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Specialty Pharmacy Services: An Overview for Oncology Practices

Innovations in Oncology Management, Vol. 2 No. 2

The term “specialty drug” refers to high-cost, high-touch medications for patients with diseases such as cancer, multiple sclerosis, rheumatoid arthritis, and other chronic or rare conditions.1,2 Specialty drugs are typically complex to manufacture and often require special handling and administration; they may be challenging for providers to manage and may necessitate ongoing clinical support to facilitate proper administration and adherence.3,4 The specialty pharmacy model requires ongoing communication and collaboration among providers, patients, and payers, and is designed to deliver services in a coordinated, patient-centric manner.2

Between 2000 and 2010, an increasing number of oral oncology agents began to enter the market, and by 2011 oral drugs represented approximately 35% of cancer medications in the pipeline.5 At that time, the majority of cancer care was provided in the community setting. Accustomed to managing office-administered chemotherapy agents, the majority of community oncology practices were unfamiliar with the process of prescribing and obtaining drugs that are covered under the pharmacy benefit.5 Likewise, conventional retail pharmacy chains were ill-prepared to stock oral oncology agents, and were not set up to deliver the counseling that often accompanies these medications.5

Responding to this unmet need, specialty pharmacies–originally established to distribute hemophilia therapies to patients’ homes–began to distribute oncology drugs.5,6 Over time, the specialty pharmacy model became increasingly popular and was embraced by payers as a way to control cost and access.7 In addition, manufacturers found that specialty pharmacies offered an effective way to manage product inventory.7 They also offer a variety of support services to patients, with the goal of improving patient outcomes, and may carry out functions typically associated with retail pharmacies or home infusion agencies.2,8

According to the National Comprehensive Cancer Network Specialty Pharmacy Task Force, the primary goals of specialty pharmacies are to ensure the appropriate use of medications, maximize drug adherence, enhance patient satisfaction through direct interaction with healthcare professionals, minimize cost impact, and optimize pharmaceutical care outcomes and delivery of information.9

Various organizations, including managed care plans and manufacturers, may enter into arrangements with specialty pharmacies to distribute oncology drugs. In 2015, more than 80% of managed care organizations reported contracting with specialty pharmacy providers for their oncology business, and 51.4% reported using a single, preferred specialty provider for all but limited-distribution drugs.10

Specialty Pharmacy Services

In the traditional community pharmacy distribution model, pharmacists dispense medications to patients after receiving paper or electronic prescriptions from a licensed prescriber.9 In the majority of cases, pharmacies receive payment directly from the patient (via copayments or coinsurance) and/or third-party payers (via predetermined reimbursement rates) through the patient’s insurer.9

In the specialty pharmacy model, the pharmacy acts as a center of care by interacting directly with the providers, patients, and payers on a routine basis (Figure).9 In addition to dispensing medications, specialty pharmacies offer a range of support services to patients, including the following8,9:

  • Patient- and caregiver-directed education regarding self-administration, potential side effects, and other informational resources
  • Medication therapy management, including evaluation of medication efficacy, side-effect management, and encouraging medication adherence through prescription refill reminders
  • Collection of medical necessity information and other documentation required to obtain prior authorization from payers
  • Customer support call centers or hotlines for product-specific inquiries or reimbursement support services
  • Help in accessing patient support services
  • Coordination with providers regarding changes in treatment and dosing
  • Drug utilization data collection and analysis, and measurement of clinical and financial outcomes.

Management of Specialty Pharmacy Drugs

Reimbursement for specialty drugs can be challenging for practices and hospitals because of the high cost of therapies.8 A relatively small proportion of patients use specialty drugs, but the per-person costs can be high, ranging from several thousand dollars to more than $100,000 annually for the highest-cost drugs.3

Payers are closely monitoring their spending on specialty oncology drugs and are implementing multiple strategies designed to control utilization.4,11 Clinical pathways, prior authorization requirements, and the mandated use of certain specialty pharmacies are becoming more common, especially for oral cancer drugs.4 Among payers, the increasing popularity of formulary specialty tiers has resulted in increased cost-sharing for patients. Another strategy designed to eliminate waste and curb drug spending involves the split-fill program, which fills only 50% of patients’ first 30-day fill to ensure that patients are adequately responding to and tolerating the drug before continuing treatment.4

Specialty pharmacies usually take on the assignment of benefits; that is, they bear the burden of obtaining reimbursement by billing the payer.4 Because specialty pharmacies are at risk for incurring pharmacy costs, they must verify insurance coverage and ensure that patients meet the payers’ formulary criteria before shipping the medications.4

Who Provides Specialty Pharmacy Services?

Medical practices, hospitals, and their patients are increasingly obtaining specialty drugs through specialty pharmacy providers. Many types of organizations provide specialty pharmacy services, often through subsidiaries of parent corporations.12,13 As a result, the relationships between commercial payers, pharmacy benefit managers (PBMs), drug wholesalers, and specialty pharmacies can be confusing to oncology providers who are accessing these services.12

Some specialty pharmacies, such as Diplomat and Avella, are independent providers.13 Other specialty pharmacies may be owned and operated by a managed care organization, large pharmacy chains, and/or PBMs. For example, CVS Caremark Specialty Pharmacy and Walgreens Specialty Pharmacy are business units of their respective parent pharmacy chain (Table).13 Accredo, the second largest specialty pharmacy provider by revenue in 2014, is owned by Express Scripts, a large PBM.13 Two other large specialty pharmacies, OptumRx and RightSourceRx, are owned and operated by UnitedHealthcare and Humana, respectively, national commercial payer organizations with members in all 50 states.13,14 Wholesalers such as McKesson (OncologyRx Care Advantage) and AmerisourceBergen (US Bioservices) also offer specialty pharmacy services through wholly owned subsidiaries.2

Hospitals and oncology practices may also dispense specialty drugs in the majority of US states; however, regulations vary from state to state, and some states require that each physician pay a licensing fee before they can dispense these drugs.15 A few states limit physician dispensing to a 72-hour or 7-day supply for patients with immediate needs who may not have easy access to a pharmacy.16

Specialty Pharmacy Distribution

Distribution of specialty drugs may vary based on how the drug is administered.9,12 For example, infused medications may be delivered via home infusion services or shipped directly to a provider or a provider’s pharmacy for administration to patients. Oral drugs and injectables for self-administration may be mail-ordered or distributed through retail pharmacy networks.9,12

Specialty pharmacy networks use several distribution models. Open networks offer a high level of accessibility and convenience to patients and providers but limited control to pharmaceutical manufacturers.4 Conversely, many specialty drugs are distributed through exclusive or limited distribution models, in which a manufacturer contracts with a single specialty pharmacy or a selected number of specialty pharmacies to oversee all drug distribution.2,4 Limited networks offer a high level of control to drug manufacturers and payers, ensuring that specialty drug distribution is restricted to appropriate patient populations; they also facilitate collection of patient use and distribution data, which is required by the US Food and Drug Administration for certain drugs.17 However, this process may be more time- and resource-intensive for practices, because they must call the specialty pharmacy provider, obtain precertification, and have the drug shipped, which can take several days, and may hinder timely patient access to therapy, particularly in urgent treatment situations.9

Some manufacturers set up specialty hubs to simplify distribution of drugs for patients and practices while maintaining a broad network of specialty pharmacy providers.4 In this model, the manufacturer’s hub determines the appropriate specialty pharmacy according to patients’ insurance carriers and directs the provider to that specialty pharmacy.4

To make informed decisions for their practices and patients, it is essential that oncology practice managers and physicians understand how specialty pharmacy providers work, as well as the advantages and disadvantages associated with their use. For drugs with limited or exclusive distribution, oncology practices must keep track of approved specialty pharmacies that are permitted to dispense each drug.18 If the practice or hospital has the capability to dispense specialty drugs in-house, they are required to follow individual state requirements regarding drug labeling, dispensing, inventory management, and record keeping.18

Depending on the situation, oncology practices may or may not have the option of using a specialty pharmacy provider. In some cases, the manufacturer will restrict drug access to a limited network of specialty providers.17 In other cases, commercial payers will mandate that a drug is obtained through a specialty pharmacy.12 If the payer or the PBM owns a specialty pharmacy, they may direct the practice to use their specialty pharmacy. Specialty pharmacy ownership may not be apparent to the practice, and can therefore be a source of confusion (Table).12

Voluntary versus mandatory use of a specialty pharmacy provider may vary by the patient’s benefit design.12 For example, for the same oral oncology drug, the use of a specialty pharmacy may be mandatory for patients with health maintenance organization coverage but voluntary for patients with preferred provider organization coverage.12

When oncology practices use specialty pharmacies, drugs may be shipped directly from the licensed pharmacy to a licensed physician, and patients can then pick up the oral or self-injectable drug or make an appointment to have the drug administered at the office; this practice is referred to as “white bagging.”19,20 However, this model presents several challenges for oncology providers, including proper storage, handling, and inventory control. In addition, liability issues may be associated with administering a drug that was not directly purchased by the practice or the institution.19,20

In other cases, the specialty drug is purchased through a specialty pharmacy but shipped directly to the patient, in a practice known as “brown bagging.”19,20 The patient is then responsible for self-administering the drug or bringing the drug to the provider for administration. Providers have raised concerns about patient safety with brown bagging, especially for office-administered drugs, because the pharmacist-to-clinician supply chain is broken. In addition, uncertainty remains about whether patients are complying with proper handling procedures.19,20

Regardless of the means of drug delivery, the use of specialty pharmacy providers must be coordinated through the patient’s health plan, and this process effectively removes providers from the responsibility of purchasing and billing for oncology drugs.12,20

Working with Specialty Pharmacies

Oncology practices and institutions may encounter numerous challenges in coordinating approval, dispensing, and drug delivery with specialty pharmacies.12 Typically, preauthorization or precertification is required for specialty drugs, and the provider must submit a medical order and supporting clinical information before the drug is dispensed. Because this information is not available to patients, practices must assume the onus of precertification and ordering.12 In addition, specialty pharmacy providers may arrange for a nurse or a home health aide to visit the patient’s home to administer the first dose of an injectable drug and provide training for subsequent self-injections; if the drug is not self-injectable, it may be administered at a physician’s office.12 Regardless of the specific situation, the practice or institution remains the hub of patient care and ultimately bears the responsibility for coordinating drug delivery and administration with specialty pharmacies and patients.12

As specialty pharmacy distribution becomes more commonplace—especially for oral oncology drugs—oncology practices, clinics, and institutions will need to adapt. One way that oncology providers can offset the time and resource commitment and reduced revenue associated with specialty pharmacy distribution is to take advantage of the support services provided by these organizations.8,9 These services include patient education, reimbursement support, and financial assistance investigation, and are provided free of charge to providers. Although oncology providers may be reluctant to cede control and trust an outside organization to assist in providing these services, some practices have established good working relationships with a handful of specialty pharmacies and have successfully utilized their “value-added” support services.


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