Specialty drugs have irreversibly rewritten the economics of pharmacy benefits, improving clinical outcomes in major leaps, but significantly shifting operational and cost considerations.
For PBMs and payers, these therapies dominate net drug spend as demand increases alongside their ability to improve the health, well-being, and longevity of individuals.
Operating with these factors requires a new playbook. This article outlines the steps executives and decision-makers should be taking, including:
- How we got here
- Why the cost challenge keeps accelerating
- Data-driven solutions that deliver sustainable savings
1. The Challenge: A Two‑Decade Surge in Specialty spend
A timeline of the specialty drug ascent
| Year | Share of total U.S. drug spend attributed to specialty | Source |
|---|---|---|
| 2010 | ~27% | pharmacytimes.com |
| 2014 | 33% | bipartisanpolicy.org |
| 2021 | 50% overall; 71% inside Medicare Part D | aspe.hhs.gov, pmc.ncbi.nlm.nih.gov |
| 2023 | 54% | ajmc.com |
| 2024 | ≈55% | carelonrx.com |
What’s fueling the surge?
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Breakthrough therapies. One-time gene treatments such as Novartis’ Zolgensma carry list prices above $2 million yet can dramatically alter patient outcomes.
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A robust pipeline. Oncology, immunology, and rare-disease research continue to push dozens of high-cost launches every year.
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Benefit-channel blur. Roughly half of specialty spend now runs through the medical benefit, complicating data capture and rebate eligibility.
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Rebate complexity. Only about one-third of employers and two-thirds of commercial health plans currently collect rebates for provider-administered drugs under the medical benefit.
For PBMs and payers, the result is a high-cost, high-complexity spend center that traditional formulary, utilization management, and rebate processes struggle to contain.
2. The Playbook: Five Practical Levers for PBMs & Payers
1: Unify Data on Both Cost Centers
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Integrate pharmacy and medical claims so decision-makers have better insights into the net cost of therapies across both spend centers.
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Implement real-time adjudication to flag pricing outliers, duplicate claims, and off-contract billing before payment (Thirdwave RX’s real-time adjudication processes hundreds of thousands of claims per day with custom rule sets).
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Leverage data-based insights to profile upcoming launches and model net cost under multiple scenarios (list price, expected rebate, alternative therapies).
2: Design managed formularies anchored in clinical & financial evidence
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Adopt medical drug formularies to rationalize drugs billed through the medical benefit.
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Refresh tiers at least quarterly so biosimilar launches, new guidelines, and updated rebates flow through quickly.
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Embed therapeutic interchange (TI) rules so prescribers automatically shift to cost-effective, equivalent options when clinically safe.
Make sure there are processes in place to provide and distribute clear, concise provider education whenever changes are made.
3: Modernize Utilization Management (UM)
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Move from static prior authorization (PA) checklists to rules-driven PA that uses clinical data (e.g., genetic markers) to verify eligibility.
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Offer providers preferred alternatives via “market-basket” PA; within a given drug class, the system prefers lower‐net-cost options and routes exceptions to specialized clinicians for expedited review.
4: Automate medical-rebate capture
At Thirdwave, we’ve seen firsthand how manual processes result in organizations missing millions. Modern workflows should:
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Ingest claims and EOB data automatically in the format each manufacturer requires.
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Scrub for duplicates—a major audit pain point that impacts manufacturer relationships.
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Submit and reconcile with full transparency so finance teams can trace every dollar.
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Pass funds through quickly. Thirdwave clients receive rebate payments monthly, not just quarterly, improving cash flow.
5: Augment internal teams with specialty pharmacy experts
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Clinical pharmacists, actuaries, and contract specialists collaborate to translate raw data into policy changes that stick.
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Expert teams maintain manufacturer relationships, interpret FDA label changes, and preemptively update PA and formulary files, avoiding costly operational lags.
3. Why Thirdwave RX? A Purpose‑Built Platform for PBMs & Payers
Thirdwave RX combines proprietary automation, deep pharmacy expertise, and a transparent, pass-through model that lets PBMs keep full control of client relationships:
| Capability | How it helps PBMs & payers |
|---|---|
| Real-time adjudication with custom rule layers | Stops leakage on day one Enforces contract pricing and TI rules across pharmacy and medical benefits |
| Automated rebate administration (pharmacy & medical) | Captures every eligible dollar Delivers payments monthly to accelerate ROI |
| Analytics & reporting dashboards | Give actuarial teams on-demand visibility into trend drivers and forecast the impact of upcoming launches. |
| Expert advisory team | Former PBM and health-system pharmacists tailor strategies without disrupting member care. |
Case Study: We worked with a national LTC pharmacy chain to cut their drug costs by double-digits within two months. Through unrivaled adjudication technology, we are processing thousands of claims in real-time each day.
Key Takeaways for Executive Teams
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Specialty dominance is here to stay. The category has jumped from 19% of spend in 2004 to 55% today and is projected to continue rising.
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Visibility + automation ≠ control. Unified data, living formularies and automated rebate capture shrink the gap between list price and true net cost.
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Rebates are powerful only when collected. Too many organizations still leave medical-benefit rebates on the table; automation combined with expert management fixes that.
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Thirdwave RX offers a turnkey solution. We help PBMs keep client relationships while tapping into specialized technology and expertise for sustainable savings.
Ready to see what a modern specialty-management platform can do? Contact a Thirdwave RX expert for a no-risk net-cost analysis.
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