McKesson's 2019 Health System Pharmacy Trends

IRVING, Texas, November 29, 2018— The McKesson RxO^® team, a group of trusted advisors working to help hospital and health system pharmacy leaders track, manage and grow their pharmacy operations, announced top trends anticipated to impact hospital and health system pharmacies in 2019.

Trends such as continual growth around specialty drug spend and the increased demand for better tracking drug costs reveal the need for comprehensive solutions leveraging data and analytics to provide quality patient care.

Specialty drug spend is growing

Specialty drugs represent approximately 45 percent of the overall pharmaceutical market spend in the U.S. Hospitals and health systems* have seen approximately 16 percent growth in the specialty drug market in 2018 according to IQVIA, National Sales Perspectives, October 2018. Restricted access by biopharma manufacturers and payers continues to be a challenge for health systems taking care of patients. Despite these hurdles, specialty pharmacies can still generate significant revenue, and internal capabilities can support health systems’ quality and continuity of care initiatives. Whether health systems want to build, purchase or partner, McKesson provides resources to develop the required clinical and operational competencies and expertise to leverage the patient care and potential revenue opportunities associated with specialty drugs.

Next-door healthcare is on the rise

To counter cost and patient access issues, health system pharmacies are working to bring care closer to home. Employers are exploring self-insurance options in addition to contracting directly with local providers to establish regional and local markets. Employer incentives are designed to encourage the use of local contracted providers. To date, these local market contracts have been realized in pharmacy services integrated into retail locations or stand-alone medical clinics. And more recently, we observed several examples of health systems customers partnering to expand pharmacy and health services on a local level. For example, earlier this year, Emory Healthcare announced a new Accountable Care Plan that will serve employees in the Atlanta area. The plan is value-based which means payment will be determined by patient outcomes.

Increased focus on 340B performance and compliance

Ongoing debate in Congress regarding the 340B Drug Pricing Program continues to raise significant focus by health system leadership on the performance and compliance of 340B programs. The Health Resources and Services Administration (HRSA) continues to raise the bar on covered entity compliance through tougher audits and revised guidance regarding self-disclosure and corrective action plans. To help navigate the complexities of the 340B program, health systems can draw on industry expertise to develop actionable recommendations at McKesson’s 340B Tips, Tricks and Traps event in January 2019. In addition to the bi-annual event, Andy Wilson, PharmD, FASHP, vice president of 340B Solutions at McKesson, has developed the 340B Program Handbook. The handbook, published in partnership with American Society of Health-System Pharmacists, is a practical guide for pharmacy leaders, hospital administrators, business managers and pharmacy supply chain professionals.

Tracking and managing data will optimize outcomes

Pharmacy directors face increasing pressure to use data and analytics to optimize their health system pharmacy for growth. But effectively using data to manage drug spend while driving quality patient care requires a clear view into the pharmacy’s purchasing history and spending trends. This is why the ability to track and monitor drug spend and utilization will continue to be top priorities moving into 2019. To help pharmacies stay on track, McKesson offers a suite of Spend Analytics and Utilizations Analytics tools which provides meaningful analysis and a service model that gives customers an expert at their side.

Public policy is driving greater transparency

Highlighting a lack of transparency in drug pricing, list prices for prescriptions rose 58 percent over the past five years, but final out-of-pocket costs declined by 17 percent according to the Medicine Use and Spending in the U.S. report from IQVIA Institute for Human Data Science. These stats are a reflection of the complex dynamics that determine how much patients pay for medicine as well as the need for greater transparency at every level of the healthcare continuum. While prescribed medications continue to be cost effective compared to invasive procedures or repeated emergency room visits the industry must achieve a balance between price and value.

Finally, regulatory road blocks that do not allow key parties to openly discuss supply chain disruptions need to be addressed. While not all disruptions can be addressed, a good number could be easily resolved with open dialogue between suppliers, distributors and providers.

“When you see the challenges hospital pharmacies face in terms of managing costs and contributing to a health system’s revenue cycle, you realize the problem begins with the data. We’re seeing hospital pharmacies need a data-driven approach to revenue recovery management,” said Mark Eastham, RPh, senior vice president, McKesson RxO. “Pharmacy leadership needs actionable insights to help maintain a healthy bottom line and achieve meaningful impact for their patients, their pharmacy and their health system,”

*Hospitals and health systems includes the following channels: clinics, federal facilities, home healthcare, long-term care and non-federal hospital.

About McKesson Corporation

McKesson Corporation, currently ranked 6^th on the FORTUNE 500, is a global leader in healthcare supply chain management solutions, retail pharmacy, community oncology and specialty care, and healthcare information technology. McKesson partners with pharmaceutical manufacturers, providers, pharmacies, governments and other organizations in healthcare to help provide the right medicines, medical products and healthcare services to the right patients at the right time, safely and cost-effectively. United by our ICARE shared principles, our employees work every day to innovate and deliver opportunities that make our customers and partners more successful — all for the better health of patients. McKesson has been named the “Most Admired Company” in the healthcare wholesaler category by FORTUNE, a “Best Place to Work” by the Human Rights Campaign Foundation, and a top military-friendly company by Military Friendly. For more information, visit www.McKesson.com.

© 2018 McKesson Corporation and/or one of its subsidiaries. This release may be freely republished, with attribution, in whole or in part.