Thursday, March 26, 2020

Coronavirus Industry Impact Survey: Winners and Losers (Part 3)

Today is the final installment of our three-part investigation into the coronavirus’ ultimate impact on the drug channel.

Below, I examine expectations about how the coronavirus will affect the public’s perception of various industry participants. We explore what our survey respondents said about:
  • Pharmacies
  • Pharmaceutical manufacturers
  • Hospitals
  • Wholesalers
  • Pharmacy benefit managers and plan sponsors
  • Insurance companies.
In these early stages of this crisis, my crystal ball is as cloudy as yours. Let’s hope that the country will stabilize within a few months. I may then rerun the survey to determine how (if at all) everyone’s perspective has changed.

PROJECTING THE IMPACT

Here are links to the first two articles in this series:
Part 1 details the survey’s methodology and respondents. Below, I provide context for some responses by highlighting relevant material from our 2020 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers.

REPUTATION

We asked our readers to respond to the following question:
When we look back on 2020, how do you think the coronavirus will have affected the public’s perception of the following drug channel participants?

The chart below summarizes responses to this question for six industry participants.

[Click to Enlarge]

1) Pharmacies are expected get the biggest boost to their reputation.

Nearly two-thirds (62%) of our respondents believe that the public’s perception of pharmacies will improve in the post-pandemic world. Only 4% expect that pharmacies’ reputation will be harmed.

These beliefs likely reflect the already-positive perceptions that most people have about pharmacies and pharmacists. Pharmacists are on the front-line of patient care. Consumers are generally satisfied with pharmacies. (See Section 1.3.2. of our new 2020 report.) For retail chains, most people focus on location. But not for independent pharmacies—consumers who use them report that they “like the pharmacist/pharmacy staff.”

I expect that pharmacy associations will leverage any halo effect to advocate for legislative priorities. Here are some key issues along with the sections of our new 2020 report that discuss each issue:
  • Recognizing pharmacists as providers under federal law (Section 1.4.2.)
  • Reforming direct and indirect remuneration (DIR) pharmacy fees in Medicare Part D (Section 11.4.)
  • Passing state laws regarding PBM oversight and regulation (Section 12.4.3.)
  • Establishing additional legal and regulatory restrictions on pharmacy benefit network design (Section 7.1.3.)
One survey respondent summed up the potential positive benefit for pharmacies:
“It will show how independent pharmacies can shine in these moments.”
2) Pharmaceutical manufacturers are also expected to see their reputations improve.

As I noted yesterday in Part 2, even the pharmaceutical industry’s harshest critics have started rethinking their wholly negative commentary.

I suspect that this helps explains why about half of our survey respondents believe that manufacturers’ reputation will improve when life returns to normal.

Here are a few representative comments:
“There of course is considerable irony in the fact that the people who complained about the awful drug industry now wait for that same industry to save them from the virus. (I wonder what the anti-vaxxers are thinking now?) Anyway, perhaps that's a bit petty, but I am growing weary of politicians on both sides of the aisle trying to win cheap political points by vilifying an industry whose mission is to save and improve lives.”

“There will be a select few ‘winners’ in the manufacturer sector based on their quick response and potential impact on providing a treatment/vaccine. It could also have an impact where the manufacturer responds to government by stating ‘See, this is why our prices are so high-it enables us to quickly respond and develop cures.’ ”

“The private sector will benefit. The private industry's ability to mobilize and support patients and the healthcare system while not requiring any fiscal support will change the entire conversation regarding manufacturers and insurers.”
This survey revealed some divergence of opinion among sectors. A majority of respondents from manufacturers and wholesalers expect that the industry’s reputation will improve.

Others expressed skepticism that manufacturers would benefit. A plurality of respondents from pharmacies and PBMs/payers believe that the coronavirus would have no impact on manufacturers’ reputation with the general public. Some comments:
“There is no winning for the pharma or health care industry here. Regardless of the response, it will be perceived as inadequate (too slow, too expensive, not broad enough, etc.).”

“I suppose the heavy regulatory hand is obvious to many now but the pharmaceutical manufacturers look like the good guys for a change. I’m not sure that will be long lasting.”
Yesterday, I noted that many people expect that drug manufacturing will shift back to the United States. Such a move would increase employment and further strengthen the industry’s domestic political position.

3) Hospitals are expected to get a boost to their reputation—but also face significant risks.

About six out of ten of our respondents (59%) expect hospitals’ reputation to improve. However, one-quarter believe that hospitals’ reputation will be harmed from the coronavirus. There were no notable differences among industries.

Here’s how I interpret these responses. We should all be grateful for the doctors and nurses who will be putting themselves at great personal risk to care for the expected onslaught of seriously ill patients.

At the same time, we all hope that what happened in Italy won’t happen here. If it does, hospitals and their management will face justifiable questions about their actions.

One survey respondent summarized the risks and opportunities in this way:
“I believe the effects will be long lasting. If the current system fails to deliver care expeditiously and of the highest quality, then the impact to the future of healthcare in all segments will be negatively impacted. If however, the current system is perceived as delivering and solving to meet the greater good including better outcomes, then it could be a very positive impression left as a benchmark for future pandemics.”
4) Insurance companies and PBMs face the greatest reputational risks.

Many respondents expect that the coronavirus pandemic will tarnish the reputations of pharmacy benefit managers (PBMs) and insurance companies. Unsurprisingly, the only group that disagreed with this assessment were the respondents from PBMs, health plans, insurers, and plan sponsors.

The reputational risks are plentiful. Will patient out-of-pocket costs for prescriptions be reasonable? Will people will face surprise bills from out-of-network doctors who practice at an in-network hospital?

SOME FINAL THOUGHTS

Thank you again to everyone who took time to respond to our survey. The nearly 700 respondents captured perceptions at a time when uncertainty seems highest. The responses to our open-ended request for comments were especially insightful and raised many intriguing issues.

Many of the crucial issues for our healthcare system will remain after we all get through this period of crisis. That’s why Drug Channels will start getting back to our regularly scheduled programming next week. In the meantime, feel free to add any other thoughts and predictions by commenting below.

Hang in there, everyone. We will get through this tough time. However, I suspect we will never return to our pre-2020 lifestyles.

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