For the past 5 years, I have been interviewed by several of their UK-based leaders for an annual white paper on the state of the US pharmaceutical industry, and have been asked to share some of my predictions for the future. I thought it would be valuable to give our readers a preview of some of the issues we discussed and to elaborate on them.
There is no future in predicting the future, but that has never stopped me before. There are 5 major challenges for the pharmaceutical industry as we emerge from the dark tunnel of 2020 and the light starts to shine brighter on the healthcare system of 2021. Allow me to elaborate on each of the 5 major trends that I discussed with IQVIA’s leadership.
I believe that on the delivery system side, or provider portion of our ecosystem, we will witness the continued consolidation of smaller providers, which will result in larger integrated delivery systems with scores of hospitals and clinics. This consolidation will be driven, in part, by the significant losses that many providers have sustained during the multiple surges of the pandemic.2 Only large and well-capitalized systems, with solid bond ratings, will survive and evolve. The big will get bigger with time.
From a pharmaceutical industry perspective, this consolidation will bring certain key challenges, and chief among them will likely be the role of an enterprise pharmacy and an enterprise-level Pharmacy & Therapeutics (P&T) committee. In our system at Jefferson Health, as 14 disparate hospital providers coalesce and mature together, we have devoted a considerable amount of energy to the creation of an “enterprise formulary.” Outsiders may scratch their heads here, but insiders know that every hospital P&T committee has its own culture and its own way of doing business. To think that all providers across 14 hospitals, which include a medical school–based teaching hospital at the core, will somehow magically agree on the selection of key new pharmaceutical agents is naïve. This will be gut-busting hard work to mold a formulary that is evidence-based and acceptable to everyone. One could write a book about this journey alone.
The second trend that I see in the near-term will be the preservation of most of the attributes of the Affordable Care Act (ACA), which was first approved more than a decade ago. Under the Biden administration, it is no secret that Democratic health policy people want to see improved access and the expansion of services.3 Although everyone wants greater transparency in drug pricing (more on this later), I believe that the ACA’s preservation will inexorably lead to greater pharmaceutical consumption. To me, it is axiomatic that expanded coverage equals greater drug utilization. I am hopeful that this trend will also actually improve health! I surely will be tracking this assiduously.
I predict that a third powerful trend will be the continued expansion of Medicaid, which is currently the single largest component of national healthcare spending, eclipsing Medicare. With Medicaid’s expansion, even in states with a Republican governor, comes increased spending on pharmaceuticals.4 Remember, too, that so-called red states, such as Oklahoma and Arkansas, when put to a public vote, overwhelmingly chose to expand Medicaid, and therefore offer more citizens access to a broader range of drugs than ever before.4 Broadening Medicaid, in any state, means increased healthcare utilization. Once again, the key question remains as to the impact of Medicaid’s expansion on the health of the population, but there are clearly good data to support increased access to care and improvement in many outcome measures of health with increased access to Medicaid.5
The fourth trend is a bit more complex, and here my crystal ball gets cloudy. The drug price transparency discussion will likely continue, but we will not see price controls, per se, under the Biden administration. We will see continued debate and legislative proposals to reign in drug costs, especially in light of very recent evidence demonstrating that the national healthcare spending has grown for a fourth consecutive year.6 But remember, even a very well-regarded health policy think tank such as the Kaiser Family Foundation and its highly regarded president Drew Altman have said, “drugs aren’t the reason the U.S. spends so much on health care,” but instead inpatient and outpatient care are.7 This conversation is not over by a long shot, and I believe that the pharmaceutical industry has gotten a public reprieve with the rollout of the COVID-19 vaccines. There is growing sentiment in the US public that the pharmaceutical industry saved the day, and no one is in the mood right now to criticize this sector of our very complex healthcare industry.8
The final trend is broader, and it relates to the creation of what I have called the “payvider”—a clunky term that refers to many different joint venture structures that connect payers to a delivery system. An example of a payvider may include traditional payers, such as Kaiser Permanente and Geisinger Health System. The more recent payvider structure is exemplified by the relationship between Blue Cross and Blue Shield of Michigan and a primary care organization such as ChenMed,9 and Braven Health, which is the result of a joint venture among Horizon Blue Cross and Blue Shield of New Jersey, Hackensack Meridian Health, and RWJ Barnabas Health.10
Although it is simply too early to grasp fully the ramifications of the evolution of the payvider, these trends remain clear—we are experiencing a renewed commitment to evidence-based prescribing, adherence to practice guidelines, and much tighter formulary controls to decrease the unexplained clinical variations in care. These are all positive trends in my estimation.
The main 5 trends discussed here will continue to shape the purchase and distribution of all pharmaceuticals in 2021. I am confident that IQVIA will be tracking these trends with its powerful data analysis capabilities, and that many white papers and blog posts will emerge early in 2021.
- IQVIA. About us. www.iqvia.com/about-us. Accessed December 25, 2020.
- Orszag P, Rekhi R. The economic case for vertical integration in health care. NEJM Catal Innov Care Deliv. May-June 2020;1.
- Butler SM. Four COVID-19 lessons for achieving health equity. JAMA. 2020;324:2245-2246.
- Robeznieks A. Why Oklahoma voters put Medicaid expansion in their constitution. American Medical Association. July 14, 2020. www.ama-assn.org/practice-management/medicare-medicaid/why-oklahoma-voters-put-medicaid-expansion-their-constitution. Accessed December 25, 2020.
- Inserro A. Medicaid expansion under ACA found to have more positive than negative effects. American Journal of Managed Care. June 4, 2018. www.ajmc.com/view/medicaid-expansion-under-aca-found-to-have-more-positive-than-negative-effects. Accessed December 25, 2020.
- Martin AB, Hartman M, Lassman D, et al. National health care spending in 2019: steady growth for the fourth consecutive year. Health Aff (Millwood). 2021;40:14-24.
- Altman D. Drugs aren’t the reason the U.S. spends so much on health care. September 30, 2020. www.axios.com/drugs-arent-the-reason-the-us-spends-so-much-on-health-care-d68da7b8-71c9-46a7-bd71-0b94ba850129.html. Accessed February 8, 2021.
- Allison GT. Who made the vaccine possible? Not WHO. Wall Street Journal. December 24, 2020:A15.
- Blue Cross Blue Shield of Michigan partners with dedicated senior medical centers as they open six primary care centers in Wayne County. December 14, 2020. www.globenewswire.com/news-release/2020/12/14/2144893/0/en/Blue-Cross-Blue-Shield-of-Michigan-partners-with-Dedicated-Senior-Medical-Centers-as-they-open-six-primary-care-centers-in-Wayne-County.html. Accessed February 8, 2021.
- Braven Health. About Braven Health: why Braven Health? https://bravenhealth.com/about-braven-health/why-braven-health. Accessed December 25, 2020.