- Major U.S. insurer UnitedHealthcare said Tuesday it plans to pass on drugmaker rebates to some consumers at the point of sale, adjusting how manufacturer discounts are processed in an effort to more visibly lower out-of-pocket costs for prescription medicines.
- Beginning next year, UnitedHealthcare will apply the savings from drug rebates upfront when individuals insured through commercial group benefit plans fill prescriptions at retail pharmacies. The changes will apply to more than 7 million people, the company said.
- Typically, insurers use the discounts offered by drugmakers to lower premium costs for all members. That approach, however, makes it difficult to determine the true cost of a drug and has opened up insurers and pharmacy benefit managers to criticism from pharma of pocketing savings from drug rebates.
As debate over prescription drug costs continues, more attention has been paid to the current system's lack of transparency into what a medicine actually costs. Drugmakers typically disclose the wholesale acquisition cost, or list price, of their products, but consider the rebates and discounts they offer to insurers and PBMs as confidential information.
For some therapeutic areas, such as diabetes, discounts can amount to significant sums, rising to 40% or 50% of the drug's list cost. Consumers never see this behind-the-scenes action, however. Insurers say rebates and discounts are used to lower premium costs across the board, but the degree of that impact is hard for outsiders to measure.
Sensing an opportunity, the pharma industry has accused insurers and PBMs of lining their own profits with those discounts rather than lowering costs for consumers — a suggestion that insurers adamantly reject.
Against that backdrop, the idea of passing drugmaker rebates on to consumers at the point of sale has gathered some momentum. Last November, the Trump administration proposed requiring Medicare Part D sponsors pass on a percentage of rebates provided for covered drugs, requesting comment from industry participants.
Pharma appears supportive of the idea, but some insurer and PBM groups oppose the changes as currently proposed, arguing such requirements would have the negative consequence of raising premium costs for all consumers.
UnitedHealthcare's plans would affect a smaller number of consumers, but its move to do something similar suggests broader payer interest in the idea.
Both CVS Health and Express Scripts, competitors to UnitedHealthcare, have also published documents exploring how point-of-sale rebates could work as well, although UnitedHealthcare's plans go a step further.
Department of Health and Human Services Secretary Alex Azar praised the move by UnitedHealthcare, saying it is emblematic of the transparency the Trump administration wants to see.
"Empowering patients and providers with the information and control to put them in the driver’s seat is a key part of our strategy at the Department of Health and Human Services to bring down the price of drugs and make healthcare more affordable," Azar said in a March 6 statement.
Editor's note: This article has been updated to include comment from the Department of Health and Human Services Secretary