2022 is coming to an end, leaving many eager to see what the new year has in store. What can we expect in the pharmacy benefit industry for 2023? We’ve made some predictions from shifts in trend, to patient assistance programs, and industry disruptions.
Trend
2022 trend is expected to end higher than 2021. Most plans will see trend for 2022 in the high single digits or low double digits before rebates. Rebates are expected to mitigate trend by about three percentage points. Trend for 2023 is likely to be similar.
Trend Drivers
Specialty drug classes will continue to be a trend driver, along with a few non-specialty drug classes, thanks to therapy add-ons, up switching to newer more expensive products, and medical-to-pharmacy benefit transitions. Once federal funding ends for pandemic-related expenses (vaccines, diagnostics, treatments) the impact of these will become more evident. Expect more jaw-dropping prices for cellular and gene therapies for rare conditions. It’s likely there will be lower prices for gene therapies in the pipeline that are applicable to more common conditions. However, they will not be budget-friendly. Diabetes and weight loss products (GLP-1s and GLP-1s/GIP), Continuous Glucose Monitors (CGMs), and migraine agents (CGRPs) are expected to continue to fuel non-specialty drug trend.
Pipeline
The pipeline is filled with pricey novel therapies. Recently, the first gene therapy for hemophilia B was approved, named Hemgenix (etranacogene dezaparvovec-drlb.) It has a price tag of $3.5 million. More hemophilia treatments are on the horizon along with numerous cancer drugs and biosimilars. Biosimilars may provide up to 35% savings relative to the reference brands. Interchangeability will help biosimilars gain traction and formulary placement. There’s great anticipation for Humira to lose exclusivity from its patent expiring in 2023. It is expected to reduce costs, however, more substantial savings will likely not be seen until 2024 or beyond as competition increases. Terzepatide for diabetes, as well as a future pending indication for weight loss, may become one of the next best-selling drugs in the coming years.
PBM Revenue
PBM revenue streams continue to evolve in new and novel ways. Administration and service fees will continue to grow and displace historic revenue streams such as generic spread pricing, mail service, rebates, and specialty. Expect to see more third-party arrangements where PBMs get a share of the revenue. Third-party arrangements may include GPOs, discount cards, digital, virtual, and/or telehealth. Big data equals big money, much like other segments of our economy, the same goes for healthcare.
Patient Assistance
Financial necessity may force more drugmakers to make fundamental changes to their business practices. The exponential growth and mounting pressure of rebates and alternative funding, not to mention others (340B, Medicaid best price, etc.), are not sustainable as-is. Expect greater scrutiny and program revisions. Non-needs-based as well as needs-based programs may become harder to access and/or less generous. We have already seen revised terms and conditions for some copay card programs citing they are not to be used for individuals with plans using true accumulations and copay maximization programs.
Changes to terms and conditions are one thing, accurate identification and enforcement are another. Some copay card programs have also begun to tier the value provided based on the type and/or lack of coverage. Drugmakers need to unilaterally address programs for the insured, underinsured, and uninsured in order to prevent alternative funding vendors from migrating individuals from one funding source to another.
PBM Transitions
PBM transitions may not be as smooth or easy as they used to be. Repricing exercises may become more challenging as more and more plans leverage multiple vendors to manage the pharmacy spend and may fail to adequately capture the fragmented claims experience. Some vendors are complicating matters by including the value of their copay card or other programs in claims files for repricing purposes while others are not. PBM integration with discount card providers or their own in-house discount card programs may complicate matters further and blur the line between commercial benefits and discount cards. Alternative funding programs and discount card arrangements are now added to the list of critical variables analyzed when trying to assess savings. Other variables include formulary coverage, tier changes, specialty drug designations, pharmacy network providers, and pricing differences. These factors can vary greatly from one vendor to the next.
Regulations
Legislation and regulations may continue to provide added difficulties, impede management strategies, and likely will not provide any meaningful impact to the bottom line for payors thanks to the self-serving interests of regulators, drugmakers, independent pharmacies, and patient advocacy groups. For example, currently, approximately 1/3 of states have laws banning copay accumulation use. Self-funded ERISA plans may continue to have greater flexibility when it comes to copay card accumulations or any willing provider requirements.
Role of the Pharmacist
During the pandemic, the role of the pharmacist has expanded. Vaccine administration is now the norm rather than the exception. Protocol and prescribing rights continue to expand. Interactions with pharmacists may become more common in the delivery of health care due to their accessibility and education, especially as CVS Health and Walgreens position themselves as leading health solutions companies for the future.
Disruptors
The PBM industry is ripe for disruption. There were high hopes for some recent attempts, for example, Amazon Pharmacy. Newer PBM pricing models, such as Guarantee Net Cost Pricing Models, have fallen by the wayside. More industry consolidation may be expected from the numerous concierge, advocacy, delivery, and telehealth pharmacy models. Cost plus vertically integrated models, such as Mark Cuban’s Cost Plus Drugs, are ramping up, and gaining attention but it may be too soon to see if they’ll truly be disruptive.
The pharmacy benefit industry is constantly evolving, making it difficult to project the future. Nevertheless, our team of pharmacy benefit experts at National CooperativeRx are always prepared to guide our member groups through shifts in the industry. If you are interested in discussing how these potential changes in the industry may affect your pharmacy benefit plan, please reach out to your strategic account executive.
Stay tuned for a new year of informational blogs covering the latest trends and topics.
