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Two health plans are sharing the wealth-in this case, drug discounts from manufacturers-with consumers at point of sale. Beginning in 2019, Aetna and UnitedHealthcare will enable members of their fully insured plans to reap the benefits of the rebates they receive from pharmaceutical companies.
Aetna’s discounts, which will apply 100% of the rebate, could potentially reach 3 million members, while UnitedHealthcare estimates more than 7 million members will be eligible.
Both insurers already allow self-insured employers to pass along drug company rebates to consumers. However, only about 4% of employers do it, while 68% use the money to offset their spending on drugs, according to a survey of employers by the Pharmacy Benefit Management Institute.
What’s driving the change
Matt Wiggin, spokesperson for UnitedHealthcare, says the insurer sees the approach as an opportunity to help mitigate high drug prices. “Drug costs shouldn’t be challenging even with insurance,” he says. Passing along discounts is also part of UnitedHealthcare’s broader effort to simplify benefits and increase generic use and transparency, he says.
Matt Sturm, associate principal, ECG Management Consultants says the actions by UnitedHealthcare and Aetna are a direct response to growing consumer frustration over drug prices. “They also are setting an example of ‘playing nice’ instead of having to respond to the government’s call for more transparency,” he says.
On March 6, HHS Secretary Alex Azar responded to UnitedHealthcare’s announcement by saying, “UnitedHealthcare is a prime example of the type of movement toward transparency and lower drug prices for millions of patients that the Trump Administration is championing.”
Brian Duffant, vice president, BluePath Solutions, a health economics/outcomes research firm, says two primary dynamics are motivating payers to share rebates: consumer dissatisfaction with high out-of-pocket drug costs and criticism about not sharing rebate savings with consumers that have high-deductible plans, often requiring coinsurance payments on the full gross price as opposed to payers’ actual net price.
Gabriel Levitt, cofounder and president of PharmacyChecker.com in White Plains, NY, which provides online prescription drug prices, says insurers are tired of bearing the brunt of consumers’ frustrations.
“It is clear that what Pharma considers ‘middlemen’-insurers and pharmacy benefit managers (PBMs)-are now the focus of more scrutiny in terms of drug pricing; it wants them to be the new punching bags of the industry.”
He believes that the recent decisions by Aetna and UnitedHealthcare are likely efforts to try and dilute these attacks by providing consumers more savings and avoiding potential legislation demanding transparency in drug pricing.
If insurers pass along drug savings, and the public sees them as real, the finger may be pointed back at Pharma for setting prices so high, Levitt says.
He predicts that if the two new discount programs could help insurers remain competitive, other plans might be tempted to follow suit. He also says that mergers such as CVS-Aetna last year, which virtually eliminated the middleman, might make insurers more willing to pass along rebates.
Next: What discounts will look like
What discounts will look like
Levitt predicts that discounts on branded drugs will be about 10% to 15%, aligning with the rebates accrued by using manufacturer drug discount cards. “The result could be reduced copays only on expensive branded drugs,” he says.
Sturm estimates that discounts could range from a few dollars to more than a thousand, with higher savings in categories such as rheumatoid arthritis, where Humira (adalimumab) and Embrel (etanercept) are battling it out in the marketplace.
The amount of discounts will depend on manufacturer rebates and on a member’s benefit plan, Wiggins says. He says those in high–deductible plans may stand to earn more savings because their out-of-pocket costs are higher.
Mesfin Tegenu, president of PerformRx, a PBM that is part of the AmeriHealth Caritas Family, says rebates are contracted on a drug-by-drug basis, and if a health plan adjusts the member cost based on the actual drug being taken, there could be a different discount for each drug. “However, aggregated rebates could provide a more homogenous discount across all branded drug products.”
Resistance and skepticism
Last year, federal officials said they were considering requiring insurers to use a fixed percentage of their rebates to reduce Part D patients’ out-of-pocket costs on prescriptions. Several PBMs and insurers-including UnitedHealth-opposed the idea and say it will require them to raise premiums, according to a March Wall Street Journal article.
“Insurers argue that by keeping rebates for themselves, they can keep premiums lower. If they pass those savings on, premiums will have to go up,” Sturm says. “Keep in mind, there is no ‘free lunch.’ If health plans pass savings onto consumers, they will likely need to raise premiums in order to cover the incremental expense.”
Although Express Scripts can process point-of-sale rebates for insurers who are interested, very few insurers choose to ask the PBM to do so, says Jennifer Luddy, spokesperson for the PBM. “Most clients prefer to use the savings from rebates to keep costs low for all members (i.e. keep premiums steady), rather than just passing them onto patients who are using a rebated medication.”
Tegenu is skeptical about whether consumers will actually reap benefits from point-of-sale rebates because they might result in higher premiums. “This could actually increase the cost of healthcare for those who don’t use drugs having rebates, while disproportionately decreasing costs for those who do use drugs with discounts,” he says.
Mari Edlin is a frequent contributor to Managed Healthcare Executive. She is based in Sonoma, California.