PWC recently published their 12th annual Top Health Industry Issues report for 2018. The twelve issues in the report run the gamut…from pricing to natural disasters to reform. It’s an unusually sweeping report that’s well written and makes for good reading.
Three of the issues caught our eye:
Issue 1 – Opioid Crisis
It’s quite interesting to see the Opioid Crisis discussed at the same level as natural disasters and security threats. And why not? With over 64,000 overdose deaths in 2016, it’s a major problem that is growing rapidly.
Aetna and CVS Caremark are adjusting their policies in order to reduce overall exposure and inappropriate use. But there will not be an easy fix, as patients who legitimately need strong pain relief struggle with dependence and inappropriate use by family members.
The recent partnership between Pacira Pharmaceuticals, Aetna, and AAOMS aims to reduce opioid use post-tooth extraction. It’s an excellent example of how pharma, payers, and physicians can partner to tackle this problem.
But change will likely come slowly. As critical as this problem is, we think it is one that will be with us for many years to come.
Issue 5 – Medicare Advantage
Medicare Advantage, the private alternative to government Medicare, is expected to grow rapidly in the coming years, thanks to our aging population.
That is not surprising. But what is interesting is the notion that healthcare consumers 65 and older are increasingly willing to use digital devices and tools at home, in order to interact with their physicians virtually.
Now the idea of “telemedicine” has bounced around for decades; certainly as long as the Internet became a widespread technology permeating millions of homes. But the concept of using digital tools to maintain health is likely to be a far better long-term investment.
Indeed, digital-based tools and services, like Lyft and Uber to provide non-medical transportation to fitness centers, will likely play an increasingly important role in keeping our Seniors healthier, thereby reducing overall healthcare cost. Companies like Apple and Google are also making noise in the healthcare space.
Look for other digital technologies to improve health, wellbeing, and convenience, especially via social media, remote monitoring, and caregiver tools and support (cf., Issue 8 in the report).
Issue 10 – The Endangered Middleman
Once upon a time, pharmacy ‘intermediaries’ had a simple job. They accepted pallets of medications from pharmaceutical manufacturers, then distributed them down to the pharmacies and hospitals. Margins were slim, but the business was a good one.
Today, wholesalers and pharmacy benefits managers (PBMs) are increasingly under pressure to demonstrate how they are adding value to the value chain, and justifying their existence. Indeed, the entire sector is in a flux of partnerships heretofore unanticipated just a few years ago.
Even the FDA is getting into the act. While the FDA has no say on drug pricing, they are concerned about the effect of middlemen on the pricing structure of our industry, as eloquently described in a recent speech by FDA Commissioner Gottlieb.
And now Amazon smells opportunity, as they continue to acquire wholesale pharmacy licenses in multiple states. The potential impact of Amazon entering this market cannot be underestimated. Their core competency is to squeeze margin out of the supply chain in order to reduce cost by increasing efficiency via robotics and other technologies, while sacrificing profit.
Imagine yourself as a traditional wholesaler about to receive a new entrant that uses cutting-edge robotics and related technologies while sacrificing near-term profit. Would you be a little nervous?
Most of these marketing pieces published by service companies are clickbait and marketing fluff, with precious little substance. The annual PwC is a notable exception.
The report is admittedly broad in scope, and offers few practical, detailed solutions (presumably you have to retain them if you want practical, detailed solutions).
Regardless, it is a well-referenced, quick read that may make you think about some of these issues a bit more deeply.