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Employers concerned COVID-19 will limit employee access to medications

Health and Benefits
COVID 19 Coronavirus

By Nadina J. Rosier | March 16, 2020

While employer concerns about drug shortages are justified, they can take steps to help protect employees’ access to critical pharmaceuticals.

Employers are becoming increasingly concerned that the COVID-19 pandemic could hinder their employees’ access to critical medications and medical treatments due to the disruptions to supply chains. Given that about 80 percent of active pharmaceutical ingredients (API) manufacturers are located outside the U.S., according to the U.S. Food and Drug Administration (FDA), their concerns are understandable.

Both China and India are critical countries in the pharmacy system, with China producing much of the APIs present in commonly used medicines (largely generic) such as pain relievers, anticoagulants and antibiotics. Many drug manufacturing sites in China are reporting they are back online after initial disruptions, with some at full capacity and others operating between 50% and 80% capacity. This is reassuring news in the hope that the integrity of the pharmaceutical supply chain remains intact, but the situation requires diligent monitoring by insurers as the virus spreads to other locations and concerns around stockpiling remain. 

Employer plan designs have historically been structured to limit when and how often a patient refills their medicines, usually until most of the drug dispensed has been used. While for many years, employers have implemented strategies that provide incentives for patients to fill 90-day supplies through either retail or mail order, there may likely be employees that have not taken advantage of that benefit feature.  

Employees are also anxiously wondering when medications that prevent and treat COVID-19 will be available and whether their benefits will cover these important drugs. Scientists are working to develop new therapies or repurpose existing antivirals to treat the virus. 

FDA tries to allay fears of drug shortages

Though the FDA reported that they have not seen signs of a significant shortage, the agency said little about the potential impact a widespread shutdown of China factories may have on the pharmaceutical supply chain in the U.S. They further highlighted that drug shortages have historically happened occasionally for various reasons, including general ingredient supply issues or pharmaceutical companies slowing production and distribution because drugs may not be as profitable or not as widely used. In fact, there have been more than 100 drug shortages across several therapy categories in the U.S. over the last decade alone. In the U.S., an estimated 210 drugs are currently not readily available or are at risk of not being readily available, according to a national database maintained by ASHP (formerly American Society of Hospital Pharmacists). 

On February 27, 2020, the FDA announced its first drug shortage attributable to COVID-19. While the FDA did not indicate the name of the drug (or the therapeutic category), FDA Commissioner Stephen Hahn noted that a manufacturer alerted them to the shortage of the drug and that “the shortage is due to an issue with the manufacturing of an active pharmaceutical ingredient used in the drug.” He further noted, “...there are other alternatives that can be used by patients.” It is estimated that 20 drugs are on the primary FDA drug shortage list as these drugs are made in China or the APIs contained in these drugs are manufactured in China. The FDA has not yet made this list publicly available as it continues to work with 180 pharmaceutical manufacturers around the world to evaluate the supply chain and any potential shortages. 

India officials announced that the country was restricting exportation of active pharmaceutical ingredients (APIs), as well as some of the drugs that use these APIs, such as metronidazole, erythromycin, clindamycin and other products.

Is a COVID-19 vaccine or treatment in sight?

There is currently no available vaccine or FDA-approved treatment for COVID-19; however, the National Institutes of Health has selected the Kaiser Permanente Washington Health Research Institute to launch the first investigational clinical trial to test a possible coronavirus vaccine. In addition, the World Health Organization is helping to accelerate research and development efforts with a range of partners.

Several treatments have been used to help individuals manage the symptoms of COVID-19, including anti-pyretic and analgesics such as ibuprofen, antitussives and anti-asthmatics for those with the underlying disease. Scientists and researchers continue to investigate potential treatments, a combination of new and repurposed drugs, including some that currently treat HIV and hepatitis C.

For example, an experimental drug Remdesivir is currently being tested for COVID-19. Lopinavir/Ritonavir (brand name Kaletra or Alluvia) are also being tested to target various parts of the new coronavirus. While neither is an FDA-approved treatment for COVID-19, employers that sponsor a health-savings-account-qualifying high-deductible health plan (HDHP) may cover testing for COVID-19 without any cost-sharing (or reduced cost sharing).

Some employers have been seeking guidance around the implications of first dollar coverage and eliminating out-of-pocket costs for COVID-19 testing and treatment.

Marketplace reactions amid pharmacy shortage concerns

The health plan and pharmacy benefit management marketplace have been varied in their reactions and responses to proposed pharmaceutical shortages attributable to COVID-19. Insurance carriers have acknowledged the need to closely monitor the supply chain, including developing specific policies to monitor real-time drug shortages.

Employee stress about drug shortages can have an adverse impact on their overall wellbeing and productivity. The good news is that health plans and pharmacy benefits managers are leveraging disaster preparedness policies and previous triggers for other notable shortages (e.g., Epi Pen shortage).

Among some of the more immediate steps employers are taking to work with their vendor partners to monitor impact and ensure access to their medications include:

  • Evaluating current “refill too soon” (RTS) limits and consider temporarily relaxing thresholds

    Some PBMs have applied a universal discontinuation of “refill too soon” edits in pharmacy drug utilization review systems. RTS has historically prevented patients from stockpiling medications by limiting refills to after 65%-75% of the days supply of medication had been utilized (i.e., 20 – 23 days per month).

    Employers may request relaxing these limits temporarily in anticipation of any drug shortages or member quarantine. We don’t advise that employers eliminate the threshold entirely as stockpiling can lead to worsening drug shortages, but reducing the limit threshold can ease the minds of employees. Waste can also result from stockpiling medications, as drugs have expiration dates, and some have a very limited shelf-life. This type of unused medication waste can add up to billions of dollars each year.

  • Continuing to encourage employees and their families to fill 90-day supplies of chronic medications

    From our 2020 Willis Towers Watson Best Practices in Health Care Survey, over 30% of employers surveyed (growing to over 50% by 2021) have provided aggressive incentives to mandate mail order for maintenance medications that treat common chronic conditions such as high blood pressure and diabetes. There may still be patients that have not taken advantage of the benefit due to reluctance or lack of understanding of how mail order works. Employers can increase communications to employees encouraging them to consider asking their physicians for a 90-day supply of their maintenance medications.

    Some employers allow three months of medication to be filled at local pharmacies such as CVS or Walgreens, as part of the benefit offering at a discounted out of pocket cost. This can help ensure that patients have enough supply on hand to remain adherent to their drug regimens in case of a shortage or quarantine.  

    Finally, some PBMs are also allowing for an emergency 14-day supply for members who may live in impacted emergency areas where self-containment is required or strongly suggested. Employers should work with their PBMs to establish protocols that allow for dispensing of medication in a timely manner, including alternative delivery arrangements as needed.

  • Preparing to potentially relax utilization management criteria in case of quarantine

    Many employers have implemented utilization management (UM) changes across a host of drugs, namely specialty pharmaceuticals, to ensure they are used for clinically appropriate purposes. Some UM criteria may require lab testing for approval. We recommend that clients, in collaboration with their PBMs, relax required prior authorization criteria that would otherwise mandate testing for those members that may be impacted by a quarantine or self-containment.

  • Working with PBMs to make formulary exceptions more readily available

    For many therapy classes, there is more than one drug alternative that may be clinically viable for treatment. As many employers have implemented more restrictive formularies to contain costs, employers may want to allow for access to alternative medicines that would normally be considered “tier 3” or “non-preferred” to be provided at a reduced or “tier 2” out-of-pocket cost, in the event the initial drug experiences a shortage and is not available.

We will continue to monitor the supply chain and drug shortage concerns expressed by employers and work with insurers to implement protocols that allow access to medicines that employees and their families need to maintain their health. For further questions, please contact your Willis Towers Watson pharmacy adviser.


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