Understanding White Bagging and Other Alternatives

Understanding White Bagging and Other Alternatives

Trends in Specialty Drug Distribution and Reimbursement Models

The specialty pharmaceuticals market is undergoing explosive growth, driven by rising demand for targeted treatments, an expanding pipeline of therapies for complex chronic conditions, and increased prevalence of diseases such as cancer, autoimmune disorders, and rare genetic conditions. The global specialty pharmaceuticals market is projected to grow from $293.1 billion in 2024 to $568.4 billion by 2029, at a compound annual growth rate (CAGR) of 14.3% (Mordor Intelligence, 2024).

In the U.S., the specialty pharmaceuticals market is expected to grow by more than 10% annually between 2023 and 2028, fueled by innovations in key therapeutic areas like oncology and rheumatology (McKinsey & Company, 2023). Mercer (2023) also projects specialty drug spending to rise by 6.5% to 10.5% annually through 2026, with the average annual cost per specialty drug now exceeding $5,000 (Quantum Health, 2023).

In response to the significant growth in specialty pharmaceuticals, insurers are increasingly adopting new policies aimed at managing the delivery, distribution, and reimbursement of high-cost specialty therapies. These models are designed not only to contain costs but also to align incentives around value and outcomes. Each approach carries unique implications for stakeholders, including patients, healthcare providers, and pharmaceutical manufacturers. Below is an overview of some of the most common distribution and reimbursement models used in the specialty drug landscape today.

Common Specialty Pharmacy Fulfillment Models

  1. Buy-and-Bill

Providers purchase medications directly, maintain onsite inventory, and bill patient insurance for both the drug and its administration. This established model gives providers greater control over procurement and dosing adjustments, with costs and reimbursement managed under the medical benefit.

  1. White Bagging

Specialty pharmacies buy medications and ship them directly to healthcare providers for administration. Providers then bill insurers only for administration, while the pharmacy manages drug reimbursement. Insurers often adopt this model to leverage negotiated drug prices and reduce provider markups.

  1. Brown Bagging

Patients pick up or receive specialty medications at home and take them to their healthcare providers for administration. Providers bill insurers solely for administration services, while pharmacies handle drug billing.

  1. Clear Bagging

A health system’s own specialty pharmacy dispenses the medication and delivers it internally for patient administration. Although provider billing is separated from drug reimbursement, oversight remains within the same health system, potentially minimizing treatment delays and improving operational continuity.

  1. Gold Bagging

An emerging model in which a health system’s specialty pharmacy manages the entire medication process, from prescription coordination through dispensing and administration, aiming to provide patients with an integrated and seamless care experience.

  1. In-Office Dispensing (IOD)/ Medically Integrated Dispensing (MID)

This model supports not only immediate access to necessary medications but also comprehensive, personalized care planning and monitoring-making each patient's journey simplified while enhancing treatment outcomes.  

Buy-and-Bill Advantages

Despite emerging alternatives, buy-and-bill remains a core method in many specialties. In 2024, just 15-20% of physician offices reported using white bagging, underscoring buy-and-bill’s continued popularity (Shih, Xu, & Yao, 2023). Reasons for this include:

  • Clinical Control: Providers can adjust dosage and timing more precisely without waiting on external pharmacies.
  • Streamlined Workflows: Practices can integrate drug purchasing, storage, and administration into existing systems.
  • Immediate Medication Access: Onsite inventory reduces treatment delays, improves patient adherence, decreases medication abandonment rates, and ultimately supports better patient outcomes, particularly for time-sensitive therapies.

In-Office Dispensing/Medically Integrated Dispensing (IOD/MID) for Enhanced Patient Outcomes

With onsite, on‐demand prescription fulfillment, IOD/MID closes treatment gaps, reduces wait times, and alleviates prescription abandonment, all of which contribute to improved patient outcomes.  

This streamlined model ensures direct communication between providers and patients, boosting therapy adherence and enabling real‐time adjustments to dosage or medication schedules when needed. Multiple studies underscore that IOD/MID can significantly enhance care plan compliance, offer better clinical oversight, and bolster patient satisfaction by consolidating medication management within one care team. Platforms like Elevate Health Technologies’ OnePulse Connect further amplifies the benefits of IOD/MID, integrating real‐time data capture, analytics, and patient engagement tools for an all‐encompassing, patient‐centric experience.

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Partnering with Elevate Health Technologies

Elevate Health Technologies is committed to making healthcare better for everyone. We collaborate with healthcare providers, patients, pharmaceutical companies, and payors to deliver innovative technologies that truly make a difference. OnePulse Connect helps healthcare practices enhance collaboration, increase efficiency, and streamline care, with PulseAI software for buy and bill and inventory management. Tailored solutions include convenient in-office dispensing, comprehensive data and analytics and robust patient engagement platforms fostering a simplified patient journey. Together, we move as One Pulse-driving smarter, faster, more connected health technologies for the best possible patient experience and outcomes.  

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References

  • American Society of Clinical Oncology (ASCO). (2023). Position Statement on White Bagging. Retrieved from ASCO White Bagging Position.
  • Institute for Clinical and Economic Review (ICER). (2023). White Bagging, Brown Bagging, and Site-of-Service Policies: Best Practices in Addressing Provider Markup in the Commercial Insurance Market. Retrieved from ICER White Paper.
  • Shih, Y.T., Xu, Y., & Yao, J.C. (2023). Financial outcomes of “bagging” oncology drugs among privately insured patients with cancer. American Journal of Health-System Pharmacy, 80(24), 1796. Retrieved from AJHP, 2023.
  • Vizient. (2021). Vizient Member Survey: Impact of White Bagging in U.S. Health Systems and Hospitals. Retrieved from Vizient Report.

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