Why This Health Plan Moved Away from Exclusive Relationships with Specialty Pharmacies

Several years ago, Highmark began questioning its exclusive relationships with specialty pharmacies and started working with Free Market Health, which matches patients to the pharmacy that best fits their needs.

Several years ago, Sarah Marche, senior vice president of pharmacy services at Highmark, began to question the “legacy way” health plans were managing specialty drugs, which was through exclusive relationships with specialty pharmacies. The idea was that the “best way to get the best price was to scale your lives and the utilization to one pharmacy,” she said.

“I was constantly getting approached by other specialty pharmacies about some of the unique things that they were doing to care for their patients that were really specialized on certain conditions,” Marche said. “We had oncology pharmacies taking care of oncology patients differently, or cystic fibrosis pharmacies taking care of those patients. … My answer to those pharmacies was always ‘I can’t work with you, because I have an exclusive relationship with a pharmacy,’ and that just started feeling like that was not the right answer.”

She made these comments last week during a panel discussion at the Abarca Forward conference in San Juan, Puerto Rico. She said that due to this challenge, the company moved away from exclusive relationships with specialty pharmacies and began working with Free Market Health about five years ago.

Through this partnership with Free Market Health, Highmark members are matched to the specialty pharmacy that best fits their needs, whether that be health system pharmacies, community pharmacies, those that specialize in certain disease states or large specialty pharmacies. Before Free Market Health, every single Highmark member went to the one pharmacy Highmark had an exclusive relationship with, whether or not there was a better fit for the patient, according to Marche.

“When I met Joe Cardosi from Free Market Health, he talked about this new model of really taking a look at each individual patient and saying, ‘What is their clinical situation? What disease do they have? What comorbid conditions do they have?’ And really matching them up with the best-fit pharmacy for them,” Marche said. “The best-fit pharmacy could be because that pharmacy is focused on certain aspects of that clinical condition, and they [have] some proven outcomes on how they manage that disease. Or it could just be that it’s a strong financial match for that member.” Cardosi is the founder and CEO of Free Market Health.

Highmark initially rolled out this Free Market Health partnership with its Medicaid population and then eventually with its ACA and fully-insured population. In 2025, it began selling to its self-funded population. 

What Highmark hopes to prove in this partnership is that by improving patient outcomes, medical costs will decrease, Marche added.

“Having an oncology patient that’s serviced by an oncology pharmacy, we should see better outcomes and at the end of the day, those patients should be more cost-effective,” she stated. “So right now, we’re working on, how do we prove out that value proposition?”

However, this marketplace model doesn’t come without challenges. But it’s worth it in order to create more value for patients, argued Mark Conklin, president and COO of Free Market Health, during a separate presentation at Abarca Forward.

“When we think about what the options are today with an exclusive provider, if you’re kind of in an open style network, conceptually, those are much simpler,” he said. “So if we’re talking about disaggregating the model of partners to build value, or in this case we’re going to talk about a new way to think about a specialty drug program — a marketplace model — there is a decision burden there that is greater than what we have to pay. But there is also the opportunity to capture far more value in a far more well orchestrated ecosystem.”

Editor’s note: This story is based on discussions at Abarca Forward, a conference in San Juan, Puerto Rico, hosted by Abarca Health, a pharmacy benefit manager. MedCity News was invited to attend the event. Accommodations for the team were covered by Abarca. However, company officials had no input in editorial coverage. 

Read the story in MedCityNews.