5 Pharmacy Benefits Trends To Expect In 2021

Here’s how to prepare

HR leaders have experienced a year unlike any other. When the World Health Organization (WHO) officially declared Covid-19 a pandemic, remote work became a way of life, and employee engagement required a new level of creativity. Healthcare needs to be shifted too, and HR leaders needed to balance rising health costs while Continuing to meet employee needs. Healthcare costs were predicted to rise up to 7% due to Covid – in addition to the 5% already projected for 2020 – with pharmacy benefits accounting for 21 cents of every healthcare dollar spent.

Several big pharmacy benefits moments this year are poised to impact pharmacy plans and decision-making in 2021. Here are the top 5 HR leaders need to know:

1. New Pharmacy Option Pops Up

Amazon recently announced two new retail pharmacy offerings for its U.S. customers: a remote retail pharmacy solution that will accept insurance and be in PBM pharmacy networks, and a drug discount program for uninsured customers to purchase prescription medications. 

Acting as a remote retail pharmacy, the Amazon Pharmacy accepts most insurance and allows customers in 45 states to order up to a 30-day supply of their medication. Before purchasing their medications, customers will see the cost of their prescription co-pay alongside the drug’s cash price, as if they did not have insurance. For employer-sponsored benefit plans, Amazon Pharmacy is simply another option employees have for filling their brand and generic drug prescriptions. Its drug pricing transparency component will help to increase members’ understanding of the value of their employer-sponsored benefit. If the pharmacy benefits contract already applies a “lower-of” pricing logic, Amazon Pharmacy’s insurance price and cash price of any given drug should match. 
 

However, Amazon Pharmacy’s limitations could differ from what members experience using their prescription drug benefits at other pharmacies. For example, while a prescriber can write a 90-day script, Amazon Pharmacy will only fill a 30-day medication supply at a time, and there is no auto-refill option. There also are safety concerns when consumers choose to use the cash price because the claims will not process against any clinical checks for drug-drug interactions or appropriateness for their condition. Additionally, specialty drugs, compound medications, and Schedule II controlled substances are not available. 

HR leaders must guide employees on Amazon’s services to understand all the details and the differences between what Amazon Pharmacy offers and what they receive with their current mail-order pharmacy service.

2. Covid-19 Vaccine Advances Closer to Mainstream Market

The Food and Drug Administration (FDA) recently authorized the United States’ first Covid-19 vaccines for distribution under the Emergency Use Authorization. According to the latest guidance by the Department of Health & Human Services (HHS), distribution will take place in phases. Each state has a roll-out plan that determines mandates and prioritizes populations, including health care workers, front-line, and other essential workers, and people with increased risk of severe illness from Covid-19. However, the Centers for Disease Control & Prevention (CDC) expects sufficient vaccine supply to be available for all beneficiaries in doctor’s offices, retail pharmacies, hospitals, and Federally Qualified Health Centers. Self-funded employers should prepare accordingly for how this could impact their medical or pharmacy benefits expenses.

During the initial phase of limited vaccine supply, the federal government plans to purchase all of the vaccine supply and allocate quantities to each state for prioritized distribution. During this time, the federal government will cover the ingredient cost of the Covid-19 vaccine. Plan sponsors must cover the administration cost for plan members, with most plans planning to require zero cost-share. HR leaders in non-front line industries should begin preparing for the vaccine roll-out and understand any potential mandates for their employees in their state. They must also consider the associated ingredient costs, administrative fees, and dispensing fees that could hit their budgets in 2021. 

3. Covid-19 Shifts Prescription Utilization Trends

Over the last few months, drug utilization trends centered around several primary shifts due to Covid – and for self-insured employers managing a prescription drug benefit, there is potential to see an impact. 
 

• Plan Enrollment Changes: While some employers have seen little or no change in member enrollment, many have been greatly impacted. We typically look at averages when describing utilization trends, so in today’s world, where 60% or more of cost is attributable to roughly 2% of members, enrollment changes can have a significant impact in either direction.
• Increase in Chronic vs. Acute medications: There has been a decrease in prescriptions for acute medications that people might typically get for the common cold or aches and pains, and a disproportionate number of chronic medication prescriptions. This trend is likely a short-term phenomenon caused by the pandemic. The number of prescriptions for acute conditions will eventually tick back up as we head into 2021.
• 90-Day vs. 30-Day Fills: There has been a shift from people getting 30-day fills of their prescriptions to getting 90-day fills. This trend will likely continue because once people make this shift, they are more likely to stick with it. Most pharmacy benefits managers (PBMs) relaxed their refill-too-soon policies early on in the pandemic to ensure people had access to their medications. As things begin to resolve, it’s appropriate to expect a shift back to 70%-80% refill rates so that people cannot stockpile medications. For example, with a 70% refill rate for a 90-day prescription, people will need to wait until day 63 to refill their medication, which is appropriate.

The long-term effects of these changes in trend will take time to unfold. For some people, the changes helped support a healthier lifestyle, while for others, lockdown periods prevented them from accessing appropriate health care services. Looking ahead to 2021, employers may continue to face shifts in drug utilization and will need to prepare for potential new expenses stemming from new prescriptions and Covid therapies and vaccines. There will be greater pressure than ever on employers to reduce costs. I HR leaders will want to implement a clinical management strategy focused on appropriate utilization that both enhances member safety and access and provides economic value to the company.

4. Drug Pricing Regulation

Prescription drug pricing reform has been an important topic in politics this year across the Federal government and at the state level. This year saw much activity but very little progress expected to have a lasting impact on employer-sponsored pharmacy benefits plans. Here is a summary of the major Executive Orders and subsequent HHS rulings related to prescription drug costs:
 

• New Safe Harbors for Drug Rebates: Permits health plan sponsors, pharmacies, and PBMs to apply discounts at the point-of-sale to lower out-of-pocket costs. The changes would have the most direct impact on plan sponsors who benefit from manufacturer rebates on high-cost brand-name prescription drugs utilized by their members. It is slated to take effect in 2022 but faces numerous legal challenges and economic concerns, making implementation unlikely.
• Drug Importation: Allows states, Indian tribes, and potentially pharmacists and wholesalers to import certain drugs from Canada upon submitting a proposal to the FDA for review and receiving authorization to do so. Several states have been working on proposals for an importation program despite Canada announcing policies limiting bulk exports for high-demand drugs. The reality is that drug manufacturers would not increase their supply to Canada because people from the U.S. are going there, showing this is not a sustainable solution. 
• Most Favored Nations Pricing: Initiates a seven-year test of a “Most Favored Nation” pricing policy for 50 costly Medicare Part B covered prescription drugs and biological products. Set to take effect in January 2021, the U.S. would piggyback on the discounts negotiated by drug manufacturers and other developed nations. Because Congress bans Medicare from negotiating with drug makers, this rule provides an avenue for the government to cap costs of those prescription drugs while determining whether the payment cap is effective.
• 340B Drug Discounts For Patients: Directs qualified entities, including eligible hospitals, to pass the 340B pricing discounts they receive from drug manufacturers for insulin and injectable epinephrine directly to their low-income patients. This change benefits low-income individuals with a high cost-sharing requirement for these medications, a high unmet deductible, or no health insurance. 

The question now is what policies will stick and impact self-funded employers? The answer mainly lies in seeing what the new administration plans to do. In a Biden presidency, health insurance and the coronavirus pandemic have been named top priorities. Drug prices would be a focus, but the industry consensus is that any significant drug pricing initiatives won’t occur until Covid is behind us. 

5. New Strategies Emerge to Manage Specialty Rx

Specialty drugs now represent 50%-60% of pharmacy plan costs but just 1%-2% of members. Not to mention, the drug pipeline is full of new entrants to accompany the well-known heavy hitters in therapeutic categories with high utilization. With the high prices, growing volume, and increasing utilization of specialty drugs, finding the optimal strategy to manage specialty medications is a top priority for most employers.

Two controversial strategies emerged this year as employers looked for ways to avoid high-cost claims: carving-out specialty medications (i.e., coverage through another entity) or excluding specialty drugs (i.e., no benefits or discounts for the drug) from the pharmacy benefit. However, it’s crucial to thoroughly analyze the value and understand all the details, including the impact on member access, employee retention efforts, and potential legal ramifications, before deciding to exclude or carve-out specialty drugs. 

As a best practice, HR leaders should consider exploring and implementing the built-in specialty drug management strategies to ensure they are pulling all available levers to manage appropriate medication use and reduce wasteful spending. These proven strategies include accessing the most competitive pharmacy benefits contract pricing, rebates, and guarantees around specialty drugs, leveraging any manufacturer assistance dollars, revising the formulary and benefit design to a more cost-effective model, and using an independent pharmacist to review specialty expenses apart from any financial conflict of interest. These strategies also have grown this year and are available to help HR leaders manage specialty and non-specialty prescription costs for long-term affordability. 

Lowering costs for employer-sponsored pharmacy plans and employees while providing a rich benefit will be critical in 2021. Working with your broker and a pharmacy benefits optimizer will be vital to ensuring you have the most competitive pricing and rebate terms, independent clinical oversight to reduce wasteful spending, and a personalized service experience that puts your employees first.

Nathan White is the Chief Client Officer, joined RxBenefits in 2017 with more than 18 years of experience in pharmacy benefits client consulting, account management, and medication compliance and safety with both CVS Health and OptumRx. Nathan’s successful career is fueled by his passion for helping benefit consultants and clients cut through the complexity of the pharmacy ecosystem. He utilizes data to help them make intelligent pharmacy benefits decisions and develop tailored solutions that meet their unique needs. Connect Nathan White Follow @RxBenefits