Setting the Record Straight about our Specialty Drug Program

Key Takeaways

  • We're covering the same drugs, administered by the same doctors at the same facilities.
  • Tennessee employers who joined the program can save around 20% on specialty drugs through our new program.
  • The specialty pharmacies in our network are well equipped to properly store, handle and ship these drugs. They can deliver anywhere in the U.S. in 24 hours.

A response to the American College of Rheumatology and other provider organizations

Specialty drugs account for about 1% of prescriptions covered by BlueCross, but account for about 50% of our total drug costs. Tennessee employers have been asking us to help better manage these costs. Our solution was to roll out a new way for health care providers to order specialty drugs they administer for some of our members – and we stand by it.

This new program saves these employers and our members money while covering the same drugs administered by the same doctors at the same facilities.

We’ve allowed providers to buy these drugs from wholesalers and bill us for them (with a markup). That’s no longer cost-effective for the people we serve. We’re asking providers to buy from qualified, in-network specialty pharmacies instead. That’s because as the state’s largest health plan, we’ve negotiated lower prices with those pharmacies.

Some providers have expressed operational concerns about our new process, and we’ve had extensive conversations and made changes to address those concerns. Even so, some provider organizations continue aggressively sharing misinformation, stoking fear and even turning away our members.

On Feb. 11, the American College of Rheumatology issued a press release to draw attention to their claims, which were originally shared in a letter addressed to us and co-signed by a number of other organizations.

Below, we’ll set the record straight on several key points.

Ellen Gravallese, MD, president of ACR: “We have had an alarming number of practices reporting they have been denied the ability to use therapies currently available in their offices to administer patient care quickly. Rheumatology patients receiving in-office treatments typically have debilitating conditions such as rheumatoid arthritis that cause severe pain, inflammation, joint immobility and deformity. The decision to use a more potent infusion or injection therapy often comes after patients have failed less potent prescription drugs and have continued to show signs of disease activity and/or progression. Finding an effective treatment quickly is imperative, because joint damage progresses in the setting of continued inflammation, and we cannot reverse damage once it has already taken place.”

BlueCross: First, let’s be clear we’re not denying treatments and we’re not asking members to seek care from different doctors or at different facilities.

Most of the time, specialty drug treatments are scheduled in advance and require prior approval. Our specialty pharmacies can deliver drugs anywhere in the United States in 24 hours, so ordering through them should not be a barrier to care under normal circumstances. But we do understand there are rare cases where a treatment may be prescribed and administered the same day – and we’re working on an exception process to facilitate that. A provider can always call us for help when a need like this arises.

American College Rheumatology (ACR): Practices currently engaging in the buy-and-bill model operate under thin margins. If forced to obtain drugs from a specialty pharmacy, even these small margins will be erased. Drug administration fees alone will not cover practices’ overhead costs associated with in-office administration such as rent, utilities, drug storage, insurance, and staff salaries.

BlueCross: We’re still paying providers for their services administering specialty drugs because we value the services they provide. The drugs are the same regardless of how they’re shipped to providers, and we have a responsibility to help members get them at the best possible prices. 

We needed a new solution because providers wouldn’t accept lower reimbursement rates for the buy-and-bill method.

Here’s an example of how much our members could save:

Providers are already ordering specialty drugs from a wholesaler and handling shipments and inventory, so we don’t believe our process will add significant time to these activities.

ACR: You surely recognize the offer of a “dispensing provider agreement”, which allows for ongoing buy and bill procedures with reimbursement at your specialty pharmacy reimbursement rate, to be a hollow offer as our providers cannot acquire drugs at the price quoted by your PBM (which is artifactually lowered through opaque rebate policies which incent higher list prices and increase Magellan’s profit).

BlueCross: We negotiate the prices directly with our in-network specialty pharmacies, and that network is managed directly by us at BlueCross. Our pharmacy benefits manager (PBM) is not involved in setting these prices. Magellan is not our PBM and is not even in our specialty pharmacy network – so they are not earning any revenue or profit from this program.

Rebates have nothing to do with this process change because where a drug comes from doesn’t determine whether a rebate is available or how much it amounts to. We get rebates on some specialty drugs, and we factor those in when we are developing premium rates each year.

The fact is this program will help Tennessee employers save around 20% on provider-administered specialty drugs in 2020. Those savings go directly to the employers and the members covered by their plans – not BlueCross or a PBM.

ACR: The predictable result of this policy will be a shift in site of care for your patients’ infusions to a more expensive hospital outpatient setting, which may serve as a significant barrier to their access to treatment and will certainly serve as an inconvenience to them.

BlueCross: There’s no evidence to support this claim. In fact, the only reason this would happen is if providers refuse to follow our new process and turn our members away. Sadly, though, some providers are making this choice and forcing patients to find new sites for care.

Other insurers are trying to manage specialty drug costs by asking their members to get care from different doctors and facilities. We found a way to deliver savings without disrupting the relationship our members have with their providers.

ACR: If a patient has drugs ordered through specialty pharmacy and that patient is unable to use the medication for any reason (i.e. infection, change in medical history, or intolerance/ineffectiveness of medication) then the medication must be wasted as it is unethical and illegal to administer the medication to a different patient. Furthermore, any necessary change in dosing will force a delay of treatment. Even if it appears that a health plan is able to pay less for drugs through a specialty pharmacy, wasting medication for one infusion for one patient will certainly dwarf any savings created.

BlueCross: Waste can happen in the system today. We’re not suggesting this process will completely eliminate waste, but we don’t believe it will substantially increase waste either. The specialty pharmacies in our network are equipped to deliver drugs in under 24 hours and make sure they’re handled appropriately based on the drug’s requirements.

Ultimately, we still believe this program will save around 20% for Tennessee employers and our members.

ACR: How did the drug arrive at the specialty pharmacy, how can the infusing provider verify its supply chain, and what are the legal ramifications of infusing a drug with a compromised supply chain?

BlueCross: These questions appear designed to create fear by implying a drug has a “compromised supply chain” when it simply has a different one. We’re covering the same drugs, manufactured by the same pharmaceutical companies. Providers who buy and bill order from a wholesaler and have drugs shipped to their offices. There’s no reason to believe that is safer than ordering through a specialty pharmacy.

The specialty pharmacies in our network are well equipped to properly store, handle and ship these drugs – and we have contracts with performance guarantees to make sure they do so.

ACR: The discussions we have had with individual patients in the last month have almost uniformly validated their understanding of the economic model we work under and recognition that this policy, if implemented, will push these patients’ treatments out of our offices into the more expensive hospital setting.

BlueCross: The only reason a patient would have to get treated in a different facility is if a provider refuses to treat them. If members of the ACR choose not to continue treating our members, then we will help our members find a new site of care.

ACR: We appreciate the concerns you may have regarding the price of biologics. However, we believe the current buy-and-bill model is the best option for infusible medications to ensure patient safety and continued access to these critical treatments.

BlueCross: Specialty drug manufacturers have been raising prices for years, and we’ve been asking providers for help with this issue. We’ve had hundreds of conversations about specialty drug rates as part of our contract negotiations.

When we’ve asked them to accept lower markups on the drugs, they often respond by asking how we’ll make up the lost revenue for them. That’s not our job; we’re here to help our members get the treatments they need at the best possible prices.

ACR: Providers offering physician-administered drugs are operating under a part B model, and we intend to educate your employer groups regarding the difference in cost incentives for this model vs the PBM model, where higher drug prices are incentivized. The numbers do not lie.

BlueCross: This isn’t about Medicare, so discussions of Part D and Part B don’t apply – they’re just a way to restate providers’ frustration at PBMs. (And as a reminder, our PBM doesn’t hold the contracts or set the prices for provider-administered specialty drugs in this program.)

But we do agree on one thing: the numbers don’t lie.

As we’ve shared with them in detail, our program will save Tennessee employers around 20% on specialty drug costs in 2020. It will also help protect them against the continued price increases pushed by specialty drug makers.

For more on our specialty drug program, see our article with 7 key facts or visit

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