Visante’s Top 10 Issues in Pharmacy for Hospitals & Health Systems in 2023
We are pleased to again bring you Visante’s Top 10 issues in pharmacy for 2023. For 2022 our Top 10 items (Pharmacy Org Structure, 340B Program, Vertical Integration & Marketplace Restrictions, Drug Prices & Supply Chain, Infusion Services, Drug Shortages, Pandemic, Economy, Election, Social Justice) all turned out to be very relevant and many of these items again made the list for 2023.
To say that 2022 was turbulent would be a significant understatement! With the pandemic, economy, election and social justice issues driving national concerns, including pharmacy, coupled with the more pharmacy-specific elements it was an extremely challenging year for pharmacy and healthcare in general. However, despite the magnitude of the challenges we observed pharmacy programs all over the country stepping up and meeting these challenges head-on. Pharmacy programs demonstrated innovation, creativity, commitment to purpose, and a tremendous work ethic in supporting their patients and their organizations and should be justifiably proud of their work in 2022.
It was an honor and privilege to be able to work alongside so many great colleagues to help with the advancement of their pharmacy programs and to address the many challenges and we sincerely thank you all for the opportunity. We look forward to again supporting the advancement of high-performance pharmacy for 2023.
(1) Eight Essential Skills for Today’s Top Health System Pharmacy Leader
Steve Rough, Phil Brummond & Dave Hager
In a modern health system, the minimum skills and competency areas required of a top pharmacy leader are incomplete. . . This paper outlined the following core competencies: emotional intelligence, continuous professional development, strategic planning, driving innovation, business acumen, professional organizational involvement, and mentorship. These are undoubtedly valuable in health system pharmacy leadership and in many other leadership roles across different industries. They are unlikely to change over time and were likely true 10 years ago.
Meanwhile, the health system environment is changing rapidly. While these historic skills are essential, they may not be sufficient to fulfill the high demands placed on current pharmacy executives. For example, one area of growing importance in terms of core competencies is ensuring continuous accountability for compliance. As we work with clients, we see that this maintenance work, particularly as health systems grow, is pushed down the priority list at the risk of patients and the career of the health system pharmacy leader. Some of these core competencies, like professional organizational involvement, are valuable within the profession, but can be detrimental to the top pharmacy executive’s standing within their health system. As Visante works with top health system pharmacy programs across the country, we’ve identified eight essential skills that are needed to meet the ever-changing needs of the health system pharmacy enterprise.
Mastery of healthcare finance complexities. While the HVPE describes general business acumen as an area of core competency, it references budgeting, reporting, business plan development, revenue cycle, project management, and strategic planning. Top health system pharmacy executives need to have a depth of knowledge far surpassing the level obtained in an MBA program. Instead, they need to understand where the money flows throughout the system – which entity is profiting at each step in the medication use process and what levers are available to favorably shift value back to the health system.
Another facet is the rapidly changing nature of health care finance – even a month in lapse of focus can have dire consequences to a health system. For example, in a given month you may encounter federal legislative changes on drug pricing (e.g. Inflation Reduction Act of 2022), new entries into the retail pharmacy space (e.g. CostPlus Drug Company, Amazon Pharmacy), actions by pharma in relation to 340B (e.g. ESP Data requirements), or changes within payer’s strategies to contain infusion spend (e.g. Cigna and Aetna oncology site of care restrictions). Constant vigilance and systems for staying up-to-date are essential. The ability to understand the value proposition in each of these to the main players in-market, and to take action strategically and proactively, are vital skills.
Tangible ideas for new pharmacy revenue streams, such as: optimizing the medical benefit pharmacy revenue cycle, specialty pharmacy, and home infusion. Given half of health systems have negative margins following the pandemic, health system senior leaders are relying on pharmacy departments to create new programs, services or strategies that bring in new hard dollars. Historically, negative margins have led to a focus on labor expense savings, but health system leaders are nervous, for now, to put pressure back on their workforces. How long this reluctance will last as the federal government’s pandemic financial support runs out will be highly variable.But make no mistake – either top pharmacy executives will have an arsenal of new revenue ideas or they will be asked to find labor expenses to play their part in shoring up health system finances.
Values that place the organization, not pharmacy, first. This is one of the most significant changes since the rise of the Chief Pharmacy Officer (CPO). The strategy behind the CPO’s elevation was that pharmacy would finally have the seat required to best advocate for pharmacy – and have a voice similar to other team members such as nurses and physicians. What has largely transpired instead is that the CPO is looked upon like other administrative or financial leaders similar to laboratory or supply chain. The expectation is not to be just an advocate for advancing the profession, but instead this is a three to five-year role to move the priorities of the organization forward, largely around new business ventures. If successful, the CPO gains additional areas of oversight and can even find themselves taking on additional responsibilities having a broader influence on organizational strategy. Building a 20-year leadership career by stabilizing and slowly progressing the pharmacy department is no longer desired by senior leaders at the top organizations.
Advanced negotiation skills and the ability to leverage them with external business entities (group purchasing organizations, wholesalers, pharma, automation vendors, technology companies, start-ups, etc.). The medication use process is ripe for disruption, and health care in general is seeing a growing number of new entries into the market. Given the exorbitant amount of money the US spends on health care, everyone is trying to solve health care’s problems. So new technologies and services are often targeted at health care, and top pharmacy executives will have as many partners outside of health system pharmacy as they have inside it.
Real innovation will likely come from these outside groups, as it has in every other industry. Leaders who have networks that will allow them early access to new services will provide a competitive advantage to their organizations. Again, senior health system leaders are not just looking for innovation that will advance pharmacy’s goals, but for solutions that will deliver results to patients more holistically. This will require a broad array of partnerships that may fundamentally change where top pharmacy executives spend their time. For example, the potential impacts of artificial intelligence (AI) on pharmacy is an area that has received a lot of talk but little action. A top pharmacy executive will need to have the right partnerships to make AI in pharmacy a reality. This will set a new standard for the profession, and potentially for healthcare more broadly.
Entrepreneurial skills beyond traditional silos of inpatient, ambulatory, and retail. This is a type of innovation that will produce tangible new revenue streams for the organization, and it requires expertise in setting up separate business entities. This could include creating their own technology platforms, spinning out parts of their existing work into LLCs, or even marketing their services in areas of excellence to other health systems. These leaders will seek accountability for areas of medication use not typically thought of within the pharmacy purview to create new financial opportunities and partnerships. We commonly see this in employee health plan design, population health and overall infusion strategy including site of care. Leaders whose journey followed one of the transitional silos of inpatient, ambulatory or retail may be at a competitive disadvantage unless they can gain expertise in these emerging areas.
Creativity in how to maximize pharmacy supply chain value for the organization. The potential benefits to patients and the organization are significant when the pharmacy supply chain is optimized, improving access to care and financial performance. Currently, we work with a number of clients where an outside view has found traditional opportunities they are missing. Our consultants also identify that few organizations look beyond traditional opportunities to maximize savings. Moving beyond this short-sighted approach should involve planning for the worst-case scenario in terms of possible pharma and regulatory erosion of 340B savings. Great executives will have plans in place for how they will pivot today’s services and resources in the event that 340B savings are reduced in the future.
Transformational leadership to move from an organization to a system. This comes down to three major steps. First, the leader needs to have insight into optimal system structures that meet the unique needs of their organization. Next, they need to tie business and clinical performance to that new structure to get support to implement it. Finally, they need to have the change management skills to establish the system structure. Pharmacy can lead the way in this area as a clinical department where system approaches create real value back to the organization. This can be a model for others to follow.
The ability to attract a diversity of top talent in a world of workforce challenges. Every pandemic has had workforce implications that rippled through society for years, and it is naïve to think this will not be our future as well. Given the breadth of expertise needed and the patient populations we serve, highly skilled and diverse candidates will be critical. The old model was to establish a health system pharmacy administration and leadership residency program to keep the talent you developed. While this is still necessary, the demands are much higher now for diversity of experience. The network of leaders pharmacy executives will recruit from needs to be broader. Nationwide, we see , organizations hiring thought leaders from other sectors outside of pharmacy, including analysts, project managers, and even former executives from adjacent health care fields (PBMs, wholesalers, retail chains, etc.). This will not be about smooth sales pitches, but having a regional and nationwide network that pulls talent in and retains them.
As a top pharmacy executive (or future executive), this is a daunting list. As Peter Drucker famously said, “Universal genius has always been in scarce supply.” There are not enough leaders who have all eight of these skills, plus the core competencies to occupy all the health systems who need them. And those with these competencies don’t always have the bandwidth to accelerate the changes they aspire to lead. Having a trusted partner to shore up soft spots in any of these areas will be essential to most, if not all, health systems. This could be accomplished through insourcing leaders with expertise in these areas and fostering regular dialog with them to ensure competence, or by engaging an outside consulting firm with deep expertise in these areas for guidance. Top health system executives realized years ago that health care was changing too quickly for one person to master all the complexity. So they turned to consultants for help, keeping one to two on retainer at all times. Visante is seeing pharmacy executives who lean into this benefit similarly to their senior leader counterparts. As is often said, a leader needs to act like the position they want to grow into.
(2) Emerging Technologies Driving the Evolution of Healthcare
One of the “silver linings” from the continuing challenges of the coronavirus pandemic has been the realization that we need to change the way we think about our processes, and consider new and innovative strategies to improve them. One area that has received a lot of attention, which will continue in 2023, is the development and use of technology to improve processes and delivery of care.
The World Health Organization (WHO) defines health technology, as the “application of organized knowledge and skills in the form of devices, medicines, vaccines, procedures, and systems developed to solve a health problem and improve quality of lives.”
For 2023, pharmacy will be a part of this medication-use technological expansion. We are excited to share some examples of emerging companies and new technologies to watch out for.
AI with Invistics: Drug Diversion
Invistics is applying machine learning (ML) and artificial intelligence (AI) to the challenges of drug diversion. A study published in AJHP details the benefits of using this technological approach as opposed to more traditional detection methods. In the study, 10 acute care inpatient hospitals across four independent health systems extracted two datasets from various health information technology systems for comparison. The machine learning model had 96.3% accuracy, 95.9% specificity, and 96.6% sensitivity in detecting transactions involving a high risk of diversion using the initial sample dataset. In subsequent testing, using the much larger historical dataset, the analytics detected known diversion cases in blinded data faster than existing detection methods (a mean of 160 days and a median of 74 days faster).
Tula Health Smart Watch: Type 2 Diabetes
Tula Health is transforming the care of Type 2 diabetes. The company currently provides a smart watch that captures a variety of outputs such as exercise, blood pressure, heart rate and sleep patterns. They also offer a smart phone/glucometer combination where patients can enter their glucose levels and communicate with their health coach at the touch of a button. All this information is provided real-time to a health coach who is available 24 hours a day to work with the patients to optimize their diabetes control. Tula Health has shown improved use of primary care providers and decreased use of emergency and hospital services, which has reduced costs in their target patient populations by up to $3,000 per patient per year.
The company is also adding some amazing technology to this system. Working with the physics department at Brigham Young University, they have miniaturized a full-size spectrometer to the size of a dime. They have also successfully created an impedance algorithm that only reads moving items, effectively filtering out skin and tissue and reading only blood. Inserting the miniature unit into the smart watch provides the ability to capture real-time, continuous blood glucose levels without finger sticks, which could be a “game changer” for diabetes management when the technology becomes commercially available.
Pharmacy Stars Smart Glasses: Medication Inspections
Pharmacy Stars is working with Iristick, along with the pharmacy team at Houston Methodist, on the use of “smart glasses” to improve the efficiency of medication inspections. In addition to its IV Quality Management System, called Compounding 360, Pharmacy Stars also offers a Joint Commission inspection tool. They can load the inspection tool into the smart glasses so the pharmacy technicians who are conducting inspections receive a “heads-up display” of all their required inspection items. The technicians can quickly and easily check off needed items and use the glasses to take a picture of any out-of-compliance elements. All this information is downloaded directly from the glasses into the Pharmacy Stars tool to produce a report of the inspection, thus saving significant time. Additional use of the glasses for observation of technician sterile compounding technique to allow for remote monitoring and remote facility inspections is also planned.
Vitae Industries 3D-printing: Compounding
Vitae Industries Auto Compounder gives pharmacies the ability to 3D-print drug dosage forms. The unit utilizes ready-to-dispense NDC-coded cartridges filled under cGMP (503b facility) containing standardized non-sterile compound formulations as source material. The unit can be programmed for drug strength and quantity to make a variety of customized dosage forms like gummies, troches, or suppositories quickly and accurately.
Emancro Robtics Corp. Robots: Dispensing Automation
Emancro Robotics Corp. is working on a fully autonomous robot that can be utilized for functions such as picking drugs in the central pharmacy to fill automated dispensing cabinets (ADC) and/or the actual filling of the ADCs themselves. The robot’s secure locker is filled with medication in the hospital’s central pharmacy. It can then visit desired locations in the hospital, restocking medication and updating inventory autonomously. The robot can scan bar codes and operate elevators and electric doors. It is also designed to handle all dosage forms.
Audaire Platform: Clinical Outcomes Data
Audaire Health Inc (“Audaire”) is a healthcare technology company with a mission to increase patient access to high-cost lifesaving medications, deliver impactful clinical programs and facilitate innovative outcomes-based contracting models. Audaire’s platform captures high quality clinical outcomes data outside of the claims infrastructure, which provides full visibility into the efficacy of gene and cellular therapies. By leveraging clinical outcomes data, the Audaire platform facilitates greater flexibility in contracting for high quality clinical outcomes and deploying impactful clinical programs.
These are just some examples of what we can look forward to in the near future. 2023 looks to be an exciting time for emerging technologies to further develop and reach the marketplace. At Visante, our pharmacy informatics and technology practice group is helping clients invest in and optimize technology to improve financial performance and clinical outcomes. Contact us to learn more about how we can support your organization’s goals in 2023. Email email@example.com.
(3) Insights on the Impact of ESP and New 340B Opportunities
Kristin Fox-Smith and Angela De Ianni
For decades, the 340B drug pricing program has served an important purpose by helping hospitals and other Covered Entities (CEs) receive discounted prices on drugs to offset care provided to vulnerable, underserved populations.
But over the past several years, drug companies have started pushing back on the 340B program, putting restrictions and conditions in place that have threatened to dismantle it altogether. These restrictions are causing significant financial losses for CEs with contract pharmacy relationships.
One such condition has been for CEs to submit their 340B contract pharmacy claims data to drug companies through a third-party contractor called ESP. The goal of ESP was to provide a secure and easy-to-use platform for 340B CEs and pharmaceutical manufacturers to work together to resolve duplicate discounts. Ideally, the CEs submit their claims data, ESP takes the data and submits it to the manufacturer, and pricing is restored to the CE. This has also given CEs the hope that manufacturer inquiries and audits would decrease (or go away altogether) for manufacturers that participate in ESP, given they are receiving all the necessary details related to the 340B dispense on the front end.
Since this structure was put in place, large numbers of CEs have begun submitting data to ESP in an effort to regain some of the past two years’ lost revenue. The process was said to be simple, straightforward, and efficient – but the reality has been quite the opposite.
The entire process of pricing restoration is dependent on communication between the wholesaler, manufacturer, and Third-Party Administrator (TPA), and often takes 12 weeks or more for CEs to see pricing restored. There is also tremendous effort involved in managing communication to keep the process moving forward.
Combine this with the fact that pricing is not restored all at once, but rather manufacturer-by-manufacturer, and the process slows down even further. Meanwhile, CEs need to allocate supplementary resources to manage additional requests and track the delays. Manufacturer lookback dates also vary by manufacturer, making data retrieval and submission even more challenging.
Strategies to help manage 340B challenges
Visante continues to encourage TPAs to develop standard reporting for their CEs to use to allow for easier data extraction, analysis, and submission. While several vendors have made progress in this regard over the last several months, there are still several TPA vendors that are lagging, creating work around processes for CEs that are both time consuming and inefficient.
Furthermore, Visante recommends that CEs consider ways to reduce losses. As losses continue to challenge many CEs, 340B optimization should be considered as an opportunity to decrease revenue loss. Some potential areas to target are referral prescription capture, managing WAC spend, and auditing non-eligible claims to determine ways to make them eligible. Through auditing non-eligible claims, a CE may discover multiple issues that prohibit claims from qualifying, such as:
- Settings within the 340B validating process that prohibit claims from qualifying
- Outdated prescriber files or non-eligible prescribers writing prescriptions from a 340B eligible area
- Clinics not currently captured in the 340B universe
- Contract pharmacy opportunities
- Referral capture opportunities
Visante’s team of 340B experts, most with 340B ACE credentials, is an industry-leading consulting firm that helps CEs of all kinds to reach their compliance goals, prepare for and successfully complete audits. Our experience and know-how with ESP has helped hundreds of CEs recover funds in a timely manner. We help hospitals and health systems to make the most of their programs and optimize savings. Contact us at firstname.lastname@example.org to talk to one of our team members.
(4) Consolidated Service Centers Become More Prevalent
Jerame Hill and Jim Lund
Last year we highlighted three major pharmacy supply chain trends: health system investment in consolidated service centers (CSCs), the continued growth of home infusion therapy, and renewed focus on cost savings. As 2022 ends, it is safe to say that all three trends have played out as predicted this past year and will continue in 2023. Here, we’d like to focus on CSCs and common trends to watch for.
In 2022, Visante partnered with many health systems in various capacities and at different phases of their CSC journey. While each journey is different, there are some common trends we have observed with our clients.
CSCs becoming more prevalent
Most health systems are looking to build comprehensive CSCs, comprising pharmacy, medical and surgical supply chain, and other support services. Often, health systems view this strategy as an opportunity to collaborate and achieve efficiencies from shared service needs, such as transportation and logistics. Furthermore, it allows for shared savings related to the actual facility build. We expect this trend to continue in 2023.
Pharmacy generating positive ROI
Although construction costs have drastically increased, health systems are still producing positive returns on their investment in as little as three years. Pharmacy is often generating over 80% of the return across multiple pharmacy verticals, including pharmacy supply chain, specialty pharmacy, home infusion therapy, compounding and repackaging, and clinic distribution.
CSCs support adaptability in volatile market
Consolidating pharmacy operations, and specific pharmacy verticals, can help streamline operations and build in scalability and redundancy. This allows systems to better control drug shortages and generate efficiencies to help address ongoing staffing challenges that have persisted beyond the pandemic.
Overall, even while we observe some health systems decreasing capital funding, we expect these organizations to continue to invest resources in CSCs. This is due to the scalability and long-term returns that systems can expect related to these operations. Pharmacy plays an important role in funding these centers, and pharmacy leaders should engage with key organizational leaders to drive these discussions forward. Often, it will require partnering with multiple departments within the system to get a CSC initiative off the ground.
Here at Visante, we help hospitals and health systems to make the most of their programs and optimize savings. Contact us at email@example.com to talk to one of our team members.
(5) Infusion Strategy a Top Priority in 2023
Phil Brummond, Erick Siegenthaler and Jeff Prosch
A comprehensive infusion strategy will be essential for health systems to generate new revenue, care for patients, support care team workflows, and may even be required for patients to receive needed infusions through the health system.
Health systems should evaluate their broader infusion strategy portfolio considering continued payer and market forces. Systems should consider expansion across multiple infusion sites of care including hospital outpatient, physician’s office, infusion suite, and home infusion locations. A combination of multiple options implemented in a coordinated fashion is needed. For systems that are not focused on this area, multiple factors will likely continue to drive infusion business out of the health system.
Factors shifting infusion opportunities away from a health system are primarily payer driven strategies to decrease spend. These include vertical integration, shift to a lower-cost site of care and white bagging. Payer-mandated policies for specialty infused medications continued to expand in 2022, including some national payers identifying oncology immunotherapies as targets to move out of hospital-based infusion settings. These factors led to significant care fragmentation, financial risk, delays in care and waste.
Additionally, we have seen an increased presence of private equity investment into external infusion suite options to capture infusions leaving hospitals due to these policies. In 2023, as financial pressures impact employers and negative media attention revolves around high drug costs, efforts by payers to implement and expand these policies seem inevitable; continued investment in the infusion space is expected to increase competition where alternate options don’t exist.
In 2022, Coram and Optum Infusion closed a significant number of branches across the country. These players are expected to reduce their focus on traditional infusion services like antibiotics, parenteral nutrition and tube feeds. While these services can be profitable as part of a broad strategy, the national for-profit organizations recognize increased local competition and high costs to maintain necessary local relationships with referral sources. This exit will create additional challenges for care coordination when patients leave hospital settings on these therapies.
The view that expanding into alternate site infusion service options will cannibalize hospital outpatient (HOPD) infusion revenue for an organization can be seen as an antiquated one. Already, payer policies are leading to leakage out of the systems – expansion of external infusion suites is a good marker that this is happening enough to justify investment. This leakage outside health system infusion centers is frequently not quantified by the electronic health records. Additionally, HOPD capacity issues resulting in significant lead times for patients often lead to further erosion to outside providers that promise shorter lead times and “easy” access. The volume and impact of leakage is driven by the infusion site of care options a system supports and how well a system manages services and stakeholder coordination.
What can health system leaders do?
Payer mandates and benefit designs that financially incentivize the patient to receive high-cost infusion medications outside of the hospital in lower cost settings are likely here to stay. Additionally, 2023 will bring new challenges to discharge care coordination for hospitals. There are, however, great strategies health systems can employ to maintain patient access, support care coordination and mitigate the financial impact. Visante recommends that health system leaders take the following actions to maximize patient care, safety, and convenience:
- Move swiftly to create an internal home infusion program with freestanding infusion suites within the organization’s pharmacy enterprise. This will provide two new sites of care within the system, enabling the organization to more effectively negotiate with payers to keep high-quality, affordable care within the system.
- Collaborate with senior leadership and managed care leadership. Pharmacy leaders must partner with managed care teams to negotiate payer contracts that are inclusive of all internal sites of care. Seek support to consider innovative shifts in care delivery, such as home infusion and infusion suites as described above, and billing under the pharmacy benefit as described below.
- Negotiate for in-network health system specialty pharmacy. To ensure optimal continuity of care, health system specialty pharmacy should become in-network with payers for patients served by the health system.
- Take a bold stance on white bagging in your organization. Prohibit this practice and collaborate with managed care, medical staff and other clinicians to ensure policy compliance.
- Expand support of prior authorization and medication access services for all medications including hospital infusion, home infusion and specialty pharmacy. Measure the impact of site of care and prior authorization denials to identify changes that may impact financial and operational performance. Utilize insights around medication access to help measure and drive utilization of your health system pharmacy services.
- Get engaged. Support local and national efforts to address the unsafe practice of white bagging.
Here at Visante, we help hospitals and health systems to make the most of their programs and optimize savings. Contact us at firstname.lastname@example.org to talk to one of our team members.
(6) Anticipating the Launch and Impact of Biosimilars on Specialty Pharmacy
If we were to create a post on Tik-Tok or Instagram for health system specialty pharmacies (stay with us boomers!), here are a few must-have hashtags we’d include. #healthsystemspecialtypharmacy, #patientcare, and #exceptionalhealthcare are a few of the big buzz words in the market. With 2023 looming, #biosimilars is another hashtag that is top-of-mind for many specialty pharmacies as the industry prepares for the staggered and much-anticipated launch of adalimumab biosimilars.
The “Purple Book,” FDA’s searchable and online database containing information about all FDA-licensed biological products regulated by the Center for Biologics Evaluation,1 lists current approved biosimilars, many which fall in the provider-administered category. The majority of the brand alternatives on the list are those billed under the patient’s medical benefit, and at times dispensed to the patient outside of the pharmacy workflow. 2023 will bring a new wave of biosimilars making their debut in the patient self-administered or take-home category.
Most notable in this category is the loss of exclusivity for adalimumab, Humira’s biosimilar. Humira has been the top-selling drug worldwide, raking in more than $20 billion in revenue last year.2 With seven FDA approved adalimumab biosimilars set to make their debut in 2023, many health system specialty pharmacies are trying to understand what impact this change will have on their program. We expect essential aspects of the impact will include economical, clinical and operational considerations as adoption of these therapies becomes mainstream.
We also anticipate an increase in patient access as many payors adopt biosimilars to their formularies for cost savings factors. Like retail counterparts, specialty pharmacies need to be prepared operationally to stock, store and distribute several products versus one kind of innovator specialty product. Some things to consider are storage space for different manufacturers and distribution adjustments for possible increases in volume to accommodate the different payor plans serviced at your site.
Ways that health systems can support patients
How can we support patients during this impactful change in their therapy? Education and continuing to be an integral part of the care team will be key. While many providers may have a general knowledge of biosimilars, they may lack knowledge on current biosimilar developments within their specialty. Providers play a crucial role in shaping the patient’s perception of therapy and are a key source of information for patients. By helping providers bridge this knowledge gap and serving as the drug information resource, the specialty pharmacy can support providers as they incorporate biosimilars in their clinical practice.
While it may be hard to predict the financial impact these drugs will have, an important thing to consider is the dynamic nature of this environment. Innovator products will take unique steps to maintain their hold on the marketplace, so don’t return them just yet! Payors may be hesitant to make changes to their formulary until biosimilars become more mainstream in the industry.
How will this impact your health system specialty pharmacy? Here are a few key points to consider:
- Education is key! Improved awareness of biosimilars and their impact is critical to help facilitate discussions between the care team, patients, and their families. Take a proactive approach in educating your pharmacy team, collaborate with your provider champions and lead the change.
- Get ready! Get an idea of current volumes from a dispensing aspect. Are there many operational changes that are necessary if you had to stock 2-3 different manufacturers for the anticipated increase in volume? Begin to have these conversations with the appropriate leaders.
- Stay connected. Use the appropriate resources to stay up to date with the day-to-day changes in the biosimilar space. Utilize these resources to keep a pulse on the how/when the biosimilar rollout will occur.
- More questions? We can help you understand the impact, opportunities, and help put together a strategy! Contact us at email@example.com to talk to one of our team members today.
(7) Navigating Changes in Prescription Benefit Management Programs
Dan Valvassori, Jim Jorgenson and Phil Brummond
With prescription drug prices continuing to rise for 2023, driven in large part by specialty pharmaceuticals, PBMs will continue to be in the spotlight for their role in high prescription drug costs and a lack of transparency around their revenue streams. And, while we can expect continued government activity at the federal, state, and local levels around PBM business practices, federal action may be more limited due to Republican control of the House of Representatives.
For 2023, the evolution of fully transparent PBM models will continue to be an industry disrupter. The majority of PBMs, including the “big three,” use a traditional lock-in mode which often includes hidden revenue streams for the PBM that can add costs for plan sponsors. While these traditional PBM models do provide discounts for volume and high rebates, they also can typically contain spread-related compensation from pharmaceutical manufacturer revenue on rebates, discounts and incentives. Traditionally, it has been difficult to compare the two models, and many organizations rely heavily on the rebates with the traditional model. However, as transparent PBM models generate more experience and outcomes, more plan sponsors are moving away from the rebate-driven approach. This is because the transparent pass-through pricing models provide greater transparency into the PBMs’ financial and operational processes, where 100% of rebates and discounts received are passed back to the plan sponsor. Spread is not utilized throughout the pharmacy dispensing channel, so plan sponsors are billed the same amount the pharmacy is paid. This approach, along with clinically appropriate medication utilization, makes prescriptions more affordable by taking the unnecessary costs out of pharmacy benefits, resulting in an overall lower net-cost, and will continue to gain traction in 2023.
Also for 2023, we expect to see an increased PBM focus on the management of specialty drugs which now comprises over 50% of the total prescription drug spend but less than 5% of total prescription volume. With specialty drugs driving costs, this is a very important focus. For example, the new gene therapy for hemophilia B is estimated to cost $3.5 million per infusion. However, this comes with a warning, as some of the tactics that may be employed can have a negative impact on pharmacy operations and patient access. Case in point, recently, in September of 2022, over fifteen thousand pharmacies received a communication informing them that, because they elected to not re-contract with one of the America’s largest health plans, their relationship was terminated. Unfortunately these pharmacies were never even sent anything to elect. What followed was a barrage of confusion, finger pointing, government involvement and, eventually, backtracking. Meanwhile, communications sent to the plan went largely unresponsive as pharmacies quickly saw one of their largest payers walk out the door. These types of negotiation tactics may be employed more frequently in the future against pharmacies that dispense specialty medications. With the increasing amount of health systems dispensing these specialty prescriptions, they make for easy targets. Health system pharmacies should be vigilant and prepared to deal with attempts to “narrow the network” like this.
First and foremost, be sure to keep track of all communications from your PBM networks and PSAO providers. Keeping tabs on communications can prove to be a daunting task, but keeping good organization of this documentation can help provide a lot of clarity when disputes like this arise. If it happened to your pharmacy, it likely also happened to another pharmacy you know. Align with a local, regional, or national pharmacy association to gain strength in numbers and get your message out there. In the example above, the health plan eventually conceded and sent out election options to terminated pharmacies – but only after it became national news. While there may not always be avenues to reconcile the problem independently, you need to know that your voice matters.
Finally, we expect Fraud, Waste, and Abuse (FWA) prevention activity to continue to increase in 2023 driven in large part by plan sponsor concerns. PBMs will be placing a growing emphasis on helping plan sponsors protect their assets by more aggressively working to prevent FWA (fraud being the use of false information to gain payment for a drug; waste being overutilization of services generating unnecessary costs; and abuse being activity that results in unnecessary payment for drugs). With the pandemic creating a variety of new remote practice opportunities, while this improved patient access to care, it also increased opportunities for drug related FWA.
Visante has long standing experience in supporting self-insured employers like hospitals and health systems and other plan sponsors to create the best PBM strategy for their organization and to prevent FWA and we continue to advocate for the active participation of pharmacy in organizational decision making around PBM services.
(8) Workforce Challenges will Need Unique Solutions at All Levels
Dave Hager, Steve Rough and Phil Brummond
Within pharmacy, workforce strategy this past year has focused on pharmacy technician recruiting and retention. In the coming year, the impact will broaden as the labor market pressure on health systems continues to grow and will also include pharmacists and pharmacy leaders. Those who act creatively, decisively, and quickly in 2023 will experience significant challenges and opportunities.
The low-wage healthcare labor (e.g., pharmacy technicians, medical assistants, nursing assistants, home care aids) shortage projections are nothing short of dire. Mercer predicts that by 2026 we will be short 3.2 million low-wage healthcare workers who provide essential services to patients. Pharmacy technicians have struggled in the same three areas for decades, confirmed again by the Pharmacy Technician Certification Board (PTCB) survey data in 2022: low wages, lack of career opportunities and high workload. Making the market even more competitive, large retailers increased pharmacy technician wages significantly. For example, Walmart increased pharmacy tech wages twice in 2022 while also implementing scheduled pay increases to directly compete with many health systems’ recruitment and retention strategies.
To recruit and retain pharmacy technicians in the coming years, system leaders will need a multi-faceted approach, including:
1) Leveraging technology, automation, process improvement, centralization, and system integration as aggressively as possible to reduce pharmacy technician labor demand;
2) Advocating for regular re-assessment of pharmacy technician compensation structures and career ladders to remain competitive;
3) Growing the pipeline of new pharmacy technicians through the creation of apprentice or technician training programs where the health system pays the trainee a living wage;
4) Aligning as a profession on the entry level requirements for health system technicians, including requirements for registration, licensure, and certification to demand higher entry level wages; and
5) Deploying innovative engagement strategies and redesigning roles and responsibilities to improve job satisfaction and workforce flexibility.
The stress of serving as a front-line clinician is not limited to physicians and nurses. Burnout among pharmacists was high prior to the pandemic and only intensified as pharmacists were expected to take on new roles, work with less, and juggle at-home demands with high levels of stress at work. That stress has led to many pharmacists leaving health systems and looking for opportunities outside of direct patient care. It also has caused many remaining front-line clinicians to question the leadership and administration they felt were responsible for creating the conditions they endured. Health system leaders should consider the following suggestions:
1) Empower pharmacists with transparency about the organization’s pressures and create structures for them to openly contribute to solutions;
2) Engage in frequent leadership rounding, listening and acting on the feedback received;
3) Re-design care models to include more flexibility with work from home and shared roles;
4) Plan to invest in development and growth strategies for the new clinicians that onboarded during the pandemic as the time, energy and effort provided was likely inadequate for a successful orientation to the department’s roles and culture; and
5) Create organization-sponsored programs to build community and a safe place for mental health support.
While some pharmacists may have questioned their leadership – many leaders questioned how much longer they wanted to remain in leadership roles. Often trapped between high demands and low resources, many leaders who could retire, did, and many of those who had considered leaving leadership for other roles, also did. Pharmacists, seeing what was expected of them and their leaders, are staying in individual contributor roles despite the many pharmacy leadership positions open across the country.
Almost every client Visante encounters has needs for pharmacy leadership. The solution, however, is not going to be new graduates, as that pool of talent is shrinking rapidly and generationally. Also, we have observed that many recent graduates demonstrate significant reservations about being accountable for others success and accepting formal leadership positions.
Health system pharmacy leaders should:
1) Prioritize succession planning to prepare for inevitable turnover and to show intentionality in leadership development;
2) Engage in strategic planning. Leaders have been forced to be reactive for more than two years and time to refocus out of the day to day to achieve alignment on priorities will reinvigorate them;
3) Determine what you are going to stop doing. Adding additional priorities without identifying what will be removed will contribute to more burnout. Support leaders in identifying and communicating what is being re-prioritized;
4) Grow the leadership pipeline by partnering with pharmacy schools or internal internship programs, and demonstrate the rewards of a career in pharmacy leadership for student pharmacists; and
5) Leverage the current pressures to show senior health system executives the value of investing in pharmacy and how placing pharmacy leaders in the right siutation within the organization can generate improvements in patient care, quality, service and value.
High pressure can turn coal into diamonds or to dust, depending on how skillfully that pressure is managed. Health systems that create a compelling workforce strategy will propel themselves out of the vicious cycle of open positions that lead to burnout, leading to turnover, leading to leadership turnover, and then leading to more open positions. Bold leaders will be able to take advantage of the opportunities created by other vacancies on the health care team and fundamentally increase the level of influence pharmacy has within their organization. Pharmacy leaders would be wise to focus on workforce and invest strategically in this area.
Visante’s team supports organizations in their strategic plans and efforts to build a high-performing pharmacy enterprise. We help recruit pharmacy leaders and support their development over time. We can also help support service delivery short and long-term, freeing up resources and giving you flexibility. Contact us to learn more at firstname.lastname@example.org or call 866-388-7583.
(9) Prescription Drug Prices will Continue to Rise in 2023
The high cost of prescription drugs will continue to be a “Top 10” issue for 2023. Prescription drug release prices were at record highs in 2022, causing many to demand action. Recent investigations found the median annual price of 13 novel drugs approved for chronic conditions by the U.S. Food and Drug Administration was $257,000 this past year.
With the passage and signing of the Inflation Reduction Act in 2022, there is now some forward movement toward prescription drug price control. The bill leverages the federal government as the largest purchaser of drugs and includes provisions that allow the federal health secretary to negotiate the prices of a small selection of drugs each year for Medicare. Scaling slowly, the bill allows the government to negotiate “a fair price” for 10 drugs covered by Medicare Part D in 2024 and to implement those new prices starting in 2026. Medicare would select from the 50 drugs with the highest total annual Medicare costs.
The negotiated price list would then expand to 15 drugs in 2027 and 2028. In 2029 and subsequent years, 20 drugs would be negotiated. Medicare will only be allowed to select Medicare Part B drugs starting in 2028. Overall, to be eligible for negotiation, drugs must have been approved for nine years for small molecule entities and 13 years for biologics, and a drug would be removed from the list if a generic alternative becomes available.
While these changes will have no immediate impact for patients or Medicare spending, this process lays the foundation for future federal action on drug pricing. The bill also capped out of pocket expenses starting in 2025 and eliminated the prescription drug donut hole – a long-standing barrier to patient access. Leading Republicans have openly stated that if they controlled Congress, they would move to repeal or dramatically restructure this law. However, with the Senate remaining in Democratic control, the Inflation Reduction Act appears to be secure in the near term.
Cost caps and rebates
The cost of insulin nationwide has been a critical issue, and the Inflation Reduction Act attempted to cap the price of insulin at $35 per month. However, the cap was ruled out of order by the Senate parliamentarian, who ruled the cap could apply on Medicare but not on private insurance. As a result of that ruling, the Democrats split the measure between Medicare and private insurance, but Republicans ultimately blocked the measure for private insurance and insulin pricing concerns will continue into 2023.
The parliamentarian also ruled that a measure in the bill forcing drug companies to offer rebates if prescription prices outpaced inflation was not totally in line with the rules for budget reconciliation. The ruling also stated this measure could only apply to Medicare patients and not to those with private insurers. This provision began in October for Part D drugs and will start in January 2023 for Part B drugs.
Pricing relief from the private sector
In the private sector, the expansion of companies like Civica and Mark Cuban Cost Plus Drugs (MCCPD) are stepping in to provide more immediate drug pricing relief. We expect continued expansion of their portfolios in 2023.
Civica Rx is a non-profit generic drug company established as a 501(c)(4) social welfare organization by U.S. health systems and philanthropies to provide a reliable supply of essential oral and injectable low-cost medicines on a cost-plus basis. Civica’s current list includes 67 different drugs that are provided to its member hospitals. To date, the company has supplied over nine million vials or syringes of generic medications to hospitals, which have been used to treat up to three million patients. Civica Rx and its affiliated ventures are on track to produce up to 100 drugs by 2023.
The organization is also building a state-of-the-art pharmaceutical manufacturing facility in Virginia, where it will manufacture its biosimilar insulin offerings priced at no more than $30 per vial. CivicaScript LLC, is a public benefit company dedicated to bringing lower-cost generic medicines to U.S. consumers. CivicaScript will develop and manufacture common but high-priced generic medicines for which there is currently not enough market competition to drive down price. Using a cost-plus and price transparent model, CivicaScript, with its health plan partners, plans to lower the cost of prescription medicines to ensure that patients benefit from them at lower costs.
MCCPD as a public benefit company fills and delivers prescriptions at cost plus a fixed 15% margin. Prescriptions are fulfilled by accredited pharmacies. MCCPD ships prescriptions to patients nationwide and is available to patients directly or through employer sponsored programs. To date, MCCPD has nearly 1,000 highly utilized and/or high-cost generic medications and is working to expand in 2023 to over 1,500 generic medications as well as working with trade name manufacturers to add both single source brands and specialty biologics to their offering.
In terms of health system price increases, Vizient in their Pharmacy Market Outlook is forecasting an aggregate 3.26% overall drug price inflation rate for the calendar year beginning Jan. 1, 2023. The rate reflects a continued trend toward moderation of the overall increase in drug prices, a result of the balance between the increased use of high-cost medications, the introduction of lower-cost generic drugs, and greater utilization of biosimilars.
Overall, 2023 prescription drug price increases will continue to roll on as the general course of action. Patients and health systems may have more options in 2023 to control prices – however, that will come at the cost of increased complexity to navigate.
Here at Visante, we help hospitals and health systems to make the most of their programs and optimize savings. Contact us at email@example.com to talk to one of our team members.
(10) Keys to Achieving Strong Financial Performance in 2023
Steve Rough & Phil Brummond
In 2022, the financial impact of a changing payer landscape, drug and supply inflation, rising wages, increased utilization of an outsourced workforce and the diminishing governmental Covid-19 financial relief has put significant financial strain on most US health systems. Many organizations are operating in the red and are being challenged to transform their operations to overcome the headwinds expected in 2023.
However, health systems that are leveraging and developing strong pharmacy programs are positioning themselves to successfully weather the storm that lies ahead. These organizations have developed a strong infusion strategy, progressive specialty pharmacy operations, a pharmacy revenue integrity program and have leveraged an innovative approach to acquire drugs at the best possible cost advantage. Health systems with these strategies and services are positioned for improved financial success in 2023.
We see three specific strategies to position you for future success:
1.Develop a comprehensive organizational pharmacy strategy to grow revenue and margin, reduce non-labor expense and improve pharmacy business integrity. In 2022, we saw select health system pharmacy departments making significant investments to develop high-value pharmacy services and we expect more organizations to make bold moves to quickly leverage a highly integrated pharmacy program to drive improved quality, safety and financial health.
2.Expand the role of the pharmacy executive to develop and implement an organizational strategy to highly integrate pharmacy services. We see that this type of leadership can generate tens of millions of dollars in financial benefit. Successful organizations must position the pharmacy executive at the right level in the organization to drive system strategy and achieve results.
3.Leverage strong internal pharmacy services as a strategic asset. The opportunity to optimize programs like specialty pharmacy and infusion services has never been better and will improve the overall financial health of the hospital or health system. This is particularly important given the significant investments being made in the for-profit landscape aimed at disrupting the health system’s ability to provide comprehensive pharmacy services for their patients. With medications being one of the primary treatment modalities for disease, establishing stronger internal pharmacy programs that provide comprehensive care for patients across the continuum is key to succeeding in a future value-based payment environment.
Visante consultants have experienced much success in helping health system executives understand the value resonant in the pharmacy service lines and how to properly invest and structure pharmacy as a strategic asset. And with such understanding, significant investments in pharmacy resources typically follow suit. We stand ready to assist you! Contact us to learn more at firstname.lastname@example.org or call 866-388-7583.