6 Important Trends Impacting Supply Chain and Drug Pricing
For most of 2020, the pharmaceutical supply chain was stressed and overshadowed by the pandemic. Drug shortages have also been a main headliner. Hospital have been inundated with the need to provide timely vaccines to a growing number of patients while continuing to provide COVID-related and routine care. Beyond the COVID vaccine, what else can we expect to see through the rest of 2021 related to the pharmaceutical supply chain and overall drug prices? Here are a few thoughts.
- Overall decrease in the buy-and-bill model: During the first few months of the pandemic, we saw a large decrease in buy-and-bill volume. This was driven by an overall decrease in services secondary to the pandemic and a move to home infusion services where a larger portion of utilization is shipped to the home infusion provider or the patient’s home from specialty pharmacies. While we expect the buy-and-bill model to recover from the lows that we saw at the beginning of the pandemic, we do not expect to see a full recovery. This is due to patient and payer preference for home infusion services and a continued push by payers to move away from buy-and-bill model to take advantage of lower cost sites of care.
- Increase in spend on home infusion therapies: As outlined in #1, an increase in the use of home infusion services is likely here to stay. As a result, we expect an increase in therapies that are commonly used in this space. Additionally, we expect some providers to become more aggressive in the therapies they are willing to administer in the home setting, including biologics (specialty drugs) which are traditionally administered in infusion clinic settings.
- Continued uptake in biosimilars: Over the past few years, we have seen an increase in the adoption of biosimilars. Due to the financial pressures of the pandemic, we expect health-systems to become more aggressive in their efforts to accelerate the uptake of biosimilars. Additionally, we expect payors to continue their adoption, especially those who are vertically aligned with providers. This adoption should pave the way for uptake of some larger market biosimilars set to launch in the coming years (ex: Humira)
- Price increases for specialty pharmaceuticals: I am sure it will be a shock to all, but we expect specialty pharmaceuticals, which drive most pharmacy budgets, to take price increases this year. We expect these increases to follow past trends.
- New launches of specialty and orphan drugs: The pharmaceutical pipeline is filled with specialty and orphan drugs that will continue to put strain on pharmacy budgets. Additionally, due to the pandemic, some FDA approvals were delayed, or the manufacturer chose to delay product launch. Expect a push to increase utilization of these products early in 2021. One drug to watch is aducanumab, a drug for Alzheimer’s disease. In November, an FDA advisory committee issued a negative vote on the drug; however, a final verdict is not expected until March 2021. If approved, aducanumab is a potential $15 billion drug that will alter budgets and put pressure on infusion capacity.
- 340B changes: Yet another topic related to drug prices and supply chain that has its own “Top 10” spot. This is an area that everyone should be closely monitoring due to the implications on the overall pharmacy budget.
In 2020, many pharmacy budgets experienced a drastic decrease in spend early in the pandemic secondary to a decrease in infusions of high-cost therapeutics. In 2021, while the pandemic is still ongoing, we do not expect this trend. Rather, we expect an overall budget increase secondary to price increases and new launches of specialty and orphan drugs. The impact of buy-and-bill changes will depend on the hospital or health-system. For those with a specialty pharmacy and/or home infusion pharmacy, the change may be minimal. Finally, the adoption of biosimilars will offer some relief to the growing pharmacy budget.