2016 HealthCare Consumerism Outlook

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2016 BY GEORGE VAN ANTWERP SENIOR MANAGER DELOITTE CONSULTING LLP

Pharmacy Benefits

The Specialty Pharmacy Elephant If you want to talk about growing health care costs in the United States, specialty pharmaceuticals1 (i.e., high cost drugs used to treat conditions like cancer, rheumatoid arthritis or Hepatitis C) is one topic which gets people excited for multiple reasons: 1. Pharmacy spending in employer insurance benefits has ballooned up to 19 percent of total health care costs (excluding drug spending under the medical benefit); 2. U.S. spending on pharmaceuticals is projected to grow 34 percent between 2015 and 2020, driven by2 specialty drug costs; and 3. Forty-two percent of the late-stage drug pipeline is for specialty drugs3.

R

ight now, specialty pharmacy issues remind me of the story of the Six Blind Men and the Elephant — each man can only get a sense of the part of the animal in front of him, and, therefore, each comes away with a completely different take. Like the elephant, everyone has a different view of the high costs of specialty drugs depending on his or her vantage point. • Pharmaceutical manufacturers are worried about innovation (and return on R&D investment) and being limited by payers’ actions on pricing and utilization management. • Employers and health plans are worried about their ability to provide coverage at a reasonable cost (which is important for attracting and retaining talent) with increases in drug prices4 and new, high-cost drugs coming to market. • Consumers are worried about health care costs. Forty-five percent of surveyed adults under the age of 65, reported not filling a medication due to cost. • Distributors and specialty pharmacies are concerned about growth opportunities.

While a lot of our focus is on cost management through formulary, copays and utilization management, we spend a lot less time thinking about the patient journey and how that varies by age, gender, condition, geography and other attributes.

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Annual Outlook 2016 I www.TheIHCC.com I HealthCare Consumerism Solutions™

Physicians are worried about the increased use of prior authorization requirements to control the limit the use of specialty medications since PAs are already estimated to take 20 hours per week.

If we can’t all agree on what this elephant is and how to manage it, the risk is that the industry will face increasing government regulation or intervention. We already know that 76 percent of consumers say the top health care issue5 for the President and Congress is to address high cost medications. Additionally, several of


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