What is a Specialty Drug?

A specialty drug is one which is of very high cost or has special counseling requirements. Payers will typically designate certain drugs in their specialty tier and will only reimburse pharmacies they recognize as specialty pharmacies to dispense them. Medicare defines any drug with a monthly cost greater than $670 as specialty. Commercial insurance usually cuts off specialty designation at similar dollar amounts. Drugs which have strict requirements in terms of patient counseling or monitoring will also often be designated into specialty tiers. Given their typical cost, many biologics, including monoclonal antibodies, also end up in specialty tiers.

For payers such as insurers and PBMs, controlling who can dispense specialty medications can help with cost containment for highly-priced therapies. It can also help ensure that the right patients are getting it and through the additional counseling offered by specialty pharmacies, that the patients are taking it appropriately, etc.

Who can dispense a specialty drug?

Typically, payers will limit who they will reimburse for a drug classified in a specialty tier. Each payer may have their own criteria on what qualifies a pharmacy to be a specialty pharmacy, but common determinants can include accreditation by bodies such as URAC. Specialty pharmacies tend to have much more patient contact and work closer with providers (compared to retail pharmacies) to ensure that the appropriate documentation is gathered for reimbursement approval (including prior authorization documents).

Some retail pharmacies also have accreditation or the ability to dispense specialty drugs via various mechanisms including central fill and specialty through retail.