How to Reduce Costs for Specialty Medications and Injectables

Specialty medications and injectables are saving lives-but they’re also breaking budgets. These drugs treat serious conditions like cancer, rheumatoid arthritis, MS, and hepatitis C. They often cost over $1,000 a month. And while they make up just 2% of all prescriptions, they’re responsible for half of all pharmacy spending. For employers, that’s an average of $34.50 per employee, per month. If you’re paying for these drugs-whether through an employer plan, Medicare, or out of pocket-you’re feeling the pinch.

Use Formulary Management to Stop Unnecessary Spending

Formulary management isn’t just jargon. It’s a practical way to make sure patients get the right drug at the right time, without overpaying. Most plans use prior authorization, step therapy, and quantity limits to control use. For example, before approving a high-cost GLP-1 weight loss drug, a plan might require patients to try a cheaper, clinically proven alternative first. That’s step therapy. If the drug isn’t on the preferred list, the prescriber must justify why it’s necessary-that’s prior authorization.

Excellus BlueCross BlueShield found this approach saved $13.64 per member per month on GLP-1 drugs alone. And 87% of employers using similar systems said they were satisfied with the clinical outcomes. The key? Making sure these rules aren’t arbitrary. They must be based on real evidence-not just cost. A good pharmacy and therapeutics committee, made up of unbiased pharmacists and doctors, reviews data regularly to update what’s preferred. Without this, you risk denying care or creating administrative headaches for providers.

Switch to a Narrow Pharmacy Network

Not all pharmacies are created equal. Many plans let patients use any specialty pharmacy. But that leads to higher prices. By limiting coverage to a small group of high-performing specialty pharmacies, plans can negotiate better rates. CarelonRx reports this can cut costs by 10-15%. Children’s Hospital Association tracked a $1.3 billion drug spend over three years and found a preferred CVS network saved 10%.

Why does this work? These networks have volume. They can demand rebates, offer better patient support, and integrate with electronic health records to catch errors before they happen. Patients get help with side effects, injection training, and delivery scheduling-all bundled in. One study showed patients in preferred networks rated support services 8.7 out of 10, compared to 7.2 elsewhere.

There’s a catch: switching pharmacies can be frustrating. About 22% of employers saw a spike in member calls during the transition. But with clear communication-letters, emails, phone calls explaining why the change helps lower costs-most patients adapt within 3-6 months. The long-term savings and better care make it worth it.

Choose Biosimilars When Possible

Biosimilars are the closest thing to generic drugs for biologics. They’re not copies-they’re highly similar versions of complex, living-cell-based medicines. The FDA approves them only after proving they work just as well and are just as safe. And they cost about 50% less.

Think of Humira, a top-selling drug for autoimmune diseases. Its biosimilar, Amjevita, entered the market in 2023. Hospitals that switched saw 20-30% savings without a drop in patient outcomes. Across the industry, biosimilars could save $180 billion over five years, according to Quantum Health.

But adoption is still low-under 30% for most conditions. Why? Doctors are hesitant. Patients fear switching. Pharmacies don’t always stock them. The solution? Education. Pharmacies and providers need training. Patients need clear, simple explanations: “This drug works the same way. It’s been tested on thousands. It’s cheaper, so your plan saves money-and so do you.” The FDA’s Project BioSet, launching in 2025, aims to speed up approvals and make biosimilars easier to get. Start pushing for them now.

Move Injectables Out of the Hospital

Many injectables are given in hospital outpatient departments-even when they don’t need to be. Infusing a drug for multiple sclerosis or rheumatoid arthritis in a hospital costs 2-3 times more than giving it in a doctor’s office or even at home.

Quantum Health studied 220 specialty drugs and found 63% of patients didn’t need hospital-level care. When they moved those patients to lower-cost settings, costs dropped by 48%. Prime Therapeutics confirmed similar results: 40-50% savings by shifting from hospital to clinic or home.

This isn’t about cutting corners. It’s about matching the setting to the need. A patient stable on their treatment? They can be trained to self-administer at home with nurse support. Someone new to the drug? A clinic visit with a trained nurse is safer and cheaper than a hospital infusion center. The trick is coordination. Systems need to work with home infusion companies, track adherence, and make sure insurance pays the right rate regardless of where the drug is given. Some states now require equal reimbursement for the same drug, no matter the location. That’s a big step forward.

Use Value-Based Contracts

Traditional drug pricing is broken. You pay for the bottle, even if the drug doesn’t work. Value-based contracts change that. Instead of paying a flat fee, the payer only pays if the drug delivers results.

For example, a plan might agree to pay full price for a cancer drug-but only if the patient’s tumor shrinks by a certain amount within six months. If it doesn’t? The manufacturer refunds part of the cost. Prime Therapeutics saw a 45% increase in these agreements last year. Dr. Peter Bach from Memorial Sloan Kettering calls this “the most promising approach” to aligning cost with actual benefit.

It’s not easy to set up. You need clear outcome measures, reliable data tracking, and legal agreements. But for high-cost drugs with unpredictable results-like some gene therapies or immunotherapies-it’s the only way to avoid wasting money. More manufacturers are open to this now. Ask your pharmacy benefit manager if they offer value-based contracts for your top 5 most expensive drugs.

Maximize Financial Assistance Programs

Manufacturers often offer copay coupons to help patients afford their drugs. But here’s the problem: those coupons usually don’t count toward your deductible or out-of-pocket maximum. So you pay $0 this month-but next month, you’re still stuck with a $7,000 deductible.

That’s where copay maximizers come in. These are programs offered by some insurers that let manufacturer coupons count toward your out-of-pocket limit. The result? Patients hit their cap faster, pay less overall, and stay on therapy longer. Employers save too-because once the patient hits their cap, the plan pays less for future claims.

CarelonRx reports this can reduce employer costs by 5-8% annually. It’s a win-win: patients get relief, and plans avoid costly emergency care later. Check with your insurer: do they offer copay maximizers for specialty drugs? If not, ask them to add it.

What Doesn’t Work

Some ideas sound good but don’t deliver. Capping monthly out-of-pocket costs for specialty drugs? Sounds fair. But it doesn’t lower total spending-it just shifts it. The plan still pays the same amount. You’re not saving money-you’re redistributing it.

Also, don’t just push patients to cheaper drugs without clinical justification. That can lead to treatment failure, hospitalizations, and higher long-term costs. The goal isn’t to cut costs at all costs. It’s to cut waste while keeping care effective.

Getting Started: A Realistic Plan

You don’t need to do everything at once. Start here:

1. Identify your top 5 most expensive specialty drugs. Ask your pharmacy benefit manager for a report.
2. Check if biosimilars are available for any of them.
3. Review your current pharmacy network. Are you using a narrow, high-performance network?
4. Look at where your injectables are being administered. Are they in hospitals when they could be in clinics or homes?
5. Ask if your plan uses prior authorization and step therapy-and if it’s based on clinical guidelines.
6. Find out if copay maximizers are available.

Implementation costs? Between $50,000 and $250,000 for large employers. But ROI comes in 12-18 months. For smaller plans, start with just one strategy-like switching to biosimilars-and build from there.

What’s Coming Next

The Inflation Reduction Act lets Medicare negotiate drug prices. That’s already changing the market. Experts predict private insurers will follow. By 2026, experts at Quantum Health expect 60-70% of specialty drugs to shift from medical benefit to pharmacy benefit-where pricing is more transparent and competitive.

And with 42 FDA-approved biosimilars already on the market, and more coming fast, the next few years will be the biggest shift in drug pricing since generics arrived. The key is to act now-not wait for someone else to fix it.