Specialty Drug Coverage: What Small Businesses Need to Know

When Sarah, who works at a small accounting firm on Long Island, was diagnosed with rheumatoid arthritis, her doctor prescribed a specialty medication that cost thousands of dollars per month. Her employer's health plan covered it, but the process involved multiple steps and approvals. If you're a business owner, understanding specialty drug coverage isn't just about managing costs—it's about ensuring your employees can access life-saving treatments when they need them most.

What Are Specialty Drugs?

Specialty drugs are high-cost medications that typically treat complex, chronic conditions like cancer, multiple sclerosis, rheumatoid arthritis, or rare genetic disorders. Unlike picking up blood pressure medication at your local pharmacy, these drugs often require special handling, storage, or administration.

Think of specialty drugs as the difference between a standard office printer and a high-end commercial printing system. Both serve important purposes, but one requires specialized training, maintenance, and significantly more investment. Specialty drugs often need refrigeration, special delivery methods, or patient monitoring—making them more expensive and complex to manage.

Why Specialty Drugs Require Special Handling

Insurance companies treat specialty drugs differently for several reasons. First, the costs are substantial—often representing a significant portion of a health plan's total drug spending despite affecting relatively few employees. Second, these medications require careful monitoring to ensure they're used appropriately and safely.

Most specialty drugs also have specific requirements around who can prescribe them, where they can be obtained, and how they're administered. Some must come from specialty pharmacies that have the proper storage and handling capabilities, while others require patients to visit infusion centers for administration.

Understanding Prior Authorization

Prior authorization is like getting approval before making a major business purchase. Before your employee can receive a specialty drug, the insurance company wants to verify that it's medically necessary and appropriate for their condition.

Here's how the process typically works: Your employee's doctor submits detailed medical information to the insurance company, explaining why this specific medication is needed. The insurance company reviews the case, sometimes requiring additional documentation or lab results. This review can take several days to weeks, during which your employee may need to use alternative treatments or wait for approval.

While this might seem like an unnecessary hurdle, prior authorization helps ensure that expensive specialty drugs are used appropriately and that patients have tried less costly alternatives when medically appropriate.

Step Therapy: Starting with Basics

Step therapy, sometimes called "fail first" requirements, means patients must try less expensive medications before accessing specialty drugs. It's similar to troubleshooting a computer problem—you start with simple solutions before moving to more complex ones.

For example, an employee with rheumatoid arthritis might need to try traditional medications first before their insurance will cover a specialty biologic drug. This approach helps control costs while ensuring patients receive appropriate care progressively.

Why Employers Include Specialty Drug Coverage

Including specialty drug coverage in your employee benefits package serves several important business purposes. First, it demonstrates that you genuinely care about your employees' health and well-being, which builds loyalty and trust.

From a practical standpoint, employees who can access necessary specialty medications are more likely to stay healthy and productive. Without coverage, an employee might delay or skip treatments, potentially leading to worse health outcomes, more sick days, and higher overall healthcare costs down the road.

Specialty drug coverage also helps you attract and retain top talent. In competitive industries like law, accounting, and healthcare, comprehensive benefits can be the deciding factor when candidates choose between job offers.

The Employee Experience

For employees who need specialty drugs, having coverage can be literally life-changing. These medications often provide relief from debilitating symptoms and can slow or stop disease progression in ways that traditional drugs cannot.

However, the process can be overwhelming for employees navigating prior authorizations, specialty pharmacies, and complex insurance requirements. Many employees appreciate when their employers provide support and resources to help them understand and access their benefits.

The peace of mind that comes with knowing catastrophic drug costs are covered allows employees to focus on their health and work rather than worrying about financial hardship.

Managing Specialty Drug Costs

Smart employers work with their benefits advisors to implement cost-management strategies without compromising care. This might include choosing plans with reasonable specialty drug coverage, implementing employee assistance programs, or providing resources to help employees navigate manufacturer discount programs.

Some plans use specialty pharmacy networks or require employees to use mail-order pharmacies for ongoing specialty medications, which can provide cost savings and better medication management.

How Benton Oakfield Helps Navigate Specialty Drug Benefits

Managing specialty drug coverage requires expertise in plan design, employee communication, and ongoing support. At Benton Oakfield, we help Long Island businesses understand their options and choose plans that balance cost control with comprehensive coverage.

We also focus on employee education, ensuring your team understands how to access specialty drug benefits when they need them. Our ongoing support means you have a resource when employees face complex situations involving prior authorizations or specialty pharmacy requirements.

Ready to review your current specialty drug coverage or explore options for your team? Contact our team to discuss how we can help you provide comprehensive benefits while managing costs effectively.

Compliance Note: Benefit plan rules and tax implications vary based on company size and location. This guide is for educational purposes only. Please contact your Benton Oakfield representative to discuss how this applies to your specific situation.

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