While providing many benefits, there are still many elements that could benefit from a revised approach, such as high monthly premiums, limited access in some areas, affordability, and adequate funding. We spend over 18% of our total GDP at $3.3 trillion dollars annually on healthcare. We can and must do better in all of the above areas and everyone should hold all elected officials accountable for their performance on improving healthcare. With medications representing the fastest growing element of US healthcare spending and the primary treatment modality for the majority of patients, pharmacy can play a significant role in addressing these challenges.
Continuing Drug Shortages:
We have seen no significant abatement of the ongoing issues surrounding drug shortages this year and there are no indications that this situation will improve in 2019. As of this publication there are well over 200 drugs in shortage situations.
The impact of drug shortages is significant and includes the expense and time to provide alternative medications, communicate statuses with staff, keep IT and automation updated with new products, purchase cost of non-contracted products, and more.
Escalating Drug Costs:
This year the total prescription drug spend is expected to exceed $460B and projections are that by the end of 2019 that total will be at half a trillion dollars. Prescription drugs now represent approximately 17% of the total US healthcare spending. Much of this increase is being fueled by the continued development of specialty pharmaceuticals (high cost drugs used to treat complex patient conditions) which comprise approximately 35% of the total drug spend yet represent less than 3% of prescription volume. Rising drug costs pose a financial challenge to hospitals for inpatients, but high cost drugs are also an opportunity for the hospital’s outpatient business.
A number of recently formed alliances and acquisitions points to new technology and distribution innovations that could transform how medicines are paid for and delivered. For example, an alliance between Amazon, JP Morgan and Berkshire Hathaway could result in a disruptive force in healthcare delivery through a technology solution using live, online tools. Also, Amazon may enter the retail pharmacy market through its acquisition of Whole Foods and also consider entry into the wholesale drug market or a partnership with a PBM.
The safe preparation of compounded sterile products both from a patient and healthcare worker perspective remains a focus for 2019. We can expect to see enhanced options for preparation, including guided prep systems and next generation robotics. A paradigm shift in the approach to these practice standards as requirements to meet compliance must change to a desire to meet standards and exceed them for patient and employee safety.
At the same time that USP standards are in process, State Boards of Pharmacy are also actively working on enhancements to their regulations as well as continuing to elevate the training around sterile compounding compliance for their inspectors. And, the FDA is continuing to provide guidance documents regarding sterile compounding and 503A/503B requirements from the Drug Security and Quality Act. It should be noted that while 503A compounding remains the primary responsibility of State Boards of Pharmacy, the FDA can and will investigate any concerns in this space.
Pharmacy workforce issues will be a challenge for 2019 as there is a technician shortage but a pharmacist oversupply. Well-trained and experienced technicians are essential for a robust medication safety program, but high-turnover rates have been an issue. For pharmacists, we expect market trends like an aging population and the introduction of complex medication therapies will lead to a higher demand and create more opportunities for pharmacists.
The 340B Program has grown considerably since its inception and now represents approximately 4% of the total US prescription drug spend. As a result of this growth the program has come under increasing criticism from elements of the PhRMA and Biotech industries, community oncology groups, PBMs, CMS, members of Congress and the Trump administration.
For 2019, CMS is suggesting further reductions in payments to 340B hospitals for Part B drugs and biologicals. As part of its proposed payment regulation for hospitals under the Outpatient Prospective Payment System (OPPS) for 2019, CMS proposes continuation of the 30 percent payment reduction for Part B drugs implemented earlier this year for certain hospitals in the 340B drug pricing program, and further proposes to extend the payment reduction to drugs provided in non-excepted off-campus hospital outpatient departments (HOPDs) that are subject to reduced “site neutral” payments. CMS also is working to change how the payment reduction applies to certain biosimilar products, reducing the size of the payment reduction for these products, and clarifies the application of the payment cut to new drugs. These changes would represent significant financial losses for some hospitals and should be monitored closely.
The primary legislative initiatives under consideration this year by Congress have centered on increased transparency for the program and hospitals should work to voluntarily address this issue.
Unfortunately, the current opioid epidemic shows no signs of abating in 2019. Every day, more than 115 people in the United States die after overdosing on opioids and the total “economic burden” of prescription opioid misuse alone in the United States is approximately $80B annually and rising.
With the advent of much more powerful pain medications including the recently released Dsuvia (sufentanil sublingual), which is 5-10X more powerful than fentanyl, physicians were given significantly enhanced medications to manage pain. However, the unintended consequence was an enormous increase in people addicted to prescription pain medications. It is possible to become addicted after a single course of treatment and it is impossible to predict exactly who might have this addiction predilection.
For 2019 hospitals and health systems should have better opioid management as a priority and consider an Opioid Stewardship program.
Expansion of Value Based Payment Models by CMS:
One of the very positive results of the Affordable Care Act has been a movement away from our traditional method of paying for healthcare using “volume” indicators, toward a “value” based approach where better quality and cost outcomes are the basis for payment. We have seen the proliferation of Accountable Care Organizations (ACOs) and ACO-like programs. An ACO is typically a collaboration between a physician group and hospital group where they agree to be accountable for the care of a defined patient population for a defined time period, such as a Medicare ACO that requires a minimum of 5,000 covered lives for three years.
There are two basic approaches to ACOs and value-based payment. In the simplest approach the ACO receives quality and cost targets and is incentivized by additional payments if they hit their required quality and cost goals. In the second model the same basic quality and cost targets are present but there are enhanced levels of payments, however these come with a “down-side” risk of reduced payments if the targets are not reached. Recently HHS Secretary Azar announced his intention to eliminate the “no risk” ACO payment option and move to the second model only. It has also been a stated goal of CMS to move at least 90% of ambulatory payments to an ACO or bundled payment type arrangement over the next 10 years.
PBM Evolution toward New Delivery Models:
The PBM industry has made significant contributions to better management of the US prescription drug spend yet it has come under increasing criticism. Efforts focused on PBMs feature prominently in President Trump and Secretary Azar’s Blueprint for Drug Cost Reduction. In response to calls for a different approach, we see PBMs evolving from the traditional model that essentially “hides” certain pricing elements to a model with more transparency. The new fully transparent PBM programs eliminate concerns about hidden fees, rebate amounts, Maximum Allowable Cost list and spread manipulations.
We also see the introduction of new terminology with companies like Ventegra now branding itself as a Pharmacy Services Administrator (PSA) as opposed to a traditional PBM and offering a fully transparent approach and a greater emphasis on 340B and specialty pharmacy options along with enhanced medication therapy management programs.
For 2019, hospitals and health systems would be wise to evaluate their current PBM performance for their employees and any “at risk” populations they are responsible for – and pharmacy should be part of this analysis. Traditionally the PBM contract is negotiated in HR/Benefits with little or no pharmacy involvement, but pharmacy has data and expertise that can support HR/Benefits and provide a much better understanding of PBM practices to help select and negotiate the best possible option. For health systems with their own retail and specialty pharmacies, “insourcing” more employee prescriptions may also offer significant cost reduction opportunities.