10 Key Pharmacy Trends Shaping the Industry in 2023

Jim Jorgenson, Visante CEO

It’s clear that 2023 has ushered in some unprecedented challenges for the pharmacy industry. But here at Visante, we also see this as a year of extraordinary opportunity. For smart health systems that are looking to prepare for what’s ahead, now is a great time to reflect on the year’s key trends and their impact on the future of pharmacy. Here’s our list of 10 developments that have shaped the industry in 2023.

340B challenges

340B pressures continue to mount for health systems as manufacturers take unprecedented steps to expand their pharmacy restrictions. As of this August, a total of 26 companies are now imposing new contract pharmacy restrictions and/or data submission requirements. Additionally, the House Energy and Commerce Committee is considering hearings on 340B around transparency, which could mean additional documentation requirements for Covered Entities (CEs). States including Minnesota and Maine have already enacted state legislation requiring CEs to provide extensive annual documentation for 340B eligibility and management. You can learn more about the latest 340B challenges in our article: Have 340B pressures reached a breaking point?

Bottom line: CEs will need to work harder to keep up with expanding documentation requirements and continued shrinkage of available 340B contract pharmacy pricing.

Financial pressures

Hospital finances are still facing headwinds, both in terms of expense and revenue. PWC’s Health Research Institute recently released its expense projections for 2024, predicting a 7% rise in overall expenses with drug prices increasing by high single or double digits. Other key predictions include continued decreases in inpatient utilization, along with a corresponding shift to lower-cost outpatient, virtual, and home-based care settings. And as labor shortages persist – particularly for pharmacy technicians – staffing costs continue to be a major issue for health systems.

Bottom line: Increasing labor and drug costs aren’t likely to abate anytime soon. But we believe that enhanced pharmacy services – particularly in the areas of specialty pharmacy, infusion and 340B program management – are a key opportunity to help relieve these financial pressures.

Site neutral payments

The expansion of site-neutral payment initiatives continues to be a threat for hospital-based outpatient department (HOPD) infusion operations. Reduced reimbursement rates for outpatient facilities not only can hurt patient access to quality care, but also represent the potential for a significant loss of infusion patient volumes and revenue. A recent American Hospital Association report found that site-neutral policies ignore important differences between hospital outpatient departments and other outpatient care settings. This results in increased costs that can total more than $200 per patient, which isn’t sustainable for many services.

Bottom line: Health systems need to prioritize a comprehensive hospital solution that meets all payer requirements and drives infusion volume retention. Pharmacy leaders should play a key role in this strategy.

Cybersecurity risks

Ransomware and malware attacks on hospitals and health systems are at an all-time high and are continuing to escalate. In fact, according to a 2023 report from Check Point Research, the healthcare sector ranks second out of all industries for the most cyberattacks in the U.S. And while the number of overall U.S. attacks increased by 57% in 2022, healthcare organizations saw an increase of 86%. As cybersecurity threats increase, so do insurance and prevention costs and fines for data breaches – not to mention significant patient privacy risks.

Bottom line: Cybersecurity should be a top priority for health organizations, and prevention efforts should extend to all vendors that exchange data with a hospital.

Economic uncertainty

A tenuous economy continues to define the investment market for 2023, characterized by persistent inflation concerns, interest rate instability and high debt market costs. However, investments in “blue chip” opportunities continue to produce strong multiples. And the pharmacy space continues to be a particularly high area of interest for investors. As a result, our outlook on the economic climate for healthcare-related investments in 2023/24 is one of cautious optimism.

Bottom line: Hospitals and health systems should consider the opportunity for investment in entities like 503B voluntary outsourcing facilities. This can help to increase the availability of ready-to-use drugs while also addressing time and cost constraints.

Corporate entities expanding into healthcare

From traditional players such as CVS and Walgreens to newer market entrants like Amazon, corporate entities continue to expand into healthcare at a rapid pace. Amazon’s nearly $4 billion purchase of One Medical in 2022 is an example of how corporations are eyeing the business of healthcare as an opportunity for growth and new profits. But while corporate interest and investment in the healthcare space is at an all-time high, its impact on service quality and patient care remains unclear.

Bottom line: Health systems need to assess the continuity of patient care around medication therapy and the subsequent impact on 30-day readmissions. And pharmacy leaders should be active participants in any decisions involving retail and specialty pharmacy strategies.

Remote healthcare

The COVID-19 pandemic generated unprecedented interest in remote healthcare, along with a surge in the use of telehealth and virtual care. Interest in expanding remote care remains high across the industry, but just how big is the virtual care opportunity? According to a report from McKinsey & Company, more than 50 million in-person visits per year could potentially be converted to virtual or telemedicine visits. And while several improvements and new models are in development, we haven’t yet seen the emergence of a “gold standard” for virtual health.

Bottom line: Since pharmacy is the primary treatment modality for the majority of patients, pharmacy leaders should be engaged in the design and development of future remote health programs.

Pharmacy benefit managers

The Pharmacy Benefit Manager Transparency Act of 2023 generally prohibits pharmacy benefit managers from engaging in certain practices when managing insurance plan prescription drug benefits. So pharmacy benefit managers (PBMs) continue to be a key area of focus in terms of their impact on overall drug costs. We’re continuing to monitor the impacts of this legislation in key areas including the elimination of PBM gag clauses, ownership of PBM plan compensation and the required disclosure of broker compensation.

Bottom line: Any PBM strategy should include pharmacy services. We’ve found that the best approach to optimizing PBM services is one that combines both pharmacy and HR data and expertise.

USP 797 & 800

Hospitals have been gearing up for the implementation of USP 797 this November, which also makes USP 800 – the guidance for safe handling of hazardous drugs – compendial. These new standards will require more time and attention to address, and organizations should consider electronic options to reduce their administrative burden and improve documentation outcomes. Many state boards and national accrediting bodies are planning to aggressively enforce the new standards, so hospitals should plan accordingly.

Bottom line: Pharmacy leaders need to validate readiness and educate organizational stakeholders, including risk management and executive leadership, about the importance of these new standards.

Drug shortages

Drug shortages continue to challenge the industry and put patients at risk in 2023. But despite continuing shortages, there are a few notable bright spots emerging this year. The Mark Cuban Cost Plus Drug Co. plans to begin selling lower-cost drugs to hospitals and clinics in the fall, and the FDA is moving to support production of some critical cancer chemotherapy medications in 503B sites. However, tornado damage to Pfizer’s NC plant, which produces 25% of Pfizer’s injectable medications, is increasing concern over worsening shortages. Pfizer supplies 8% of the hospital injectable market and overall according to reports, already has 230 products listed as “depleted” or in “limited supply.”

Bottom line: Drug shortages are a hidden cost that drives higher drug spending and requires more labor to manage. Pharmacies should stay proactive in managing these shortages and continue to document their clinical, safety and financial impact.

For more insights on the latest pharmacy trends, read Visante’s Top 10 Issues in Pharmacy for Hospitals & Health Systems in 2023.

Here at Visante, we’re focused on helping health systems accelerate strong financial and operational performance. Our deep expertise and innovative solutions can help you optimize a fully integrated health system pharmacy program, driving significant value quickly. Contact us to learn more about how we can support your organization. Email solutions@visante.com or call (866) 388-7583 to speak to one of our team members.