The recent OPM call letter for 2007 benefit and rate proposals encouraged carriers “to pursue the advantages of specialty pharmacy programs aimed at reducing the high costs of infused and intravenously administered drugs.” Specialty drugs are now a huge market, approximately $40 billion in 2005, and all of the major PBMS, e.g, Caremark, Medco, offer specialty drug programs.

Medicare has a new specialty drug program. Medicare generally covers specialty drugs through the Part B program (rather than Part D) because they are physician administered. The Medicare Modernization Act modified Medicare’s reimbursement methodology for Part B drugs — switching from average wholesale price to average sales price. This week, CMS announced that it has entered into a contract with “BioScrip as the vendor for the initial phase of the new Competitive Acquisition Program (CAP) for certain Part B drugs and biologicals that begins on July 1, 2006. The CAP is a voluntary program that offers physicians the option to acquire many drugs they use in their practice from an approved CAP vendor thus reducing the time they spend buying and billing for drugs.”