Business shutdowns, labor shortages and vaccine mandates dominated business headlines during the COVID-19 pandemic, but other, less attention-grabbing consequences had effects on the workers’ compensation industry. Here are three pandemic-related outcomes that already have or possibly could impact our industry.
DISRUPTION OF THE DRUG SUPPLY CHAIN
Despite a drop in prescription drug usage in recent years, prescription drug prices represent approximately 14% of workers’ compensation claims costs. Some of the measures employers normally take to control prescription drug prices have been to focus on provider behavior, physician dispensing and vendor selection.
But one thing employers can’t influence is the prescription drug supply chain. Drug shortages aren’t new, but COVID-19 put intense pressure on the supply chain and exposed weaknesses in the system such as:
Interconnectedness: Currently nearly 80% of the raw materials needed to manufacture pharmaceutical drugs are imported from outside the U.S. China is a major source of all three key drug ingredients: active ingredients, raw materials and finished products. China’s shutdowns during the pandemic severely disrupted the supply chain for all countries, not just the U.S. (For example, India, which is the world’s largest producer of generic drugs, imports about 70% of its pharmaceutical raw materials from China.)
Just-in-time manufacturing: Drug manufacturers don’t keep excess stock in warehouses because of the costs associated with storage and maintenance. Product is manufactured only when it’s needed to keep costs down and operate more efficiently.
How long are supply chain problems expected to persist? It’s hard to quantify, but currently, public-private partnerships are working to create a more resilient supply chain which would help in the face of future disruptions such as trade restrictions, natural disasters and technology breaches.
DELAYED REGULATORY OVERSIGHT OF MEDICATION PRODUCTION
During the pandemic, travel restrictions slowed down the U.S. Food and Drug Administration (FDA) inspections and oversight of drugs produced in other countries during the pandemic, sparking concern that inferior products could potentially enter the U.S. market. While these delays affected all prescription drugs, injectable drugs and other medications that require special quality assurance were the most disrupted.
Even drugs manufactured domestically were affected by the slowdown in FDA inspections. The backlog started building almost immediately after the pandemic hit: The FDA conducted only 52 domestic inspections between March and September 2020, compared with 400 during the same months in 2019. The FDA said at the time it was protecting its workers, who had not been deemed “essential.”
One solution posed by the pharmaceutical industry is to allow for FDA inspectors to conduct virtual inspections using remote video technology. In April 2021, the FDA took steps to use remote interactive evaluations for moderate- and low-risk facilities, but to what extent they’ll continue remains unclear. Some experts predict that unless the FDA—which averages about 1,500 domestic and international inspection trips every year—speeds up the pace of inspections whether in-person or remote, bottlenecks will continue for years to come.
COURT DOCKET BACKLOGS
Another institutional system that was tested and plagued with backlogs during the pandemic was the U.S. court system. Courtrooms across the country shut down in March 2020, causing an escalation in litigation administrative costs and, in some cases, delaying the outcome of benefits owed to injured workers. Some courts reopened more quickly than others, but like any other business, courts were forced to adapt:
- Many courtrooms turned to technology to restart court proceedings via teleconferencing platforms, which proved to be a time and cost saver.
- Court-ordered and private mediations, which normally occur in person, started taking place virtually, which some mediation participants saw as a positive (easier to schedule, no travel involved), but others found problematic.
Despite these actions, court backlogs escalated. A 2021 Thompson Reuters study found that, of the courts they surveyed, the average court case backlog a year before the pandemic was 958 cases, but increased to 1,274 cases within the first 12 months after the start of the pandemic.
COVID-19 AS A COMORBIDITY
The fact that comorbidities such as diabetes, obesity and asthma can exacerbate the severity of workplace injuries and illnesses is nothing new to the healthcare community or those who manage workers’ compensation claims.
According to a study conducted by the National Council on Compensation Insurance, workers’ compensation claims involving comorbidities nearly tripled from 2000 to 2009. Further, the average cost of workers’ compensation claims connected to a comorbid condition is almost twice that of comparable claims that don’t involve comorbidities.
A question on the minds of the workers’ compensation community is whether COVID-19, which appears to have long-term effects on some people, could eventually be considered a comorbidity. As the long-term effects of COVID-19 undergo continued study, both payers and employers will be watching to see whether it becomes class