Top 3 Things You’ll Learn
- Prescription drug spending as a percentage of overall healthcare industry growth
- Projected increase in the top 20 drug manufacturers’ earnings in 2021
- Three of the top priorities and trends among HR leaders in 2021
The start of a new year typically means a time for retrospective reviews and forward-looking surveys as everyone tries to prepare for the year ahead. As we start 2021 with a deep focus on healthcare costs and COVID-19’s impact on employers, the typical industry reports this year convey a definite sense of urgency to take action. HR leaders are at the beginning of what could be a turning-point year as they navigate the new normal of their workplace and the long-term ramifications of the pandemic on their employees and their budgets – while balancing new growth goals as their businesses rebound post-COVID.
Here are a few of the more interesting pharmacy benefits related stats, especially in the story they tell together of what is happening in the market and the opportunity available to help HR leaders make a difference for their company and their employees this year. Pharmacy benefits should not be left out of the discussion, as an area to both optimize costs and improve the member experience. These points are worth exploring and leveraging in your conversations with your self-funded employer clients and prospects this year:
- 5.7% increase in spending on prescription drugs at retail pre-COVID – A January 2021 Modern Healthcare report tracking the fastest growing healthcare sectors shows a 5.7% increase in spending on prescription drugs at retail from 2018 to 2019. This represents a higher increase than healthcare overall, which came in at a 4.2% increase. However, it is less than the share of hospital spending which saw a 6.2% increase over that time.
- 7.8% projected growth in drug manufacturer earnings – Analysis of the reported 2020 earnings and 2021 analyst earnings projections of the top 20 prescription drug manufacturers shows that they are not letting up. While COVID was wreaking havoc on the world and hospitals and other small to mid-size businesses, in particular, they raised prices on dozens of high-cost drugs throughout 2020 and continued that trend to start 2021. As medication utilization trends begin to normalize post-pandemic, these increases are expected to begin impacting employer-sponsored plans in a bigger way.
- 50% of HR leaders prioritize “Optimizing Costs” in 2021 – In Gartner’s 2021 HR trends and priorities report, more than 800 leaders across all major industries shared their plans for the year. Not surprisingly, 50% of survey respondents say they plan to Optimize Costs in 2021, which is up 13% from last year. More than a quarter of HR leaders also reported plans to improve the employee experience, including health and wellness initiatives. This data is a telling sign of COVID’s impact on businesses and the challenges facing HR teams in a primarily virtual
These stats tell an interesting story of what is happening in the market and the opportunity available to ease the pressures for self-funded benefits plans and employees this year. Pharmacy benefits should be a priority, as an area to both optimize costs and improve the member experience.
The Bottom Line
HR leaders face the challenge of knowing just how much these trends will continue post-pandemic and what adjustments need to be considered in the short- and long-term. By optimizing the pharmacy benefit to focus on appropriate utilization of prescription drugs now and in the future, while delivering an improved member experience, HR leaders will be positioned to pull their organization from the budget and wellness pressures they face. As their trusted partner, you are in the driver’s seat to help them evaluate their current pharmacy arrangement on a true apples-to-apples basis and show them the potential that exists to save money this year while not sacrificing (and likely improving) the member experience.
Check out our free ebook on the State of the Pharmacy Benefits Industry in 2021 for more prescription drug trends and cost-drivers impacting pharmacy benefits this year.