Implications for Biopharmaceutical Companies
Health plans have few short-term levers to cut costs. Their most effective tools for reacting to the profitability impact of COVID-19 require benefit design changes, such as changing covered services, provider networks and drug formularies. These changes can’t occur during a benefit year and may take more than one year to pull through. In the short-term, plans’ tools for reducing cost are limited to administrative tactics whose implementation doesn’t require regulatory oversight or new employer contracts. These short-term tools include expansion of pharmacy oversight of drugs administered under the medical benefit, specialty pharmacy mandates to reduce payments to physicians and incentives to providers to refer patients to infusion sites not owned by hospitals. Plans’ targets for costs control will likely include specialty drugs, particularly for autoimmune drugs, which account for the largest proportion of payers’ drug spending increase. Biopharmaceutical companies should expect health plans to deploy these administrative tools for the remainder of 2020 and into 2021.
In the longer term, 2022 and beyond, health plans are likely to respond to employers’ COVID-19 related economic costs with less expensive health benefits that reduce premiums by limiting coverage and patient choices. As biopharmaceutical companies look beyond 2021, they should revisit market access landscape assumptions for new and in-line brands, particularly related to payer and distribution mixes, patient financial assistance requirements and site of care.