The Coronavirus Impact On The Pharma World

Notwithstanding the unique impact of coronavirus impact illness 2019 (COVID-19) on the economy and organization, its effects on the health plan company appear to be practical and functional rather than necessary and financial. This judgment comes from a pilot study with health plan decision-makers.

Although multiple settings within the health plan company were mentioned, the consensus was, as one respondent noted, it is “marketing as usual.” 1 The suggested changes are discussed below.

The Workforce

Not unlike the workforce generally, the most crucial change is the majority of staff now work remotely. Issues routinely concluded with a passing conversation are quickly marketed through phone calls, email, and immediate messaging. Meetings are sent via video interviews.

From the standpoint of the work process, the advantages that appear to be the most powerful are maintaining a dialogue with existing leadership and ensuring that COVID-19 efforts move expeditiously. Consistent with the continuity theme, there may be a trend for negative formulary changes to be delayed three months (i.e., moving a product from formulary to non-formulary). Therefore, sufferers have more time to focus.

The idea here is that action and COVID-19 actions will remain the top advantages currently. Still, other priorities health plans had before the pandemic are expected to gain traction in some phased way once removed working gains more great maturity.

Coronavirus Impact on Manufacturers

The most obvious connection is that agreements with health plans will be replaced by video conference for the foreseeable future. As a result, building a productive video conference is expected to become an essential core competency.

Given a wide range of topics, key characteristics that create a big video conference can be required to vary. Video organizations centered on a new indication versus a business issue versus new health economic data versus patient adherence are each likely to be optimized with some variation in narrative construction and data show. One-size-fits-all could get tired very quickly.

Since a remote working landscape likely changes to a “one shot on goal” reality, identifying essential success factors for core topics in video conference presentations merits explicit attention by companies.

The Health Plan

A second implication from health plans‘ old working has more specific business results. Health plans might not have the appetite to partner on new value-based contracting events as they had before. With control and staff drawn into COVID-19 needs, they have less bandwidth to act on more complex contracting methods.

Closely linked to this last point, plans seem likely to favor greater upfront transparency in contract discussions and look less favorably on protracted negotiations.2 There may be differences—super high-cost specialty medicine treatments, plus gene and cell treatments, for example, in which outcomes studies are required—but at least for the balance of this year, the “keep it manageable” principle for most contracting is likely to be favored by health systems.

Expenses Caused By Coronavirus Impact

Coronavirus impact doesn’t seem to affect health plan payments negatively. One respondent cited a 20% decrease in medical payments in April compared with February. A second likely 25%.4 A third indicated a 15% total reduction in services for March, 30% for April, and 30% extended for May.5 With state orders that prohibit elective surgery varying across the country plans in some states will see more meaningful savings than others.

When elective operations that had been arrested eventually hit the system, the expanded volume seems more likely to be stretched out rather than a spike. This can be connected to 3 factors:

1) More acute situations addressed first.

2) Patient caution holding back demand until there is a vaccine.

3) Facility caution because of reputation and liability concerns tied to non-symptomatic staff and the risk of infecting non-infected sufferers.

As a consequence, the interpretation here is that developed COVID-19 health plan expenditures and expenses related to elective procedures should be absorbed enough in the current multi-year profit and loss cycle. This is compatible with a recent Moody’s assessment of business financials, stating that “US health insurers will remain effective under the most likely situations.”

The Drugstore Side

To date, although there may be a trend for health plan medical expenses not to be adversely influenced by COVID-19, there are signs the drugstore side may be seeing some short-term gain. Where medicine has increased, it can be attributed to:

• Patients were stocking up on medicines in anticipation of potential deficiencies.
• Ideas were starting a new refill override to block edits that generally require 80% use.
• Pharmacy departments are promoting 90-day numbers through member outreach and adding a 90-day option to benefit language.

Manufacturers would profit from controlling these developments and exploring ways to deepen contracting associations that align with how plans to promote increased supplies.

Commercial Membership

Plans are working with employer groups having a hard time paying premiums. One respondent estimated 15% of accounts are having difficulty, and a “few percentage points” have lost coverage entirely.7 Another respondent put the number of forgotten accounts at less than 5%.8

Where health plans are modifying payment schedules for some portion of their small group commercial accounts, they may need to have that development somehow mirrored in their manufacturer relationships. Whether it involves high-cost specialty pharmacy products, insulin, or lower-cost chronic use medications, there is a cascading effect from employer financials to health plans to patient health.

This issue merits manufacturer attention because it introduces the idea of partnership taking on a different financial dimension with health plan customers.9

Self-Funded Space

No numbers were mentioned, but many comments pointed to health plans anticipating growth in their Medicaid enrollment in 2020 and into 2021. For smaller regional projects, this will likely mean a drop in Commercial enrollment; for national plans, it could mean a sizeable increase in their Medicaid business line.

In addition to Medicaid, a potential future scenario appears to be ACA markets gaining share from the small group, self-funded market. Prior research, the author conducted pointed to groups with 3000 and fewer lives beginning to consider whether exiting the self-funded space is a viable option because of high-cost cancer treatments and future risk from gene and cell therapies. The financial coronavirus impact could advance that thinking.

For pharma brands, the coronavirus impact from the above developments can materialize in at least three ways.

• Revenue model: Given the magnitude of discounting in Medicaid, to the extent share migrates from Commercial to Medicaid, and brand managers may need to revise their revenue models.
• Closed formularies: With closed formularies being standard in Medicaid, and widely used in the ACA markets, non-contracted products may be grandfathered for three or even six months, but eventually patients will lose access.
• Continuity of care challenge: Patients with cancer and other patients in the orphan disease space are unlikely to face continuity of care issues if new coverage involves closed formularies. However, that principle does not apply to patients generally. Consequently, having “access” as a business objective, brands may need to build contracting and be on formulary into their strategy going forward.

Product Launching

COVID-19 has disrupted the environment for product launches, and respondents did not point to any natural rebound—any “V-shaped” turn—to more favorable conditions for the remainder of the year. What they did lead to was a need for manufacturer adjustment and flexibility.

For example, since scheduled P&T reviews will take a back seat to any treatment or vaccine that health plans need to address, new products “could see a delay in their drug getting P&T review and default to non-preferred or non-formulary/medical exception status for some time.” 10

The suggestion here is that existing axioms in the payer pharmacy space could take on higher weight and be less forgiving than under normal circumstances.

• More accommodating to clinically significant benefits and less to benefits that rest solely on statistical significance.
• More receptive to presentations that firmly establish the clinical role and fit in the standard of care, and more hesitant were only adequately secured.
• Open to drawing on health economic data that are real-world, peer-reviewed, and clearly generalizable and openly skeptical of data that are not.

Key Constructs

The COVID-19 pandemic is multi-track, including but not limited to crises in population health, the health system, the economy, and personal finance. As science gains the upper hand, the recovery will likely be uneven.

Besides, key constructs shaping market behavior—such as cost-benefit, trade-offs, financial thresholds, priorities, and partnership—could, in various ways, change. Understanding these developments will require further inquiry and additional insight. Optimal performance in the COVID-19 landscape will require that understanding as well.