OBJECTIVES: Audience participants will: 1) understand the benefits associated with a health plan establishing a contract with a specialty distributor for the cost-effective procurement of an expensive injectable; 2) evaluate the challenges to establishing a contract with a specialty provider and investigate the steps necessary to foster a smooth transition for the health plan; and 3) learn about palivizumab and its prudent use in infants who are at risk for Respiratory Syncytial Virus (RSV). METHODS: Due to the high cost of palivizumab, pediatricians were obtaining referrals for babies to receive monthly palivizumab injections through an outpatient hospital setting. The health plans' cost for hospital administration was $5225 per palivizumab injection. As a result, the health plan established a contract with a specialty injectable provider that supplied the drug at a discount off average wholesale price (AWP). The drug was then sent by the specialty distributor to either the physicians' office or the parents' home for administration. RESULTS: Through this initiative a cost savings of $3675 per injection resulted. A total of fifteen at risk infants received injections during the months of November through April 2001, none of which required hospitalization during the Respiratory Syncytial Virus (RSV) season. The health plan experienced a total cost avoidance of over $180,000 and had the potential to save over $300,000 if all 15 infants were identified at the beginning of RSV season (October). CONCLUSION: Establishing a contract with a specialty distributor can prove to be cost effective for health plans with large member populations. It is advantageous for the health plan to pursue specialty providers for the procurement of specialty injectables like palivizumab, and at the same time provide quality patient care.