In a move likely to help people in high-deductible health insurance plans who take expensive, brand name drugs, the nation's largest health insurer announced it will pass along rebates on prescription drugs directly to some consumers.
UnitedHealthcare said the policy, which would begin next year, would lower out-of-pocket costs for 7 million people enrolled in fully insured commercial group benefit plans. Health care policy specialists noted that the effects for individuals covered by those plans would vary depending on which drugs they take, how big the rebates are and the structure of their health benefit.
"I think this is a great step in the right direction. I think patients -- particularly those struggling with very high deductibles and costs associated with prescription drugs or high coinsurance rates associated with very high price drugs -- stand to benefit significantly from this announcement," said Rena Conti, a health economist at the University of Chicago.
As people have struggled with high prices for drugs, ranging from insulin for diabetes to the lifesaving EpiPen, there has been heightened scrutiny of the complicated mechanics of drug pricing. Drugmakers set the list prices of drugs, but grant secret rebates to pharmacy benefit managers that negotiate on behalf of insurers and employers.
Due to the lack of transparency in the industry, a raging debate has developed over the extent to which such rebates are being passed on to insurers, employers and consumers, with pharmacy benefit managers saying they produce savings and drug companies arguing that rebates aren't trickling down to patients. The most concern has focused on consumers in high deductible plans who get stuck paying the high list price -- even though their plan receives a discount.
Analysts said that other companies were likely to follow the move, which has been an idea the Trump administration has also been exploring as a potential policy change to Medicare's prescription drug benefit.
The largest pharmacy benefit manager, Express Scripts Holding, allows clients to share rebates with consumers at the point-of-sale, but has not seen uptake of the plan design. Express Scripts negotiates drug prices on behalf of employers or insurers, which can choose whether to pass on rebates or use those savings to lower premiums more broadly.
"Most prefer to use the discounts from rebates in other ways that benefit all of their members since not all medications are rebated," spokesman Jennifer Luddy said in an email.
CVS Caremark, another large pharmacy benefit manager, said that it provides more than 90 percent of the rebates it negotiates to clients. CVS has offered an option to pass on rebates at the point of sale since 2013. At the moment, about 12 million members are enrolled in plans with this kind of benefit design.
"For clients who do not choose to apply rebates at the point of sale, they may instead opt to use rebates to lower overall member health benefit costs by reducing deductibles, premiums or copays for all members," CVS spokesman Christine Cramer said in an email.
In theory, passing rebates to consumers could increase premiums for everyone else, but UnitedHealthcare spokesman Matthew Wiggins said that the company expected a minimal effect. Conti said that it was not readily apparent what effect the change could have on premiums, but was skeptical that it would have much of an effect on premiums.
George Hill, an analyst at RBC Capital Markets wrote in a note that the move was more of a public relations move than a structural change to how pharmacy benefit managers (PBMs) work.
"We expect other health plans to follow suit working with their PBM partners, and for this news to have little actual impact (if any at all) on the PBM space," Hill wrote.
Business on 03/07/2018