To kick off the new year, Navitus' CEO, David Fields, shares his industry insights on what plan sponsors should watch for in 2021.
The pharmacy benefits industry has evolved quickly over the last year, despite significant spikes and drops in service needs and long-term implications stemming from the COVID-19 pandemic. Yet as we look to the year ahead, one thing is constant—affordability and access to care will remain high priorities.
As CEO of Navitus Health Solutions, a full pass-through pharmacy benefit management (PBM) company, I have a unique perspective on the role of transparency in the pharmacy world and how it leads to cost-saving opportunities for our clients. We need more transparency in the industry to help combat the rising costs of medications, and plan sponsors will be on high alert as they face mounting budget pressures in the year ahead. In this context, here are my top five predictions for plan sponsors in 2021:
#1 Pharmacy Benefits Will be Top of Mind for Employers Looking to Cut Costs
A recent report by PWC shows employer spending on healthcare could increase anywhere from 4-10% next year. Coupled with extreme revenue losses due to the COVID-19 pandemic, employers and other plan sponsors are seeking ways to reduce benefit expenses. While one of the largest expenses plan sponsors grapple with is healthcare benefits, they may not realize that pharmacy benefits is an area where they can shave potentially 10-15% off their costs. A transparent, pass-through PBM partner can help plan sponsors gain visibility and control over their costs and create greater savings opportunities.
#2 Specialty Drugs Will Demand Extra Attention
Specialty drugs are expected to exceed 50% of drug spend over the next three years, so managing a company’s specialty pharmacy spend will be increasingly important as costs continue to rise, and new drugs are launched. Plan sponsors need to engage with a PBM who can leverage pharmacy benefit management tools that can reveal specialty drug savings opportunities, whether they fall within the pharmacy benefit or medical benefit, and develop strategies to help better manage spend and improve care. These strategies may include benefit design, including alternative funding.
#3 Employers Will Look Beyond Rebate Strategies and Seek More Transparency
Sixty-nine percent of employers say they would welcome an alternative to a rebate-driven approach. Plan sponsors will demand more transparency around rebates as they try to understand why some rebates are actually driving up costs. Many plan sponsors will consider a lowest-net-cost approach that includes a more affordable, yet clinically effective drug mix, including generics and less expensive brands, allowing for substantial rebates without the added costs.
#4 PBMs Will Focus on Lowest-Net-Cost Formularies to Reduce Drug Waste
Wasteful drug spending can represent 3-24% of a company’s total spend and will continue to rise unless plan sponsors find ways to better manage their formularies, which often include drugs that have little or no clinical value and drive up costs. In fact, a recent report from JAMA estimates that the cost of waste in the U.S. healthcare system makes up about 25% of total healthcare spending. A lowest-net-cost formulary chooses drugs that provide clinically sound, cost-effective alternatives using generics or less expensive brands to reduce waste.
#5 Opioid Misuse Prevention Wil Be a Top Priority for Plan Sponsors
According to the American Medical Association, more than 40 states have reported increases in opioid-related mortality since the COVID-19 pandemic began. With opioid addiction continuing to rise as the pandemic trudges on, plan sponsors will need to find ways to prevent opioid abuse through proactive and retrospective safety solutions that provide actionable guidance and education to avoid over-prescribing.
While there are still many unknowns around the pandemic, plan sponsors will remain committed to providing affordable and quality healthcare for their members. In 2021, we’ll see an increased demand for transparency and new strategies to help reduce pharmacy benefit costs. What are your industry predictions for 2021?
written by David Fields
David Fields is the President and CEO of Navitus, where he provides strategic direction to drive its steady growth. He is responsible for external relationships such as industry thought-leader engagement, media interaction, and potential and current client strategies and support.