Wednesday, June 19, 2024

Independents Outshine PBMs in Manufacturers’ Exclusive Specialty Pharmacy Networks (rerun)

This week, I’m rerunning some popular posts while I prepare for Friday’s live video webinar: The 340B Drug Pricing Program: Trends, Controversies, and Outlook.

Click here to see the original post from April 2024.

Last week, we documented the substantial concentration of dispensing revenues for specialty drugs. See The Top 15 Specialty Pharmacies of 2023: Market Shares and Revenues at the Biggest PBMs, Health Plans, and Independents.

Today, we examine how manufacturers’ specialty networks contribute to this concentration. In DCI’s exclusive analysis below, we show that specialty pharmacies affiliated with pharmacy benefit managers (PBMs) play an outsized role in manufacturer-designated dispensing networks.

A typical network contains about five specialty pharmacies—but one in three specialty products with a manufacturer-designated network contains only a single specialty pharmacy. In those exclusive networks, independent and smaller specialty pharmacies are the big winners.

Read on for DCI’s updated profile of specialty networks—and ponder why smaller pharmacies are winning the battle for exclusive networks.


Manufacturers often limit and manage the specialty pharmacies eligible to dispense specialty medications. A manufacturer can adopt one of three basic pharmacy channel strategies for its patient-administered specialty drugs:
  • Open distribution. This channel strategy does not explicitly distinguish between specialty and traditional drugs. All pharmacies have access to open distribution products because they can be purchased from a full-line wholesaler. Therefore, wholesalers can inventory, sell, and distribute these specialty products as they would traditional, nonspecialty drugs. Through open distribution, the manufacturer does not limit the number of pharmacies that can dispense its product.

    Retail and other pharmacies have the greatest access to such open distribution specialty products because they can be purchased from a full-line wholesaler. Health plans and PBMs, however, typically limit retail pharmacies’ ability to dispense these open distribution products.
  • Limited dispensing network. In this approach, pharmaceutical manufacturers limit the number of specialty pharmacies authorized to dispense their specialty products, by specifying the pharmacy locations eligible to dispense its product. Manufacturers select pharmacies with the distinctive capabilities required to serve patients, providers, and payers efficiently and effectively. Pharmacies that are excluded from a manufacturer’s network are unable to purchase and dispense a particular specialty product.
  • Exclusive dispensing network. In some cases, the manufacturer may designate only one pharmacy to dispense to the entire patient population. An exclusive network is typically used when the patient population is small, the patients need extensive product-specific services, or the product has significant safety issues.
For more on the specialty pharmacy market and the strategies behind manufacturers’ network choices, see Chapter 3 of our 2024 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers.


To characterize manufacturers’ specialty pharmacy networks, we relied on IPD Analytics’ Access Hub platform, which includes a Limited Distribution Drug Network Tracking offering. This unique database tracks a broad universe of specialty drugs and their pharmacy networks. To the bext of our knowledge, there is no comparable resource available for analyzing specialty pharmacy networks. To learn about this database and how you can get access, please contact Tim Powers (

As of January 2024, IPD Analytics tracked 364 specialty drugs with a manufacturer-defined limited or exclusive specialty pharmacy network. We analyzed these data to identify the number and identity of specialty pharmacies in each product’s network. Products with multiple routes of administration or formulation, e.g., capsule vs. tablet, were treated as a single product. In all cases, the specialty pharmacy networks were identical regardless of drug formulation.


The chart below summarizes the specialty pharmacy network size for 364 specialty drugs.

[Click to Enlarge]

Consistent with our previous analysis, the average manufacturer-defined network has five specialty pharmacies.

However, this average disguises substantial variability in network size:
  • One in three specialty drugs (33%) have exclusive dispensing networks, with only a single specialty pharmacy.
  • A further 34% of networks have small, but nonexclusive, networks with two to four pharmacies.
  • More than one in five specialty drugs (22%) have networks with 5 to 10 specialty pharmacies. The average network size for these products is seven pharmacies.
  • About one in eight products (12%) have a relatively larger network of 11 to 25 specialty pharmacies. The average network size for these products is 15 pharmacies.

There were more than 150 unique pharmacies that participated in at least one of the 364 specialty drugs’ networks. Exhibit 63 of our 2024 pharmacy/PBM report shows the 10 specialty pharmacies with the greatest access to specialty drugs with a manufacturer-defined limited or exclusive specialty pharmacy network.

By contrast, smaller and independent specialty pharmacies have much greater representation in manufacturers’ exclusive specialty pharmacy networks. The chart below identifies the companies designated as the sole specialty pharmacy network participant for the one-third of products with exclusive networks.

[Click to Enlarge]

As you can see, the two largest PBMs had access to only one-quarter of all products with only a single specialty pharmacy.

However, a majority of products with an exclusive network rely on a specialty pharmacy that is not affiliated with a PBM. McKesson’s Biologics and RxCrossroads pharmacies accounted for 17% of the exclusive-network drugs, while PANTHERx Rare Pharmacy accounted for a further 11% of these products. AllianceRx Walgreens Pharmacy, BrightSpring’s Onco360, and other non-affiliated pharmacies accounted for a further 38% of the drugs.


After manufacturers establish a specialty network, health plans and plan sponsors often further narrow the network by requiring patients to use the specialty pharmacy that the plan or PBM owns and operates. This further contributes to the concentration of dispensing revenues with the largest PBMs, especially when combined with manufacturers’ dispensing network strategies shown above.

But when a manufacturer utilizes an exclusive network, the smaller pharmacies must be included in a PBM’s network. Building the capabilities and strategies to service an exclusive network has allowed some smaller specialty pharmacies to retain network position and grow more quickly than the overall market.

When asked for advice on how to be famous, Steve Martin once opined: “Be so good they can't ignore you.” Sage advice for getting into a nightclub or a manufacturer’s specialty pharmacy network.

No comments:

Post a Comment