The U.S. market for prescription drugs has evolved significantly over the last few years. High and increasing costs of healthcare, together with changes related to the Patient Protection and Affordable Care Act (ACA), have been at the forefront of discussions. Health insurance coverage for previously uninsured, institution of Accountable Care Organizations (ACOs) and various other healthcare quality and efficiency initiatives have also been prevalent topics.
We studied and analyzed how the implementation of various components of ACA is impacting the prescription drug industry and published the results in a detailed article in the April edition of Clinical Therapeutics. A high-level summary of findings is below. The complete article is available here.
U.S. market trends and ACA impact
Many aspects of ACA implementation are reinforcing changes that had already started to have an impact on the U.S. prescription drug market. As a result, we have seen the following main trends:
- MCOs and PBMs have increased the use of coverage restrictions, such as prior authorizations (PAs), step edits (SE) and exclusion lists to contain the budget impact of high-cost specialty drugs.
- Marketplace Exchange plans, instituted under the ACA, have established fairly large deductibles and co-payments on drugs, particularly for bronze plans.
- Actual use of specialty drugs among Exchange patients is higher than for commercial plans, thus driving a relatively high treatment cost burden for the plans.
- Marketplace Exchange plans have mainly applied federal subsidies toward reduction in medical benefit deductibles and co-payments, rather than pharmaceutical co-payments. These plans seem to have deliberately chosen to disincentivize prescription drugs in favor of medical interventions.
- Patient financial contributions to healthcare, through deductibles, fixed co-payments and percentage coinsurance rates have increased gradually, but significantly, across all healthcare plan categories. Co-pay offset coupons have negated the impact on patients for the commercial market, but introduction of additional coverage restrictions of various kinds may limit the effectiveness of coupons in the future.
What are the implications of these changes on the U.S. prescription drug market? One word: “value.” The drug industry seemingly has ignored a need to communicate value to its customers. We give coupons to avoid discussions about value to physicians and patients. We are learning now that physicians are increasingly open to discuss benefit-cost trade-offs, as they perceive prescription drug prices to be too high; many now consider “financial toxicity” as a meaningful burden to a patient that deserves close consideration in prescribing. Physicians and medical associations have become more willing ears to payers who complain that at the current cost evolution, tough choices will have to be made. “We can no longer afford everything” is a more frequently heard statement today than it was even a few years ago.
For the pharma industry, demonstrating value of individual drugs to a broader set of stakeholders, including prescribing physicians, patients, payers, medical associations, patient associations and the media is increasingly critical, particularly for high-cost and high-budget-impact prescription drugs. Value claims and supporting evidence need to be customized toward the individual preferences and financial incentives of each customer.