Specialty pharmacy service (SPS) companies are filling a new niche in the expanding role of chronic disease management (DM). These companies distribute expensive biotechnology drugs to patients who have relatively uncommon but very expensive chronic diseases. Although there are considerable differences among the competitors, some of the SPS companies have evolved into organizations that have built data systems and processes rivaling those offered by dedicated DM companies. These data systems and processes will allow several of the companies to demonstrate improved medical outcomes.Since the SPS companies can fashion contracts where they do not charge a separate fee for the DM portion of their services, this model is especially attractive to managed-care organizations (MCOs) [both preferred provider organizations and health maintenance organizations] and to third-party administrators that operate in self-insured or administrative services only environments. These companies can also reduce the administrative burden for MCOs and the ‘hassle factor’ for physicians and patients by performing delegated prior-authorization functions for the MCO.Pharmaceutical companies have played a key part in advising and assisting the development of the unique role of SPS companies. Future challenges and opportunities for this sector include: integration of comorbid conditions; publication of outcome results; customization of educational material to individual patient needs; and accreditation. MCOs and investors will recognize the development of an integrated, proven DM, outcome-driven business model as a key differentiation factor in this niche industry.