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Payers brush aside concern over drug prices — for now​

27 Oct 2021

Negotiating for drug-price discounts has been less of a concern for payers than the shift to telehealth and other operational issues, a study showed.

Asking a health insurer about drug prices is, more often than not, likely to elicit strong reactions. Yet seeking discounts from drugmakers has been less of a worry for payers than the unexpected shift to telehealth and other operational issues, according to a new study measuring COVID-19's impact.

Only 9% of payers correlate the changes in the market seen during the pandemic to requiring lower drug prices. The study included 35 respondents handling benefits for roughly 165 million Americans spread over commercial and managed Medicare/Medicaid plans.

"There always are going to be some payers who will express they want lower drug prices," noted Bill Lobb, VP of Indegene and a partner at market-access advisory Medical Marketing Economics (MME), which conducted the study in the year's second quarter. He cautioned, however, that "the expectation that Covid requires lower drug prices was limited, in that payers realized that that wasn't the impact."

Insurers were never that worried about the pandemic from a financial perspective, with several posting record earnings last year. That was no surprise, as the delay in elective procedures meant they had fewer medical claims to pay. But as Americans got vaccinated and resumed seeing their doctors in the first half of 2021, healthcare spending soared.

Respondents evinced a certain serenity about their finances. On a 10-point scale, with 1 being "business as usual" and 10 being "destabilizing," the "increase in unplanned medical costs directly related to the treatment of COVID-19 in your membership" drew just a 5.6 for 2020 and a 5.3 for 2021. Similarly median scores were reported for the impact on pharmacy costs.

The impact on overall business operations resonated more, garnering a 6.2 on the 10-point scale. Among “disruptors,” the shift to telehealth ranked highest (26%), followed by the delay in elective procedures and resulting decrease in healthcare utilization (14%) and increase in hospitalization (14%), the pollsters found.

The shift to telehealth took payers by surprise. “Before the pandemic, they kind of gave it lip service, but they didn’t really do it,” explained Jack Mycka, MME global president and CEO. “And then, all of a sudden, they had to do it – and they not only did it, but they started to like it.”

Telehealth became the key enabler of healthcare, with 29% of payers saying they had implemented more telehealth visits and telemedicine options. Anticipated growth of telemedicine over the six- to 12-month period was 5.1 on the 1-10 scale, with 100% of the respondents saying they would support telemedicine claims.

“Because payers are paying for virtual visits on a routine basis and have shifted that way, patient monitoring has become simplified as a result of COVID,” Lobb added.

Meanwhile, in surveying other aspects of the payer/manufacturer relationship, MME found minor disruption among payers in Medicare rebate negotiations (46% reported a one-month delay). But activities like pharmacy benefit reviews, rebate negotiations and contract renewals for new and existing product launches all saw minimal upheaval. Ditto for prior authorizations and new drug reimbursement.

All 35 respondents said they were happy with the way pharma responded during COVID-19, rating their manufacturer relations as a 6.8 (where 1 was "very poor" and 10 "very good"). "This is significant, as payer/manufacturer partnerships are key to the cost of a product and criteria for its use," MME noted.

Interactions between the two parties were impacted (5.9 out of 10), as payers highlighted delays in meetings which impacted cost discussions and contract negotiations. But a switch to virtual meetings was welcomed.

Forty-one percent said that switching to web meetings was the most helpful of pharma initiatives, followed by improved access/accessibility (12%) and frequent communication (9%). Nearly a fifth said they wanted to see more telemedicine visits and virtual interaction.

"Manufacturers flipped to virtual to support their payer interactions relatively quickly, amid the huge decrease in face-to-face meetings," said Lobb. "That continues, at least through this year, with not a lot of payers looking to bring in-person meetings back immediately."

This means that, rather than physically over a meal, drugmakers should plan to conduct formulary discussions virtually, at least for the foreseeable future. Payers expect in-person meetings to increase from 9% in 2020 to 15% in 2021 and 34% in 2022 – all with immunization cards in-hand. To that point, all respondents said they would require participants to be vaccinated prior to meeting physically in 2021.

"Two-thirds of these meetings will continue to be virtual," MME noted in its report, adding that 19% of payers said they had not scheduled any in-person meetings for 2021.

"That will probably vary a little bit by geography and plan," said Mycka. " They're not all going to follow the exact same criteria for going virtual. There are some people who like free lunch more than others."

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