This past October marked the two year anniversary of health insurance exchanges. The introduction of HIX plans, the result of the Affordable Care Act, represents a major paradigm shift in U.S. health coverage. The promise of the ACA is a healthcare model that balances economic output with clinical outcomes by reducing care variation and adopting a holistic, evidence-based medicine approach to care delivery. Current trends across payers, providers and pharma highlight the implications of the ACA.
A recent study reveals that health insurers ramp up new branches of digital health in an ongoing effort to streamline operating procedure and help tailor their services to the consumer. The Affordable Care Act brings a set of new regulatory requirements for insurers, some of which directly related to IT infrastructure and overall online presence. The disruption from ACA forces many health plans and PBMs to implement cost containment strategies when it comes to IT spend. To remain competitive, payers strategically align resources, both internally and externally, to optimize their digital initiatives. For instance, the recent push for JSON compliance provided an opportunity for payers to create innovative analytical tools off the back-end of this new standardized data.
Health exchanges create a more competitive payer landscape through a new channel available to consumers. Relating this dynamic to another growing trend in the healthcare industry, the introduction of biosimilars into the U.S. market also represents added competition. Like HIX plans, biosimilars represent lower cost alternative means for obtaining healthcare. Originally, the Patient Protection and Affordable Care Act granted an exclusivity period to biologic manufacturers, preventing biosimilar entry into the market for some time. Healthcare economists call out that this new dynamic, where biosimilars play alongside biologics, should benefit manufacturers from each camp, creating more competition and driving the development of more innovative treatments for patients. Insurers focus on how this new group of treatments will be covered across multiple insurance channels, including health exchanges, which will have major implications on the future of the biologic space.
While HIX plans may drive value for our nation's health care system, they present tremendous challenges and opportunities for pharma manufacturers. In some ways, the "disruption" we see with growing HIX volume compares to the market dynamics realized with the introduction of Medicare Part D back in 2006. In both cases, we saw net new benefits, a new population of enrollees and a changing market landscape that required thoughtful planning, deep analysis and data driven decision making. Both market events introduce additional complexities to benefit design and allocation thereby greatly influencing market access realities for pharma manufacturers. Pharma manufacturers that proactively study how these changing dynamics influence their total market landscape, the advantaged or disadvantaged status of their therapeutic brand and what this means for their commercialization strategies, are best equipped to thrive with these changes.
A closer look at PBMs and large private insurers reveals the stress of Obamacare exchanges from the payer perspective. Considering that insurers operate primarily on managing risk and Obamacare is relatively risk-impartial in order to provide healthcare for everyone, payer business models feel the burden after several years of operating with this new dynamic. Recent news highlights UnitedHealth Group’s $500 million downgrade in its earnings forecast, showing the pressure of operating in the complex market landscape. Along with other private insurers, UnitedHealth may need to withdraw from the health exchanges over the next couple of years, due to the burden of insuring more diverse populations.
The promise of the ACA is a healthcare model that balances economic output with clinical outcomes by reducing care variation and adopting a holistic, evidence-based medicine approach to care delivery. As the reach of the ACA continues to iterate, it is important for payers, providers and pharma to stay current on the implications across the healthcare spectrum.
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