Specialty medications, used to treat complex conditions such as cancer and autoimmune diseases, are among the most expensive treatments in the market. To manage these costs, payers can:

• Implement utilization management protocols, such as prior authorization and step therapy, to ensure appropriate use.
• Encourage site-of-care optimization, shifting administration from high-cost hospital settings to lower-cost outpatient or home infusion services.
• Leverage specialty pharmacy networks to negotiate better pricing and enhance medication adherence, a strategy supported by research from KU Leuven on pharmacy benefit optimization.

Biosimilars—lower-cost alternatives to biologic drugs—represent a key opportunity for reducing prescription drug spending. Despite their potential savings, uptake remains slow due to provider hesitation and market exclusivity of brand-name biologics. To increase biosimilar utilization, payers can:

• Incentivize provider adoption through education and financial benefits for prescribing biosimilars.
• Expand formulary coverage to prioritize biosimilars over higher-cost reference biologics.
• Partner with manufacturers to secure competitive pricing agreements, an approach emphasized in a study published in Future Oncology.

Traditional drug pricing models often do not align costs with patient outcomes. Value-based contracting, which ties reimbursement to treatment effectiveness, is an emerging solution that can improve both cost efficiency and care quality. Payers can:

• Develop risk-sharing agreements with pharmaceutical companies to align drug prices with clinical outcomes.
• Use real-world data analytics to monitor treatment efficacy and adjust payments based on patient response.
• Encourage performance-based pricing models, as discussed in research from Tandfonline, to ensure cost-effectiveness in drug spending.