagging, where a specialty pharmacy ships the drug to the site of administration instead of the provider buying and billing it

White bagging can lower drug costs, but it has trade-offs. If a patient’s dose changes after the drug has shipped, the drug may go to waste, and infusion staff take on extra handling. It works best for specific drugs and sites rather than as a plan-wide rule. The same goes for the PBM’s specialty pharmacy arrangements on the pharmacy side, which are worth reviewing along with the rest of the client’s PBM contract.

Keep Health System Partners in the Conversation

Site-of-care strategy doesn’t have to mean moving care away from health systems. The goal is the lowest-cost appropriate setting, and for many members that can be a health system’s own physician-office infusion suite or home infusion program. Clients with a direct contract with a health system can often build site-neutral drug rates into the agreement itself, which protects both the savings and the relationship.

Where the TPA and PBM Have to Work as One

Specialty drugs are where a plan’s medical and pharmacy benefits overlap most. The same drug can be billed under either one, depending on where and how it’s given. When the TPA and PBM don’t share information, gaps open up: claims get paid twice, costs are harder to see and stop-loss coverage can miss claims it should protect. Consultants who can help clients close those gaps are solving a problem most specialty strategies overlook.

Catch Duplicate Payments Across Both Benefits

A drug dispensed by a specialty pharmacy and billed through the PBM can also show up on a medical claim from the provider who administered it. Without shared data, both claims get paid. Cross-benefit review belongs inside the plan’s broader payment integrity program, and consultants should ask whether a client’s TPA and PBM exchange claims data often enough to catch it.

Monitor High-Cost Claimants Across the Whole Plan

A member’s specialty cost rarely sits on one side of the benefit. A cancer patient might fill an oral therapy through the PBM while receiving infusions billed as medical claims. When claims data from both vendors comes together, the TPA’s clinical team can spot members trending toward high cost early, coordinate case management and review each therapy in context. Early identification is one of the core cost containment levers for any self-funded plan, and specialty drugs are where it matters most.

Keep Stop-Loss Aligned With Both Benefits

Confirm whether a client’s stop-loss policy covers pharmacy claims as well as medical ones, and whether PBM claims reach the stop-loss carrier on the same timeline. A specialty claimant whose pharmacy spend isn’t reported until after the contract period closes can leave the plan absorbing costs it thought were protected.

Frequently Asked Questions About Specialty Drug Management

Should medical-benefit specialty drugs be moved to the pharmacy benefit?

Sometimes, to select drugs. Moving a drug to the pharmacy benefit can bring formulary controls and pharmacy pricing into play. It can also raise member cost-sharing, complicate coordination with the infusion site and shift savings into rebate arrangements the employer can’t easily see. Most plans make the call drug by drug rather than as a single policy.

How does a site-of-care program affect members already in treatment?

Well-designed programs phase changes in rather than interrupting active treatment. Common approaches include grandfathering current patients through a transition period, applying new site requirements at the next reauthorization and assigning a care coordinator to help members make the move. A program that disrupts treatment mid-course tends to create clinical risk and member complaints that outweigh the savings.

What specialty data should a consultant request from a client’s TPA at renewal?

Start with specialty spend split by medical and pharmacy benefit, the site-of-care mix for the plan’s top infused drugs, the list of drugs that require prior authorization on the medical side and high-cost claimant reporting that combines both benefits. If the TPA can’t produce those views, that gap is a finding worth raising on its own.

Can a self-funded plan manage specialty drugs without changing PBMs?

Yes. Most of the strategies above sit with the TPA and plan design, not the PBM contract. Medical-benefit prior authorization, site-of-care rules and cross-benefit claims review can all be added around an existing PBM relationship, which makes them a practical starting point for clients who aren’t ready to go to market.

Specialty Drug Management Works Best When Someone Owns the Whole Picture

Specialty drug costs won’t be solved by one contract or one program. The clients who get ahead of them are the ones whose medical and pharmacy benefits are managed as a single strategy, with clinical review, site-of-care rules and claims data working together instead of in separate vendor silos.

BHPS is a third-party administrator, not a PBM, and that is by design. We administer the medical side of the specialty benefit, where much of the spend sits, and work alongside whichever PBM fits a client’s plan. Our in-house chief medical director and clinical team review high-cost specialty drugs before they are administered, backed by URAC accreditation in Health Utilization Management. The Create® Technology Platform flags high-dollar claims and brings reporting together, so consultants and their clients can see specialty trends as they develop rather than at renewal.

If specialty drug costs are showing up in your clients’ renewals, talk with the BHPS team about building a specialty strategy that covers both sides of the benefit.