Specialty Pharmacy Explained

Specialty pharmacy is the fastest-growing segment of healthcare spending, with specialty drugs now accounting for over 50% of total pharmacy expenditures despite representing fewer than 2% of prescriptions. Understanding specialty pharmacy economics is essential for any employer managing healthcare costs.

What Makes a Drug "Specialty"

There is no single standard definition, but specialty drugs typically share several characteristics: high cost (often exceeding $1,000 per month), complex manufacturing (typically biologics rather than small-molecule chemicals), special handling requirements (cold chain storage, restricted distribution), clinical complexity (requiring monitoring, dose adjustments, or patient education), and limited patient populations (treating rare or complex conditions).

The Specialty Pharmacy Channel

Specialty pharmacies differ from retail pharmacies in their clinical capabilities, patient management programs, and distribution infrastructure. They maintain cold chain logistics for temperature-sensitive biologics, provide patient counseling and adherence monitoring, coordinate with prescribers on clinical assessments, manage prior authorization and manufacturer copay assistance programs, and report outcomes data to payers and manufacturers.

Spending Trends

Specialty drug spending has grown at double-digit rates for over a decade, driven by the expansion of biologic therapies into larger patient populations, new product launches in oncology, immunology, and rare disease, the emergence of gene and cell therapies with per-patient costs exceeding $1 million, and the GLP-1 receptor agonist utilization surge. For employers, specialty pharmacy management is no longer a niche concern but a primary driver of pharmacy budget performance.