Most Americans seem to be moving on from initial COVID-19 panic, and we are seeing states follow suit by systematically putting plans in place to open back up. This post-pandemic world is being described as the “new normal,” implying that things will not return to the “good old days” of early 2020. How has this new normal impacted the pharmacy benefits space, and what changes might be lasting?
Overall demand for new brand prescriptions is down 45% over the same time last year. Speculation points to many factors. The first: increased attention to finances. With more Americans than ever tightening their belts, money going out is scrutinized more closely. Second, given shelter-in-place recommendations, many Americans have shown an unwillingness to go to a doctor’s office for new scripts or new ailments. Primary care offices have been pushed to the brink, with revenues down 50% or more over prior years. Lastly, the loss of jobs has resulted in loss of employer-sponsored insurance. Without stable income or assistance to purchase necessary medications, many Americans will go without.
The Centers for Disease Control (CDC) recommended that Americans obtain extra medication in preparation for the pandemic outbreak, and many health plans rewrote or lifted Refill-Too-Soon restrictions and lowered their thresholds for allowing refills. These criteria are in place to thwart waste, decrease potential abuse and ensure members are still needing, wanting and using the medications prescribed. However, having access to medication and adequate supply on hand is and will always be a major concern, even more so in a pandemic. In addition to wanting a supply on hand for sheltering in place, many Americans feared job loss and loss of insurance, thus increasing the desire to stockpile a supply of necessary medications.
The end of April signaled demand for early refills returning to normal pre-pandemic levels. While plan design language might forever have changed, comfort in knowing one’s pharmacy is available for the next fill doesn’t seem to have. What has shifted in many cases is where that next fill is coming from and how it’s being covered. As demand for contactless options in all industries increased, so has that demand in pharmacy. We have seen a shift from in-person retail pharmacy filling to mail-order fulfillment. Mail has always been a convenience option for many members, but the desire to shelter in place safely has increased demand for the service. Through April, mail-order prescription fulfillment is up 3.6% across the board, while in-person retail filling is down 0.8%. New mail-order starts have slowed as April closed; however, we would expect scripts that transitioned to mail to remain on that platform.
We will also see an increase in cash pay and discount card programs. As more Americans deal with joblessness, alternatives to insurance will spike. That said, it’s safe to say the payer mix will be changing. Unemployment has risen, ensuring employer-sponsored health insurance will play a smaller role in the mix. The expectation is that up to 60% of the newly unemployed will lose coverage. With Part D share expected to remain flat, this decrease in employer plan covered lives delivers increases to both Medicaid and the exchanges.
At the height of Affordable Care Act (ACA) expansion in 2019, Medicaid enrollment was up as high as 74 million. This was quite a dramatic increase from pre-recession numbers of 46 million in 2007 and recession numbers of 59 million in 2013. Predictions for 2020 going forward are 82 million on the low end to as many as 94 million. These lives and the dollars attached will be big business as pharmacy benefit managers (PBMs) clamor to enter the state health plan space.
The last area we will look at is specialty pharmacy and the post-COVID buy/bill disruption. We expect to see specialty pharmacy’s role increase. Social distancing is here to stay, and with it, an increase in demand for therapy options outside the medical center. Increases should continue to be seen in the oral, subcutaneous, autoinjector and home infusion space. Limiting exposure while maintaining continuity of care has become paramount.
As states open, so will our eyes open to the “new normal”. Plan designs will be under the microscope, with provisions added and adjusted to better prepare for the future. Formularies will likely be adjusted as members look for cost savings while not losing access due to drug supply shortages. Government program memberships will swell. Considerations will be made for preferred sites of care (home) with eyes on safety, especially for more complex patients. This new normal seems to be anything but business as usual.
Every Excelera member is on the front line in the fight against the novel coronavirus (COVID-19). We welcome any additional stories you would like to share about our members during this unprecedented public health crisis at firstname.lastname@example.org.