Specialty Drug Contract Optics Putting Your Clients at Risk

Unbeknownst to some, there is not a universally used specialty drug definition or specialty drug list that applies to pharmacy benefits contracts. Each pharmacy benefit manager (PBM) maintains its own specialty drug list and its own specialty drug contract terms. Furthermore, each PBM may have many iterations of their contracts. While there may be some standard language used across the board, each contract contains negotiated terms that can significantly alter specialty drug rebates and vary the contract’s rebate performance in ways clients do not understand.

These 5 pharmacy benefits contract optics can pose a big risk to your expected specialty drug rebate performance. #specialtyRx

The first piece to understand when looking at pharmacy benefits contracts is the basic blocking and tackling, making sure generic definitions are in your client’s favor, getting the most aggressive termination clause to keep your clients safe. But the primary focus of the contract and the language is now in the specialty channel. So, whether it’s the specialty guarantees, the specialty exclusions, how specialty is defined in the contract, and what the specialty list is, that is where your focus needs to be today.

As you negotiate a competitive pharmacy benefits contract for your self-funded clients, it’s important that you clarify any vague or misleading language, especially around specialty drugs. In our experience, these areas can pose some of the biggest risks to your clients’ contract and can significantly impact their expected rebate performance:

  • List of specialty drugs on the formulary
  • Limitations related to the fulfillment channel used
  • Restrictions according to days’ supply
  • Not properly modeling the value of any drug exclusions from the rebates
  • Altering rebates based on claims utilization

When looking at pharmacy benefits contracts, the first piece to understand is the basic blocking and tackling – making sure generic definitions are in your client’s favor and getting the most aggressive termination clause to keep your clients safe. But the primary focus of the contract and the language is now in the specialty channel. So, whether it’s the specialty guarantees, the specialty exclusions, how specialty is defined in the contract, and what the specialty list is, that is where your focus needs to be today.

Watch our on-demand webinar to discover other contract and clinical best practices to help your self-funded employer clients manage their specialty drug costs.

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