Impact of COVID-19 on the Global Pharmacy Benefit Management Services Market
The World Health Organization (WHO) declared COVID-19 a pandemic in March 2020 owing to the surging outbreaks in several countries across the globe. A public health emergency was declared, and measures were circulated to prevent the spread of the virus. Currently, the quick spread of COVID-19 is having a pervasive impact on several industries and markets.
Many pharmacy benefit management (PBM) companies are working on developing policies to address the rapidly changing market landscape. These companies act as third-party drug program administrators for their clients, typically interfacing with health plan insurers, retail pharmacy chains, and drug manufacturers. PBM systems ensure that every drug dispensed by a prescription is cross-checked with rules set by the health authority and insurance companies. Thus, PBM companies are the foremost influencers in the supply chain of outpatient pharmaceutical products, such as medications and drugs. Financing, distributing, pricing, and shipping are factors that affect how prescription medications are dispensed. The current scenario can have a significant effect on the global pharmacy benefit management services market.
Due to the global pandemic scenario, it is evident that there is a shortage of medications. As several countries depend on imports for medications, this can cause a major disruption in the supply chain of drugs. Therefore, it is uncertain whether the PBM companies will be able to ensure an adequate supply of medicines. A possible short-term supply disruption within pharmacies and healthcare provider organizations for select medications, as a direct result of demand surge, can occur. PBM companies that own pharmacies can increase their orders to keep up with the demand owing to the significant growth of mail-order and specialty utilization. Since inventory levels can be affected, ramping up the on-premises inventory levels of the most used drugs to ensure easy access is crucial.
With the increasing prescription rates, the administrative burden of the service providers can increase drastically. This can result in interference in the functioning of the pharmacy management systems. PBM companies can decide on extending prior authorizations for previously approved prescriptions. These policies can aid in the reduction of the administrative burden on providers, allowing more resources to be devoted to combating the COVID-19 outbreak. Several drugs are being used in the acute care setting to treat severe cases of COVID-19. A lot of companies offering PBM services are introducing utilization management product bundles for these medications. These measures are being enacted to help ensure that an adequate supply of necessary medications is maintained for use in acute care settings while also balancing the needs of existing patients in outpatient settings.
Many PBM companies are using shelter-in-place policies as an opportunity to migrate members with medications for chronic conditions to mail-order pharmacies. Proactive strategies such as direct-to-member mail and telephone communications are being used to engage members and educate them about mail-order pharmacy services.
Moreover, some PBMs are allowing temporary overrides for non-preferred items, but still allowing members to pay preferred co-pays. This can be enacted if a specific pharmacy is out of stock for the preferred drug, and the patient has an immediate need for the prescription. This could cause plan costs to increase due to increased utilization of non-preferred drugs compared to preferred drugs.
Supply chain management and drug availability play an important role in the algorithm that PBMs and pharmacies employ to manage pricing. Owing to the increasing supply-demand gap, the pricing schemes and the factors used in the pricing algorithms have been negatively affected. Managing compound utilization to ensure treatments are paid in line with plan designs can be difficult for companies that provide PBM services.
Parameters that influence the pricing for PBM services include: